I did find the founders and I did find a product in some stores. The founders live in Santa Fe. The products, as you see from the photo on the left (sorry, a magnifying glass would help), are “Assembled in Mexico.” Wait, I thought the SIC investment in EarthStone was supposed to create jobs in New Mexico not Mexico.

On EarthStone’s website, the company offers six products for sale: Four cleaning products with brand names GrillStone, PoolStone, BathStone and KitchenStone; and two sanding products with brand names QuikSand and PowerSand.

Back in 2004, when the founders were searching for money from the State Investment Council’s private equity program in EarthStone, the founders claimed that the company’s products were “distributed in more than 30,000 retail stores worldwide.”

In an email to EarthStone’s CEO George Morandin I asked where I could find EarthStone products to which he replied “our retail customers include Wal-Mart, Bed Bath and Beyond, Lowe’s and Home Depot.”

I did several store visits in the Albuquerque area and found one of the company’s products, GrillStone, carried by two retail chains – Lowe’s and Home Depot. I did not find GrillStone in either Wal-Mart or Bed Bath and Beyond. And I did not find any of the other five brands in the stores I visited.

This doesn’t mean that the company’s products aren’t distributed in “30,000 retail stores worldwide,” but I can’t verify that distribution figure myself. Which is why I have been asking the State Investment Council, the founders of the company, and the CEO of the company EarthStone’s sales figures – which would at least give me an indication to measure the company’s product distribution claim of “30,000 retail stores worldwide.”

For the heck of it, I thought I would do an online retailer check and, lo and behold, all EarthStone products are available here at Amazon.com.

Gay Dillingham and Andrew Ungerleider, the founders.

Ms. Dillingham and Mr. Ungerleider remain shareholders in EarthStone and, according to George Morandin in an email to me, “provide some input to the company at the board level.”

Since all three board members (Mr. Morandin has a board seat) told me they couldn’t provide me with any financial specifics for proprietary reasons regarding how EarthStone is doing today – such as sales figures, or how many New Mexicans has the company hired, or even a rough idea of EarthStone’s valuation since the only chance the people of New Mexico have of getting their money back on this investment is if a liquidity event happens (the company is acquired or it goes IPO). I decided to see if Charles Wollmann, SIC Director of Communications, could provide me with something to go on – or at least point me to someone who can be more specific regarding the financials of the company.

Here’s what he had to say to me in his email:

“Disclosure of individual investment valuations within the New Mexico Private Equity Program portfolio prior to exit, is not only contrary to industry standard but is potentially damaging to the company in question and ultimately jeopardizes the state’s investment of public dollars.”

Unfortunately, no one connected to the company will provide me with answers to the three main questions that prompted this update investigation in the first place: (1) What are EarthStone’s sales figures, (2) How many New Mexico workers has the company hired? and (3) What is EarthStone’s 100 percent equity stake valued at – and do the people of New Mexico have a chance of getting back their money?

Mr. Wollmann did attach a report in his email to me that reflects the latest fund performance regarding the New Mexico Private Equity Program. It is a quarterly report written by Sun Mountain Capital, which manages the SIC’s private equity investment program. To date, the SIC has put investments into 28 venture capital funds who have made investment commitments in 63 New Mexico companies. Here’s the list.

As you can see, seven investments have exited at a gain. 15 have exited at a loss. And 41 are in active status, including Mr. Ungerleider and Ms. Dillingham’s EarthStone and GrowStone.

The NMPEIP report lists the investors in each company. Under EarthStone, the investors listed are (1) Angel Investors, (2) Livingry Fund, (3) New Mexico Co-Investment Partners, (4) Triton-Pacific Capital Partners and (5) Volkart. Here’s a description of the investors waiting in line for something good to happen to EarthStone otherwise they don’t get their investment back:

(1) Angel investors are typically high net-worth individuals who buy an early-stage equity stake in a company before the company goes out and raises higher amounts from venture capital firms. It can be quite lucrative if an angel picks the right company.

For example, the first investor in Google was an angel investor who wrote a check to the founders for $200,000 to keep product development going until follow-on rounds of capital venture came in. When Google went public the angel investor netted 5.1 million shares. At this point in time, each share of Google is worth $600. If that investor had held onto all his shares they would be worth more than $3 billion dollars today. Not a bad return on $200,000.

(2) The Livingry Fund is Gay Dillingham. According to New Mexico Grantmakers Directory, Livingry Foundation “synergistically spans a breadth of issue areas to help build a foundation for a world that can work for all beings.” I think what this means is Ms. Dillingham just may be using her own money to keep the company operating.

(3) The State Investment Council convertible loan of nearly $11 million for EarthStone is now standing in the equity line awaiting for something good to happen. Or it will join the 15 SIC investments that have “exited at a loss.”

(4) Triton-Pacific Capital Partners out of Los Angeles lists EarthStone as one of its portfolio companies.

(5) Volkart. This is the weird one. When I Googled them the first thing that came up was a Security Agreement between the “Secured Party” Volkart America, Inc and EarthStone International the “Debtor” in the Uniform Commercial Code section on the New Mexico Secretary of State’s Office website. Each state has a UCC which serves as a central filing office for certain financial statements and other documents filers wish to put into the public domain.

As you can see here this agreement filed by Andrew Ungerleider December 21 1999 was terminated by Volkart America in December 21 2004. As reported earlier in this investigation, EarthStone received all of its loan money from the SIC in 2004. Is the timing between the lapsed security agreement between one of EarthStone’s lenders and getting money from the SIC at the same time coincidental? Perhaps. Perhaps not. Big Bill Richardson to the rescue?

The odd part is that when I Googled Volkart America nothing remotely resembling a venture capital firm or financial services firm came up.

What did come up was Volkart International, with the same address listed in Phoenix on the 1999 security agreement filed by Mr. Ungerleider, only this company was listed as “cotton merchants.” I called the number in Phoenix and the number had been disconnected with no forwarding number.

In the end, let’s all hope EarthStone is a success.

After all, that’s how the state of New Mexico is going to get its money back.

In the coming months I will be chronicling what I see are the positive changes in the State Investment Council. It has become much more transparent from what insiders tell me since 2010 legislation made it be so. And in this Watchdog’s opinion those legislative changes in 2010 were definitely influenced by the year-long investigative series on EarthStone in 2009 by my predecessor Watchdog Jim Scarantino.

I just hope the state’s $11 million investment in Ms. Dillingham and Mr. Ungerleider’s recycled glass company hasn’t been recycled into thin air.