Fourth in a continuing series. Reporting partner WSJM is examining the inquiry by Berrien, Cass, and Van Buren counties into the Berrien-Cass-Van Buren Workforce Development Board, which does business as the Kinexus Group.
In 2016, the agency that runs Southwest Michigan’s job training programs held $17,530 it could spend however its board chose. Today, across the group, it holds $3,863,947.
It has used money like that to start or buy three companies. It has not yet made money on any of them.
Kinexus Group bought its most recent company just four days before Christmas in 2023, at a special meeting it closed to the public, with $1,125,000 it authorized itself to borrow. Fourteen months later, the committee that sets the chief executive’s pay made a plan to sell that company his second paid objective for the year.
Where the money came from
Yesterday, WSJM reported that Kinexus’s auditors have found a problem with its books in each of the last three years, and that beginning in 2024 its audits stopped reporting how any individual subsidiary is performing.
There is a second gap. Of the five categories of records the counties requested in June, Kinexus produced four. The one it withheld was Affiliated Entities and Corporate Structure — the category covering nearly everything in this account. Kinexus told the counties it would produce the rest by August 4. A county official confirmed late Tuesday afternoon that a production had been received. No description of its contents was available at press time, and WSJM has not seen it. Whether it includes the withheld category is not yet publicly known.
Nonprofit accounting divides the money an organization holds into two piles. Money with donor restrictions can only be spent as the grantor specified. Money without restrictions can be spent on whatever the board decides.
The unrestricted balance is now roughly 220 times what it was in 2016, and most of it sits at the workforce board itself rather than at the companies — $2,778,803, or about seventy-two percent of the group total. Restricted money followed a different curve: it peaked at $879,158 in 2020 and has fallen by more than half since, to $414,846.
Two federal pandemic programs account for much of the unrestricted money — a Paycheck Protection Program loan of $1,171,000, and $2,308,201 from the Employee Retention Credit, a refundable payroll tax credit that arrives as cash from the U.S. Treasury and carries no restrictions on how it is spent. Without the credit, the workforce board’s books would have been roughly $465,000 in the red in fiscal 2024.
Kinexus has said the direction was deliberate. Its 2023 audit states that “the Organization continues to diversify its financial backing in order to support programs in furtherance of its tax-exempt status.”
What it has bought
The board minutes describe how that money gets used. In October 2022, presenting a loan agreement with the affiliated Manufacturing Growth Alliance, treasurer Rick Dyer told directors that “KG invested in the creation of the MGA as a non-profit startup with unrestricted funds.”
The Alliance is a trade association Kinexus created in fiscal 2020 to serve small manufacturers. It lost $338,653 in its first two years and by its fourth was still $176,367 short of breaking even. It has had three executive directors. And by Gustafson’s own account it is not built for the counties that own it: he told the Kinexus board in February 2023 that “the way the State and MEDC set this up, MGA does not represent Berrien, Cass and Van Buren.”
Nearly all its money comes from Industry 4.0, a Michigan Economic Development Corporation program Kinexus told its board is “scheduled to close out in June 2026.” The MEDC now describes the grant in the past tense on its own website and says the application is closed.
The one before
On the day the HR Collaborative deal closed, WSJM asked Gustafson whether this was the first for-profit company Kinexus had been affiliated with.
“It is,” he said. “We had years ago tried to, we had created one pre-COVID — bad timing.”
He did not name it, and he did not say what it did. Public records show that company was Change Agents Consulting, Inc., and what it did was human resources. Kinexus incorporated it in June 2018. In fiscal 2020 it took in $29,900 and spent $42,378. That September, directors were told its “business has not grown as anticipated” and voted to dissolve it.
Three years later, the board borrowed $1,125,000 to buy a company doing the work its own for-profit had failed at.
What the for-profit has produced
The board spent fifty-five minutes behind closed doors that December afternoon, in a session called “for the purpose of discussing the creation of a for-profit subsidiary and for profit acquisition(s) opportunity for that subsidiary.” It came back at five o’clock and, in the next ten minutes, accepted a letter of intent to buy the assets of a Grand Rapids human resources firm called HR Collaborative, created a for-profit company to hold them, and authorized the borrowing. The minutes record no purchase price, no projections, and no financial analysis.
Whether the purchase has worked is harder to establish than it should be, for the reason yesterday’s story described. Beginning in 2024, the audits stopped reporting each affiliate separately and folded three subsidiaries into a single column.
Kinexus HR’s own bottom line can still be found, though — on a different line entirely. Because it is a for-profit corporation rather than a nonprofit affiliate, the workforce board carries it as an investment and books its result there each year.
That line showed earnings of $59,856 in fiscal 2024, covering the four months after the February 29 closing, and a loss of $66,577 in fiscal 2025, its first full year.
On the day the deal closed, Gustafson said the purchase would pay for the mission.
“Through the profit that they make, it will be reinvested through a dividend to the Kinexus Group, in which we will then distribute to advance the purpose and mission of all our subsidiaries and our work.”
No dividend appears in any audit or return.
What the counties were told
Kinexus’s 2023 audit, signed nearly three months after the deal closed, said this under Subsequent Events: “Kinexus Group formed a subsidiary which acquired a company. As part of the acquisition, Kinexus Group guaranteed debt of the company acquired.”
That is the entire disclosure. The counties were told a subsidiary had been formed and a company acquired, without either being named.
Eleven weeks earlier, Gustafson had described the nonprofit’s exposure differently.
WSJM: “Okay, so none of the pieces of the nonprofit are involved in that and they won’t be co-mingled?”
Gustafson: “No. That’s why I specifically highlighted the dividend. In the for-profit, as it creates a profit, that has to be legally turned into a dividend and then passed back to the corporate Kinexus Group to determine how to invest that in the subsidiaries and the mission.”
He answered no — and then described profits required to pass from the for-profit into the nonprofit parent, and from there into its other subsidiaries.
And then the plan changed
On April 29, 2025, the board’s Corporate Executive Committee met to review Gustafson’s performance and set his objectives for the coming year. Four members were present. The chairperson of the Chief Elected Officials Board, the counties’ representative on that committee, was recorded absent.
The first objective was “Clean Audit.” The second was “HRC Value Creation and Spin-Off Plan Approval.” The fourth was exploring a captive Professional Employer Organization — a company that becomes the formal employer of another business’s staff, handling payroll, benefits, and human resources compliance while the client directs the work. The minutes do not say who it would serve.
Fourteen months after borrowing $1,125,000 to buy the firm, a plan to spin it off was the chief executive’s second paid objective.
Nothing about a spin-off appears in any audit, any tax return, or any public statement by the organization.
What Kinexus says
Kinexus has provided no specific answers to WSJM’s written questions, submitted across two rounds, including those about its subsidiaries’ finances, the acquisition, and the spin-off.
Its attorney, Mark Rizik, said the organization “is committed to transparency,” that “many of the questions involve documents that have not yet been released or reviewed in their entirety,” and that “it is important that any conclusions be based on complete information.” Some of those documents have since begun to move. A county official confirmed Tuesday that a further production had been received.
WSJM offered to extend its deadline on any question the organization identified as needing more time. The statement identified none.
Rizik is also Kinexus’s corporate counsel. Gustafson credited him on the day the acquisition closed as the lawyer who helped the organization “navigate the due diligence, the legal process, and all the checks and balances.”
The account above is drawn from Kinexus’s audited financial statements, its federal tax returns, its board minutes, and Gustafson’s recorded public statements.
