A Philadelphia venture-capital fund that focused on building companies outside the usual tech hotbeds has been taken over by the U.S. Small Business Administration after its losses exceeded levels permitted by the SBA.

U.S. Attorney Zane Memeger filed a federal civil complaint in Philadelphia on Thursday, citing Murex Investment Capital I L.P.'s deficient finances, which led to the takeover. The government says Murex owes $2.6 million.

The move follows the bankruptcy last fall of what was once a promising Murex investment, Advanced Workstation in Education of Chester. AWE sold computer learning systems to libraries and schools.

As part of the New Markets Venture Capital initiative under President Bill Clinton's administration, the Murex fund, founded in 2003, raised $13.75 million from banks and other investors to buy into firms based mostly in low-income census tracts.

The total included $8.5 million in SBA investment guarantees, $1 million in Pennsylvania state economic-development funds, and support from Ben & Jerry's, the "socially responsible" ice cream maker, Joel Steiker, managing partner at the fund's parent company, Murex Investments, said Thursday.

"It's a very sad story" of a government program crafted to extend venture capital into poor communities under conditions so detailed that it became difficult to find qualified targets," Steiker added. "We took on some tough challenges."

Backed by prominent advisers including former Chase Econometrics chief executive Lawrence Chimerine and investment manager Franklin Square Capital Partners' cofounder Michael Forman, Murex invested in several successful companies, including electronic-payment service PayQuik of Bala Cynwyd, acquired by Citigroup in 2008 for a price 51/2 times what Murex had invested, and AnySource Media of Malvern, bought by DivX Corp. in 2009.

But the November bankruptcy of Advanced Workstations in Education left Murex with debts it could not pay. AWE, which employed 50 at its height in 2013, was sold in a Chapter 11 Section 363 auction in April by investment banker J. Scott Victor and his colleagues at SSG Capital Advisors, West Conshohocken, to Blackstreet Capital Management L.L.C., a Bethesda, Md., firm that specializes in corporate turn-arounds.

"AWE was a really sweet little company. The guys who ran it were terrific guys. We're very unhappy" with its collapse, Steiker said.

In a statement, SSG said that Advanced Workstations' financial collapse followed an "aggressive multi-year sales initiative" to sell to public schools, a tougher market than public libraries, its earlier focus. School sales "failed to meet revenue expectations," SSG concluded.

"They were competing with iPads," Victor said. The price left nothing for Murex.

AWE's chief executive until its April sale, Karl Thornton, a former track star at the University of Pennsylvania who founded the company in 1994 after working at SmithKline Beecham, did not return a call to his home in Delaware County.

Steiker said he hopes the eventual sale of other Murex investments will help pay the fund's obligations.

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