News: CJ Exclusives

Businessman Sues Group Affiliated with Golden LEAF

A Raleigh businessman who has sought to build an ethanol plant in North Carolina for more than 20 years is suing a consortium of interests that include the North Carolina Grain Growers’ Cooperative, which is heavily financed by Golden LEAF. His accusations include racketeering, extortion, corruption, and conspiracy, which reach “the highest levels of state government.”

The action was filed Monday in Wake County Superior Court by William Horton, president of The DFI Group, a real estate and commercial development company. Horton accuses several individuals and organizations of conspiring to keep him from building an ethanol plant in Beaufort County. After hearing Horton’s motion, Superior Court Judge Howard Manning signed an order allowing Horton’s lawyer, Scott Wilkinson of Raleigh, to begin taking depositions of some defendants Feb. 20.

Horton alleges that a coalition of eastern North Carolina farmers and economic development officials used their political connections to state Senate President Pro Tempore Marc Basnight to pressure Horton to give up his business plans and site options for building the plant. In interviews with Carolina Journal prior to filing the suit, Horton said the Grain Growers’ Cooperative, the North Carolina’s Northeast Partnership, and a group named Ricky Wright & Associates wanted to participate in his $75 million ethanol project.

Horton’s Quest for Ethanol

A native of eastern North Carolina, Horton started DFI in 1978. In addition to its real-estate interests, DFI has focused on developing an ethanol industry in the eastern part of the state. Producing fuel-grade ethanol involves a distillation process using corn, sweet potatoes, or other vegetable sources. The ethanol would be used as a fuel additive to regular unleaded gasoline to produce a fuel that burns cleaner and reduces carbon monoxide emissions.

In the early 1980s Horton planned to build an ethanol plant in Johnston County. The project failed after the state legislature terminated an ethanol fuel-tax exemption. Horton said he lost more than $5 million on the project.

Horton did not give up. In March 2000 with Gov. Jim Hunt, DFI announced plans to build three ethanol plants in eastern North Carolina. “DFI Group’s plans will revitalize the economy and farm community of rural Eastern North Carolina and could have long-term impact on the region’s economic outlook,” Hunt told The News & Observer of Raleigh.

Since that announcement, most of Horton’s efforts have gone to a project in Beaufort County, where DFI has optioned a waterfront site on a tributary of the Pamlico River near the town of Aurora.

Unwanted Partners

In November 2001, Horton said, Jim Perry, who was mayor of Wake Forest from 1978 to 1982, approached him and offered to help him obtain state permits and build political support for his projects. Over the course of the following year, Perry visited DFI’s office in Raleigh almost daily, Horton said. On more than one occasion, Horton said, Perry claimed to be representing Basnight’s interest in the project.

In 1998 Perry was convicted of a felony in South Carolina for criminal conspiracy and receiving stolen goods. Perry and several others embezzled $2 million from the Sumter school system.

In Summer 2002, Horton said, Perry introduced Horton to a close associate, Ricky Wright, the owner of a motor shop in Wake Forest and prolific fund-raiser for mostly Democratic candidates. He, his wife, daughter, and son-in-law contributed a total of at least $15,000 to Dennis Wicker and Mike Easley in the 2000 Democratic gubernatorial primary and general election. In 2001 Wright hosted a fund-raiser at his Wake Forest business for Basnight.

Over time, Perry’s efforts evolved into trying to broker a deal in which DFI would accept partners, including the Grain Growers’ Cooperative, Horton said. The cooperative, which promotes the production of alternative fuels, has received five grants for a total of $1,114,250 from Golden LEAF. In addition, Golden LEAF awarded Grain Growers $10 million in August 2002 to build a biodiesel plant. Golden LEAF, a nonprofit organization created by the General Assembly, is responsible for distributing half of the state’s revenues from the 1998-tobacco settlement. Last week Carolina Journal detailed the relationship among the Grain Grower’s Cooperative, Ricky Wright & Associates, North Carolina’s Northeast Partnership, and the ethanol project (See Co-op Transfers Ethanol Plant to Private Group).

Perry also brought Rick Watson and Vann Rogerson of the publicly funded North Carolina’s Northeast Partnership, in addition to Wright, for a potential deal with DFI, Horton said. Horton said he wasn’t looking for partners for his ethanol project, nor did he seek public money.

However, Horton said, the groups increased pressure upon him to allow them in, to the point where they threatened that if Horton didn’t relent, they would force him out of business and pursue DFI’s projects on their own. Ultimately the groups drew up an agreement in which DFI would sell its proprietary technology and site interests for the ethanol project to Ricky Wright & Associates.

The document stipulated that in exchange for transfer of the ethanol interest, DFI would be paid a total of $3 million in three equal increments, the last to be paid after the second year of the plant’s operation. The document included a “non-compete” clause and stipulated that Horton “agree not to discuss DFI’s current interest and activities or the subject matter of this letter of intent with anyone.” Horton said he refused to sign the document, which was presented to him on Christmas Eve last year.

Shortly afterward, without explanation, Branch Banking and Trust called in two loans to Horton. The bank demanded immediate payment on Deeds of Trust to his Raleigh office building and on a property he owns in Greensboro. Horton believes the bank acted in response to political pressure, and two BB&T officials are scheduled to be deposed on Feb. 20.

Horton’s Claims

The motion presented to Judge Manning says Horton and DFI “have, upon information and belief, credible evidence which forms the basis of the complaint to be filed.” It describes a “complex and intricate conspiracy involving extortion, corruption, and racketeering by public and private individuals reaching the highest levels of State government.”

After hearing the motion, Manning signed an order allowing the depositions to proceed prior to filing the actual complaint.

A statement of purpose of action filed with the court claims that the defendants are guilty of “the illegal and improper use of the judicial process to obtain “foreclosures” on deeds of trust executed by his company. He also alleges the defendants are involved in a conspiracy to obtain property through force or violence; to obstruct commerce through wrongful force; to commit fraud; and with interference with a contract. He also charges them with intentionally asserting and registering fraudulent claims and the intentional infliction of emotional distress.

Watson, of the Northeast Partnership, claimed Horton’s charges are frivolous and that he’s desperate to save his business.

“I know he’s grasping for straws,” Watson said, “and we may have to take actions ourselves just to set the record straight.”

The list of defendants to be deposed starting next week include: Sam N. Lee, Jr., CEO of The North Carolina Grain Grower’s Cooperative; Rick Watson and Vann R. Rogerson, employees of North Carolina’s Northeast Partnership; Thomas R. Wright of Ricky Wright & Associates; officials of Branch Banking and Trust Company; James A. Perry, Jr. of Wake Forest; and Paul Darby of Southern States Cooperative Foundation.

Carrington is associate publisher for Carolina Journal.