News: CJ Exclusives

Ethanol firm officials get 30-month prison terms

Former state official already serving time in conspiracy

U.S. District Court Judge Terrence Boyle sentenced two principals of a failed ethanol production company to 30-month prison terms for their roles in a bribery scheme to secure environmental permits.

David Lee Brady, 77, of Raleigh was president of Agri-Ethanol Products and James Albert Perry Jr., 63, of Wake Forest was an employee. Brady is a Raleigh businessman and real estate developer. Perry served as mayor of Wake Forest from 1978 to 1982. Boyle also handed out a $60,000 fine to Brady and a $10,000 fine to Perry.

Each pleaded guilty in federal court in last June to one count of conspiracy after a grand jury indicted them in 2008 on charges also involving extortion and perjury. 

AEP planned to build an ethanol production plant in Beaufort County. The conspiracy charge, outlined in the indictment, stated that Brady, Perry, and others committed a crime against the United States when they agreed to obstruct, delay, and affect commerce through an extortion arrangement involving a public official.

Under that arrangement, Boyce A. Hudson, a former senior field officer in the Department of Natural Resources, agreed to expedite environmental permits for AEP. In return, Hudson stood to collect a lump-sum payment of $100,000 and a two-year consulting contract for $4,000 a month after AEP received financing for the project.

The General Assembly approved an incentive plan that could have totaled $24 million and Beaufort County officials authorized as much as $1.6 million in subsidies to purchase land for the facility. AEP expected to receive full funding for the plant in 2005, but the funding was not secured and the project was never built.

Earlier plea agreement

Hudson, now 69, who retired from DENR in 2005, pleaded guilty in 2008 to extortion and money laundering and received a 40-month in prison sentence. He is incarcerated in the Butner Federal Correctional Complex.

Assistant U. S. Attorney John Bruce told Boyle that Brady and Perry offered no assistance to the federal government in the investigation, but noted that Hudson had been cooperative. Boyle said he was inclined to reduce Hudson’s sentence to 30 months so that all three men would receive the same sentence.

During a previous court appearance, Assistant U S. Attorney Dennis Duffy explained that Thomas “Ricky” Wright and Barry Green, both AEP investors, had a social and business relationship with Hudson that started in 1993. They met with Hudson in April 2004 to discuss the ethanol project.

Wright is a Wake Forest businessman, a former state Alcoholic Beverage Control commissioner, and has been a fundraiser for Democrats. Green at one time had an ownership in Thee Dollhouse, an adult entertainment facility in Raleigh. Neither Wright nor Green has been charged in connection with the AEP project.

During a subsequent meeting at a North Raleigh restaurant, Brady requested that Hudson, who at DENR acted as a liaison with members of the state legislature and the governor’s office, use his official position to expedite AEP’s permits.

An FBI undercover operation played a significant role in developing the allegations against Brady and Perry. In September 2005, an undercover FBI agent, posing as a potential investor, expressed interest in the project and became acquainted with Hudson and AEP officials.

In separate meetings with the agent, Hudson described his efforts to expedite the permits but expressed concern that he had not been paid. The agent later provided Hudson with a $15,000 bank check as a first installment of AEP’s obligation to Hudson.

Holding addresses sentences

“Corruption comes in all forms,” U.S. Attorney George Holding said to reporters after the sentencing hearing. “Over the course of the last eight years we have seen it in a variety of different forms and fashions and how it has crept into the culture of our government. The bottom line is that corruption in any form undermines the people’s confidence in government and their elected officials. It is something that we cannot tolerate and that we have to expend the resources in law enforcement to root it out at every turn.”

He also said that rank-and-file DENR officials were not part of the corruption problem. He noted that the head of DENR is the governor and that Boyce Hudson was a high-ranking DENR official.

When Carolina Journal asked about the status of Wright and Green, Holding said, “We investigated many different angles in this investigation we and believe that we have wrapped this investigation up.”

Previous allegations

In 2003, Carolina Journal first wrote about corruption allegations involving efforts to launch an ethanol production company in eastern North Carolina. Raleigh businessman William Horton alleged that Perry, former Northeast Commission CEO Rick Watson, and others conspired to keep him from building an ethanol plant in Beaufort County. AEP was formed after Horton made his allegations and the company ended up controlling the same site where Horton had planned to build his plant.

Brady and several state and local government officials formally announced the AEP ethanol project Dec. 15, 2006, at an event at Beaufort County Community College.

A document released at that event, titled “History and Background of the AEP Project,” highlighted the key roles of three officials.

“The plant would not have been possible without the dedication of three very dedicated public servants: Secretary of Revenue Norris Tolson, Representative Joe Tolson, and Representative Arthur Williams. Together they crafted and passed a 25-percent tax credit to encourage North Carolina to produce fuel, as opposed to importing it. This will have an enormous economic impact,” read the document.

Norris Tolson now serves as president of the North Carolina Biotechnology Center. His brother Joe and Williams still serve in the N. C. House of Representatives.

Don Carrington is executive editor of Carolina Journal.