DO DILIGENCE (PLEASE)
by Dan Leahy
“We've been trying to figure out
what they have in mind” - Governor Inslee
Associated Press, June 10, 2015,
The Olympian
In April, 2015, thanks to a public
records request by the Columbia River Keeper, Washingtonians learned
of crude oil refinery proposed on the Columbia River at the Port of
Longview.
The documents made available by the
Columbia River Keeper include 1) an overview of the refinery project
(headed “Riverside Refining LLC”) presented to the Port of
Longview, and 2) a Memorandum of Understanding (MOU). The MOU was
dated July 2014 and signed by Lou Soumas. He was identified as the
CEO of Riverside Energy, Inc.
According to the documents, Riverside
Energy would own and develop a refinery to be supplied from the
Bakken Shale oil fields. Crude oil would arrive in 100 to120 car unit
trains at the rate one train every three days. The refinery would
produce low-sulfur diesel oil, gasoline and jet fuel. The overview
named three individuals as the Riverside “Project Team”: Lou
Soumas as CEO, Damon Pistulka as Senior Vice President (SVP) and
Chris Efird as Chairman.
Under the MOU, Riverside would have the
exclusive right for 180 days to negotiate with the Port of Longview
for the use of certain premises, with the intent to enter into a
definitive agreement including a 50-year lease by Dec. 31, 2014. The
MOU was apparently never signed by the Port of Longview and its
current status is unknown. Port of Longview Commissioners haven’t
commented directly on the proposal since it was brought to light this
past April.
Riverside Energy, Inc or Riverside
Energy LLC or ??
Riverside Refining LLC and/or Riverside
Energy Inc proposed a partnership with the Port of Longview to site a
new crude oil refinery on the banks of the Columbia River. Should
the Port agree to this proposal? The answer to that question would
require an evaluation of the material facts – something a
reasonable person does before entering into a financial transaction.
Is Riverside Energy -- or Riverside
Refining -- known in the energy field? Do the company’s CEO and
principals have a track record of success in the refinery sector? Do
they have the ability to raise financing for the project? To answer
these questions, we need to know something about Riverside Energy,
Inc. (Or is it Riverside Refining, LLC?) And what does the Project
Team of Soumas, Pistulka and Efird bring to the table that would
justify taking their refinery proposal seriously?
Since there was nothing in the
published documents nor any of the news articles that gave
information about these individuals or about the corporation they
headed, I undertook to find out myself. Corporations must register in
the state of their incorporation, so I went to the website of the
Washington Secretary of State (SOS), which lists registered
corporations in Washington.
Nothing called Riverside Energy, Inc.
-- or Riverside Refining, LLC -- is registered in Washington State.
News coverage of the refinery proposal said that Riverside Energy,
Inc hailed from Texas. I looked at filings with the Texas Secretary
of State: Riverside Energy Inc. was there – listed as
“inactive” with a status of “forfeited existence.” None of
the other names showed up.
Since nearly half of all public
corporations in the United States are incorporated in Delaware, I
looked there and found them. Riverside Refining, LLC, incorporated in
2014, was listed. A “Riverside Energy, Inc.” was incorporated
in Delaware in 1992, but is shown as “Closed Corp.”
Since Corporations are Persons . . .
How did Soumas, Pistulka and Efrid
relate to these corporate entities – open or closed? Our
Washington State SOS shows the “governing persons” for businesses
incorporated here. The Delaware Secretary of State doesn’t offer
access to such information. According to a corporate registration
agent quoted in a Business Day article, Delaware is the state that
requires the least amount of information. David Finzer, Chief
Executive of Capital Conservator said “Basically, it requires none.
Delaware has the most secret companies in the world and the easiest
to form.”
Since I was unable to look into the
Riverside listings registered in Delaware for the names of the
individuals governing them, I started looking up the team members
listed on the 2014 refinery project overview: Soumas, Pistulka and
Efird. (continued below)
The overview described the experience
of the team members of “Riverside Energy” as follows:
Lou Soumas – CEO, 25 years experience building successful business
in a variety of industries. Energy developer since 2006. Extensive
Washington State experience.
Chris Efird – Chairman, 20 years experience financing major
industrial projects with extensive energy industry connections and
experience.
Damon Pistulka – SVP, 25 years of building and operating industrial
facilities.
It turns out that all three individuals
were involved in a joint venture with a subsidiary that briefly ran a
biodiesel plant in Eastern Washington. And that’s not good news.
I started with Damon Pistulka. Google
linked him to Evergreen Renewable, LLC and TransMessis Columbia
Plateau, LLC.
Evergreen Renewable, LLC filed with the
Washington SOS in June 2007 and was still active as of June 30, 2015.
The form lists Pistulka as the registered agent; and shows Louis
Soumas as a governing person. One address given in the listing
appeared nonexistent; the only other address turned out to be a
single-family residence owned by Damon C. Pistulka. Evergreen
Renewable LLC also showed up on-line as a business partner of a
non-profit called Climate Solutions, based in Seattle. I found
nothing else about the company.
TransMessis Columbia Plateau, LLC also
showed up with the Washington SOS, filed Nov. 1, 2013 and then listed
as “inactive” as of March 2015. It listed Pistulka as the
registered agent. Another governing person was Joseph Rozelle.
An article in Biodiesel Magazine (Nov.
26, 2013) under the byline “TransMessis Columbia Plateau LLC,”
describes TMCP as subsidiary of TransMessis Columbia Renewable Energy
– whose CEO is Damon Pistulka. The final paragraph of the article
explains that TransMessis Columbia Renewable Energy is a joint
venture of Evergreen Renewable LLC and Access Global Investments LLC.
Access Global Investments turns out to
be Christopher Efird, another member of the project team. Efird is
shown on the website of Access Global Investments LLC as Managing
Director and CEO. Based on Efird’s stated 20 years’ experience
financing major industrial projects – and given the highly
regulated financial world -- I expected him to show up under the
Financial Institutions Regulatory Authority (FINRA) or be listed by a
state Securities Board that issues permits to those involved in the
sale of financial securities.
Christopher Efird search in FINRA’s
Broker Check returned the response “not licensed.” Under
“current registration(s) it said, “The broker is currently not
registered with any firm.” I did find Access Global Advisors on
the form used by investment advisers to register with the SEC and
State authorities. Form ADV was from 2012 and contained the following
circuitous statement under “miscellaneous” Schedule D:
“Access Global Advisors, LLC is the Investment Advisor to Access
American Investments, LLC. Access America Investments, LLC is the
General Partner to Access America Fund, LP. Access America Fund, LP
is a ten year private equity fund that has committed capital of
approximately $20 (million) Access Global Advisors has no other
clients at this time. Access Global Advisors is wholly owned by
Access Global Funds, a Cayman Island exempted company, which is
wholly owned by Christopher Efird.”
The form was signed by Joseph Rozelle.
Rozelle is in FINRA's Broker Check: “not licensed” and the same
for Access Global Advisors: “not licensed.” In conversations
with a staff member at the Texas State Securities Board I learned
that neither Christopher Efird nor Joseph Rozelle were permitted by
the State of Texas to sell securities in Texas. In addition, I
received a packet from that office containing information on the
employment histories of both Efird and Rozelle. Neither history has
any obvious “extensive energy industry connections,” as suggested
in their presentation to the Port of Longview.
Only Louis J. Soumas remained. As a
director of Evergreen Renewable LLC, he participated in the joint
venture with Access Global Investments to create TransMessis
Renewable Energy Inc.—the parent of TransMessis Columbia Plateau
LLC. As signator on the MOU for the proposed crude oil refinery in
2014 he was Louis J. Soumas, Chief Executive Officer of Riverside
Energy, Inc. But as noted above, Riverside Energy Inc. is listed as
inactive with a forfeited existence in Texas and as a “Closed Corp”
in Delaware.
In addition, according to the Texas
Secretary of State's office, there is no record of Louis J. Soumas as
“the registered agent, officer, director, member or general partner
for any entity on file.”
Members of the Team Do have a track
record in Washington State
In November 2013, the Odessa Record
reported that officials of TransMessis Columbia Plateau, had closed
on a $6 million deal to restart a biodiesel plant in Lincoln County.
The plant would crush up to 300 tons of canola seed and produce up to
10 millions gallons of biodiesel. Damon Pistulka was quoted in
Biodiesel Magazine: “We are excited to be able to bring the
facility back on line and ultimately live up to the expectations of
the community. This facility will be a source of 30-plus jobs and
markets for the local economy. This is a unique opportunity to start
up a facility with a tremendous wealth of knowledge in place from day
one.”
The plant apparently opened early in
2014, but TCP officials closed the plant again in July with a promise
to open it back up in September. When I asked about this, a reporter
at the Record informed me that the plant remains closed and … that
TCP and its officers are being sued in Lincoln County Superior Court.
On April 2, 2015, Wolfkill Feed and
Fertilizer Corporation, a Monroe, Washington company filed suit
against TransMessis Columbia Plateau, a Delaware LLC. (Court Case
number: 15-2-00023-4).
The complaint states that Damon
Pistulka is the CEO of TransMessis Columbia Plateau (TCP), Louis
Soumas is the CEO of Evergreen Renewable, LLC and a Director of TCP,
Joseph Rozelle is the Chief Financial Officer of TCP and Christopher
Efird is the CEO of Access Global Investments, LLC and a Director of
TCP.
The complaint alleges that, based on a
false credit application signed by Damon Pistulka indicating that TCP
had a annual gross income of $49 million dollars and annual net
income of $3.8 million dollars, Wolfkill entered into a credit
relationship to supply canola seed to the Odessa facility. In April
2014 TCP ceased paying Wolfkill for the seed it received and
processed. By the end of July 2014, TCP owed its supplier
$1,685,928.64 on unpaid invoices.
The complaint also alleges that, rather
than paying its unpaid invoices, TCP diverted revenue to pay
compensation to its officers, including Pistulka, Rozelle, Efird and
Soumas. The complaint argues that these individuals should not be
shielded from liability by their corporate structure.
The Odessa Public Development Authority
received a $4.2 million loan from the Washington State Dept. of
Agriculture for building, land and equipment. They continue to
search for a tenant.
Although the Lincoln County lawsuit has
not yet gone to trial and counsel for TransMessis Columbia Plateau
LLC denies the allegations, you might think that this record would
prompt Longview Port Commissioners and state officials to direct some
serious questions to the individuals promoting a new refinery project
for Longview. None of this questioning seems to had taken place by
April of this year.
Making a Crude Oil Refinery Green:
From Riverside to Waterside
What is even more extraordinary is the
appearance of a more recent document relating to a proposed oil
refinery at the Longview Port.
A March 18, 2015 letter from Lou Soumas
to the Washington State Energy Facility Site Evaluation Council
(EFSEC) and the Governor’s Office for Regulatory Innovation and
Assistance announced that Waterside Energy, Inc. through its
subsidiary Riverside Refining LLC, plans to build a refinery to
process 30,000 barrels/day of crude oil AND 15,000 barrels of
“sustainable seed and vegetable oil.” Waterside Energy, Inc. will
be looking for permitting through EFSEC.
Who or what is Waterside Energy Inc?
We’ve been down this road before. The March 18 letter from Soumas
to EFSEC and the Governor is on stationery that’s blank except for
the words “Waterside Energy, Inc.” No address, no contact
information, no website. Nothing, just Lou Soumas. Waterside Energy,
Inc is not filed with Washington, Delaware or Texas Secretary of
State offices. There is a Waterside Energy, LLC but it was
incorporated in Delaware on May 6, 2015 two months after Soumas'
letter.
Just as the corporate name has morphed,
so has the description of what the oil refinery would do.
In his letter, Soumas still proposes to
bring in crude from shale oil fields on unit trains to refine 30,000
barrels/day at the Port of Longview, but he had added a component in
a bid to make his crude oil refinery “green” and gain the support
of the Inslee administration and environmental groups. Lou Soumas
now includes the processing of 15,000 barrels per day of
“sustainable seed and vegetable oil, used cooking oils (UCO).”
How could Mr. Soumas -- who as a
participant in a joint venture that closed a biodiesel plant in July
2014 and that same month as CEO of Riverside Energy, Inc with no
active corporate status in Texas, propose a crude oil refinery to the
Port of Longview, and then in March 2015 as CEO of an unidentified
Waterside Energy, Inc. -- propose a crude oil + cooking oil refinery
to EFSEC, the Governor and the Port of Longview?
What Happened to Due Diligence
Verifying Corporate and Leader Backgrounds?
Recently released emails indicate that
in February 2015 Governor Inslee's Commerce Department Director,
Brian Bonlender, was introducing Soumas to state officials, Inslee's
Executive Policy team and to leaders of the non-profit group Climate
Solutions so they could learn about the refinery.
On February 26, 2015, Commerce Director
Bonlender set up a meeting at his Seattle office for Lou Soumas. The
subject of the meeting was “Riverside Energy Project.” Port of
Longview officials were also invited, as well as Inslee policy staff
members. On February 27th, Keith Phillips, Inslee's
Special Assistant on Energy and Climate invited Soumas to brief “the
state's clean fuels team.” On March 18, 2015, as we have seen,
Soumas, sent his letter to EFSEC about his oil refinery, now
including a bio fuels component.
It's quite possible that the Inslee
Administration is in full support of this oil refinery proposal
indicated by the high level of legitimacy given to Lou Soumas by
Director Bonlender and Special Assistant Keith Phillips. While
Bonlender and Phillips' direct communication with the Port of
Longview officials is unknown at this time, their legitimating of Lou
Soumas must send a strong signal to the Port's Commissioners.
On May 29, 2015, Port of Longview
spokesperson Ashley Helenberg revealed in a TDN press story that
Riverside had passed “an initial review” and could move to the
negotiation stage.
While Ms. Helenberg mentioned Riverside
rather than Waterside in the TDN press story, it seems any corporate
name, fictional or otherwise, will do.
Either way, due diligence isn't
necessary when the (fuel) fix is in.
---
Dan Leahy is Chief Executive Officer of
Westside Refining LLC, a wholly owned subsidiary of CEOsComeFirst.
He knows Bakken Crude is Green and BNSF Oil Trains are Safe. He can
be reached via email: dan@baysideenergy,
com. If the email doesn't work, just ask Director Bonlender to set up
a meeting. More importantly, Dan has very cool stationery.
(believe it- or not :)
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