Who's behind the ethanol deal?

Charles O. Luna, Greg Wilmoth and Jeff Negre are partners in Gulfstream Bioflex Energy LLC, the Mount Vernon-based company working to build a $185 million ethanol plant in southwestern Webster County and at least two similar plants elsewhere in Missouri. All three men have worked in the transportation and fuel distribution business.

Luna was forced into bankruptcy in 1993, when a long list of creditors – mainly banks, fuel suppliers and equipment-leasing companies – launched an involuntary Chapter 7 bankruptcy case that lasted three years.

Questions also have been raised about Luna’s relationship to a defunct farmers’ cooperative whose founder was indicted for securities fraud and racketeering after standing trial as the lead conspirator behind an alleged murder-for-hire plot targeting Luna in the late 1970s.

According to a Springfield Leader and Press report in May 1977, Luna was acquainted with Russell E. Phillips, the man federal prosecutors pegged as the mastermind behind a massive fraud scheme that bilked farmers in four states – Missouri, Arkansas, Oklahoma and Texas – out of millions of dollars. Phillips carried out the scheme under the guise of Progressive Farmers Association, which went belly up in 1977 after it filed for bankruptcy.

Around the same time, Springfield police said Luna was the target of an alleged murder-for-hire plot arranged by Phillips, who was later acquitted by a St. Louis County jury. Prosecutors said Phillips hatched the plot because authorities had approached Luna – then a businessman in Branson – about testifying against Phillips in a securities fraud case pending in Arkansas.

Luna, who now lives near Bull Shoals Lake in Ozark County, is a vice president of Gulfstream Bioflex Energy, which was created in May, according to the Missouri secretary of state’s office. The company’s attorneys say Luna, who has an engineering background, is only a consultant and has no ownership in the project.

Wilmoth is the company’s CEO and has ownership in Nick’s Transport Inc., a fuel trucking business in Mount Vernon. Negre, also a GBE vice president, is head of Boomerang Transportation Inc., a long-distance freight trucking company in Aurora.

How the three men became business partners is unclear – all three declined interviews with Springfield Business Journal – but archived Greene County court records show Luna was the target of numerous lawsuits in the late 1980s and early 1990s.

Legal woes

In the late 1980s, Luna owned Luna Oil Co. and operated a grocery store/gas station in Gainesville, records show. Luna also owned Nick’s Transport, a trucking company that distributed fuel. Wilmoth now owns a company by the same name, but attorneys for GBE said Luna did not sell Nick’s Transport to Wilmoth.

The source of Luna’s financial woes at the time isn’t clear in court documents, but several companies he was doing business with sued him after he defaulted on payments.

His legal problems began in 1986, when Colorado-based Interstate Petroleum sued Luna for breach of contract. Records show Luna signed a conditional fuel supply agreement with Interstate for gas at 1 cent per gallon above cost plus freight.

Interstate’s attorneys alleged that Luna broke several clauses in the contract, costing the company more than $100,000. Luna, in turn, countersued Interstate, claiming the supplier failed to provide fuel at the stated price. The suit was dismissed in 1992 after both parties reached a resolution.

But several suits that followed the Interstate case were never resolved.

Two Arkansas-based oil companies – Lion Oil and Continental Ozark – sued Luna in the late 1980s to recover a combined debt of more than $500,000. A judge ordered Luna to pay back the debt plus interest in both cases and later authorized both companies to garnish his assets, including all bank accounts, certificates of deposit, cash and jewelry.

In 1991, Luna was hit with another spate of litigation after he defaulted on payments to companies that had leased him trailers and equipment. One of his largest debts was owed to Washington-based Paccar Financial Corp., a company that repossessed 53 of the 54 trucks it leased to Luna.

A judge ruled that Luna breached his contract with Paccar, and ordered him to pay the company more than $1 million in damages. As of August 2005, the company was still attempting to collect $617,818 that survived Luna’s Chapter 7 bankruptcy proceedings.

Co-op sales pitch

GBE attorneys with Husch & Eppenberger LLC in Springfield refused to answer questions about Luna’s bankruptcy case or his relationship with PFA, suggesting the queries were irrelevant to the proposed plant. The attorneys also would not disclose who had invested ethanol plant, but did say GBE is negotiating with private equity funds outside Missouri. The project would be financed through private equity groups, senior lenders and subordinated lenders.

When Phillips was arrested and charged in March 1977, police detectives quoted in a Springfield Leader and Press article said Luna “had handled business transactions for Phillips in connection with PFA.”

GBE attorneys said Phillips attempted to involve Luna in PFA activities, and Luna reported the overture to federal authorities.

Luna was never charged in the PFA scandal, but a local cattle producer told SBJ on Oct. 13 that Luna pitched a similar co-op to a group of southwest Missouri farmers at an organized sales presentation three decades ago.

Darrell Moore, of Republic, said Phillips also was part of the sales presentation, which promised lower feed prices to farmers who invested in the co-op.

“It was going to be a good deal,” said Moore, who owns Moore Cattle Co. “I was impressed with how they presented it. I remember (Luna) did the talking. He talks a good game.”

Moore liked what he heard and bought into the co-op for $1,860, but he said he never received anything for his money. Moore filed suit in Greene County Circuit Court, and in March 1978, a judge ordered Luna to pay back the money with interest plus $5,580 in punitive damages.

Luna appealed the case to the Missouri Court of Appeals, which affirmed the judgment against him. Greene County judges revived the judgment three times – the last in March 1996 – but Luna never complied, said Moore, who was surprised to hear Luna has a stake in the proposed ethanol plant.

“I would beware,” Moore said of Luna’s connection to the proposed ethanol plant. “After that one meeting, that was it. I think it was a scam from the start.”

While details about Luna surfaced in numerous public documents, information about Wilmoth and Negre was less available.

In recent years, Wilmoth has been listed as an officer for several family businesses, including Wilmoth Enterprises, Ozark Mountain Petroleum, Warsaw Oil Co. and Travelcenters of the Ozarks Inc.

The Wilmoth family owned the TA Travel Center along Interstate 44 in Mount Vernon for more than 25 years, according to an article in Road King magazine. Opened in 1980, the truck stop was the first TA franchise, according to the report.[[In-content Ad]]