Sustainability Credit Enterprise Gone Awry: Authorized Battle Unfolds over $67 Million Land Deal | Arkansas Enterprise Information

Jerry Lee Bogard noticed gold within the flooded fields and duck-hunting timber round Stuttgart, pitching a plan for promoting sustainability credit on 12,500 acres he purchased together with his former enterprise companion, Rebecca Winemiller.

However years after borrowing $67 million to purchase the Arkansas and Jefferson county land and by no means seeing the eight-figure paydays Bogard predicted, Winemiller sees the mission as a cash drain.

Their plan was to develop sustainability credit that could possibly be value a whole lot of hundreds of thousands of {dollars}. However the credit by no means offered, and Bogard and Winemiller are actually going through off in a lawsuit over their enterprise, Grand Prairie Farming & Water Co. LLC, which is being managed by a court-ordered receiver.

In courtroom filings, Winemiller mentioned she was by pumping cash into an bancrupt enterprise.  

“Mr. Bogard was good at spending cash and never being profitable,” mentioned Winemiller’s legal professional, Skip Davidson of Little Rock. “And my purchasers reached a degree the place they determined they weren’t going to fund his administration of the corporate anymore, and he refused to promote. So we had no recourse however to go to courtroom and have a receiver appointed to handle the corporate and to liquidate the property.” 

In a counterclaim, Bogard accused Winemiller of fraud, breach of contract and taking cash out of the corporate, blocking its development to profitability. 

In March, Arkansas County Circuit Choose Donna Galloway appointed James F. Dowden of Little Rock because the receiver, however Bogard has appealed, arguing the corporate shouldn’t be ordered dissolved with out a trial to find out whether or not it’s viable.

Bogard mentioned in an April 28 affidavit that Amazon has expressed curiosity within the sustainability credit because the lawsuit was filed, and {that a} sale to Amazon would generate $10 million a 12 months for Grand Prairie. Geese Limitless of Memphis additionally was within the credit, Bogard mentioned, however the litigation was a roadblock to negotiations.

“I introduced this firm to some extent the place it may be worthwhile. And I’ve finished it by paying her method in addition to mine,” Bogard mentioned in a deposition, referring to Winemiller. “We simply want for her to get out of the best way.”

Within the meantime, Dowden has entered right into a contract to promote Grand Prairie in a package deal value $59.5 million to an organization owned by Winemiller, who’s married to outstanding landowner and agri-businessman Jimmy Winemiller.

Bogard additionally is anticipated to submit a proposal to purchase the corporate. 

The sale wants approval from Choose Galloway, and the subsequent courtroom date is about for Sept. 19.

If the sale is authorised, Winemiller may function the portfolio of farmland, timberland and reservoirs, or she may promote it, Davidson mentioned. 

In an uncommon authorized twist, Jimmy Winemiller’s first spouse has requested to enter the case, alleging that she believes she has an curiosity within the Winemillers’ property. (See sidebar.)

The case offers a cautionary story for companions in a 50/50 enterprise, legal professionals say. 

On the whole, the individual offering the cash ought to have the controlling curiosity in decision-making, Davidson mentioned. 

He advises avoiding 50/50 offers, or ensuring partnership or working agreements spell out a pathway to unwind the corporate with out having to go to courtroom.

“This case is an ideal instance of that,” Davidson mentioned. “They couldn’t agree on the right way to run the enterprise, they usually couldn’t agree on a buyout. And they also needed to go to courtroom to get a courtroom order to dissolve the corporate and liquidate the property.”

Born Out of Battle 

In 2014, a long-running sibling dispute between Deborah Tipton of Memphis and her youthful brother, George Dunklin Jr., was about to return to an finish with a court-ordered sale of practically 16,000 acres in Arkansas and Jefferson counties.

On the time, Dunklin was nationwide president of Geese Limitless. Bogard, who mentioned he was buddies with Dunklin, was excited by shopping for the property, however not for the farms.  

“It by no means was in regards to the land,” Bogard mentioned in a January deposition. “It was about creating the water system in such a method that we may qualify for” the groundwater preservation/sustainability credit score mannequin that will be scientifically verified and eligible for federal tax credit and different state and federal grants. 

Bogard beforehand had handled Jimmy and Rebecca Winemiller by a separate enterprise enterprise, and in 2014 Jimmy Winemiller requested Bogard to return to his Memphis home to current his plans for purchasing about 12,500 acres of Dunklin’s property. 

“After presenting my plans, Jimmy Winemiller requested me to face and shake his hand as a result of he was my new companion,” Bogard mentioned in one other affidavit filed in January. The Winemillers “implored me to not search different traders. They represented that they needed to be ‘the cash’ and that we might share Possession Curiosity equally.”

They have been profitable bidders in 2015 and borrowed $67 million from Metropolitan Life Insurance coverage Co. of New York. The true property was purchased by 100% financing, that means no down fee was made and the land worth equaled the debt. 

To safe the mortgage, MetLife required the Winemillers to mortgage extra property in Florida and Mississippi. It additionally required ensures from Winemiller, her husband and Bogard. 

The house owners knew it was going to take a while earlier than the credit can be prepared on the market, in keeping with Bogard’s counterclaim. He mentioned the house owners agreed that among the property must be offered to cowl the mortgage funds. In different circumstances, Winemiller or one in all her firms must mortgage cash to Grand Prairie to cowl the mortgage funds. 

Nonetheless, there have been excessive hopes for the corporate.

Bogard made guarantees of excessive earnings from promoting irrigation water and advertising and marketing a brand new product referred to as water credit and/or carbon credit or offsets, Winemiller mentioned in a Nov. 18 affidavit. “The credit have been smooth property associated to using the land and water that could possibly be offered to main firms,” she mentioned. 

Corporations is likely to be excited by shopping for the credit to offset their environmental footprint. A single verifiable credit score could possibly be value as a lot as $400 to $500. 

In 2016, the corporate’s five-year professional forma earnings assertion for Section 1 confirmed that by 2020 it will have $32.4 million in income and $10.5 million in internet earnings. 

It additionally projected that by 2022 its accrued revenue can be $175.5 million.

However these projections by no means materialized.

Disputed Claims

The property was for use to generate some earnings by farm leases, looking leases and irrigation water gross sales, however the enterprise has by no means made a revenue, Winemiller mentioned in her Nov. 18 affidavit. 

Bogard continued over the succeeding years to vow “nice” rewards from the smooth property, Winemiller mentioned. “Bogard by no means delivered.”

She mentioned that “not one single greenback has ever been constituted of” the sale of a credit score.

“But over one million {dollars} has been financed by me to cowl bills associated to those smooth property,” Winemiller mentioned. 

Bogard, in his courtroom papers, disputes Winemiller’s monetary evaluation of the corporate.

“Winemiller desires to say the Firm by no means made a revenue when it was very clear that earnings have been being made after which eliminated by her,” he mentioned. Bogard is represented by legal professional Kendel Grooms of Campbell & Grooms of Little Rock. 

Bogard mentioned that it was by his actions that the Grand Prairie didn’t default on its obligations for 2017, “and her actions have continued to” set the corporate again by years.

“Becky Winemiller NEVER objected to my paying her a part of the bills of the Firm as long as she was in a position to proceed to personally wire herself massive, undisclosed and unscheduled sums of cash from the GPFWC checking account with out consequence,” Bogard mentioned. 

Winemiller disputes that she improperly took cash out of the corporate. 

She mentioned that every one the alleged inappropriate transactions may be linked to a Grand Prairie enterprise transaction, she mentioned. 

However the state of affairs on the firm was getting worse, Bogard mentioned. 

All through 2019, Bogard mentioned, he was in a relentless state of stress as a result of Winemiller didn’t talk the wants of the corporate with him.  

He mentioned he would obtain each day telephone calls from distributors concerning shut-off notices of firm gear. He mentioned he would then must scramble to search out methods to pay the obligations “for which myself and Becky Winemiller have been BOTH accountable.”

In October 2019, he mentioned, he and Winemiller agreed that he would search for traders to purchase her portion of the corporate. Her portion of the corporate didn’t promote. 

Then COVID hit in early 2020. Throughout the pandemic, the choices and alternatives of the corporate have been restricted, he mentioned.

Making issues worse, the Winemillers have been concerned in a severe automobile accident whereas vacationing in Florida in 2020 and have been out of communication with Bogard for a number of months.

Bogard mentioned that in 2021, the Winemillers needed to promote their curiosity within the enterprise, however a 12 months later, they modified their minds and needed to maintain the corporate.

On Nov. 18, Winemiller filed go well with towards her enterprise companion, alleging the corporate was bancrupt. And it didn’t have a option to pay its present legal responsibility of $8 million or the 2023 working bills or debt service. 

Winemiller and Bogard “can’t agree upon the style through which firm cash and property needs to be used,” her lawsuit mentioned.