Ethanol Fraud


Ethanol (C2H5OH) has been presented to this society as a panacea for our energy problems.   Ethanol, its production, basic chemical and physical nature present some very unfortunate problems as a matter of fact.

The first question that needs to be answered is – if ethanol is so wonderful why is its limited to 10-15% of the total gasoline volume and not make up 100% of the gasoline?   The answer is that the vapor pressure of ethanol is so low that with more than 15% in the gasoline mix that the car will not start. 

Another detail that is not  mentioned by the Corn Processors Association et al. is that Ethanol is about  35% Oxygen by weight.  Have you ever tried to burn oxygen?  Well it doesn't burn but it takes up space and weight.  Consumers are forced to purchase a non-combustible portion of a molecule.  It is just that simple.

The production of ethanol in an aqueous mix presents another unfavorable situation.  Due to a phenomenon called "azetropic distillation", a water distillation of ethanol water mix cannot be purified to more than 95.6% pure alcohol.  The majority of the remaining 4.4%  water is removed via adsorption typically using propane for the energy requirement.   

Ethanol in the fuel attracts water which attracts Oxygen from the air.  This oxygen through catalytic action promotes rust on any iron or steel that may come into contact with the fuel.  Ethanol due to an uneven electron balance is what we call a ”polar” molecule.  Because of its dissolving characteristics, it will dissolve any rubber piping, gaskets or latex materials.  Existing gaskets and seals of rubber, PVC, Cork, leather, plastic need to be removed as they will destruct.   New gaskets made from Viton, Teflon, or EPDM etc. need to be used as replacements.   

Carbon gives off much more energy per unit weight or volume than hydrogen.  Carbon has 4 electrons in its outer shell which may enter into chemical reactions while Hydrogen only has one.  That is why coal will never be replaced by any crazy environmental concept.  In fact many ethanol plants are heated by steam produced from coal. 

When people buy this corn robbing, famine producing ethanol, they are paying for oxygen that does not burn.   This nation will consume more gasoline on both a volume and weight basis as a result. Unfortunately this society is going to have to go through a serious energy crisis before the necessary changes are made by the lawyers in Congress.  The situation is not just increasing food prices at your local grocery store or feed at the feed store.  We are headed towards a famine as corn is the diet of chickens, horses, cows, hogs and people.  Let it begin. 


Fracking and Saudi Arabia

In 2016 we have to face the following facts.  Fracking and the foreign policy of Saudi Arabia have caused the price of crude oil to be in the $40's per barrel.  The US now exports Liquefied Natural Gas, LNG, basically methane.  Saudi Arabia has decided to maintain its petroleum export rate regardless of world price.  The princes in Saudi Arabia are more interested in maintaining their coveted position of power and prestige than worry about the world price for petroleum. They are willing to sell out the store in order to stay in power.  In a system, every element in the system affects every other element. The bottom line is that fracking and Saudi Arabia will affect the Hoke Ethanol Plant and both in a very negative way.


Hoke County, North Carolina  Ethanol Plant Background

​The Hoke County Commissioners sponsored a development agreement to build an Ethanol Plant.  The county gave CleanBurn LLC 500 acres on the county's 1,366-acre industrial site, about three miles south of Raeford in Dundarrach.

The land was part of a 635-acre parcel purchased by the county in 2006 for about $3.8 million and initially gave Clean Burn 500 acres there. About $1.5 million was spent by Hoke County  to extend utilities to the site.

CleanBurn Fuels originally filed for permission to build the plant in 2005.  By 2007 it had been awarded a $35 million loan from the US Department of Agriculture (USDA), in addition to a $65 million bank loan from Cape Fear Credit Union and alleged funding of $10 million from private investors.  

The plant was expected to begin producing 60 million gallons per year of ethanol by mid-2008 but on going problems meant the plant's opening was delayed until Q2 2010.  However in March 2011, fewer than 12 months since production began, rising corn prices forced the facility into temporary closure. Clean Burn Fuels LLC filed for bankruptcy on April 4, 2011 and then Cape Fear Farm Credit foreclosed on the loans. The property was auctioned on 24 August 2011.  Cape Fear was the highest - and only - bidder, with a bid of $34.5 million.

Cape Fear put it on the market and there were no takers.   Three years later, in May 2014, Tyton N.C. Biofuels LLC, which is part of Danville, Virginia-based Tyton BioEnergy Systems, bought the plant for approximately $12.8 million.

Tyton NC Biofuels LLC in conjunction with  Tyton BioEnergy Systems, intends to operate the plant with a special strain of  "energy tobacco" as the feed stock.   Tyton claims that this unique energy tobacco is a highly efficient source of plant sugars and oils for the production of biofuels. 

Tyton claims that, " . . . this proprietary energy tobacco can produce up to three times the amount of ethanol per acre as corn and three times the oil per acre as soy."

Tyton claims to have a patent-pending extraction process.


Hoke County, North Carolina  Ethanol Plant August 2016 Update


On the morning of August 26, 2016 there were a maximum of 8 parked cars in front of the office.  There was no smell of fermentation.  There was a small amount of steam, actually condensed water vapor from a few sources but it did not appear that the plant was running in anything approaching full operation. There was no the sound of electrical motors or any crushing or grinding equipment.

One of my sources told me that the plant has just started this week and they will use corn as the initial feed.

The current owner is TYTON NC Biofuels LLC, incorporated in Delaware and with its principal office in Stateline, Nevada.  Barbara Carlisle is listed as the first manager.  Checking deeds and the recording tax of 0.2%, Tyton BioEnergy Systems (a separate corporate entity) has bought the facility for $12.8 million.  There is no Tyton BioEnergy Systems registered with the NC Secretary of State.  There is a Tyton Biosciences LLC (created in Delaware with its primary office in Danville, VA) registered with the NC Secretary of State.  Yes it is confusing to those not familiar with corporate filings. 

Tyton Biosciences on their website claims that they in conjunction with the Department of Energy have created a new strain of tobacco that will be the new feed to the ethanol plant.  Tyton has claimed that tobacco will not need fermentation etc.  Nonsense.  No tobacco that I know of produces ethanol.  Maybe some small amount of sugar but absolutely no ethanol.  Ethanol can only be produced by fermentation which involves the destruction of sugar, sucrose or dextrose.  I don’t believe Tyton's claims and we need to see this new energy tobacco produce ethanol first.

Michael Futch, reporter for the Fayetteville Observer, has reported that the project was made possible in part by a performance-based grant from the One North Carolina Fund of up to $232,000.  The One NC Fund provides financial assistance, through local governments, to attract business projects that will stimulate economic activity and create new jobs in the state.

Checking the One Carolina Fund page we learn that Hoke County as a tier one county would be expected to match 1 for 3 of state money.  So 1/3rd of $232,000 is $73,000   The Hoke County manager, Ms. Edens, has told me that no $73k payment will be made because Tyton has not performed on its commitments.

I spoke with a former employee of the Aberdeen & Rockfish railroad.  He described the railroad connection necessary for this plant.  He told me that there was NO way that the railroad was  going to pay for that track and connection.  Hoke County has paid for roadway modifications, a sewerage plant as well as the initial outlay for the land and I suspect the operator may have a tax abatement in future years.

The following statement comes from the TytonBiofuels website. 

“This proprietary energy tobacco can produce up to three times the amount of ethanol per acre as corn and three times the oil per acre as soy. When combined with a patent-pending extraction process, energy tobacco can unlock tremendous value for biofuel producers.”  

To my knowledge this alleged new tobacco plant product is still in the laboratory stage and has not been field tested nor obviously produced seed to make thousands of plants for full scale production.

I believe that Tyton's statement is nothing but a bald face lie and has not shown to be true either in research or in commercial facilities.  Have thousands of plants been grown in a nursery for field planting?  It will be hard to run an industrial plant on tobacco if none is available. 

The plant closed in 2011 when the price of corn rose to about $7.50 per bushel.  The other unfortunate fact of the matter is that present (2016) crude prices are about $45/petroleum barrel compared to the $80 range in 2011.  All ethanol production has to compete in this real world economics environment especially considering that Brasil is still producing ethanol from sugar cane and the product is being imported through the Virgin Islands.  Due to the Caribbean Initiative there is no duty.   I can't see this plant surviving under any reasonable circumstance.  It is absolutely imperative that the county does not “invest” any more money in this project. 

Bottom Line – The Hoke Ethanol plant is a loser based upon a non-proven agricultural optimization and governmental funding and mandate.  The taxpayers of Hoke County need to be informed of this fraud in that the county property owners are paying for it via their tax bills.

The plant first built by CleanBurn Fuels Inc. was estimated to cost in excess of $100 million of borrowed money largely from the Cape Fear Credit Union and the United States Department of Agriculture.  Tyton purchased the plant for $12.8 million based upon their perception of the value of the land and the scrap value of the current plant.


Ethanol plant August 31, 2016 Update

                         HOKE’S GREATEST DISASTER

Conceived in illusion, developed in fraud, ratified in ignorance, fertilized by debt, useless as a plant without leaves.  That is Hoke County’s ethanol plant.  Hoke County taxpayers paid $3.8 million for an irrevocable gift of land to the plant and $1.5 million for utility improvements.  $5.3 million in 2008 dollars was stolen from the Hoke County taxpayers. No encumbrances were placed on the deed, meaning that the plant could be sold and Tyton NC BioFuels would keep the proceeds.  $5.3 million at 3% for 8 years is $6.7 million, today’s present cost to the taxpayers or about $143 per person for Hoke’s 46,952 population based upon the 2010 census.

The plant is trying to create a future with GMO tobacco that does not exist nor which has ever been field tested.  Tyton Fuels presently owes $813,000 (Dec. 2016) in  taxes and has to pay interest on a $15.5 million note, say $450,000 a year.   The soonest that any tobacco could be harvested will be July 2017.  How will these bills be paid from a plant that creates no wealth and produces no product?  The ink on the plant’s obituary is still wet.  The epitaph for the tax payers has been dry since 2008.

My summation follows:

The taxpayers of Hoke county are never going to recover the approximately $5 million that the County Commissioners paid for the ethanol plant and associated utilities.

Original Purchase -- The 500 acre parcel was originally purchased from a Z.V. Pate.  Pate apparently is very wealthy and has numerous parcels of land.  It can be assumed that he is/was very well connected to the political powers in the county.

Agriculture -- Neither of my two agricultural sources know of any farmer who has contracted to grow “energy tobacco” in the county.  At this time (2016) the “seed” would have had to have been harvested for planting in greenhouses next January/February.  Information from the Internet gives no location of any plots of land where this tobacco was grown to furnish the seed.  Its hard to be run a plant on tobacco if none is available.  Assuming that the tobacco seed exists and that it will be planted.  It won’t be till July 2017 before any crop could be harvested.  What will the plant do till that time?  How will they pay property taxes and bank interest?

Taxes – Publicly available records at the present time (29 August 2016) show that Tyton NC Biofuels, LLC owes $406,729 for real estate and the same amount for personal property or $813,458 total.  A person in the county office told me that the original gift of the land by the county would be offset by property taxes, yes if they pay them.

The current assessed value for the property is $19,164,510.  At a previous time and I don’t know when, the assessed value was $21,373,300.  Apparently some form of an appeal was made and the Commissioners reduced the value.

Same family – The Fayetteville Observer reported, “Jack and Greg Carlisle developed and managed Clean Burn, which was expected to bring about 100 jobs to the area. But, because of rising corn prices, the business struggled through its nine months of operation.”  Greg Carlisle, the son, was killed in an airplane accident in January 2013.


Under the North Carolina Secretary of State corporations listing, we find that
Barbara B Carlisle, 281 Andria Drive, Stateline, NV 89449  is the manager of Tyton NC Biofuels LLC.  This tends to confirm that the relationship between CleanBurn Fuels LLC (now dissolved) and Tyton NC Biofuels was not at arm’s length but was a family relationship of some kind.  An individual who was involved in the bankruptcy of Clean Burn Fuels confirmed my suspicions in this matter.

Frankly considering the number of people who were burned by the bankruptcy of CleanBurn Fuels, I doubt if any Raeford businesses will be eager to provide services or material to the new Tyton NC Biofuels.

Cape Fear Credit Union (CFCU) – Cape Fear loaned $65 million initially to CleanBurn Fuels.  CFCU paid $35 million to buy the plant from bankruptcy at auction. CFCU received $13 million in the sale to Tyton.  Well 65 + 35 – 13 = 87  How the hell can Cape Fear sustain an $87 million hit?  Cape Fear Farm Credit 333 E Russell St, Fayetteville, NC   (910) 323-9188  I called them and they could not give me any answer not that they owe me.  This is just another Kafkaesque part of this plant. Many things simply do not make sense.

Register of Deeds – I reviewed several deeds.  This is somewhat complex because there are several deeds for each piece of property and separate Deeds of Trust.  I believe that I have the major ones however.  The Hoke County Deed books are online and can be accessed by anyone.

Here is the king pin.  A deed signed 28 March 2008 by James Leach, Chairman of the Hoke County board of Commissioners, and attested by Linda Revels, Deed Book 801, pages 285-286, Hoke County gifted to CleanBurn Fuels, L.L.C. 500 acres for the sum of "$10 and other valuable considerations . . ."   THERE WERE NO COVENANTS ON THE DEED THAT IF THE PLANT FAILED ETC. THAT THE LAND WOULD REVERT TO THE COUNTY.  Translation, Tyton can sell the property and plant and keep all of the money with no contractual requirement to give any of the proceeds to the county.  Note that as of November 2016 CleanBurn Fuels L.L.C. has been administratively dissolved by the North Carolina Secretary of State.

On 30 November 2011, deed book 966 page 0133, we find that Cape Fear Farm Credit bought the property for $34,500,000 with stamps costing $69,000 or 0.2%

On 27 May 2014 we find that CFF Holdings granted to Tyton NC Biofuels,  deed book 1079 page 606, paid an excise tax of $25,636.  No sales price is listed but using the same 0.2% ratio gives us a transfer price of $12,818,000

On 6 Dec 2014, deed book 1099 page 91, we find that Tyton NC Biofuels executed a 22 page Deed of Trust to Fifth Third Bank for $15,500,000.

Would you loan $15.5 million to a company that had bought property for $12.818 million or about 23% over value?  Some mortgage, some deal.  No I can’t explain it either.


On Tuesday evening, 6 September 2016,  at a meeting of the Hoke County Commissioners, during the public comment portion, Russell Walker clearly told commissioners about the inevitability of closure of the facility, the absurd lies about energy tobacco by Tyton NC BioFuels L.L.C. and the outstanding $813,000 property tax bill.

Bottom line is that I believe that the entire ethanol thing is a fraud, chemical as well as financial.  I cannot see how this plant can ever be profitable.  Ultimately it will be put up for sale and the Hoke County taxpayers may have to take a complete loss on their "investment".

It is my opinion that the transfer of land from Hoke County to CleanBurn Fuels L.L.C. was illegal.  

Immediately below is the civil action to Quiet Title to the 500 acre site, filed on November 8, 2016 in Hoke County Superior Court.  The case was dismissed by Judge Ammonds in December 2016.  An appeal was taken to the North Carolina Court of Appeals.  All of the documents for the appeal are listed on the ncappellatecourts.org website.  The case number is 17-341 and all of the documents are available for public view.

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STATE OF NORTH CAROLINA                                    IN THE GENERAL COURT  OF JUSTICE
COUNTY OF HOKE                                                    SUPERIOR COURT DIVISION

RUSSELL WALKER                                   )
                   Plaintiff                               )
                                                             )
vs.                                                         )       
                                                             )                             C.A. No. 16 CVS 771
HOKE COUNTY                                        )    
and FIFTH THIRD BANK, Inc.                     )
and TYTON NC BIOFUELS LLC                    )
                                                             )
                   Defendants                           )

 
                                                           COMPLAINT

Summary - 
This is a complaint to Quiet Title to the ownership of 500 acres of land in Hoke County that the Hoke County Commissioners gave to CleanBurn Fuels LLC in 2009.

Parties, Venue and Jurisdiction –

1.  Hoke County is a political subdivision of the State of North Carolina.  It is governed by 5 elected Commissioners.  Letitia J. Edens is the County Manager for Hoke County.  Her address is 227 N. Main Street, P.O. Box 1585, Raeford, NC 28376

2.  Tyton NC BioFuels LLC is a foreign corporation.  Its registered agent is CT Corporation System, with its office at 150 Fayetteville St., Box 1011, Raleigh, NC 27601-2957

3.  Fifth Third Bank, Inc. is a foreign corporation.  Its registered agent is Corporation Service Co., 327 Hillsborough Street, Raleigh, NC 27603-1725 

4.  CleanBurn Fuels LLC was dissolved administratively by the North Carolina Secretary of State.

5.  Russell Walker is an adult of full age and resides at 176 Quewhiffle Road, Hoke County, Aberdeen, NC 28315  His e-mail address is littlefarm1@windstream.net

6.  Hoke County Superior Court has jurisdiction over Quiet Title Actions and all persons found to be within its presence.

                                                             ALLEGATIONS

7. The Hoke County Commissioners sponsored a development agreement to build an Ethanol Plant.   Hoke County purchased from  Z.V. Pate a 635-acre parcel in 2006 for about $3.8 million.

8. The county gave via deed in fee simple to Clean Burn LLC, 500 acres of the county's 1,366-acre industrial site, about three miles south of Raeford in Dundarrach.

9.  A deed signed 28 March 2008 by James Leach, Chairman of the Hoke County board of Commissioners, and attested by Linda Revels, Deed Book 801, pages 285-286, gifted in fee simple absolute to CleanBurn Fuels, L.L.C. 500 acres for the sum of "$10 and other valuable considerations . . ."

 10.  William Corbett Fields, Jr., the County Attorney at that time,  conspired with the County Commissioners to issue this fraudulent deed.  Fields is either corrupt or incompetent or both.

11.   The deed was patently fraudulent on its face in that there is no way that 500 acres of some of the finest land in the county with an estimated 10” thick of topsoil could be valued at “$10.  and other valuable consideration in hand”.

 12.   Leach committed fraud regardless even if it were an official action.  The maxim of law, Fraus Omnia Vitiate, comes into play.  This Latin phrase means ‘fraud vitiates everything.’

 13.  Leach was ultra vires fraudulently to give away substantial County property in violation of the NC Constitution and NC Statute Law in that no economic benefit would accrue to the county and that there would not be taxes to justify the purchase of the land.

14.  North Carolina Constitution -- Article 1 - Sec. 32.  Exclusive emoluments.
No person or set of persons is entitled to exclusive or separate emoluments or privileges from the community but in consideration of public services. 

 15.  General Statute 158-7.1 (d2) (2) states as follows:  (2)        The governing board of the county or city shall contractually bind the purchaser of the property to construct, within a specified period of time not to exceed five years, improvements on the property that will generate the tax revenue taken into account in arriving at the consideration.  Upon failure to construct the improvements specified in the contract, the purchaser shall reconvey the property back to the county or city.

 16.  The word “shall” in the statute means mandatory and not directory.  Defendant Tyton NC Fuels LLC is in violation of NC Statute law.

 17.  The land was conveyed by the county in 2008.  Based upon information and belief 8 + 5 equals 13.   The year is 2016, nearly 2017 and no improvements have been made to generate any tax revenue.

 18.   Since the transfer of the property in 2008, history has shown that the entire transaction was fraudulent and deceptive on the part of all of its promoters, agents, corporate and municipal combined to defraud several private investors, the Cape Fear Credit Union and the United States Department of Agriculture in the total sum of approximately $100 million dollars.

19.   Based upon information and belief, the United States Department of Agriculture lost about $30 million in loans and the Cape Fear Credit Union lost approximately $70 million or more in loans to several owners of the 500 acre parcel. 

20.   About $1.5 million additionally was spent by Hoke County  to extend utilities to the site.

21.   Timber was removed from the 500 acre site and not one penny was returned to the Hoke County taxpayers.  Based upon information and belief this timber was an additional unlawful gift to unknown parties at the present time.

22.  On 30 November 2011, deed book 966 page 0133, we find that Cape Fear Farm Credit bought the property for $34,500,000 with stamps costing $69,000 or 0.2%

23.   On 27 May 2014 we find that CFF Holdings granted to Tyton NC Biofuels,  deed book 1079 page 606, paid an excise tax of $25,636.  No sales price is listed but using the same 0.2% ratio gives us a transfer price of $12,818,000

 24.  Under the North Carolina Secretary of State Corporations website, we find that Barbara B Carlisle, 281 Andria Drive, Stateline, NV 89449  is the manager of Tyton NC Biofuels LLC. 

 25.  Based upon Information and belief it appears that the relationship between CleanBurn Fuels LLC (now dissolved) and Tyton NC Biofuels was not at arm’s length but was a Carlisle family relationship of some kind and that the $12.8 million sales price was not an arm’s length transaction.

26.  On 6 Dec 2014, deed book 1099 page 91, we find that Tyton NC Biofuels executed a 22 page Deed of Trust to Fifth Third Bank, Inc. for $15,500,000.

 27.  Based upon information and belief, no bank in their right mind would loan on 6 December 2014,  $15.5 million for a piece of property that was recently sold, 27 May 2014, for $12.8 million on the allegedly open market.

 28.  The Attorney for Hoke County, William Corbett Fields, was either incompetent or corrupt or both by approving the County land gift without checking and reviewing the North Carolina Constitution, NC Statute and case law in this matter.  Any participating attorney involved with CleanBurn LLC, Third Fifth Bank, Tyton NC BioFuels LLC, Cape Fear Farm Credit or the United States Department of Agriculture  should be sanctioned by the State Bar or charged with incompetency, conspiracy or fraud.   

 29.  This land transfer may have been the most expensive land transfer in Hoke County’s history and not just a routine property transfer regardless of the deed stating that the consideration was for “$10 and other valuable consideration in hand . . .”   Extra care in the preparation and approval of this deed would have been prudent and judicious.

                                                        PRAYER FOR RELIEF

30.  Considering the premises, Walker prays for an ORDER to the Recorder of Deeds that the deed signed on 28 March 2008 by James Leach, Chairman of the Hoke County board of Commissioners, and attested by Linda Revels, Deed Book 801, pages 285-286, be set aside as a fraudulent conveyance and as a violation of both the North Carolina Constitution and North Carolina Statute  law. 

 31.  Walker also prays that all Deeds of Trust relative to the instant 500 acre piece of land be revoked as a consequence of being pendant to a fraudulent conveyance and that the land be conveyed back to Hoke County devoid of equitable interests to others.

32.  Walker prays that any elected official who has acted in violation of Constitutional or Statute law or with gross negligence or violation of his/her fiduciary duty be removed from office pursuant to G.S.  § 14-230.  Willfully failing to discharge duties.

33.  Walker also prays that the COURT determine any illegality, conspiratorial  and/or fraudulent intent on the part of the various defendants and their attorneys and report the misfeasance to the appropriate agencies.

34.  Walker also prays for all further just and equitable relief as appropriate.

35.  All factual averments herein are signed under penalties of perjury to be true.

Respectfully submitted,


Russell Walker