Can Longview oil refinery pass due diligence? An examination of the companies and individuals behind the dubious proposal

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 December 31, 2014. The MOU was apparently never signed by the Port of Longview and its current status is unknown. Port of Longview Commissioners have not 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 do 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.

The project team members

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 (TCMP) 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 (November 26, 2013) under the byline “TransMessis Columbia Plateau LLC,” describes TMCP as subsidiary of TransMessis Columbia Renewable Energy—its 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 (TCP).   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 million 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—this is new—15,000 barrels of “sustainable seed and vegetable oil.” He also states Waterside Energy, Inc. will be looking for permitting through EFSEC.

First of all, 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.

And just as the corporate name has morphed, so has the description of what the oil refinery will do.

Adding the production of “sustainable seed and vegetable oil used cooking oils” is an obvious attempt to make the proposed crude oil refinery “green” in order to gain the support of the Inslee administration and environmental groups.

This raises the question.  How could Mr. Soumas—who as a participant in a joint venture that closed a biodiesel plant in July 2014 and in the 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—possibly propose a crude oil and cooking oil refinery to State Energy Facility Site Evaluation Council, 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 invited as well as Inslee policy staff members. On February 27, Keith Phillips, Inslee’s Special Assistant on Energy and Climate invited Soumas to brief “the state’s clean fuels team.” 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 The Daily News 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 article, 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.