Minn. plant in bankruptcy files claim against former employees

By Erin Voegele | April 25, 2013

Buffalo Lake, Minn.-based Purified Renewable Energy LLC filed a voluntary petition for Chapter 11 bankruptcy on March 24. A few weeks later, on April 8, the company filed a complaint against Patrick Riggs, its former chief financial officer, and Steven Walker, its former CEO. The company terminated the employment of both on March 13. The compliant also names the Becker & Poliakoff LLP law firm as a defendant.

The bankruptcy documents specify that Purified Renewable Energy purchased the 25 MMgy facility from the Minnesota Energy cooperative on Nov. 15, 2012. An agreement to operate the plant was reached earlier in the year, with Purified Renewable Energy beginning to operate the plant in June 2012. The agreement included an option to purchase the facility, which the company exercised in November.

The facility had been idle since 2010, and experienced two fires in late 2012, one in September and another in November. The plant ceased operations for repairs. To date, insurance has paid out $250,000, with Purified Renewable Energy expecting the total claim to reach $2 million. In addition to the fire, the company has also faced environmental compliance charges, including those involving the discharge of pollutants from the cooling tower and a from a storm water collection pond. The company was also cited for failure to provide proper training and quality assurance procedures, hazardous waste handing violations and others.

According to the filing, when the plant was operated by Purified Renewable Energy, it was producing at a rate of less than 4 percent capacity. Recent court documents note that 10 of the plant’s 23 employees remain onsite to maintain the facility. The remaining 13 were fired.

According to court documents filed in April, Purified Renewable Energy is accusing Walker for opening an account at MinnWest Bank in Sioux Falls, S.D., in early March, and designating himself as the only signatory on that account. Purified Renewable Energy said in the complaint that it did not authorize Walker to open the account and was not aware of the account at that time. The compliant goes on to say that Walker deposited $250,000 of Purified Renewable Energy’s funds into the account. Following the termination of his employment, the complaint states that Walker instructed the bank to wire $200,000 from the account to Becker & Poliakoff. Purified Renewable Energy further stated it issued a letter to Walker on March 26 asking for the funds to be returned. As of the April 8 filing date, he had not responded. The company also contacted Becker & Poliakoff in April, but the law firm declined to return the funds.

In addition, the complaint states that Purified Renewable Energy believes Walker and Riggs have a laptop, books and records that belong to the company, along with passwords to several internet accounts. According to the compliant, Riggs is also accused of changing the companies password to its U.S. EPA RIN account, and thereby preventing Purified Renewable Energy from accessing the account.

The company has also alleged that Walker and Riggs paid personal liabilities with company funds, interfered with contractual relationships, misrepresented the company to vendors, and others.

Documents filed as part of the bankruptcy specify that Purified Renewable Energy currently holds nearly $3.08 million in total assets, with more than $26.22 million in total liabilities.

Ethanol Producer Magazine was unable to reach the parties involved in the case for additional comment.