Federal jury rules Baldwin biofuel entrepreneur must pay $10.4 million

Tuesday, June 30, 2009
Staff Reporter

Montrose resident Jack Boykin spent years pitching a revolutionary invention to produce cheap biofuel from vegetable matter — a process so fantastic is seemed, to some, just too good to be true.

On Monday, a federal jury in Mobile determined it was too good to be true, and ordered Boykin's company to pay more than $10.4 million to a New York-based paper company that invested in the endeavor.

"We are pleased with the jury's verdict," said John Leach, a Mobile lawyer who represented plaintiff Parsons & Whittemore Enterprises. "We are glad that the jury found Boykin was perpetuating, trying to perpetuate, a massive fraud and awarded substantial punitive damages."

Boykin vowed to move forward with his process, which he still maintains works. His attorney, Forrest Latta, repeatedly described America as the Saudi Arabia of trees and cropland, and said Boykin's process has the potential to transform the world.

"It is not a bad thing when one has invented a process with such global potential that people are fighting over who gets to own it," Latta said in a prepared statement. "Unfortunately the courtroom is where this battle has been played out, deciding issues the parties could not agree on.

"The Boykins are an extremely fine and decent family which has given of themselves to this community for many years. They are going to be moving forward with developing this invention while the business issues are worked out through the legal process."

Found liable

The jury found Cello Energy and the partnership that owned it, Boykin Trust, liable for $2,827,123 for breach of contract with Parsons & Whittemore, which owns a pair of pulp mills in Monroe County.

The jurors also held the companies, along with Boykin and his son, Allen Boykin, personally liable for another $104,537.50 for committing fraud against Parsons & Whittemore. The jury also assessed $7.5 million in punitive damages against all of the defendants.

The jury also rejected Cello Energy's counterclaim accusing Parsons & Whittemore of fraudulently attempting to trick Boykin into signing away control of his invention.

It is unclear how much money either Boykin or his company have. Leach declined to discuss what efforts Parsons & Whittemore will make to collect the judgment. He flatly rejected a suggestion made by Boykin attorneys during the trial that Parsons & Whittemore wanted to use a verdict in its favor to take over Cello Energy.

When Jack Boykin, a chemist and former Alabama Ethics Commission chairman, met in 2007 with Parsons & Whittemore Chairman and CEO George Landegger, it seemed a natural match. Landegger owned the largest pulp mill in North America and could provide the raw materials for a process Boykin promised could make fuel for the equivalent of $14 a barrel.

In his own prepared statement, Landegger left no doubt that he now believes Boykin's promises were lies from the start.

"The jury has spoken clearly in condemning the Boykins' fraud against Parsons & Whittemore. I am gratified that the jury has put a stop to the Boykins' deceit," he said.

Initially, Landegger offered $12.5 million to finance construction of a factory. But, according to testimony during the two-week trial, Boykin resisted a condition that Parsons & Whittemore conduct "due diligence" to make sure the process worked.

Boykin insisted that he needed to keep the process secret even from his fellow investors, to protect his invention. He also cited the looming prospect of competition in needing to move fast.

Without the due diligence, P&W agreed instead to spend $2.5 million on an option to pay an additional $10 million for a one-third share in Cello Energy.

A day after signing the deal, though, Boykin secretly struck a deal with the venture capital firm Khosla Ventures, which financed construction of a plant in Bay Minette.

Khosla prevails

Parsons & Whittemore also sued Khosla, accusing the company of "tortious interference" in the business relationship between P&W and Cello. But the jury found in favor of Khosla, a Silicon Valley company started by one of the co-founders of Sun Microsystems.

Cello built and staffed the plant, but P&W insisted that it never accomplished what Boykin had long promised — deriving motor fuel from wood chips, crop residue and other biomass. Attorneys for the plaintiff pointed to testimony that Khosla tested samples from the plant in a lab at the University of Georgia and found that none of them contained any such material.

"Boykin never had an answer for the radio carbon testing," Leach said.

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