Town board majority now favors pulling the plug on Luminati deal

A majority of the Riverhead Town Board is calling to end negotiations with Luminati Aerospace on the sale of land at EPCAL, following a RiverheadLOCAL report that Luminati’s founder was fired by his previous company under allegations of fraud, as detailed in a 2009 lawsuit.

Town board members John Dunleavy, Jodi Giglio and Tim Hubbard said today they no longer support the deal and want to cancel the town’s letter of intent to sell 1,400 acres of property to Luminati, which was signed in April.

The town had already put Luminati on notice that it must come to terms on a draft agreement of sale by July 17 or Riverhead may cancel the letter of intent. Special counsel Frank Isler sent a letter to Luminati’s attorneys on June 28 setting the deadline.

Isler’s letter, written at the direction of the town board, goes on to say that if a draft agreement is finalized by July 17, Luminati must supply the town with all financial, development and other information required to be presented at the “qualified and eligible sponsor” public hearing the town board intends to hold on August 15, should it pursue the sale to Luminati.

But at the moment, that’s a big question mark.

“My suspicion is the contract will be canceled,” Supervisor Sean Walter said in an interview today. “But there is a process we need to follow,” he said.

“There are too many red flags,” Hubbard said in an interview today. “I’m just not comfortable anymore dealing with this guy [Luminati Aerospace founder Daniel Preston] and with Luminati.”

Dunleavy and Giglio echoed Hubbard’s sentiments. But Councilman James Wooten said he was not yet ready to withdraw his support for the deal.

“He has a few weeks to get his act together and get a backer,” Wooten said, referring to the July 17 deadline. “If he walks in with a billion-dollar company, then we should take that seriously. I’m not throwing the baby out with the bath water yet.”

Luminati Aerospace is seeking to purchase a 1,400-acre tract of land in the Calverton Enterprise Park (EPCAL) from Riverhead Town for $40 million – a price that would be below market value due to Luminati’s promises to spur economic growth and job creation. Founder Daniel Preston says his company will bring the aerospace industry back to the site where Grumman once manufactured fighter jets for the U.S. Navy. State law requires the town to determine, following a public hearing, that Luminati is “qualified and eligible” to buy the land for economic development purposes.

Preston’s experience in the aerospace industry is largely connected to his tenure at Atair Aerospace Inc., which he founded in 2001 and has been widely reported as having sold in 2009.

The lawsuit Atair brought against Preston in 2009 revealed that Preston was in fact terminated by Atair after the company discovered Preston had presented them with an allegedly fake job offer in order to negotiate a higher salary.

According to the complaint against Preston, filed in State Supreme Court in New York County in September 2009, Preston wrote a fake job offer letter — offering him a job that would pay a $525,000 annual salary — and solicited another firm to put the letter on its letterhead. The tactic resulted in a $50,000 raise and a lump-sum payment of more than half a million dollars, according to the lawsuit.

Atair fired Preston in 2008 after discovering email correspondence between Preston and the CEO of the company that put the offer on its letterhead at Preston’s request, according to the complaint.

In 2015, Preston founded Luminati Aerospace, which purchased the former Skydive Long Island site at EPCAL. In June 2016 Preston held a demonstration flight with great fanfare of a solar-powered aircraft, which he said Luminati had designed and built. The next month, a German aerospace company asserted publicly that Luminati had falsely claimed credit for the aircraft, which it says was “completely” designed and built at its facilities in Germany. Luminati said the German company issued a retraction letter but did not produce the letter. The CEO of the German company said no such retraction letter had been issued.

At the June 2016 event at the former Skydive site, Preston announced a partnership with Richard Rofé of SeaMax America, which he said would begin building small amphibious planes at Luminati’s facilities. The planes would be in full production by Halloween, Preston said. That didn’t happen. A Luminati spokesman said the company had put the SeaMax project “on the back burner” to pursue other projects. But a representative of Golden Flyer Aeronauticas, of San Paulo, Brazil, which owns the Seamax design, told RiverheadLOCAL the company terminated its contract with Rofé in September, after Rofé brought a legal action in Brazil against Golden Flyer over a contract dispute. The Brazilian company, in a notice addressed to Rofe, Seamax America, Luminati Aerospace and Hexcel, demanded Seamax America LLC immediately cease using the Seamax name and brand.

Facebook, which Walter said had been Luminati’s backer, has pulled out of the project, according to Walter. Numerous members of Luminati’s “dream team” have resigned from the company, including its co-founder and its lead scientist.

Democratic supervisor candidate Laura Jens-Smith was critical of the town allowing Luminati Aerospace any more time to demonstrate its qualifications to move foreard.

“It should be abundantly clear to even the casual observer, it is time to terminate the proposed EPCAL sale to Luminati,” she said in a statement.

“Walter continues to chastise those who are raising questions and looking too closely. He even went so far as to publicly declare at this week’s… town board meeting, that ‘Rooting against Luminati is rooting against the town,” she said. “I don’t agree. It’s not about cheerleading, it’s about doing the best for Riverhead’s residents and our future.”

But Walter said that’s exactly his objective. “Laura Jens-Smith can criticize me all she wants, but you have to take a leap of faith sometimes,” he said. The alternative, according to Walter, is “stagnation,” something he says marked the administration of his predecessor, Phil Cardinale.

The supervisor said media reports on the proposed deal — including the “negative” ones — have spurred the interest of other entities.

“You’ve got to get on the court to play the game,” he said.