Riverhead Town owes its citizens a hard look at the Ghermezian family

There has been much criticism of the January private meetings between Riverhead Town Board members and the Ghermezian family, which has partnered with Daniel Preston of Luminati Aerospace in the controversial EPCAL land deal. There has also been heated debate on whether board member Jodi Giglio’s solo secret meeting with them in NYC while the hearing was ongoing requires that she recuse from voting on whether they are “qualified and eligible” to buy and develop the land.

However, the town board is required to look at the other side of the coin. What does the Ghermezians’ role in these meetings suggest about their own “integrity and responsibility,” two critical factors in the “qualified and eligible” judgment, particularly given their record in Las Vegas and Canada. The board must carefully consider the ethical implications of all of the following:

Their seat at the table is based on sleight of hand.

This is not the entity with which the Town of Riverhead spent months negotiating the agreement of sale. The original party, Luminati Aerospace, and its founder, Daniel Preston, have been thoroughly discredited and in practice completely replaced by a virtually unknown newcomer: a subsidiary of Triple Five Ventures, owned and controlled by the Ghermezian family of Edmonton, Canada.

The operating agreement for the new LLC formed by Triple Five and Luminati to purchase the EPCAL land — a document the town requested multiple times — was not signed until March 28, leading to serious questions about the legal authority under which the two Q & E presentations were made. The agreement stipulates that “Luminati is a minority member of the company, is not a managing member of the company, and has no management rights over or control of any type with respect to the company, its business, affairs and/or property.” The only crumb that Preston gets in return for providing his legal cloak is that he will be kept “reasonably informed.”

Triple Five Ventures and the Ghermezian family are taking advantage of a flawed contract despite having no confidence in their ostensible 25-percent partner.

One must conclude that the only reason Preston is still a partner is to benefit from the very special privileges he obtained in his purchase agreement with the previous town board, specifically the low cost of the land and the inclusion of a large tract of currently “non-developable” acres for the disingenuous reason of saving the town the cost of mowing. While the Ghermezians may be seen as clever businessmen to take advantage of a situation that was thrust into their laps, at best they are flying under a false flag of convenience.

The Ghermezians disrespect the ability of the Town of Riverhead to evaluate their proposal independently on its own merits, refusing to compete transparently in their own name with other interested parties.

From first Q&E hearing: “[M]y question to them is whether they would consider, since I think there is much interest in their proposal, whether they would consider making a clean proposal to the Town of Riverhead, at the same time as other interested parties could make clean proposals for a transferring (sic, “transparent”) process.

The answer: “Triple Five is only interested in completing the proposal currently before the town. Should the town vote against Triple Five, finding it to not be qualified and eligible, Triple Five will not pursue the project in Riverhead any further.”

The Ghermezians’ threat to withdraw if not allowed to retain the privileged deal of their silenced partner indicates bad faith and unreliability rather than sincere interest in creating a development project responsible to the Town of Riverhead. Their unwillingness to respond to the question of limiting the purchase to the 600 developable acres, or even to justify need for the additional land, also suggests hidden agendas.

Another question at the Q&E hearing: “Whether in this eligibility, whether they would consider renegotiating the basics, in terms of the amount of land, since that’s 600 developable acres that would be sold, then why the other acreage has to be part of the deal.”

The answer: “Once again, Triple Five’s interest is to complete the process for the proposal currently before the town. We are not coming back if this project is not approved.”

The Ghermezians bent the intention if not the letter of the law to try to influence the Q&E process outside of the scrutiny of the public and press showing total disrespect to the citizens of Riverhead. They initiated private meetings in January that involved all members of the board in a manner designed to avoid open meetings legal requirements, damaging the credibility of an inexperienced board that had barely taken office.

The Ghermezians subverted the integrity of the Q&E process by inviting a single member of the board to meet secretly with them in New York City, accompanied only by a strong partisan for their cause — a former town official once charged with overseeing the EPCAL site for the Town of Riverhead. Their disrespect for established state legal process compromised the reputation of the board member leading to acrimonious debate about her recusal. They undermined mutual trust among board members as well as the process of public inquiry and consideration owed to the citizens of Riverhead.

The Ghermezians offer to give $2.5 million for a town park if the sales agreement receives unanimous approval is an unprincipled and patronizing effort to buy support for the contract they took over from Luminati. With whom do they think they are dealing in what ethical universe? Have other non-public inducements been offered to board members and opinion leaders?

The above examples are consistent with a reputation that does not inspire trust. See these articles in the Las Vegas Sun and the Las Vegas Review-Journal. 

One journalist wrote, “The family is often lavish with political contributions, in the United States and in Canada, to local officials who control land-use decisions…” Behavior like that could pollute the political atmosphere of Riverhead for decades.

To clear the air in the Q&E process, the Ghermezians should be asked by the board whether any funds have been donated or promised by Triple Five, the Ghermezian family or their agents to former or current board members and candidates, political party committees, and tertiary finance committees, including standing party committees, pre-primary committees, special events committees and housekeeping accounts as well as to county party accounts for money potentially funneled back to Riverhead.

The conventional response to such questions is that this is not corruption, that companies and individuals have the right to give to politicians who share their views. But aren’t such contributions compromising when the donor is in the middle of seeking a favorable decision from elected officials that materially affects its financial interests?

John McAuliff has had a home in Riverhead for 25 years. He is the founder and director of a not-for-profit organization, the Fund for Reconciliation and Development, that works to foster good U.S. relations with Vietnam, Laos, Cambodia and Cuba.

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