Luminati Aerospace chief pilot Rob Lutz, left and cofounder Daniel Preston, with the company's half-scale ultralight aircraft, before Lutz took it on a brief flight as a crowd of cheering onlookers watched at the Calverton Enterprise Park on June 10, 2016. File photo: Denise Civiletti

Since I reported on recent litigation against Luminati Aerospace — a lawsuit by a large public company claiming default on a $10 million loan and an eviction proceeding brought by the owner of the Plant Six building for nonpayment of rent — the status of the $40 million sale of the EPCAL site to a company partly owned by Luminati has been the subject of much discussion.

Comments are flying on social media urging the town to get out of this deal and do something else instead.

But Riverhead Town can’t just pull the plug on this deal willy-nilly — even if a majority of town board members wanted to.

There’s a contract in place with Calverton Aviation and Technology. The law doesn’t allow parties to a contract to just change their minds and get out of it. There are circumstances in which a party to a contract can in fact “undo” it — in legal parlance, it’s called rescission. But they are limited and the standards are strict — for good reason. Contracts have to have meaning under the law, after all.

Does the town have grounds for rescission of its contract with CAT? That’s an answer the town board — if it wants to ask the question — must get from the board’s legal counsel.

If the board is inclined to look into it — and under the circumstances I can’t see how it wouldn’t be — it should absolutely seek the advice of different outside legal counsel than the lawyers who represented the town in the negotiation of the contract of sale. The two lawyers hired by the town as special counsel to negotiate this contract and vett the purchaser are, in my opinion, too involved in this deal to be asked for advice about it at this point. A fresh set of eyes is in order.

There are odd things about the contract itself that the town board apparently did not question — and should question now, or at least provide answers about to the public.

The letter of intent offered by Luminati in early 2017, which then-supervisor Sean Walter signed in April 2017, said the purchaser would be a new company wholly owned by Luminati Aerospace. Yet the contract came through for a purchaser jointly owned by Luminati and Triple Five, with Triple Five owning 75 percent. What happened?

The letter of intent stated that initial down payment would be nonrefundable if the purchaser extended its due diligence period for another 90 days. The contract states that it is refundable. Why? When did that change?

The contract provides no recourse to the seller should the purchaser fail to fulfill its contract promises after title closes — with the exception of $1 million in runway “infrastructure work” within two years of the closing date. That promise is secured by a “completion guaranty” promising delivery of cash or a letter of credit to secure performance. But there’s no guarantee for any other post-closing obligation of the purchaser, including its stated plan to build 1 million square feet of commercial and industrial space on the site within five years of “the required approvals.” Heck there’s no guarantee that the purchaser will even apply for those approvals within a specified period of time.

I’ve long been very curious about the negotiation of this agreement — about both the things it says and the things it doesn’t say.

I noticed something a few days ago that really ramped up my curiosity. The contract of sale shares something curious in common with the Luminati runway use agreement, signed in November 2015 and the Luminati letter of intent, dated March 27, 2017. Each bears what is apparently a file number that begins with the letters DM. The numbers are formatted in the same way: DM2\6303112.4 on the Nov. 4, 2015 runway use agreement between the town and Luminati; DM2\7643032.3 on the March 27, 2017 letter of intent from Luminati to the Riverhead CDA; and DM2\8294884.4 on the contract of sale approved by the town board in December 2017.

The appearance of these file numbers each beginning with DM2 would seem to indicate they originated with the same author. Luminati’s law firm is Duane Morris. Do these numbers indicate each of these documents originated with Luminati’s lawyer? We know the letter of intent most certainly did: it’s a letter from Luminati, addressed to the Riverhead CDA, signed by Daniel Preston (and later counter-signed by the town supervisor). But these extremely similar file numbers on the runway use agreement — signed in November 2015 — and the contract of sale? Did Luminati’s lawyer — and not the town’s lawyers — draft those documents too? That would surprise me, to say the least. It’s customary in New York for the seller’s attorney, not the buyer’s attorney, to draft a contract of sale. Then again, it’s also customary for the town’s attorney to draft a lease of town property, such as the runway use agreement.

(Since noticing these file numbers the other day I have had an opportunity to obtain a contract prepared by Luminati’s law firm on behalf of Luminati in a matter unrelated to the Town of Riverhead. Guess what? Same type of file number, beginning with DM.)

Why would a buyer’s/lessee’s law firm be preparing these documents in deals involving the Riverhead CDA? I don’t know and it may not mean much, but if I were a member of the town board, I’d be asking this question.

The purchaser’s “intended development plan” — attached to and incorporated into the contract as Exhibit B” has Luminati Aerospace at its center. The “intended development plan” says prospective businesses” expected to locate at the property include “(i) Luminati Aerospace LLC; (ii) companies that will support Luminati’s operations, including metal companies, machining companies, composite companies, metal forming companies, assemblers and systems integrator companies, engineering companies, defense companies and aircraft servicing companies; (iii) businesses that can benefit from use of the runways; (iv) technology businesses that will have a synergistic relationship with other companies located at or near the property; and (v)the Federal Aviation Authority.”

If Luminati is out of the equation, what’s left? Businesses that can benefit from use of the runways, technology companies that have some synergy with “other companies” and a nonexistent federal “authority”? (Presumably the drafter of this plan meant the Federal Aviation Administration.)

Much of the testimony about the purchaser’s plans that was presented at the qualified and eligible hearings last year centered on Luminati’s business. Indeed, Luminati was the only business identified as a sure thing during those hearings. Other businesses mentioned during the process were “interested” in the site and in the aviation and technology park which had Luminati as its central player.

Luminati founder and CEO Daniel Preston told Innovate Long Island last fall he was moving Luminati’s VTOL division to upstate Little Falls. (VTOL stands for “vertical takeoff and landing” — i.e. helicopters.) He blamed Riverhead for taking too long to move forward with the sale of vacant land. Never mind that he already had ownership or control of two other sites within the enterprise park where he previously announced (in 2016 and 2017) he’d be manufacturing aircraft and employing hundreds of people in short order. What happened with the Substrata solar planes he said he’d be building at those sites? Or the Seamax amphibious aircraft? And those hundreds of jobs?

And what is this VTOL division Preston is moving upstate? He never mentioned it at either of the media events he staged — in 2016 at the former Skydive Long Island site and in 2017 at the grand re-opening of Plant Six. But that may be because it didn’t exist. Luminati VTOL LLC was formed in Delaware in April 2018. (Its address is listed as 400 David Court, Calverton, the former Skydive Long Island building.) The domain name was registered in September.

Preston, through two other Delaware shell companies traceable to Luminati — they share the same 400 David Court address — has indeed purchased some properties in the City of Little Falls, according to Herkimer County property records. One is an old manufacturing or warehouse building; another is a 100-year-old former Masonic lodge that was converted into a residence.

Preston also bought the assets of Florida-based Rotor Flight Dynamics, manufacturer of rotor blades, rotor heads and other parts for rotary aircraft and had them shipped to Little Falls, currently located in a machine shop there.

So, is Preston done with Calverton? If he is, where does that leave CAT and its intended development plan? If Luminati can’t or won’t deliver on its professed vision to restore the Long Island aerospace industry to its former glory and the centerpiece of CAT’s development plan flies off to a new upstate location, what will CAT do?

I called CAT’s lawyer Chris Kent last week to ask about this, but so far he hasn’t gotten back to me. When we last spoke in March, Kent told me he was “excited” about the prospects shaping up as tenants for the EPCAL site and believed CAT would be making a presentation about the plans taking shape for the site by the May 20 end of the company’s due diligence period — at which point CAT must either provide notice to proceed to closing or exercise its option to terminate the contract.

With Luminati agreeing to surrender occupancy of Plant Six to the landlord, and Hexcel, holder of a $3.4 million first mortgage on the former Skydive building at 400 David Court, suing Luminati over its alleged default on a $10 million loan, Riverhead Town must demand clear answers to these questions without delay.

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Denise Civiletti
Denise is a veteran local reporter, editor, attorney and former Riverhead Town councilwoman. Her work has been recognized with numerous awards, including investigative reporting and writer of the year awards from the N.Y. Press Association. She is a founder, owner and co-publisher of this website.Email Denise.