Luminati Aerospace CEO says he’s moving his company upstate

Daniel Preston, cofounder and CEO of Calverton-based Luminati Aerospace, has told a news outlet in upstate Little Falls, New York that he’s done with Long Island.

“I’m going to be a landowner and investor on that property,” Preston told MyLittleFalls.com, referring to the Calverton Enterprise Park site where his company is a partner in a $40 million land deal with the Town of Riverhead.

“I’m two feet out the door and I don’t really enjoy being there. I enjoy being here,” he told the news website.

Preston said he is moving Luminati to Little Falls because he “fell in love with” the city after visiting it to see a former Masonic Lodge that was on the market for sale. Preston bought the building, which had been converted into a residence, in July 2017. In November 2017, he bought an industrial building in downtown Little Falls.

Preston told MyLittleFalls.com he is in contract to buy a larger industrial building on a two-acre island where he plans to set up manufacturing operations. He has a June 1 closing date, but has arranged for early possession in order to store equipment he is moving out of his facility on Long Island, according to the news website.

In October, Preston told InnovateLI.com he was moving “Luminati’s VTOL division” to the small city upstate. In an interview last week, he told MyLittleFalls.com, “I was going to leave the composite work back in Long Island, but since then, I just made the complete decision that my life is really here, not there.”

Luminati Aerospace is a 25-percent owner of Calverton Aviation and Technology, in a joint venture with Triple Five Group, an Alberta, Canada-based conglomerate. The Town of Riverhead Community Development Agency in November 2018 entered into a contract to sell 1,644 acres of vacant land at the Calverton Enterprise Park to Calverton Aviation and Technology for $40 million. That contract grew out of a letter of intent the town signed with Luminati Aerospace in April 2017.

The contract’s “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.”

Following recent news reports of lawsuits that have called Luminati’s future at EPCAL into question — including a $12.5-million lawsuit brought against Luminati Aerospace by Hexcel Corporation, which had loaned the startup $10 million in 2016, and of an eviction proceeding to recover possession of Luminati’s leased premises on Burman Boulevard — Riverhead Town officials have decided to look into whether Luminati’s legal troubles affect the town’s contract with Calverton Aviation and Technology.

Town Supervisor Laura Jens-Smith has called a special meeting Thursday to take up a resolution hiring new outside counsel to advise the board on how, if at all, these issues affect the contract of sale with CAT.

Upon learning of Preston’s comments to the upstate news website, Jens-Smith said today the town needs to investigate his role in the project going forward “to ensure that our residents are placed first with the sale of EPCAL.”

The contract’s development plan, as well as the record on which the town based its determination that Calverton Aviation and Technology is a “qualified and eligible sponsor” for purposes of the N.Y. State Urban Renewal Law, was based on Luminati Aerospace having a central role in the project, Jens-Smith said.

“He wasn’t just a landowner and investor,” she said. “That’s quite different from what was represented to us in the Q&E.”

The supervisor said the town is hiring new outside counsel “to go through the contract and … give us assessment about where we stand in this as a town.”

Attorney Christopher Kent, who represents CAT and Triple Five, said today he was unaware of Preston’s plans.

“This is the first I’m hearing of this,” he said. “I’ll ask [Triple Five] about it and get back to you.”

Preston could not be reached for comment. The phone number at Luminati’s Calverton facility is not in service, according to a recorded message. Both of Preston’s mobile phone numbers in RiverheadLOCAL’s files belong to other parties.

Luminati in Riverhead

Luminati Aerospace came to Riverhead in 2015, when through its a subsidiary LLC, it purchased the 16-acre Skydive Long Island site adjacent to EPCAL’s active, 10,000-foot runway for $3.4 million. In November of 2015, the town entered into a runway use agreement with Luminati Aerospace, giving it control of the site’s active runway. The runway agreement was for an initial term of 10 years, with an option to renew for two additional 10-year terms. Luminati agreed to pay an annual rent of $31,810, subject to a yearly cost of living increase. Under the agreement, Luminati Aerospace assumed responsibility for maintaining the runway, taxiway and tie-down areas.

The runway agreement was approved by the town following a required “qualified and eligible sponsor” hearing, which is mandated by state law for the sale or lease of property in a designated urban renewal zone like the EPCAL site, where the transaction is not the result of a bidding process.

At the 2015 qualified and eligible hearing, Preston introduced what he called the Luminati “dream team” that would develop solar-powered unmanned aerial vehicles pursuant to contract with “a Fortune 250 company” that was funding the research and development project. The aim was to achieve perpetual high-altitude flight to bring internet connectivity to remote regions of the world. Luminati would immediately create about 40 jobs, Preston said during the Oct. 20, 2015 hearing.

“After the initial project is concluded, Luminati plans to establish itself as a major force in the global aerospace industry, focusing on cutting-edge, hi-tech aerospace manufacturing,” Preston said. “The manufacturing will trigger significant expansion of the Luminati facilities and create a substantial number of additional jobs,” he said.

In June 2016, Preston gathered officials and media at the former Skydive hangar to view a demonstration flight of a solar-powered plane he said he developed. A German company later objected, issuing a press release alleging that it, not Luminati, had designed and built that plane. Preston then said he had made so many changes to the plane built in Germany that it was effectively a new aircraft and he had a retraction letter from the German company. But he never produced the letter, despite repeated requests.

At the June 2016 event, Preston also announced a partnership with Seamax America, which had an amphibious aircraft on display at the Luminati facility that day. Preston said he would be in “full production” of the Seamax plane at EPCAL by Halloween of that year. He said he would be moving his manufacturing operation to larger quarters at the Plant Six building at EPCAL, because the old Skydive hangar was too small, he said. The companies workforce would increase from 25 to more than 40 and within three years would swell to about 800, Preston said.

Luminati did move into leased space in the Plant Six building, but after declaring it “operational” at a June 2017 media event, never began production of the Seamax plane. Seamax America had a contractual dispute with the parent company in Brazil and the collaboration never came to fruition.

Luminati made renovations to both buildings without obtaining the required town permits, prompting the town building inspector to issue violations and stop-work orders, which were never remedied.

The town inked a letter of intent with Luminati in April 2017, agreeing to sell the town’s remaining vacant land at the EPCAL site for $40 million.

The letter of intent required the town and Luminati to begin negotiating a “definitive agreement” for the sale of EPCAL and if the “definitive agreement” was not agreed to “in principle” within 30 days of the execution of the letter of intent, either party would have the right to terminate the letter of intent.

Despite that provision, negotiation of the “definitive agreement” dragged on for months — during which time Luminati simultaneously searched for and negotiated with prospective financial backers, including billionaire businessman John Catsimatidis. Negotiations between Preston and Catsimatidis continued for months, according to statements made by former town supervisor Sean Walter and a spokesperson for Catsimatidis — and the town continued to negotiate the terms of the “definitive agreement,” intermittently setting and then extending deadlines for the completion of the negotiations. Along the way, the town board flirted with the idea of canceling the letter of intent, but never mustered the three votes needed to do so.

Town officials said they learned in early December 2017 that Catsimatidis was out of the deal and a week later, Triple Five Ventures entered the scene. Triple Five, owned by the Ghermezian family, is a development company that built and manages the two largest indoor shopping malls in North America. They have many other ventures and development projects.

At its last meeting of 2017 — the last meeting at which the outgoing supervisor and unabashed Luminati advocate Walter would have a vote — the town board voted 3-2 to approve a contract of sale with Calverton Aviation and Technology, a newly formed company owned by Triple Five Realty-I and Luminati Aerospace.

The contract was approved subject to the determination by the town board that Calverton Aviation and Technology was a qualified and eligible sponsor for the purposes of the town’s urban renewal plan, as required by state law.

The town board, sitting as the board of the community development agency, held the qualified and eligible hearing in two sessions, in February and March 2018.

In November, in another 3-2 split vote, the board approved CAT’s qualified and eligible application, clearing the way for the supervisor to sign the contract of sale. The contract of sale was executed within a few days after the vote. The purchaser is currently within its extended due diligence period and has until May 20 to advise the town whether it will move forward with the deal or cancel the contract.

In March, after learning that Luminati was facing eviction from its Plant Six facility for nonpayment of rent, Hexcel Corporation sued Luminati Aerospace and its 400 David Court LLC subsidiary for alleged default on the $10 million May 2016 promissory note. Hexcel is seeking a court order allowing it to seize the machinery and equipment listed as collateral in the security agreement signed by Luminati to guaranty the $10 million note.

Luminati settled the eviction proceeding by agreeing to surrender the leased premises to the Plant Six owner, Laoudis of Calverton.

A German manufacturer filed a federal lawsuit against Luminati on April 10, claiming that Luminati is in default of its obligations under an Aug. 16, 2016 contract of sale of a $147,000 embroidery machine the company sold to Luminati, which currently owes $91,000, plus interest, on the purchase.

At a special meeting on April 11, the town board hired a law firm to collect from Luminati almost $23,000 in past-due false alarm fees and past-due runway use fees totaling at least $16,000.

“Daniel Preston’s history with the Town of Riverhead should serve as a warning to anyone putting their trust in him,” Jens-Smith said in an interview today. “Luminati makes a lot of promises, but Riverhead has learned the hard way that they are so often empty.”