Indictments Handed Down Against 7 in Okla. Cocoa Butter Case

In Multicounty Grand Jury indictments unsealed in Oklahoma County District Court, seven people, including four town trustees, were accused of conspiring to personally profit by publicly funding a failed cocoa butter plant near Hinton, state Attorney General Drew Edmondson reported.

The grand jury June 15 returned five indictments from its Hinton Economic Development Authority (HEDA) investigation. The investigation focused on the financing surrounding the construction of a plant that uses liquified natural gas to separate and extract marketable products from peanuts or cocoa beans. The technology is known as liquified gas extraction.

The investigation centers around four trustees for the town of Hinton, who allegedly created HEDA and two other entities, LGX and Hinton Enterprises, for the purpose of routing public money allotted to construct the plant back to their own pockets.

Four members of HEDA’s board of trustees are named in one indictment. Each are accused of one count of conspiracy against the state and one count of embezzlement by public officer. Accused are Eldon W. McCumber, 78, chairman; Kenneth L. Doughty, 66, vice chairman; Michael S. Chaloner, 49, secretary/treasurer, and William Sparks, 78, trustee.

When they created HEDA, Edmondson said, the four men’s status as trustees for the town of Hinton allowed them to expend public funds. The state alleges the trustees and their alleged conspirators funneled $1.7 million in town funds and $6.4 million in town promissory notes through LGX and Hinton Enterprises, the fictitious companies they created.

The indictment alleges the four trustees personally owned shares of LGX.

“The trustees were allegedly looking to personally profit from LGX, a company they conspired to fund with public money,” Edmondson said. “We allege all involved knew that the public funds could result in personal profit, and they conspired to set up the fictitious companies in an attempt to hide the money until they could line their pockets.”

Also indicted for his role in the scheme is HEDA attorney Leroy James Patton, 63. Patton was indicted on one count of conspiracy against the state and one count of embezzlement by public officer. Patton is also president, director, secretary/treasurer and the sole stockholder of Hinton Enterprises, Inc. He is accused of approving payment to LGX, a company in which he owned stock.

“The money came from the Hinton trustees to HEDA which sent it through Hinton Enterprises to LGX,” Edmondson said. “LGX then contracted with two companies, Hall Management and New Vision Foods, to construct, operate and manage the extraction plant. The facility is standing today, but not operating. This was not the sweet deal these defendants thought it would be.”

The indictments allege the deal went bust when LGX was sued by Cargill for patent infringement over the liquified gas extraction process. The suit, which is ongoing, forced the Hinton plant to close. The City of Hinton is now responsible for repaying $6.4 million in bonds and lost $1.7 million in town funding from the failed plant.

Donald R. Hall, 74, president of New Vision Foods (NVF) and manager and president of Hall Management and LGX is named in two separate indictments for his role in the scheme. In the first indictment, he faces one count of obtaining property or valuable thing of a value exceeding $500 by false pretenses. The second indictment alleges one count of conspiracy against the state and one count of embezzlement by public officer.

The final indictment accuses Michael Ray Hall, 49, manager and co-owner of Hall Management and LGX, of one count of conspiracy against the state and one count of embezzlement by public officer. Michael Hall is the son of Donald Hall and a NVF stockholder.

The Halls are accused of giving LGX stock certificates to the named trustees in exchange for the contract to construct and manage the Hinton plant.

Named in unrelated indictments also unsealed today were Thomas Brian Bates and his wife Vicki Roberts-Bates. Brian Bates was indicted June 15 on five counts of pandering, two counts of preventing a witness from giving testimony, one count of aiding and abetting in prostitution and one count of unlawful use of radio equipment. Vicki Roberts-Bates was named on one count of aiding and abetting in prostitution. Oklahoma County District Attorney Wes Lane’s office brought the matter before the grand jury and will prosecute the case.

Source: Oklahoma Attorney General’s Office