HILTON HEAD

Investors in Hilton Head green energy firm sue former manager

cconley@islandpacket.comOctober 29, 2012 

Investors in a Hilton Head Island alternative-energy business are suing the firm's former manager, claiming he used "many thousands of dollars" of start-up capital on jewelry, museum admissions, vacations "and other personal expenditures."

The lawsuit also claims John McIntyre and Silver Oak Land Management made unauthorized loans and payments to other business ventures using funds intended for Silver Oak Energy, a start-up biofuel business.

"Many of the transactions conducted by (McIntyre and Silver Oak Land Management) involved self-dealing between the defendants and other entities in which they maintained an interest," according to the lawsuit, filed Friday at the behest of five investors.

McIntyre declined to comment Monday, saying he had not yet been served with a copy of the suit.

"I'll get a look at this before I answer any more questions," he said.

McIntyre also is a principal with Silver Oak Land Trust, which invests in timber plantations in North and South Carolina. At least one investor in the energy business also invested with McIntyre's timber business.

Silver Oak Energy was launched in 2009 by McIntyre and Silver Oak Land Management with $398,000 in start-up capital from Paul Finn, James Paris, Brian Mone, David Short, and Richard Silver. At least four of the investors live on or have ties to Hilton Head.

The agreement gave investors a 65-percent share of the new company. Silver Oak Land Management was awarded a 35-percent share to manage the business, accounting and taxmatters, the suit says.

Silver Oak Energy's first big acquisition was in April 2010, when the company bought a 66-acre tract in Marlboro County, in northeast South Carolina, to grow Giant Miscanthus -- a Japanese grass that can produce four times more ethanol per acre than corn.

Almost 18 months later, signs emerged that the investment was unraveling.

In late 2011, the suit claims, McIntyre asked for and received $25,000 from Finn to maintain the Marlboro County tract. A few months later, in January 2012, Finn was told the money was needed to buy grass seedlings, not for maintenance.

The suit alleges the money wasn't spent for either.

"Said funds were not used either for farm maintenance or to acquire the material as represented, but $24,000 was, in fact, transferred to another entity in which defendants held an interest," according to the lawsuit.

After discovering the misspent funds, investors pored over the defendant's financial records, uncovering "false and misleading statements intended to disguise personal expenditures by and payments made to, or on behalf of, defendant McIntyre," according to the lawsuit.

McIntyre is accused of using investors' funds for veterinarian bills, medical bills, SAT fees, groceries, dinners out, zoo admissions and other things. The suit also claims he created bogus investor reports that suggested the energy business was doing better than it really was.

Hilton Head attorney Ehrick Haight Jr. is representing the energy firm and its investors. Haight declined to comment Monday, saying the court filing should speak for itself.

The suit accuses McIntyre and Silver Oak Land Management of fraud and mismanagement, civil theft, gross negligence, unfair trade practice and breach of duties.

The investors seek actual and punitive damages, and compensation for legal fees. They also want a judge to prevent McIntyre and Silver Oak Land Management from selling, transferring or disposing assets that could belong to them.

Finn, a Hilton Head resident, runs a Boston-area mediation firm that has helped broker multi-million dollar settlements in some of New England's highest-profile cases, including a 2003 Rhode Island nightclub fire that killed 100 peopleand the Boston clergy sex abuse scandal.

Finn declined to comment on the lawsuit Monday but said he was "really disappointed in Jack McIntyre."

"I thought he was my friend," Finn said.

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