Exclusive: Jim Talent Assisted in Illegal Sale of Biofuel Securities

In August, Senator Jim Talent was personally involved in publicly boosting an biofuel start-up's efforts to raise capital through the illegal sale of unregistered securities. Paseo Biofuels has admitted breaking the law with its solicitations at the same time Jim Talent was heartily endorsing and supporting Paseo's project.

The Office of Secretary of State today announced that it has entered into a consent agreement with Paseo Biofuels LLC as punishment for that outfit's illegal sale of unregistered securities in connection with its construction of a biodiesel plant in Kansas City. Paseo Biofuels agreed to pay fines for having sold interests in its biodiesel facility without registering with the state to sell those securities. In a statement, the Secretary of State's office wrote:

Secretary of State Robin Carnahan's Commissioner of Securities Matt Kitzi entered into a Consent Order with Paseo Biofuels, LLC, on Monday, October 23, for that company’s failure to comply with Missouri law relating to the sale of securities.

According to the order, Paseo Biofuels held six investor meetings in north and western Missouri where it solicited investors before the company received its registration exemption on August 15, 2006. Missouri law prohibits the offering of unregistered and nonexempt securities to investors.

As the release notes, Paseo received its exemption on August 15th, meaning solicitations made prior to that date were in direct violation of the state's securities law. Senator Jim Talent, according to his own website, was helping pump Paseo Biofuels start-up on August 9th --nearly a week before the exemption was granted.

Talent was even effusive in his praise for the Paseo Biofuels project, which the firm undertook jointly with agri-business giant Cargill. This despite the fact that at the very moment he was praising Paseo, the firm was illegally raising capital for its project. In an interview, Talent said of the project:

"I told the Cargill people that I was pleased about their commitment to Kansas City and I was pleased that they were doing the right thing the right way." (Emphasis mine. Click to hear Talent's quote.)

Apparently, Jim Talent believes that "the right way" to build a business is to violate the very laws that are in place to protect Missouri investors.

But why would Talent take the risk of putting his personal stamp of approval on illegal securities transactions? A cynical observer might suggest that Talent's assistance to Paseo Biofuels has something to do with the fact that two big political supporters --Dale Ludwig and David Durham-- stand to benefit financially from Paseo's success. Ludwig is the registered agent and organizer of Paseo Biofuels LLC. Durham is Paseo's chairman.

It's worth noting that Paseo Biofuels LLC is not the only bit of biofuel/ethanol self-dealing in which Durham is involved. Quite the contrary, Durham is also the chairman of the board of managers for a little outfit called Show-Me Ethanol. For the uninitiated, that's the ethanol start-up in which First Brother Andy Blunt is a key investor/director/profiteer.