Sustainability Credits Venture Gone Awry: Legal Battle Unfolds over $67 Million Land Deal

Jerry Lee Bogard saw gold in the flooded fields and duck-hunting timber around Stuttgart, pitching a plan for selling sustainability credits on 12,500 acres he bought with his former business partner, Rebecca Winemiller.

But years after borrowing $67 million to buy the Arkansas and Jefferson county land and never seeing the eight-figure paydays Bogard predicted, Winemiller sees the project as a money drain.

Their plan was to develop sustainability credits that could be worth hundreds of millions of dollars. But the credits never sold, and Bogard and Winemiller are now facing off in a lawsuit over their business, Grand Prairie Farming & Water Co. LLC, which is being managed by a court-ordered receiver.

In court filings, Winemiller said she was through pumping money into an insolvent enterprise.  

“Mr. Bogard was good at spending money and not making money,” said Winemiller’s attorney, Skip Davidson of Little Rock. “And my clients reached a point where they decided they were not going to fund his management of the company anymore, and he refused to sell. So we had no recourse but to go to court and have a receiver appointed to manage the company and to liquidate the assets.” 

In a counterclaim, Bogard accused Winemiller of fraud, breach of contract and taking money out of the company, blocking its advancement to profitability. 

In March, Arkansas County Circuit Judge Donna Galloway appointed James F. Dowden of Little Rock as the receiver, but Bogard has appealed, arguing the company shouldn’t be ordered dissolved without a trial to determine whether it’s viable.

Bogard said in an April 28 affidavit that Amazon has expressed interest in the sustainability credits since the lawsuit was filed, and that a sale to Amazon would generate $10 million a year for Grand Prairie. Ducks Unlimited of Memphis also was interested in the credits, Bogard said, but the litigation was a roadblock to negotiations.

“I brought this company to a point where it can be profitable. And I’ve done it by paying her way as well as mine,” Bogard said in a deposition, referring to Winemiller. “We just need for her to get out of the way.”

In the meantime, Dowden has entered into a contract to sell Grand Prairie in a package worth $59.5 million to a company owned by Winemiller, who is married to prominent landowner and agri-businessman Jimmy Winemiller.

Bogard also is expected to submit an offer to buy the company. 

The sale needs approval from Judge Galloway, and the next court date is set for Sept. 19.

If the sale is approved, Winemiller could operate the portfolio of farmland, timberland and reservoirs, or she could sell it, Davidson said. 

In an unusual legal twist, Jimmy Winemiller’s first wife has asked to enter the case, alleging that she believes she has an interest in the Winemillers’ property. (See sidebar.)

The case provides a cautionary tale for partners in a 50/50 enterprise, lawyers say. 

In general, the person providing the money should have the controlling interest in decision-making, Davidson said. 

He advises avoiding 50/50 deals, or making sure partnership or operating agreements spell out a pathway to unwind the company without having to go to court.

“This case is a perfect example of that,” Davidson said. “They couldn’t agree on how to run the business, and they couldn’t agree on a buyout. And so they had to go to court to get a court order to dissolve the company and liquidate the assets.”

Born Out of Conflict 

In 2014, a long-running sibling dispute between Deborah Tipton of Memphis and her younger brother, George Dunklin Jr., was about to come to an end with a court-ordered sale of nearly 16,000 acres in Arkansas and Jefferson counties.

At the time, Dunklin was national president of Ducks Unlimited. Bogard, who said he was friends with Dunklin, was interested in buying the property, but not for the farms.  

“It never was about the land,” Bogard said in a January deposition. “It was about developing the water system in such a way that we could qualify for” the groundwater preservation/sustainability credit model that would be scientifically verified and eligible for federal tax credits and other state and federal grants. 

Bogard previously had dealt with Jimmy and Rebecca Winemiller through a separate business venture, and in 2014 Jimmy Winemiller asked Bogard to come to his Memphis house to present his plans for buying about 12,500 acres of Dunklin’s property. 

“After presenting my plans, Jimmy Winemiller asked me to stand and shake his hand because he was my new partner,” Bogard said in another affidavit filed in January. The Winemillers “implored me to not seek other investors. They represented that they wanted to be ‘the money’ and that we would share Ownership Interest equally.”

They were successful bidders in 2015 and borrowed $67 million from Metropolitan Life Insurance Co. of New York. The real estate was bought through 100% financing, meaning no down payment was made and the land value equaled the debt. 

To secure the loan, MetLife required the Winemillers to mortgage additional property in Florida and Mississippi. It also required guarantees from Winemiller, her husband and Bogard. 

The owners knew it was going to take some time before the credits would be ready for sale, according to Bogard’s counterclaim. He said the owners agreed that some of the property would have to be sold to cover the loan payments. In other cases, Winemiller or one of her companies would have to loan money to Grand Prairie to cover the mortgage payments. 

Still, there were high hopes for the company.

Bogard made promises of high profits from selling irrigation water and marketing a new product called water credits and/or carbon credits or offsets, Winemiller said in a Nov. 18 affidavit. “The credits were soft assets related to the use of the land and water that could be sold to major companies,” she said. 

Companies might be interested in buying the credits to offset their environmental footprint. A single verifiable credit could be worth as much as $400 to $500. 

In 2016, the company’s five-year pro forma income statement for Phase 1 showed that by 2020 it would have $32.4 million in revenue and $10.5 million in net income. 

It also projected that by 2022 its accumulated profit would be $175.5 million.

But those projections never materialized.

Disputed Claims

The property was to be used to generate some income through farm leases, hunting leases and irrigation water sales, but the business has never made a profit, Winemiller said in her Nov. 18 affidavit. 

Bogard continued over the succeeding years to promise “great” rewards from the soft assets, Winemiller said. “Bogard never delivered.”

She said that “not one single dollar has ever been made from” the sale of a credit.

“Yet over a million dollars has been financed by me to cover expenses related to these soft assets,” Winemiller said. 

Bogard, in his court papers, disputes Winemiller’s financial assessment of the company.

“Winemiller wants to claim the Company never made a profit when it was very clear that profits were being made and then removed by her,” he said. Bogard is represented by attorney Kendel Grooms of Campbell & Grooms of Little Rock. 

Bogard said that it was through his actions that the Grand Prairie didn’t default on its obligations for 2017, “and her actions have continued to” set the company back by years.

“Becky Winemiller NEVER objected to my paying her part of the expenses of the Company so long as she was able to continue to personally wire herself large, undisclosed and unscheduled sums of money from the GPFWC bank account without consequence,” Bogard said. 

Winemiller disputes that she improperly took money out of the company. 

She said that all the alleged inappropriate transactions can be connected to a Grand Prairie business transaction, she said. 

But the situation at the company was getting worse, Bogard said. 

Throughout 2019, Bogard said, he was in a constant state of stress because Winemiller didn’t communicate the needs of the company with him.  

He said he would receive daily phone calls from vendors regarding shut-off notices of company equipment. He said he would then have to scramble to find ways to pay the obligations “for which myself and Becky Winemiller were BOTH responsible.”

In October 2019, he said, he and Winemiller agreed that he would look for investors to buy her portion of the company. Her portion of the company didn’t sell. 

Then COVID hit in early 2020. During the pandemic, the options and opportunities of the company were limited, he said.

Making matters worse, the Winemillers were involved in a serious car accident while vacationing in Florida in 2020 and were out of communication with Bogard for several months.

Bogard said that in 2021, the Winemillers wanted to sell their interest in the business, but a year later, they changed their minds and wanted to keep the company.

On Nov. 18, Winemiller filed suit against her business partner, alleging the company was insolvent. And it didn’t have a way to pay its current liability of $8 million or the 2023 operating expenses or debt service. 

Winemiller and Bogard “cannot agree upon the manner in which company money and property should be used,” her lawsuit said.