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Sour Grapefruits

[Photo: Jeffrey Camp]

Henry T. “Skip” Clements tells this story: There he was, a citrus entrepreneur from Florida, in an auditorium in Philadelphia in 1997, sitting in the front row
between the chairmen of Boeing and General Motors, an invited guest to hear the president of China give a speech. The two corporate big shots ignored Clements and talked across him, especially after he told them, “I sell oranges for a living.”

The Chinese president concluded his remarks to a standing ovation, exited the stage and stopped near the three men.“Thank you, Mr. Clements, for being here. Hope you can join us for dinner,” the Chinese president said. He left without a word to the two chairmen. The Boeing head turned to Clements and said, “What did you say you do for a living?” Recalls Clements,“I smiled and walked away.”

The tale follows a template for plenty of other Clements stories: The lowly outsider, dismissed by the elite, redeemed at the end — with those who dismissed him getting their comeuppance.

The Philadelphia meeting became just a piece of a much larger story — one that Clements hasn’t been able to make fit his template. It’s a story of a crooked lawyer, a scam — and Clements, the dreamer, who says he wound up going from “the king of the citrus industry to being homeless in just a number of days.” He craves an ending of his own writing, one with his redemption — and retribution for those he blames for his downfall.

Silver-haired, big and broad-shouldered, Clements, 56, is a U.S. Marine veteran. A Long Island native, he came to Stuart on Florida’s east coast after the Vietnam War. He earned a bachelor’s in education in 1974 at Florida Atlantic University, didn’t want to teach and went into the citrus business. In a few years he became a partner in a packinghouse, where fruit is processed and packed.

He became an investor and officer in a private-sector consulting business in Stuart that taught companies how to prevent industrial espionage. When that consulting business ended, Clements returned to citrus.

Stuart lies in the Indian River citrus region where, as Doug Bournique, executive vice president of the Indian River Citrus League, says, the “Rolls-Royce” of fruit is grown. The problem in the 1990s was that growers were producing citrus like Fords. Prices fell by a third. Grapefruit and orange growers statewide needed a new market. Says Dan Richey, former chairman of the Florida Citrus Commission and third-generation grower, “Obviously, we’re drooling when we see the population China has.”

Growers and Florida urged the U.S. government to pressure China to open its market. Clements had another idea. Using Washington contacts, he wooed the Chinese directly. For backing for his Clements Citrus, he got an investment from Joseph Rizzuti, an accountant in nearby Palm City, and later from other local business luminaries.

Clements began attracting media attention after making arrangements for the Chinese ambassador to visit Martin County.

After Clements invited the Chinese ambassador to Martin County and hosted his visit, he landed on National Public Radio — bringing out the TV crews and politicians who had until then ignored him. Clements became a celebrity, and his efforts and love of the spotlight made him a household name in Stuart for a time. The Stuart News, which sent a reporter with Clements to China, wrote that Clements “literally could save Florida’s $8-billion local citrus industry.”

Chinese Ambassador Li Zhaoxing and his wife sample a grapefruit at the Box Ranch Groves near Indiantown with Skip Clements in 2000.
Clements, in an interview, leafs through binders of his memories: The photos of him with Chinese officials, a close-up of the dinner — the actual meal on the plate — that was served at one function. It all culminated in 1998, when he received permission to bring Florida citrus into China under an exemption to its overall ban. “To be the only person in the largest market in the world. It was just amazing,” he says.

The industry, to put it mildly, was skeptical. For one, many growers and packers suspected the Chinese were only making a show of opening their market to get favorable trade treatment. Second, there was Clements himself and his reputation in some quarters for self-promotion. Among those who knew Clements, most said “this isn’t adding up,” says Richey, the former citrus commissioner. “There was never any substance to his deal that we could see.”

“To be the only person in the largest market in the world. It was just amazing,” says Clements.

Says a friend of Clements, Gordon Hunt, the state’s former international citrus marketing director: “Some people think the world of him, and others say, ‘What a pain in the ass.’ ” Still, says Hunt, who later served briefly on Clements’ corporate board, Clements was responsible “hands down, more than anybody in the state” for opening China to Florida citrus.

Clements business partner Joseph Rizzuti and Yuan Cai, director general of the Overseas Chinese Affairs Office of the Shanghai Municipal Government.

In any case, Clements’ monopoly was short-lived. China broadened the deal beyond Clements, officially opening its markets to Florida citrus in 2000. Meanwhile, Clements and Rizzuti had been forecasting huge growth for their company, with Rizzuti suggesting in a local newspaper that $1 billion a year in sales is possible by the end of the decade. But by then, even with a nearly two-year head start, Clements had yet to ship anything. He had no groves, no packinghouse and minimal funding.

A search for financing brought Clements and his cohorts to attorney Donald F. Mintmire. A Kentucky native then in his early 50s, Mintmire had his law practice in Palm Beach, a few blocks from where he lived in a 5,425-sq.-ft. home held in the name of his wife, Patricia, who was prominent as an officer (and eventually board chair) of Planned Parenthood of Palm Beach and Treasure Coast Area.

Mintmire had a measure of prominence, too. He had represented Henry Rolfs, the quixotic Palm Beach millionaire who blew his fortune in the 1980s buying run-down properties across the waterway in West Palm Beach with a vision of redeveloping the area. Rolfs failed, but under different ownership his holdings became the CityPlace residential and commercial development that now dominates downtown West Palm Beach.

To help Clements get the money he needed to begin exporting, Mintmire provided a shell corporation. Despite the connotation of “shell game,” a shell is a legitimate, inexpensive and fast way for a private company such as Clements Citrus to go public, by merging with an existing publicly held company that has no operating business. The idea is that since the shell has — or quickly can get — approval for public trading of its stock, the merged entity can sell new shares to raise money without the delay and expense of an initial public offering. Mintmire made the marriage between Clements Citrus and a shell.

Cans of frozen orange juice concentrate
carried an image of Clements.

In May 2000, Clements made his first shipment to China — five containers of orange juice and oranges. In August, the company’s president said baseball great Willie Mays had agreed to be a spokesman for a U.S. rollout of the juice. In September 2000, shares in the newly named Clements Golden Phoenix Enterprises began trading. The stock immediately went up $2.25 a share to $7 as locals looked to catch Clements’ star.

Clements and those locals, however, didn’t know that the shell Mintmire provided wasn’t legitimate. It was a “box job,” a company with figurehead investors and someone behind the scenes in secret control of the public float of the stock and therefore able to profit by manipulating how many shares are sold and when. It gets its name because all the shares and control literally can be carried around in a box.

Mintmire, federal investigators came to believe, was experienced with box jobs. According to testimony at a later trial, Mintmire assembled figurehead investors in somewhere between five and 21 companies through his son, Mark, who lived in Atlanta. It worked like this: Mark Mintmire gave cash to friends and acquaintances at The Highlander, an Atlanta bar. Each Mintmire pal got about $900. Each would then write a check for $800 — keeping $100 for his trouble — to buy shares in the company Mintmire was creating.

While the friends appeared to be actual shareholders, in the process of buying the shares they would sign documents surrendering their power over the stock to whoever was the bearer of the certificate. One man, Kevin Bell, wouldn’t learn he was principal, president and promoter of the shell company Clements merged with until years later — news he got from government investigators. From them, Bell also learned he approved the Clements merger. On paper, for a time, Bell had substantial gains on “his” stock — without ever knowing it.

To get the stock market to allow the company to be traded, Donald Mintmire provided assurances to National Association of Securities Dealers market regulators that the original investors were “sophisticated investors.” In reality, Bell was an electrician who, contrary to just one of the representations that Mintmire made to regulators, had a personal bankruptcy in his past.

In short, as then-federal prosecutor Mark Johnson later argued to a jury, Mintmire lied and created an artificially large number of shareholders to get a company stock listed. In the first week that Clements Golden Phoenix traded amid great excitement in Stuart, Mintmire surreptitiously cashed out of stock, netting more than $500,000, investigators later found. With his son, he netted a total of $250,000 on another company, they discovered.

Clements Citrus Bag
Clements talked of being the Colonel Sanders of citrus in China.

Judging from a later search warrant affidavit, Clements Golden Phoenix graduated from “box job” to pump and dump. The company put out press releases to goose the stock price, according to evidence investigators gathered. As the price rose, the only ones to benefit were some of the original “investors.”

Meanwhile, insiders like Clements and the people who spent $3 and $5 per share — a total of $2 million — to buy into a private placement before the company went public couldn’t sell because their shares were restricted.

Perhaps they wouldn’t have wanted to — the company’s prospects looked good, with Clements talking up $3 million in commitments from Chinese buyers and a new brainstorm, exporting cranberry juice. With his picture on the OJ can, he talked of being the Colonel Sanders of citrus in China. And Florida Trend (this writer, in fact) cited Clements as an authority on the market [“The Last Great Canker War?” February 2001].

Those who bothered to look at the actual financial statements the company filed with the SEC would have had reason to pause. True, they were full of pronouncements about plans to build a packinghouse. But the company was bleeding cash, mostly for marketing and trips to China.

The reality of its breakthrough? Clements Golden had only a permit to sell in China and two agreements with food brokers to represent them there for a piece of sales — there were no guarantees in the contract that anybody in China would buy anything. Indeed, in its brief run, Clements Golden chalked up only $337,302 in sales, according to its SEC filings — and Clements now says he doesn’t know how it could have brought in that much. He says the company was never paid for what it shipped to China.

‘Not a close call’

In December 2000 — barely three months after it went public — the stock began collapsing. Clements, frustrated that no money was coming in from the stock trading to replenish the company as he expected, became convinced he was being played. In April 2001, he went public in the media and visited federal authorities. Clements as whistleblower was born. The company sacked him. CFO Rizzuti filed a court action to evict him from a house he had lent him. The car Clements used was repossessed — so was his boat. He says he found out his health insurance was canceled when he was hospitalized for a heart catheterization.

Federal Prosecutor Mark Johnson
[Photo: Jeffrey Camp]

Investigators, Clements says, have asked him pointed questions about how he could have been so ignorant. He says he trusted others and was busy in China. “You were dealing with a neophyte when it came to stock,” he says. “Should I have known? I don’t know. Maybe.”

Johnson, who prosecuted the case and is now in private practice, says, “I’m confident (Clements) didn’t get any money. He just didn’t really understand how the financing worked, and he didn’t like it and was never very diligent about pursuing it. ... He still doesn’t really understand. Frankly, he’s not a detail guy, anyway. He’s a salesman.”

As it happens, in 2001 investigators from the SEC in Boston looked at another Mintmire-created company that had aroused suspicion. An SEC enforcement lawyer, in part using Mapquest, was intrigued to find that so many “sophisticated investors” happened to be in their early 20s and live in the same area of Atlanta as Mark Mintmire. “I mean, most of them don’t have money to invest in the stock market in the first place, and if they were going to invest, they wouldn’t invest in a company like that,” SEC attorney Lauchlan Wash later testified.

When questioned in 2003 by SEC lawyers about that company, Mark Mintmire invoked his Fifth Amendment rights against self-incrimination. Donald Mintmire testified for two days, not admitting to any crime but saying he had merely loaned the young people the money, though conceding that perhaps they didn’t know it was a loan.

In Florida, a grand jury led by Johnson and an IRS agent named Andrew Schmit investigated Clements’ complaints. Johnson traveled to The Highlander bar to meet the young figurehead investors. “Once we saw them, we thought this is going to be a fun case to try. Sophisticated investors?” One young man, who played in a band, told him, “Wow, man, there’s got to be some lyrics in this.”

But the SEC never issued so much as a cease-and-desist order to anyone involved in Clements Golden. The grand jury, however, did indict Mintmire for obstructing the grand jury investigation into Clements Golden and conspiring to thwart the investigation of that second company investigated out of Boston.

In a two-week trial in 2005, Mintmire didn’t testify. His defense consisted of reminding jurors he wasn’t on trial for fraud. His attorney, William Richey of Palm City, said Mintmire had come clean to the SEC. “He told them very bad things, much worse than what they’re alleging” in the two counts, Richey told jurors. The “Keystone Kops” government, he said, had mistaken being a lawyer representing a client — and getting paid in stock — with obstructing justice.

Jurors didn’t buy it and neither did the 11th U.S. Circuit Court of Appeals. “This is not a close call,” District Judge R. David Proctor wrote for the appellate panel in November in finding there was sufficient evidence for the jury to convict Mintmire.

Mintmire, 61, is scheduled to begin serving a 21-month prison sentence this month. He was disbarred. At least some other companies he was involved with now have the taint of having been represented by a convicted felon. He declined to be interviewed for this article. His son Mark could not be reached.

Richey, the elder Mintmire’s attorney, says that at their request, the judge directed the prison system to put Mintmire into an alcohol abuse treatment program while he is serving time. “It was our position that it contributed to the problem,” he says. “I think that Don Mintmire is a wonderful person,” Richey says. “If you look at the sentencing reports on him, he’s been involved in charity very deeply his entire life both in terms of giving his time as well as his money and so has his wife. This is just a very great tragedy.”

Donald & Patricia Mintmire
Purporting to help finance Clements, Donald Mintmire (leaving federal court in West Palm Beach with wife Patricia) set up a merger with an illegitimate shell company. He is scheduled to begin serving a 21-month prison sentence this month. [Photo: Palm Beach Post]
Mintmire’s comeuppance, however, isn’t enough for Clements. He wants to see others charged. From the way he talks, tops on his list is Rizzuti, the former CFO who had him evicted. In a brief telephone interview, Rizzuti says it’s been three years since any government agency has shown any interest in the case and that the statute of limitations has run out. He says he’s innocent of any wrongdoing and declined an extensive interview.

“I’m not going to engage Skip Clements ever again if I don’t have to,” Rizzuti says. “The guy’s crazier than a hoot owl. He won’t let it go. Anything he can do to show himself as the victim and keep it in front of people. A lot of people lost money on the stock. So did I. Everyone lost their ass on this deal. I’ve moved on.”

Clements, nearly seven years after he got the boot as CEO, says he can’t move on. He says he can’t get a job because his reputation and credit are ruined. He briefly worked as a teacher. An investigator suggested he try Wal-Mart. Clements lives at a friend’s house and says he can’t afford the gas to drive to nearby Miami to visit his daughter, who has leukemia. “I’m doing the right thing, and I’m paying for it,” he says.

The case has become an obsession for Clements. Johnson says that Clements expects vindication to “turn his life around and allow him to get a job. ... I think he’s overly optimistic it will change everything.”

Clements hopes that once Mintmire tastes prison, he will turn on others. He’s become a gadfly, writing letters, holding press conferences, scolding the government and then-U.S. Attorney General Alberto Gonzales for inaction. When Gonzales resigned in August, Clements held a press conference to take partial credit.

Clements is taken aback at the notion that the government could ignore Clements Golden to focus on larger frauds that are commonplace in south Florida. “I’m going to keep going,” he says. In fact, he adds, he’s just getting something in the mail to the new Attorney General.

Calculated play?

China never took off for anyone. China represents only 1.5% of all frozen juice exports from the United States. The latest data show no China imports of Florida oranges and rank it as only the 15th export market for grapefruit with just 10,000 cartons, compared to 4.6 million cartons for Japan, the largest market. Former Citrus Commissioner Richey says a major problem was that exporters who did ship to China had difficulty getting paid. Says the citrus league’s Bournique, “We thought it was going to be a tremendous market, but it was a flop.” The whole affair makes Johnson wonder whether the Chinese were being sincere with Clements. After all, if a country wanted to appear to be opening its market, without really doing so, would it give a permit to a major juice company or to a guy on a financial shoestring without groves or a packinghouse?