Fountain: A tangible example of Beaufort County's failed economic development program | Eastern North Carolina Now

    Publisher's Note: This article originally appeared in the Beaufort Observer.

    In spite of hundreds of thousands of dollars of taxpayer money that have been poured into the Fountain Powerboat business, it appears that the new ownership is doing no better than former CEO Reggie Fountain did.

    The company that the Beaufort County Economic Developer Tom Thompson touted as the savior of Fountain has now pulled out. Trade Only Today, a trade publication for the marine industry, is reporting:
Liberty Associates ceased providing management services to American Marine Holdings, which builds the Fountain, Donzi and Pro-Line lines, and Liberty's affiliate transferred its nominee ownership interest in American Marine to First Capital, a portfolio company of HIG Capital, the company announced.

    "Liberty has enjoyed its part in steering the company through the very difficult times that the boat manufacturing industry has experienced recently and wishes FCC continued success with AMH in the future," the company said in a statement.

    No reason was given for the change, and company officials did not immediately return calls seeking comment.

    After Fountain Powerboats filed for bankruptcy in 2009, Liberty Associates and Fountain filed a joint reorganization plan and Liberty acquired the company. Former owner and founder Reggie Fountain was originally kept on as CEO, but the two parted ways at the end of 2010.

    Earlier this year, Reggie Fountain filed a lawsuit against his former company for money he says is due him, as well as trophies and pictures from his racing days. Court documents that Fountain filed contain allegations of improper business dealings by Liberty CEO Bill Gates, and Fountain Powerboats is asking the court to strike them from the record.

    Fountain Powerboats filed counterclaims against Reggie Fountain, saying Fountain took company property, as well as trade secrets, when he left the company.

    The legal battle is expected to continue into next year.

    Click here to read more.

    Over the last four years, the Economic Development Commission/Committee of 100, with the help of politicians Marc Basnight and Arthur Williams spun Liberty Associates as their preferred owner/manager of Fountain. When Fountain was in bankruptcy, Liberty was one of the suitors to take over the company. Another firm, Oxford Investments, also sought to acquire Fountain. Contacts with Oxford at that time told the Observer that its plan was financially sounder than any other proposal being considered by the Bankruptcy court and explained in some detail that Liberty would not be able to do what they were claiming they would do. Oxford declined to go on record with either their position or the information they were telling us so we did not publish anything then. An Oxford representative expressed extreme frustration with Tom Thompson because they felt Thompson was misleading the County Commission about which proposal was the sounder business proposal. It now appears that they were essentially correct.

    The miscalculation of the contest between Liberty and Oxford was not the first time the EDC/Committee of 100 had been misleading about Fountain. In 2008 the Beaufort Observer published a story by Jay Niver under the headline: Optimistic spin can't float leaky Fountain, in which Niver pointed out "Less than two weeks before FPB workers started getting pink slips, Barber (the head of the Committee of 100) was touting the company's prosperity in C100's full-page "infomercial" that runs regularly in the Washington Daily News."

    It is not clear at this point what is going on with the "New Fountain" other than that ownership has changed. Current management has failed to return calls and has disclosed none of its financial information to the public, and presumably the EDC.

    What we do know is that the new owner, First Capital, is not a boatbuilder but is primarily a money lender. Thus, it would appear from what we know that Liberty's operation of Fountain (American Marine Holdings) was in financial trouble and had to sell out. Presumably, a part of the deal was that the current management of American Marine Holdings would be replaced by First Capital. Therefore, we would look for there to be a change in operational management under First Capital. One source tells us that has already begun and probably explains why the current management has been so closed mouth about what is going on.

    All that lends credence to what another source familiar with the Whichard's Beach Road operation has told us: Things are not going well and have not been going well for several years. Liberty lasted less than a year at Fountain.

    It would also appear that Thompson/the EDC/Committee of 100 has not only misled the taxpayers and County Commission, but also the State of North Carolina.

    In November, 2010 Thompson and Company convinced the state to invest taxpayer money into Fountain, owned then by Liberty. Less than a year ago Governor Bev. Perdue's office issued a press release that claimed a One North Carolina economic development incentive grant would produce "411 new jobs" in Beaufort County.

    Liberty appointed John Walker, III as Chief Operating Officer to turn around Fountain. It now appears that Walker has failed at that task. Walker refuses to return calls, and he does not have to explain what happened to the taxpayers' money that Fountain was given. The grant does not require him to do so and Liberty is a privately held company so they do not have to disclose hardly anything about their financial dealings. So is First Capital.

    What we do know is that for whatever reason Thompson and the EDC/Committee of 100 was either duped by Liberty or they have misled the State, the County and the taxpayers who were made unwitting investors in what appears now to have been a sinking ship, no pun intended.

    Commentary

    Add one more boondoggle to Tom Thompson's portfolio. Thompson led the charge to use taxpayer money to "invest" in Fountain before Reggie Fountain went bankrupt and continued to channel taxpayer money into what was at the time he was doing it and is still obviously a troubled operation.

    The Governor's press release said: "Other partners that helped with this project (One NC Fund grant) include: the N.C. Department of Commerce, N.C. Community Colleges, Beaufort County, and the Beaufort County Committee of 100." It quoted Arthur Williams as saying: "Today's announcement is wonderful news in a county that, like many others, has been hit hard by the recession," said Rep. Arthur Williams, of Washington. "Fountain Powerboat's expansion also is a tangible example of why North Carolina ranked second in job growth over the past year."

    The promised jobs that Thompson touted in a slick Power Point presentation to the County Commission never materialized. One can see that by simply riding by and counting the cars in Fountain's parking lot during any work day. Yet Thompson maneuvered more and more taxpayer money into the Fountain enterprise. And he obviously bet on the wrong horse in contending that Liberty would save Fountain.

    This debacle is sad for many people, not the least of which are the employees of Fountain and their families. But the point that must be made here is that it is not, as Arthur Williams said, "a tangible example" of creating jobs, but rather it is another example of sticking it to the taxpayers by snake oil salesmanship, also known as "Economic Development" and the way Thompson has operated for the last 10 years. Simply stated, Thompson has wasted over $6 million of Beaufort County taxpayer money and even more of North Carolina taxpayer money in bad investments.

    What Fountain represents is exactly what the Randy Parton Theater, the Dell computer plant, the Southside Industrial Park, the Quick Start II and even at the national level, Solyndra represent...bad business decisions using taxpayer money. The list goes on. And so does the failed snakeoil that Thompson, Perdue, Williams and others continue to push.

    We are not opposed to economic development grants per se. What we are opposed to is people who have no skin in the game using other people's money to sink into bad business decisions.

    Again Fountain is a sad situation for Beaufort County. But the way the EDC/Committee of 100 and particularly Tom Thompson have shafted the taxpayers of Beaufort County is a much sadder situation. And it is still going on, and apparently will continue to go on as long as the Gang of 5 controls the County Commission.
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