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Luminati CEO involved in 2009 lawsuit over salary proposal

07/06/2017 12:11 PM |

Daniel Preston, the CEO of Luminati Aerospace, the firm looking to restart the aerospace industry by purchasing Riverhead Town-owned land at the Enterprise Park at Calverton, was the subject of a lawsuit in 2009 over an alleged job offer from a company offering Mr. Preston a far higher salary than he was being paid at the company he helped create, Atair Aerospace, according to court documents.

Court papers filed in New York County state that Mr. Preston threatened to leave Atair, saying he had an offer to join E.R. Butler & Co., an architectural hardware company based in New York. In the complaint, Atair alleged that Mr. Preston provided a letter with the employment offer on E.R. Butler & Co letterhead offering a salary of $525,000 per year. The letter, later discovered by Atair, resulted in Mr. Preston’s employment at the company being “terminated,” the complaint states.

In order to avoid losing Mr. Preston, Atair agreed to increase his salary from $175,000 to $225,000 in April 2009, as well as a $530,000 payment “characterized as a loan” that he would not have to be repaid until the following year, according to the lawsuit.

In July 2009, a copy of the offer letter was discovered at Atair’s offices in Brooklyn, along with emails demonstrating that the offer was a “fraud” intended to give Mr. Preston an advantage in “extracting more favorable terms,” according to the complaint. Other discovered emails also suggested Mr. Preston had an offer from a company in “direct competition” with Atair,” according to the complaint.

The case was settled in 2010, according to court documents, which Atair’s attorney in the lawsuit confirmed last week. He would not provide the terms of the settlement. A Luminati spokesperson did not return messages seeking comment on the lawsuit and other matters.

The papers state that Mr. Preston was no longer employed by Atair, where he was CEO and CTO, in July 2009, then removed as a director of the company the following month.   

Riverhead News-Review previously reported that Mr. Preston has been the subject of at least $55,000 in liens filed against him by local contractors.

Laura Jens-Smith, the Democratic candidate for Riverhead Town Board supervisor, said in a press release Thursday morning that it was time to end the proposed $40 million sale of EPCAL land to Luminati in light of this lawsuit and other “red flags,” and that Mr. Preston “has once again shown to be deceitful and deceptive.”

She said Riverhead Supervisor Sean Walter has not been transparent in the deal. At Wednesday’s Town Board meeting, Mr. Walter said that, while the deal was not looking promising, “rooting against Luminati is rooting against the town.”

“The board took a chance here,” he said, because the town needed to take the first step forward. He reiterated that the town has set strict deadlines for Luminati moving forward. Luminati has until July 17 to send the town a final draft agreement as it approaches a qualified and eligible hearing, otherwise its letter of intent for the EPCAL sale will be canceled, according to a letter from the town’s attorney for the negotiation.

Prior to the email incident, court papers show there were “differences and disagreements” between Mr. Preston and other officers, directors and shareholders of Atair, and were resolved through negotiations that led to him resigning as CEO while “continuing his Atair employment” pursuant to an amended employment agreement in March 2008.

That agreement contained a “restrictive” covenant that prohibited Mr. Preston from competing with Atair, but did not require Mr. Preston to stay on at the company, according to the complaint.

Mr. Preston’s alleged email suggests he had a real offer from a company in competition with Atair that is not identified in the lawsuit. An email from Mr. Preston to Rhett Butler of E.R. Butler & Co in February 2008 states: “There is no way in hell I can show them my real offer letter.” Atair’s lawyer would instead “accept the word of my attorney” about an offer from a non-competing company, according to the email and the court papers.

The email, provided along with the complaint, goes on to ask Mr. Butler if he would be willing to put an offer letter on his company’s letterhead. “It will of course be a rouse [sic], but is required as my attorney will of course not lie. Having a ‘real’ letter from a non-competing company will be enough for him to speak to the other attorney and sign off,” the email states.

E.R. Butler and Co.’s offices are closed until July 10.

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File photo: Luminati CEO Daniel Preston. (Credit: Krysten Massa)

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