Ethanol Pushers

The owners of Ethanol Capital Management, Gary Schwendiman and Scott Brittenham, have questionable corporate histories. At his Nebraska-based company, Schwendiman Partners LLC, Schwendiman took $60,000 from a fund that should've gone to the company's investors, according to the Securities and Exchange Commission. In July 2002, the SEC censured Schwendiman and fined him $75,000.

Brittenham is the president and founder of Fidelity Mortgage Co. In 2003, the Arizona company had to withdraw dozens of loans promised to customers after it couldn't deliver guaranteed interest rates. Nine homeowners sued the company, and the case was settled out of court, according to an October 2003 article in Tucson's Arizona Daily Star.

Brittenham sits on the Garnett plant's board of directors.

Whereas out-of-town investors may have signed on looking for profits, many Garnett investors, including Caldwell, first want to pay down the plant's 10-year mortgage. A lifetime of farming has made Caldwell and his partners cautious about finances. When the note is paid off, "we'll be in good shape when there's a downturn," he says. "And there will be, because there are always ups and downs."

Roger Brummel is a gruff guy who answers his cell phone frequently, as he does now, this time to answer a question about a worm infestation in someone's soybean crop. He stands in the lobby of Patriot's Bank, which is in Garnett's town square, across from the red-brick county courthouse. It's on Fourth Street, past two blocks of stately old houses with wraparound porches and Corinthian columns. The bank itself stands out; the theater that was on its west side burned down in the early '80s, and the flea market and sewing store on the east side burned down several years ago.

Brummel wears a dirty ball cap with "Brummel Farm Service" stitched across the front — the feed, fertilizer and fuel company that he inherited from his father. He was there for the meeting at Yesterday's, when the town decided to spend the money for Bryan's feasibility study.

"I said I could raise the money in 24 hours," Brummel says. "Called a bunch of farmers, told 'em to put a thousand bucks in."

Scott Cooper, the president of Patriot's Bank, comes through the doors a few minutes behind Brummel. He's a tall, fit guy with graying hair and tan arms. He wears jeans and work boots. As his appearance indicates, he'd rather be outside remodeling houses than stuck behind a desk at the bank. Cooper's dad is the CEO.

Before joining his dad at the bank, Cooper worked for the Wolf Creek nuclear power plant. "All these years, we've been sitting between Lynn County and their coal plant and Coffey County with their nuclear plant," Cooper says. "Now we got our ethanol plant, so we're moving up in the world."

Garnett invested in ethanol at an optimal time. In 1999, some states began phasing out the use of a gasoline additive called methyl tert-butyl ether (MTBE), in part because some evidence showed it to be carcinogenic. That led to several states looking to ethanol as a replacement. In addition, President Bush last year signed the Federal Renewable Fuel Standard that requires gasoline to be blended with a renewable fuel, which is frequently ethanol.

Once the plant opened, Garnett had itself a major new taxpayer. "Anderson County was real, real, kind of bottom-end-of-the-scale on tax revenue," Brummel says. "Now, with something like this [the plant], you have an increased tax base. Paying utilities and taxes is going to help everybody in Garnett to alleviate some of their tax burden."

Cooper adds: "Right. And because of that, we've got a new hotel out there." He's referring to the Garnett Inn, Suites and RV Park, a new motel near the New Horizon grain co-op. "I think there will be a new restaurant out there in a few years of some sort."

The entire loan for the plant was too big for Patriot's Bank and the town's other lender, Garnett Savings Bank. But both banks lent money to Garnett residents who wanted to invest in the plant. To get the money, locals put up collateral in the form of livestock, equipment or property, Cooper says. Some Garnett residents banded together with friends and neighbors to pool their money and make the minimum $10,000 investment. One such group, Cooper says, was formed by Jeanette and Tim Young.

At the Youngs' property, about a mile from the bank, Jeanette Young is riding a four-wheeler in red jogging shorts, a black tank top and sneakers. She chugs into the drive in front of her gray barn. "Let me put my four-wheeler up," she calls. She re-emerges from her garage wiping her hands on her shorts. Her friendly eyes flash embarrassment at being caught cleaning debris from the ditches. "I promise I'm not the town trash collector," she says.