Michael Zito knew a diamond in the rough when he saw one.

Michael Zito knew a diamond in the rough when he saw one.

By the late 1990s, Schuermann Ranch, the 53.5-acre pioneer homestead off Upper Red Rock Loop Road, had become, over the years, a depressed rural enclave of trailers, cars and farm equipment.

Even so, from almost every viewpoint at the old ranch, Zito could see the famous, tourist-drawing Cathedral Rock.

Looking at the old homestead, Zito saw a chance to remedy what he called, in an interview Friday, April 20, ?my biggest mistake.?

Zito?s mistake was underestimating the amount of capital it would take to get a bio-technology company known as ECOR going.

?It would have taken tens of millions of dollars, probably $50 million? to accomplish the variety of projects identified in Zito?s Strategic Plan Summary for ECOR, the one-time affiliate of BySynergy, the Bella Terra development company.

ECOR never really got off the ground.

The company is now dormant, owes $1.5 million to creditors, $600,000 to attorneys, $300,000 to BySynergy and holds the license for a patent as its only remaining asset.

Dozens of ECOR investors, many of whom are Sedona residents, hold worthless shares in the dormant

company.

Zito said he promises to pay them all back using proceeds from the sale of lots at Bella Terra.

?Our primary focus is to enter into value-added product ventures using the company?s technology … products include natural fresh juices, carbonated sports and energy drinks, commercial grade concentrates and syrups and a variety of enhanced nutraceutical formulations,? records from the dormant ECOR state.

?Simultaneously … [ECOR] continues to develop technologies to commercially extract high-grade collagen and gelatin from sugar cane for the cosmetic, nutraceutica and pharmaceutical industries.?

That was the pitch.

In 2004, BySynergy was just one of a dozen corporations and limited liability companies listed as ECOR affiliates.

Each affiliate was created for a specific legal reason, Zito said.

Some affiliates would hold ECOR assets, like patents, licenses and other intellectual property.

Other affiliates would take on ECOR debt.

Except for BySynergy, none of the ECOR affiliates

conducts business any longer.

Some never did, Zito said.

Company records state that BySynergy?s original purpose was to engage ?in the

ecological and environmentally conscious development of underutilized agricultural lands.?

ECOR?s bid to buy land in Kauai, Hawaii, for raw materials to be used in ECOR?s chemical processing project soon collapsed.

As a result, BySynergy evolved into a land development company.

Zito and his wife are identified as the company?s only two members.

Sedona City Councilman Harvey Stearn, a veteran of corporate boardrooms, attended the April 20 interview in support of Zito.

Stearn said he sees nothing improper about the relationship between the two companies.

Zito said ECOR and BySynergy are separate entities. The two companies are connected by a single promise — Zito?s commitment to use BySynergy profits to pay off ECOR shareholders.

That?s money out of Zito?s pocket.

?I couldn?t live in this town if I didn?t do the right thing,? Zito said.

Zito?s promise could prove difficult to keep.

BySynergy was named as defendant in between six and eight lawsuits so far, Zito said.

?I can?t remember how many,? he said.

None are ongoing now, he said.

Yavapai County property records show that BySynergy secured debts of $150,000, $200,000 and $450,000 owed to various individuals using deeds of trust encumbering Bella Terra lots.

Then there?s the $600,000 that BySynergy arranged to pay to the Arizona Department of Water Resources to secure the permit for wastewater treatment at the Bella Terra site.

Zito said he?s confident there?s enough value in the Bella Terra project to pay everyone off, starting by the end of this year.

There might even be something left over for himself, he said.