Starting Mongrels = no such file to load -- initializer (load error)

I've searched high and low and cannot find a solution to this problem.
Any help would be appreciated.

My problem is when starting my mongrels with this command:
      mongrel_rails start -d -p 3000 -P log/mongrel1.pid

I get this error in my mongrel_rails_persist.log:

** Starting Mongrel listening at 0.0.0.0:3000
** Starting Rails with production environment...
/System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/lib/ruby/
1.8/rubygems/custom_require.rb:31:in `gem_original_require': no such
file to load -- initializer (LoadError)
  from /System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/lib/
ruby/1.8/rubygems/custom_require.rb:31:in `require'
  from /Library/WebServer/bf-deals/releases/20090323161724/config/
boot.rb:54:in `load_initializer'
  from /Library/WebServer/bf-deals/releases/20090323161724/config/
boot.rb:39:in `run'
  from /Library/WebServer/bf-deals/releases/20090323161724/config/
boot.rb:11:in `boot!'
  from /Library/WebServer/bf-deals/releases/20090323161724/config/
boot.rb:109
  from /System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/lib/
ruby/1.8/rubygems/custom_require.rb:31:in `gem_original_require'
  from /System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/lib/
ruby/1.8/rubygems/custom_require.rb:31:in `require'
  from /Library/WebServer/bf-deals/releases/20090323161724/config/
environment.rb:13
   ... 9 levels...
  from /usr/bin/mongrel_rails_server:87:in `new'
  from /usr/bin/mongrel_rails_server:87:in `run'
  from /System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/lib/
ruby/gems/1.8/gems/mongrel-1.1.4/lib/mongrel/command.rb:212:in `run'
  from /usr/bin/mongrel_rails_server:256

I should mention that if I do a script/server from my project
directory the mongrel starts up fine... what gives?

Thanks