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Thread: SC's biggest scam ever

  1. #1
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    Default SC's biggest scam ever

    ‘Gonna be a blood letting’: SEC’s SCANA fraud charges could be SC’s biggest scam ever


    BY JOHN MONK
    MARCH 08, 2020 05:00 AM

    COLUMBIA, S.C.
    Until recently, the largest South Carolina financial scandal in modern times was the sudden closing of Carolina Investors financial institution in Pickens County in 2003, when some 12,000 people lost more than $250 million.

    But last week’s filing of a federal Securities and Exchange Commission civil fraud lawsuit against two top former SCANA electric utility officials underscored that the $9 billion failure in 2017 of a joint nuclear power plant venture by SCANA and Santee Cooper may be, if the charges are proven, South Carolina’s biggest financial fraud ever.

    The SEC alleges that two senior SCANA executives— CEO Kevin Marsh, 64, and executive vice president Stephen Byrne, 59 — were the center of a brazen con scheme to prop up SCANA’s stock price for nearly three years. Lawyers for the two men have declined comment. They face multiple fraud charges.

    Millions of people were bilked, and billions of dollars were lost, the SEC lawsuit alleges.

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    “This stands like a Mount Everest,” says John Freeman, University of South Carolina School of Law ethics and business law professor emeritus, who - because of the enormity of the allegations - gropes for comparisons. “This is a Hall of Fame performance, in a bad way.”

    Freeman, who has worked for the SEC and whose experience with South Carolina financial and ethics disasters goes back 50 years said, “Everyone was misled - the stock market, investors, regulators and ratepayers,” the customers paying monthly electric bills.

    “Gonna be a blood letting the likes of which we have never seen,” one unidentified SCANA executive wrote to a colleague, according to the lawsuit.

    A State newspaper analysis of the SEC’s 87-page lawsuit against Marsh and Byrne shows the SEC came up with more than 35 separate instances of alleged lies and cover-ups by the two men from the beginning of 2015 to August, 2017, just after SCANA announced it was abandoning the project after a total of $9 billion was spent.

    The 35-plus alleged lies and deceptions by the two men fall in five separate categories over some 32 months : untruths to investors and analysts, cover-ups of crucial information, falsehoods to S.C. government oversight bodies, concealment of vital information to the federal SEC and deceitful video and other presentations to reporters.

    Construction on the two new nuclear units at the V.C. Summer site in Fairfield County began in March 2013 with Westinghouse as the lead major contractor. With 5,000 workers, it was one of the largest construction projects in modern state history.

    SCANA originally said one unit would be finished by 2016 and the other by 2019. But as early as September 2013, construction was delayed “significantly,” the “delays continued through 2014,” and early in 2015, SCANA’s deceptions began, the lawsuit says.

    SCANA executives effectively were telling two tales, the lawsuit says, keeping the truthful story of impending doom to themselves and a few insiders, and putting out to everyone else the false story of a booming project.

    What was the purpose of the alleged lies?

    ▪ First, to keep the steadily rising stock price of SCANA, a publicly traded company, from falling, the lawsuit says. Byrne’s and Marsh’s salaries and bonuses were in part dependent on the project’s success.

    ▪ Second, SCANA wanted to keep everyone from finding out that the nuclear project would not finish by a crucial Jan. 1, 2021, deadline. If the project didn’t finish by that date, the company would lose $1.4 billion in badly needed federal tax credits, the lawsuit says.

    Here are examples of the different kinds of Byrne’s and Marsh’s alleged deceits, as cited in the lawsuit:

    UNTRUTHS TO INVESTORS
    The lawsuit says Marsh and Byrne hid the project’s failures from investors and analysts.

    ▪ On March 30, 2015, Marsh and Byrne and other SCANA top executives decided that there was an “increased risk” the company would not qualify for the $1.4 billion in tax credits, but SCANA “did not disclose that information to ... investors.” Instead, SCANA issued a public statement saying both reactors would be finished by June 16, 2020, some six months before the tax credit deadline.

    ▪ In March 2016, Byrne and other SCANA executives attended investor conferences sponsored by Morgan Stanley, Barclays and UBS Securities, telling investors that the nuclear project was on schedule.

    ▪ On Feb. 14, 2017, Byrne told analysts that the two units would be producing power by the end of 2020. Marsh, who was present, “did not correct any of Byrne’s false and misleading statements on the call,” the lawsuit says.

    COVER-UPS OF CRUCIAL FACTS
    On August 5, 2015, SCANA — working through its lawyers — quietly hired Bechtel, an internationally known engineering, construction and project management company to assess the V.C. Summer project. Bechtel was paid $1 million. “Marsh and Byrne knew Bechtel had been hired ... because the project was significantly behind schedule,” the lawsuit says.

    In October, 2015, Bechtel presented initial findings to SCANA executives, including Marsh and Byrne. Bechtel said that the project was far behind schedule and would not be finished in time to collect all or part of the $1.4 billion tax credit.

    Byrne and Marsh “did not want Bechtel’s findings to be made publicly available, and the company went to great lengths to hide those findings and the true status of the project,” the lawsuit says, noting an unidentified lawyer hired by SCANA also requested Bechtel to “remove the schedule projections” and unfavorable language about SCANA’s oversight of the project.

    On Feb. 5, 2016, SCANA received a sanitized Bechtel report, which lacked specific information about schedule delays and tax credit uncertainty. SCANA officials ordered that it be kept secret.

    However, even the “scrubbed” Bechtel report, as the SEC called the final report, made it clear the project was in trouble and cited flawed construction plans, faulty designs, low worker morale and high turnover.

    The sanitized report was finally released by Gov. Henry McMaster, over the objections of SCANA, about a month after SCANA and its junior partner, Santee Cooper, abandoned the project in late July 2017.

    FALSEHOODS TO S.C. GROUPS
    The lawsuit also alleges that Marsh and Byrne also hid problems from state regulators and an advisory group to McMaster.

    ▪ In late October 2015, after getting the initial Bechtel report, Marsh and Bryne went before the S.C. Public Service Commission, which oversees state utilities, and “concealed the fact that the construction schedule was unreliable” and the company’s hoped-for tax credits were in doubt.

    ▪ On July 14, 2016, Byrne told Gov. Henry McMaster’s Nuclear Advisory Council, a group of people who advised him on nuclear issues, that both nuclear units were on track to be finished and making power by mid-2020.

    CONCEALING FACTS FROM THE SEC
    Under federal law, publicly traded companies are required to disclose any information that might affect their stock price. SCANA repeatedly concealed information from the SEC that its nuclear project would likely fail, according to the lawsuit:

    ▪On May 8, 2015, Byrne submitted a 10-Q filing to the SEC, claiming that both reactors were on schedule to be finished by June 2020. That 10-Q “omitted the true status of the nuclear expansion project,” the lawsuit says, adding, “Byrne knew that the information ... was false and misleading.” A 10-Q is a comprehensive quarterly report giving details of a company’s financial position that investors need to know.

    ▪ On Nov. 6, 2015, SCANA filed a Form 10-Q with the SEC, claiming the project was on schedule and it expected to get as much as $1.4 billion in tax credits. Both Byrne and Marsh certified the filing as true, the lawsuit says.

    LYING TO THE PRESS
    Throughout 2016, as the project fell further behind, SCANA “continued to publicize progress being made on the project, including in press releases and videos posted to the internet,” the lawsuit says. On Jan. 19 of that year, SCANA released a video entitled “Highlighting a year of progress for V.C. Summer.”

    ▪ On Sept. 21, 2016, SCANA held a “Media Day,” during which Marsh and Byrne told reporters from the Associated Press, The State and other media that the project would be finished in time to get the tax credits.


    ▪ On Feb. 4, 2017, SCANA issued a press release saying that Westinghouse was “committed to completing” the two nuclear reactors in time to qualify for the tax credits. On March 29, 2017, Westinghouse filed for bankruptcy. The same day, Marsh told analysts, “We’ve been transparent on this project since day one and we’re not going to change that.”

    After the abandonment of the nuclear construction project, for which customers were charged in advance, more than 20 civil lawsuits by investors, ratepayers and others have been filed against SCANA and Santee Cooper, alleging various types of fraud.

    None of those lawsuits contains anywhere near the level of detail about alleged wrong doing that the SEC lawsuit filed last week contains.

    SCANA, an investor-owned utility whose stock was traded on the New York Stock Exchange, had some 700,000 electric and gas customers in South Carolina. Santee Cooper, a state-owned utility founded in the 1930s to bring electricity to rural areas, serves some 2 million customers. For decades, both had been respected players on the state’s business landscape.

    The SEC did not regulate Santee Cooper because it was a state agency and did not sell stock to the public.

    Both Marsh and Byrne received “substantial compensation” and millions in bonuses during the time they were making false public statements about the nuclear project’s progress, the lawsuit says. Their “compensation and bonsuses” were tied at least in part to the nuclear project, the lawsuit says.

    John Crangle, a Columbia lawyer and government watchdog who had state government and businesses for more than 50 years, said the SEC indictments “are just the first step,” predicting that the behaviors alleged in the SEC complaint could warrant criminal charges. “This is very, very serious.”

  2. #2
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    These boys lived high on the hog for a long time. I doubted that they would ever face any consequence other than being exposed for what they were. Now, it seems, they actually may face prison. Nobody thought Jack Sterling would see the outside of a cell, much less the inside of one. That certainly proved to be wrong...

  3. #3
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    No thanks to the prison time - Freeze all accounts, collect all funds via WB if necessary - then add hemp properly configured.
    Genesis 9;2

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    For some reason I expected this to be about how Phillip Lowe has a say when it comes to SC wildlife regulations....
    Seeing these soulless vanilla ice lookin Yankees on a bassboat is worse than watching a woman get her implants taken out. It's just wrong. Get back in your Lund and go back to infisherman.

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    If Martha Stewart went to prison, certainly these guys need to face serious charges.
    Ephesians 2 : 8-9



    Charles Barkley: Nobody doesn't like meat.

  6. #6
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    civil fraud lawsuit

    No prison, only monetary damages.


    If a man is alone in the woods, says something, and a woman does not hear, is he still wrong?

    Bipartisan usually means that a larger-than-usual deception is being carried out. —George Carlin

    Common sense is not a gift. It's a punishment because you have to deal with everyone else who doesn't have it.

  7. #7
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    and it will never make it back to the people who actually footed the bill, but just further fill the pockets of the lawyers and legal teams and accountants.

    It's all smoke and mirrors folks. The whole dang thing.
    "This is My commandment, that you love one another as I have loved you." John 15:12

    "Strive for peace with everyone, and for the holiness without which no one will see the Lord." Hebrews 12:14

  8. #8
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    Nothing will happen and they will continue to live the high life.

  9. #9
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    There’s more than these two, scores of crooks got golden parachutes while the rate payers got $.34-$50 checks. Get them all. White collar crime needs to be prosecuted, they need to get the crooked lawyers and lobbyists too.

  10. #10
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    To bad the politicians that had their hands in this are not getting prosecuted as well.
    Quote Originally Posted by Buckin Bronco View Post
    Yep. I have a border collie mix that is smarter than most of the people on this site.
    The greatest trick the Devil ever pulled was convincing the world he didn't exist.

  11. #11
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    Quote Originally Posted by Rubberhead* View Post
    If Martha Stewart went to prison, certainly these guys need to face serious charges.
    Yep and more TIME
    Gettin old is for pussies! AND MY NEW TRUE people say like Capt. Tom >>>>>>>>>/
    "Wow, often imitated but never duplicated. No one can do it like the master. My hat is off to you DRDUCK!"

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