Archives for October 2021

COLUMBIA, S.C. (AP) — A utility executive who repeatedly lied to keep investors pumping money into South Carolina’s $9 billion nuclear reactor debacle will spend two years in prison for fraud, a federal judge decided on Thursday.

Former SCANA Corp. CEO Kevin Marsh agreed with prosecutors that he should serve the sentence and the judge approved the deal, making him the first executive put behind bars for misleading the public on the project, which failed without ever generating a watt of power.

Marsh said he wants to serve his time as soon as he can because his wife of 46 years has incurable breast cancer, and he hopes to care for her after leaving prison. The judge agreed to have him report to a federal prison in North Carolina in early December.

U.S. District Judge Mary Geiger Lewis cited Marsh’s remorse and expansive cooperation with federal authorities as she reluctantly accepted the plea deal, which is well below the federal sentencing guidelines of five years. She said the prosecution and defense depiction of the crime Marsh committed is a “vanilla way to describe it,” adding that it understates “the seriousness of this non-disclosure.”

“Your crime was committed with a little more elegance and sophistication than many I see,” Geiger told Marsh. “But you don’t get credit for that.”

Assistant U.S. Attorney Brook Andrews said imprisoning Marsh sends a message of public responsibility to powerful executives.

“It is a failure of judgment,” Andrews said. “It is a failure of conscience. It is a failure to tell the truth when telling the truth would bring dire financial consequences.”

A second former SCANA executive and an official at Westinghouse Electric Co., the lead contractor to build two new reactors at the V.C. Summer plant, have also pleaded guilty. A second Westinghouse executive has been indicted and is awaiting trial.

Marsh pleaded guilty in federal court in February to conspiracy to commit wire and mail fraud, and in state court to obtaining property by false pretenses.

Marsh is scheduled for a sentencing hearing in state court Monday. Federal prosecutors said they would agreed to his request to serve his entire sentence on both sets of charges in a federal prison.

The actions by Marsh and other executives took more than $1 billion from the pockets of ratepayers and investors, authorities said in an 87-page Securities and Exchange Commission lawsuit filed against him and a second executive in 2020.

SCANA and its subsidiary, South Carolina Electric & Gas, were destroyed by the debt and poor management and were bought out by Dominion Energy of Virginia in 2019. State-owned utility Santee Cooper, which had a 45% stake in the project, ended up saddled with $4 billion in debt even though SCANA controlled management of the project.

Marsh has already paid $5 million in restitution. SCANA had paid Marsh $5 million in 2017, the year the utility abandoned the hopelessly behind-schedule project.

Reading a statement Thursday, Marsh said he takes responsibility for the project’s failure even though he was misled by Westinghouse, which was building the reactors. “Not a day goes by that I don’t regret these nuclear plants weren’t built for the citizens of South Carolina,” he said.

For sentencing, Marsh’s attorneys also submitted 10 letters from friends, colleagues and church pastors detailing his good acts, such as helping the family of an employee killed on the job get financial and legal help, securing an air conditioner for a women’s home and taking a week out of his busy executive schedule to volunteer for vacation Bible school.

The letters also detailed his relationship with his wife, Sue, whom he married when both were teens. She has terminal and incurable metastatic breast cancer and may not be able to visit her husband in prison because of COVID-19 fears and her weakened condition, defense lawyers said.

Federal regulatory filings have documented the history of the doomed nuclear project begun in 2008. Those filings said Marsh never wavered from saying the two reactors being built at the V.C. Summer site north of Columbia would be finished by the end of 2020 — a deadline that had to be met to receive the $1.4 billion in federal tax credits needed to keep the $10 billion project from overwhelming the utility.

Prosecutors said Marsh lied and presented rosy projections on the progress of the reactors that he knew were false in earning calls, presentations and press releases to keep investors happy and pump up the company’s stock price.

After watching the hearing, environmental activist Tom Clements waited for Marsh outside. He fought the reactors since they were first proposed in 2008, saying they were unnecessary.

“Kevin, why didn’t you apologize to the people of South Carolina? You accepted responsibility but you couldn’t apologize to us ratepayers,” Clements asked Marsh during his 20-second walk from the courthouse door to a waiting SUV.

Marsh said nothing.

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Follow Jeffrey Collins on Twitter at https://twitter.com/JSCollinsAP.

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MOSCOW (AP) — A Moscow court has ruled to enforce the collection of fines from Facebook for breaching Russian laws on illegal content, officials said Thursday.

The Tagansky District Court in Russia’s capital ordered bailiffs to collect 26 million rubles (over $361,000) following Facebook’s failure to pay the fines, court officials said.

Facebook didn’t immediately respond to an AP request for comment.

Russian state communications watchdog Roskomnadzor has asked Russian courts to fine Facebook for not deleting content considered unlawful, including calls for unsanctioned anti-Kremlin protests.

The agency has ordered Facebook to pay a total of 80 million rubles ($1.1 million) in fines so far this year, and said the social media company hasn’t paid any.

Roskomnadzor warned that it would impose much heftier fines equal to 5%-10% of Facebook’s sales turnover in Russia over the content deemed unlawful.

Russian authorities have methodically raised pressure on Western tech giants, including Twitter, Facebook and Google, over their roles in amplifying voices of dissent. Authorities accused the platforms of failing to take down announcements for unauthorized protests.

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CARSON CITY, Nev. (AP) — A company that asked Nevada to let it form its own local government on its vast land holdings in the desert no longer plans to build the experimental smart city that they said could transform Nevada into a global hub for emerging technology.

Blockchains, a Nevada-based technology company, had for months lobbied state lawmakers to create new, semi-autonomous jurisdictions called “Innovation Zones,” where companies developing new technologies could experiment without oversight from rural county officials. They proposed the zones to be governed by three county commission-like board members — two of whom would at first be nominated by the company. They could create their own court systems, impose taxes and make zoning decisions.

The company said on Thursday that it was scrapping its plans and no longer would participate in the study committee that the state Legislature organized to consider the idea.

“The company is grateful for the time and energy put forth by the Innovation Zone Joint Special Committee Chair and members,” its spokeswoman Michelle Basch said in a statement. “Blockchains is excited to keep its headquarters in Nevada as it continues to develop its blockchain-based digital platform, build out the advanced technology business park on its land, and grow its relationships with like-minded companies and institutions in the United States and around the world.”

While supported by some of Nevada’s most influential lobbyists and Gov. Steve Sisolak, “Innovation Zones” provoked opposition from environmentalists, local residents, county officials and people skeptical of the growing power of technology companies. Sisolak, who praised the idea in his January State of the State address, elected to scale the proposal back to a study rather than introduce it for consideration in the statehouse earlier this year.

Storey County had called Blockchains’ proposal “separatist governing control,” but has long maintained it has been willing to work with the company on any development proposal. In a letter sent to Sisolak last week, Blockchains’ CEO offered a different account and said county officials had rejected the company’s plan outright in 2018.

In the letter, which the governor’s office provided the Associated Press, Berns said he was disappointed that the proposal never gained enough traction. He said it would be impossible to lure investors or commit to building their city without support from the state and was upset the governor didn’t do more to support the plan after his initial comments backing the effort.

“Economic diversification continues to be a priority for me. I’m disappointed that Jeff (Berns) and Blockchains chose to go in a different direction,” Sisolak said on Thursday.

Berns told the Associated Press in February that it needed some form of self-governance to experiment with new applications of blockchain technology and promised, in exchange, he could make Nevada a global leader as it grows in prevalence. Blockchain is a digital ledger that can record nearly any transaction and is best known for facilitating cryptocurrency exchanges.

Though the company said it no longer plans to build its smart city, lawmakers said they hoped it would work with local officials through traditional channels.

“They’ve withdrawn their need for legislative intervention,” said Assemblyman PK O’Neill, who sits on the committee. “I thought they had some very interesting proposals that I’d like to see them work more with Storey County on.”

Senate Minority Leader James Settelmeyer, a Republican whose represents the region where the company had wanted to build its blockchain-centric city, said the company had sent a letter to the committee and governor to withdraw the proposal earlier this week. He said he assumed it would be up to the chair of the Innovation Zone Joint Special Committee, Assemblywoman Teresa Benitez-Thompson, whether to disband the study.

Benitez-Thompson did not immediately respond to request for comment.

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Sam Metz is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.

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Tesla will relocate its headquarters from Palo Alto, California, to Austin, Texas, though the electric car maker will keep expanding its manufacturing capacity in the Golden State, CEO Elon Musk said Thursday.

Musk, who last year said he was moving to Texas from California, gave no timeline for the move when he addressed shareholders at Tesla’s annual meeting.

In the early days of the coronavirus pandemic, Musk clashed with San Francisco Bay Area health authorities trying to enforce shelter-in-place orders. At the time, he threatened to relocate Tesla’s operations to Texas or Nevada.

On Thursday, however, Musk cited the cost of housing in the Bay Area that has made it tough for many people to become homeowners, translating into long commutes.

“We’re taking it as far as possible, but there’s a limit how big you can scale it in the Bay Area,” he said Thursday. “Just to be clear, though, we will be continuing to expand our activities in California. This is not a matter of leaving California.”

Musk stressed he plans to expand the company’s factory in Fremont, California, where Tesla’s Models S, X, Y and 3 vehicles are built, in hopes of increasing its output by 50%.

The announcement drew cheers and applause from the small audience at Tesla’s manufacturing plant in Austin, where Musk delivered his remarks, which were webcast live.

While applauding Tesla’s announcement that it will expand production in Fremont, Bay Area business leaders bemoaned the headquarters move as the latest sign of the region’s ongoing issues.

“Mr. Musk’s announcement highlights yet again the urgency for California to address our housing affordability crisis and the many other challenges that make it so difficult for companies to grow here,” said Jim Wunderman, president and CEO of the business advocacy group Bay Area Council.

Last year, tech giant Oracle Corp. decided to move its headquarters from Silicon Valley to Austin, saying the move would give its employees more flexibility about where and how they work. One of Silicon Valley’s founding companies, Hewlett Packard Enterprise, has also said it will move to the Houston area.

At Thursday’s meeting Musk also touted the company’s record vehicle deliveries this year, while noting that global supply-chain disruptions that have led to a shortage of computer chips remain a challenge.

“It looks like we have a good chance of maintaining that into the future,” he said. “Basically, if we get the chips, we can do it.”

As a result, production of Tesla’s angular Cybertruck pickup isn’t likely to begin before the end of 2022, Musk said, estimating that the company would reach “volume” production on the vehicle in 2023.

“We should be through our severest supply chain shortages in ’23,” he said. “I’m optimistic that will be the case.”

Tesla said last week that it delivered 241,300 electric vehicles in the third quarter even as it wrestled with the shortage of computer chips that has hit the entire auto industry.

The company’s sales from July through September beat Wall Street estimates of 227,000 sales worldwide, according to data provider FactSet.

Third-quarter sales rose 72% over the 140,000 deliveries Tesla made for the same period a year ago.

So far this year, Tesla has sold around 627,300 vehicles. That puts it on pace to soundly beat last year’s total of 499,550.

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