Former SCANA CEO Pleads Guilty To Conspiracy to Commit Mail and Wire Fraud
Columbia, South Carolina --- United States Attorney Peter M. McCoy, Jr. announced today that Kevin B. Marsh, former SCANA Corporation (SCANA) Chief Executive Officer and former Chairman of its Board of Directors, pleaded guilty in federal court to conspiracy to commit mail and wire fraud. With the guilty plea, Marsh admits that he intentionally defrauded ratepayers, while he oversaw and managed the company’s operations – including the construction of two reactors at the V.C. Summer Nuclear Station – so that SCANA could obtain and retain rate increases imposed on SCANA’s customers and qualify for up to $2.2 billion in tax credits.
Today’s plea follows a previous guilty plea by Stephen A. Byrne, former Executive Vice President of SCANA and former Chief Operating Officer of South Carolina Electric & Gas Company (SCE&G), to conspiracy to commit mail and wire fraud, as well as a previously announced agreement with Dominion Energy that will, over time, provide at least four billion dollars of South Carolina ratepayer relief. It also follows a previously announced settlement by SCANA and SCE&G on a Securities and Exchange Commission lawsuit charging them with defrauding investors by making false and misleading statements about the nuclear plant expansion that was ultimately abandoned.
Today’s plea is the result of an exhaustive and multi-year joint investigation by the U.S. Attorney’s Office, South Carolina Attorney General’s Office, Federal Bureau of Investigation (FBI), U.S. Securities and Exchange Commission (SEC), and South Carolina Law Enforcement Division (SLED).
“Every day, this office protects South Carolinians from criminals of all types,” said U.S. Attorney McCoy. “Our office will always seek justice for those victimized by individuals or entities that misuse positions of trust and responsibility. Today’s plea shows that no one, not even a Fortune 500 CEO, is above the law. Of course, our efforts in this case would not be possible without the support of our federal and state law enforcement partners.”
“Today’s plea is another step in bringing to justice those individuals responsible for this vast and audacious fraud that impacted so many people throughout South Carolina and beyond,” said FBI Special Agent in Charge Susan Ferensic. “The FBI’s work is not done, however. We will see this case through while we continue to fulfill our mission to investigate and hold accountable those who seek to commit mass fraud and theft.”
This case arises out of the failed nuclear project at the V.C. Summer Nuclear Station in Jenkinsville, South Carolina. In 2008, SCANA and its subsidiary SCE&G announced their intention to build two new nuclear units with their minority partner, the South Carolina Public Service Authority, a state-owned public power and water utility commonly known as Santee Cooper.
As evidence presented to the court showed, beginning in November 2011, Marsh was the highest-ranking official within SCANA and, as such, oversaw and managed the company’s operations, including the construction of the two nuclear reactors.
From its inception, substantial delays and cost overruns plagued the project. No later than late 2016, Marsh knew that efforts by the company’s builder, Westinghouse, to improve the pace and productivity of the project were woefully inadequate. Marsh learned that at least one unit under construction was in grave jeopardy of not being completed and producing power by December 31, 2020, then the critically important deadline for SCANA to secure federal nuclear production tax credits valued up to $2.2 billion.
With this specific knowledge, using both wires and mail, Marsh conspired with others to defraud customers with misleading statements and omissions. This includes concealing the truthful status of the failing mega-project and making false and materially misleading statements in late 2016 to the South Carolina Public Service Commission (PSC), the Office of Regulatory Staff (ORS), the financial community and the general public.
For example, following a December 27, 2016, press release by Toshiba announcing a potential multi-billion dollar writedown related to Westinghouse’s nuclear construction business, Marsh and others received a confidential telephone briefing from senior Westinghouse officials, who indicated Westinghouse’s costs to complete the new units would be significantly higher than expected. Also on December 27, 2016, Marsh received a separate briefing from a senior Toshiba official indicating that Toshiba could not absorb the financial hit suggested by new estimates from Westinghouse’s subcontractor of the work remaining on the project. These briefings led Marsh to believe there existed a heightened risk of further construction delays. Yet, on December 29, 2016, when the ORS requested detailed information from SCANA regarding the construction schedule for both units, Marsh and his coconspirators fraudulently withheld the information provided by Westinghouse and Toshiba.
In the plea agreement, Marsh agrees to cooperate fully with federal, state, and local law enforcement agencies. He also agrees to testify fully and truthfully before any grand juries until the investigation and prosecution in the criminal acts that occurred in relation to the failed V.C. Summer Nuclear plant expansion are complete. Additionally, in the plea agreement, prosecutors and Marsh recommended a five million dollar forfeiture.
On the federal charge, Marsh faces a maximum penalty of five years in prison, a fine of up to $250,000, and supervised release of up to 3 years.
United States District Judge Mary G. Lewis accepted the guilty plea and will sentence Marsh after receiving and reviewing a sentencing report prepared by the United States Probation Office.
Assistant United States Attorneys Jim May, Brook Andrews, Winston Holliday, and Emily Limehouse are prosecuting the case in federal court, along with Special Assistant United States Attorney John O’Halloran.