South Carolina Utility Agrees to $137.5 Million Settlement to Resolve Fraud Charges
Scana Corp. and a subsidiary agreed to a $137.5 million settlement to resolve civil-fraud charges related to a failed nuclear power plant expansion, federal prosecutors said Thursday.
The Securities and Exchange Commission charged Cayce, S.C.-based Scana and subsidiary South Carolina Electric & Gas in February with defrauding investors by making false statements about the Virgil C. Summer nuclear power plant. The charges came after the $10 billion expansion was abandoned in July 2017 after almost a decade of planning and construction.
Between 2015 and 2017, Scana misled investors, regulators and consumers about the status of the project, which was to include two nuclear reactors, the SEC said in its complaint. The agency said the companies claimed the project would qualify for more than $1 billion in tax credits when they actually knew the delays would make it unlikely to qualify.
The statements boosted Scana’s stock price and enabled it to raise rates on customers and sell more than $1 billion in bonds. Investors lost hundreds of millions of dollars when the project was scuttled, the regulator said. Roughly $9 billion had been spent on the project.
Scana is expected to pay a $25 million penalty, according to the U.S. attorney’s office for the District of South Carolina. The company and SCE&G are expected to pay $112.5 million in disgorgement, plus prejudgment interest, prosecutors said. The agreement is subject to court approval. The companies neither admitted nor denied the allegations.
The SEC in February also charged Kevin Marsh, Scana’s former chief executive and chairman, and Stephen Byrne, the former executive vice president who oversaw Scana’s nuclear operations. The SEC alleged that the former executives were at the center of the fraud. Litigation involving Messrs. Marsh and Byrne is continuing, prosecutors said.
Lawyers for the former executives didn’t immediately respond to requests for comment.
Mr. Marsh last month signed a plea agreement admitting guilt to federal charges of conspiracy to commit mail fraud and obtaining property by false pretenses, according to court documents. The agreement, which still must be entered by Mr. Marsh, requires him to cooperate with law enforcement agencies in a continuing investigation. He faces up to 10 years in prison on the most serious charge and $5 million in restitution.
Mr. Byrne in July pleaded guilty in federal court to conspiracy to commit mail and wire fraud as part of an agreement that would also require him to cooperate, according to prosecutors. Mr. Byrne faces a maximum penalty of five years in federal prison.