By Marcus E. Howard
Marietta Daily Journal Staff Writer
MARIETTA - Lawyers for the plaintiffs in the lawsuit against nonprofit Cobb Electric Membership Corporation and its for-profit subsidiary Cobb Energy have filed a motion to postpone Cobb EMC's annual co-op member meeting scheduled for Sept. 4.
The motion was filed Tuesday by Pitts Carr of Carr and Palmer in Atlanta, Hylton Dupree of Dupree and Kimbrough in Marietta and Adam Webb of Webb, Klase and Lemond in Atlanta, on behalf of the six plaintiffs, including former Cobb Commissioner Butch Thompson and Marietta businessman Bo Pounds.
Cobb Superior Court Judge Stephen Schuster has not set a date yet to hear the request.
According to the motion, the plaintiffs made the request because they said business transactions between Cobb EMC and Cobb Energy are related transactions that must be fully disclosed to members, but has not been done in the past and is not intended to be done at the upcoming meeting.
They said EMC members have been denied a copy of the latest Cobb Energy financial report and EMC members will continue to be denied a "substantial portion of financial information that is not only important and required to be disclosed, but indeed key to the economic survival of their EMC."
"The EMC has funded Cobb Energy to the tune of tens of millions of dollars in recent years and Cobb Energy continues to gush red ink at a horrifying rate," the motion says. "Furthermore, the Cobb Energy relationship is drastically increasing the EMC's cost of operations."
Cobb EMC is owned by its nearly 200,000 members and governed by a board of 10 directors elected from and by the membership. The 10 positions are elected on a rotating basis. Directors serve three-year terms and represent co-op members in their respective geographic areas.
The plaintiffs said that if the court does not postpone the annual meeting until rulings can be made on the requests for information, then EMC members would be "making important decisions about the future of their company, including the re-election of four defendant EMC directors without any information about the (alleged) financial turmoil that has taken place at Cobb Energy and its affiliates, as well as the significant self-dealing in Cobb Energy stock that has generated millions for certain officers and directors of Cobb EMC, Cobb Energy and its affiliates, all while these entities are losing millions."
Cobb EMC members have a right to know, the plaintiffs said, about the "dire financial straits threatened to their EMC by the Cobb Energy relationship and the conflicting interest transactions of certain officers and directors of the EMC and Cobb Energy. Serious conflicts of interest pervade the entire Cobb EMC and Cobb Energy management structure."
The lawsuit, filed by the plaintiffs on Oct. 22, accuses Dwight Brown, CEO of both Cobb EMC and Cobb Energy, of using co-op money to aid the private, for-profit Cobb Energy.
On July 16, Brown sent a letter to community leaders that proclaimed that no wrongdoing was found in a report completed by a special litigation committee, which was appointed by Cobb EMC to examine the plaintiffs' claims.
In their motion, the plaintiffs said Brown failed to mention that the committee recommended Cobb EMC seek to recover about $13 million from Cobb Energy and that the committee "resoved to retool the entire governing structure so that there could no longer be any officers and directors of the EMC with conflicting interest positions or ownership interest in Cobb Energy."
"Mr. Browns' summary was a complete and utter mischaracterization of the (committee) report and, at best, constitutes a serious intent to mislead the members and others in the community. At worst, it is downright fraudulent concealment of the truth consistent with his handling of the financial affairs of the EMC for the past decade," according to the motion.
The plaintiffs called it "unconscionable" for the meeting to proceed without members having full information of the relationship between Cobb EMC and Cobb Energy.
Further, the plaintiffs also made allegations in regards to the date change of the annual meeting.
"The day chosen for the annual meeting was mysteriously changed, starting with the 2003 meeting, from Saturday, the day it had traditionally been held, to Thursday. 2003 was the year after the sale of millions in stock to officers and directors of the EMC and Cobb Energy began, including the millions to Dwight Brown."
"Changing the meeting day to Thursday obviously makes it extremely difficult for the members with jobs to attend. To offset the loss of attendance the employees of the Cobb Energy and its affiliates are now paid to attend the annual meeting and ordered to wear no clothing that might disclose they are employees. This fact has also not been disclosed to the EMC membership," according to the motion.
A call placed to Cobb EMC about the motion was not returned.
Schuster has allowed both sides to begin negotiations in early August for a possible settlement in the case. Former Georgia Attorney General Mike Bowers was chosen to mediate the negotiations.
mhoward@mdjonline.com
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Posted Comments
This whole Cobb EMC, Cobb Energy deal reminds me of an "onion". The more you start to peal it back, the stronger the stink gets....
Dwight Brown is trying to pull another fast one with the EMC membership. If he is successful he will continue to get the judge to seal every open records request made by the membership and again the membership will elect a board with no idea about the huge amounts of money Brown has been stealing from the poor members. Brown is a crook and needs to be run out of town. EMC Members...Get Smart...Where there is smoke, there is fire. Brown already admits that EMC members pay 11% more on their power bills just to have his personally owned company run the EMC for $ millions in profit to himself and his...wife?????. EMC members are being ripped off and they don't even realize it.
I'm glad that, finally, these people have exposed. As a former employee of one these sham affiliates (Interlink Control), I always wondered how the company could possibly be profitable or even stay in business. The officers and management, while obviously drawing huge salaries, had no experience in the field and did not have a clue what they were doing. I knew at the time that Cobb Energy was just dumping money into the company.
Once more I would like to thank Bo Pounds and Butch Thompson as well as the four other plaintiffs for taking the initiative and the tremendous burden of demanding the truth. Having long had concerns about the ethics and legality of the creation of entities related to Cobb EMC or funded by Cobb EMC for private enterprise I am very thankful for the men, and women, who are investing heavily of themselves on Our behalf. Before the recently published discoveries I would have likely seen a settlement as fair for all but at this point I am strongly motivated to know all of the truth about the transactions funded by The Membership and how our trusts may have been embezzled. The simple fact that Dwight Brown is allegedly blocking an open books requirement, to me, is the single most demanding issue.
I now have Mr Brown's letter, sent to me by first class mail and not stuffed in with my bill. More cost to each EMC member. Typical Dwight Brown, full of hot air and shallow facts. It does not mention the $13 million or the restructuring identified by this special committee, appointed by Mr Brown and his minions. The letter states that there were remedial issues identified. I guess $13 million is just not much to Mr Brown. It does state that we have spent $2.25 million to date defending these clowns. EMC members, grad hold of your wallets.
I want to be appointed to the board at the next meeting, especially after reading about their retirement account bonuses for part time work. One year on the board and over a hundred grand in your retirement account (thanks AJC, since MDJ seems to be reluctant to let us know what is going on with these crooks). I really, really need that money.
Now it seems that at least 2 of the executive officers of one of the affiliates, Interlink Control, have taken "early retirement". I wonder if they had those retirement accounts set up for them as well and decided to jump ship, take the money and run while they had the chance. Every Cobb EMC member needs to attend the annual meeting and get rid of all these crooks.
A comment on an earlier article I believe hit the nail on the head. Dwight Brown's asserts that this lawsuit has already cost Cobb EMC 2.25 million in legal fees. But, this lawsuit has also uncovered (per the special committee's own report, the one from which Dwight Brown picks and chooses the facts) that Cobb Energy should repay the EMC 13 million. Gee, Mr. Brown, even you can do this math. This litigation has already been worth it. And probably even more stolen funds will be discovered!