by JENNIFER BIUNDO
Misapplication of fiduciary duty: $716,000.
Cost of forensic investigation: $961,875.
Damage to reputation and trust of the Cooperative membership: priceless.
Pedernales Electric Cooperative has laid out an estimate of how much former General Manager Bennie Fuelberg cost the co-op membership, filing an impact statement seeking $8.8 million in restitution.
In December, a Gillespie County jury convicted Fuelberg of felony charges of theft, money laundering and fiduciary misapplication after hearing testimony that he illegally funneled co-op money to family members. While the jury sentenced him to probation and a $30,000 fine, State District Judge Dan Mills could include jail time and additional restitution when he sets the terms of Fuelberg’s probation next month.
The $8.8 million requested by PEC does not include restitution for damage to the co-op’s reputation. While loss of goodwill towards a private corporation is usually judged in terms of loss of sales revenue or a decline in stock prices, it’s harder to put a number to the same loss in a member-owned co-op, lawyers noted.
“The amount of damage in this category is difficult to quantify with accuracy but is nonetheless real and substantial,” PEC attorneys wrote.
The bulk of the requested restitution comes from about $4.1 million in attorneys’ fees related to the criminal investigation and to the member-led civil lawsuit which exposed to a flood of revelations about management practices in the previously secretive co-op.
PEC wants Fuelberg to return the $716,000 related to the criminal charges of theft and misapplication of fiduciary duty, and also wants to recoup $1.4 million in incentive payments that it paid Fuelberg in 2007 and 2008, shortly before he was forced to resign after three decades as general manager. The filing notes that PEC continues to pay Fuelberg pension and retirement benefits.
“Given the constraints of federal law as to defined benefit and retirement plans, PEC likely has no ready or certain means to limit this obligation,” attorneys noted.
PEC is also seeking about $960,000 related to the forensic investigation of the co-op by Navigant consulting company. Co-op leaders say Navigant estimates that about one-third of the $2.9 million audit price tag was “attributable to investigate costs stemming from [the] Defendant’s conduct.”
The co-op is claiming $1 million in lost interest related to funds from Texland, a secretive venture to build power generating plants. In 2008, the co-op discovered $565,000 in Texland funds that had been sitting in a non-interest bearing account for more than two decades. Additionally, they’re asking for restitution relating to the $380,000 that Fuelberg and two other former PEC officials admitted that they paid themselves from the secret Texland account at some point in the 1980s; the co-op has no record that board members knew of or approved the payment.
PEC officials say they hope to receive the restitution to recoup financial damaged caused by Fuelberg and avoid a costly civil lawsuit in the future.
