Accusations of white collar crimes such as embezzlement, fraud, misappropriation or violations of the Racketeer Influenced Corrupt Organizations Act (RICO) typically have an extremely negative effect on the personal and business reputation of the accused. That appears not to be the case for one former CEO from Cobb County. The former head of Cobb Electric Membership Corporation was accused several years ago of misappropriating funds from the electric co-op and diverting them to a for-profit subsidiary, as well of funneling member dividends to himself and other officers.
The nonprofit settled the allegations in civil court in 2008, agreeing that the man would announce his retirement on or before February 28, 2011 and seek no extension of his employment. In return, the group agreed to “forever bar the prosecution, by Cobb EMC, or derivatively on behalf of Cobb EMC, of any duplicative included or related claims.”
However, Cobb County DA Pat Head obtained a grand jury indictment this January, accusing the former CEO of 31 separate crimes under Georgia’s RICO Act. Cobb EMC’s board of directors accuses dissatisfied members of instigating the criminal complaint — violating the settlement agreement.
Now, the board has announced that it wants to rehire the accused former CEO. After an extensive search by a headhunting firm, the board unanimously agreed that the former CEO — who did, in fact, retire — is the best man for the job.
Anticipating resistance from the dissatisfied members of the co-op, the board of directors has filed a lawsuit asking the court to issue a declaratory judgment that it can rehire the man immediately, and that doing so will not violate the 2008 settlement agreement.
“The Settlement Agreement instead restricts [the former CEO] by requiring him to announce his retirement on or before February 28, 2011, and not to seek an extension of his employment. It does not restrict [him] from accepting such employment,” the complaint reads.
The board had also filed a lawsuit against the dissenting members accusing them of violating the settlement agreement by instigating the 31-count RICO indictment against the former CEO. The board dropped that lawsuit as it filed the request for a declaratory judgment.
The settling co-op members are expected to file suit to block the rehiring.
Former CEO’s criminal defense team alleges that the RICO indictment was illegal
In his defense on the RICO charges, the former CEO is represented by a team of criminal defense lawyers led by former Georgia governor Roy Barnes. In late January, the attorneys filed a motion to dismiss the RICO indictment because the grand jury proceedings were handled improperly.
According to their motion, “The Grand Jury returned their indictment on the 6th Floor of the new Cobb County Courthouse. … At the time, the new building was not open to the public … with doors locked and/or armed guards stationed at the points of entry.”
While grand jury proceedings are secret, the resulting indictments, the defense attorneys contend, must be public. The closed return of the indictment, they say, violated a “steadfast rule in Georgia that valid indictments must be returned in open court.”
A pre-trial hearing on the motion to dismiss the RICO charges is pending.
Source: Courthouse News Service, “‘As the Electricity Co-Op Turns …’” Lisa Coston, March 8, 2011