COLOMBIA – Former CEO of SCANA Corp. Kevin Marsh will spend at least two years in prison and return at least $ 5 million for defrauding electricity taxpayers in South Carolina’s $ 9 billion nuclear power fiasco, according to a court settlement presented to a federal judge February, 24.
Marsh, 65, appeared in court for the first time to plead guilty to charges of fraud and formally accept responsibility for his role in the failed decade-long expansion of SCANA’s VC Summer nuclear plant in Fairfield County. Marsh had to hand over his passport to the court, but he was released without having to deposit money for bail.
Formerly one of South Carolina’s top entrepreneurs, Marsh has spent the past six months as a criminal informant and will continue to be a key witness to state and federal prosecutors who continue to investigate the failure of the VC Summer project. He faces up to 10 years in prison if he does not fully cooperate with the investigation, according to the new terms of his court settlement.
“Justice has been served,” South Carolina Attorney General Peter McCoy said after the hearing. “For years, institutions and individuals have abused the public’s trust with little or no responsibility. This includes companies that have increased profits at the expense of their customers. It is often assumed that these executives will avoid any oversight because of who they are and where. they worked. “
Marsh’s first day in court was a long one, the result of a three-year investigation by the FBI, the South Carolina Public Prosecutor’s Office, the State Law Enforcement Division and the Attorney General’s Office, which brought charges of state and federal fraud. federal government against him.
He spent Wednesday morning atoning for his crimes in a federal court in Columbia and the afternoon apologizing to a state judge in Spartanburg.
“I’m sorry it got to this point,” Marsh told state judge Mark Hayes. “I am responsible for my actions. I will fulfill my obligations under the agreement with the state to cooperate when and how I can and I do not expect to create any problems for you or the court.”
At both hearings, Marsh – dressed in a gray suit and black mask – listened in silence as prosecutors brought up the case against him.
They recounted how the project’s sudden collapse in July 2017, now considered the biggest commercial failure in the state’s history, sent shock waves through South Carolina’s legal, regulatory, political and business communities.
Altogether, SCANA and its minority partner in the ambitious venture, state-owned Santee Cooper, spent $ 9 billion before ending the construction effort, which was to usher in a new era of clean nuclear energy in South Carolina.
The VC Summer expansion would have been the first successful nuclear construction project in the United States since the 1970s. SCANA increased its rates nine times on its 753,000 electricity customers to finance the project.
Now, SCANA and Santee Cooper taxpayers will spend decades paying that debt off their energy bills.
Marsh’s main crime during project management, Attorney General Jim May told federal judge Mary Geiger Lewis, was failing to tell regulators and the public about the ongoing supply chain, the design and construction problems they were condemning. the expansion effort.
Instead, prosecutors said, Marsh and his colleagues at SCANA presented only optimistic projections and assessments of progress at the VC Summer construction site, even as contractor Westinghouse struggled to assemble the two new nuclear reactors.
Top executives at Marsh and SCANA knew in late 2016 that their project was doomed to lose critical deadlines for getting reactors online, prosecutors said on Wednesday.
At that point, SCANA executives just needed to raise their concerns with the state’s Public Service Commission, which sets utility rates in South Carolina, and start an honest conversation about whether the project should continue.
In fact, a similar debate has taken place about the ongoing expansion of the Vogtle nuclear power plant in Georgia, following the collapse of the VC Summer project. There, regulators decided to continue the construction effort instead of canceling it.
But Marsh never took those concerns to regulators. Instead, said May, Marsh and their SCANA colleagues consciously repeated Westinghouse’s false reports of positive progress on the ground.
“This is not a typical fraud scheme,” said May. “This is not Bernie Madoff. This is not a Ponzi scheme. It is more of a crime related to the breach of public trust.”
Marsh pleaded guilty to charges of postal fraud and electronic fraud and admitted, clearly and repeatedly, in response to Judge Lewis’ questions, that he committed these crimes.
May said investigators determined that Marsh should return $ 5 million to SC taxpayers after an “exhaustive process” that included studying Marsh’s compensation for the company and determining how much of it, including performance-related bonuses, was directly linked to the project. nuclear.
Prosecutors said Marsh has been cooperating with the investigation since the fall of 2020. The investigation is “looking for other actors” who may have committed crimes during the construction of the project, May told Lewis.
“We’re going to need his help,” said May of Marsh.
Marsh, who now lives in Flat Rock, NC, is the second SCANA executive to plead guilty to taxpayer fraud. The company’s former chief operating officer, Steve Byrne, pleaded guilty to a similar deal in July.
Prosecutors now have Marsh and Byrne at their disposal as witnesses as they continue their investigation. If Marsh doesn’t cooperate or “misbehaves while he’s away, all bets are off in terms of this plea bargain,” said Creighton Waters, a lawyer in the Attorney General’s Office.
Marsh’s guilty plea comes at the end of Peter McCoy’s run as a South Carolina prosecutor. The James Island Republican is stepping down on February 28 after President Joe Biden’s government asked nearly all US prosecutors appointed by Donald Trump to step down by the end of the month.
As a state legislator in 2017, McCoy led the SC House investigation into the failure of the VC Summer project and questioned Marsh and other SCANA officials about his role.
“I am honored to have been a US attorney throughout this process,” said McCoy.
The VC Summer fiasco proved to be an existential threat to SCANA and Santee Cooper.
Once a Cayce-based Fortune 500 company, SCANA was finally sold to Dominion Energy, based in Virginia. The company was later renamed Dominion Energy South Carolina.
The General Assembly is currently debating whether to sell Santee Cooper to NextEra Energy, based in Florida, as a means of offloading the summer debt from the energy and water utility’s VC.
After the morning hearing, while McCoy and SC Attorney General Alan Wilson held a press conference to discuss the guilty plea, Marsh and his lawyers left the federal court and tried to get past the band of reporters and prosecutors near the front gate.
Tom Clements, an environmental activist who criticized the nuclear project even before its abandonment, noticed and shouted a question as the former SCANA executive passed by: “Mr. Marsh, you are going to apologize to the people of South Carolina for this nightmare nuclear? “
Marsh did not answer. He climbed into the passenger seat of a black truck that started the engine and drove away.
Avery G. Wilks reported from Columbia and Conor Hughes from Spartanburg. Jamie Lovegrove contributed from Columbia.