San Marcos Mercury | Local News from San Marcos and Hays County, Texas

June 17th, 2009
Grand jury indicts two from PEC

By ANDY SEVILLA
Associate Editor

A Blanco County Grand Jury indicted two people Wednesday on three felony charges resulting from an Attorney General’s investigation into unlawful conduct at the Pedernales Electric Cooperative (PEC).

Jerry Strickland, spokesman for the Texas Attorney General’s Office, said the names of the accused could not be released at this time.

The Austin American-Statesman is reporting that the indicted are former PEC General Manager Bennie Fuelberg and Walter Demond, who worked for PEC’s former law firm.

“Because it is a grand jury case, we cannot release any names until they have been served,” Strickland said. “We are unable to confirm any names at this time. It would be illegal for us to do so.”

The grand jury charged both defendants with misapplication of fiduciary property in excess of $200,000, theft of property in excess of $200,000, and money laundering between $100,000 and $200,000.

The charges leveled on misapplication of fiduciary property and theft of property are both first-degree felonies punishable with up to 99 years or life in prison and penalties of up to $10,000. The money laundering charge constitutes a second-degree felony that can bring about a sentence of up to 20 years and a fine amounting up to $10,000.

“The (Attorney General’s) investigation is ongoing and additional information concerning the indictments handed down today will become public once the defendants have been served,” Strickland said.

State Representative Patrick Rose (D-Dripping Springs), who represents Hays, Blanco and Caldwell Counties, praised the Attorney General’s actions. Rose has been among the ring leaders in trying to bring about reforms at PEC, where allegations of widespread mismanagement have forced change for the last two years.

“The Attorney General has acted swiftly and effectively,” Rose said. “I appreciate his leadership on behalf of PEC’s members. The Grand Jury’s actions today will allow all of PEC’s employees, who honorably serve their customers, the ability to move forward and continue to provide reliable and affordable energy. These indictments only heighten the need for legislation that guarantees democratic elections and open governance for all Texans served by co-ops.”

Earlier this week, the PEC board of directors authorized attorney Jimmy Williamson to work with PEC General Manager Juan Garza in settlement of claims against its former law firm, Clark, Thomas & Winters, where Demond was a partner.

“Discussions have reached a critical point,” PEC General Manager Juan Garza said, “and I remain committed to upholding our fiduciary responsibility to the membership while pursuing actions that will allow us to focus on our core business: providing safe, reliable electric service at the fairest rates possible.”

The board unanimously ratified the action through a resolution authorizing Williamson to: “… settle any claims Pedernales Electric Cooperative, Inc. may have against Clark, Thomas & Winters, including former partner Walter Demond, on such terms as have been set forth by the Board with final settlement documentation to be approved and executed by General Manager, Juan Garza, as the authorized representative of Pedernales Electric Cooperative, Inc.”

Said Williamson, “I have received my instructions and will work vigorously to obtain a result in the best interest of the cooperative.”

Williamson, principal of Houston law firm Williamson & Rusnak, was retained by PEC in January to lead a formal investigation of questionable payments made by Clark, Thomas & Winters while the firm served as the cooperative’s legal counsel.

Williamson has focused on alleged improper payments made by Clark, Thomas & Winters to Curtis Fuelberg, a Texas lobbyist and brother of former PEC general manager Bennie Fuelberg, and attorney William Price, son of former Board Director E.B. Price. The allegations arose following the December 2008 release of the PEC-commissioned investigative report by Navigant Consulting, Inc.

Starting in the summer of 2007, co-op members have led an effort to democratize PEC’s board elections process and to stop fraudulent spending and mismanagement by the cooperative’s leadership. Amid the furor, Bennie Fuelberg and former PEC President W.W. Burnett retired.

Since then, PEC has eliminated its self-perpetuating nominating committee for directors elections, as well as it’s proxy voting system.

In February, the PEC board rescinded a supplemental retirement package for Burnett, who retired in November 2007. A former board had approved the package for $4,895.05 per month in 2001.

PEC is the nation’s largest electric cooperative, serving more than 200,000 customers over 8,000 square miles in the Texas Hill Country.

The cooperative is holding its annual meeting Saturday at its headquarters in Johnson City. At the meeting, 11 candidates are up for three seats on the board. Locally, Patrick Cox of Wimberley is unopposed in his bid for re-election to the seat for District 7.

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