December 15th, 2010
PEC’s former GM sentenced to probation, $30,000 fine

by JENNIFER BIUNDO

A Gillespie County jury convicted former Pedernales Electric Cooperative General Manager Bennie Fuelberg of charges of theft, money laundering and misapplication of fiduciary property on Friday, sentencing the once-powerful leader of the nation’s largest utility cooperative to probation and a $30,000 fine.

The jury deliberated for five hours on Friday before returning the guilty verdict on third degree felony charges, rather than the first degree charges sought by the state. State District Judge Dan Mills will set the terms of probation in January, and could assess as much as 180 days of jail time.

Former PEC outside attorney Walter Demond is set to face similar charges next year.

Prosecutors said that between 1996 and 2007, Fuelberg, 66, secretly funneled hundreds of thousands of dollars to his brother, lobbyist Curtis Fuelberg, without the knowledge of board members. Defense lawyers told the jury that his actions showed bad judgment, but weren’t illegal. Curtis Fuelberg testified that he was paid as a consultant to keep PEC abreast of legislation that could impact the co-op.

For three decades, Fuelberg unequivocally ruled PEC, earning $6.3 million in his last 10 years at the co-op. In 2007, a member-led lawsuit blew open the previously cloistered and secretive co-op, leading to the ouster of top officials. Over the course of three elections, PEC members voted out incumbents on the PEC board of directors, replacing them with candidates who campaigned on a reform platform.

Following Fuelberg’s resignation, an investigative report from Navigant Consulting commissioned by the co-op painted a grim picture of the Fuelberg regime, characterized by wasteful spending, questionable financial transactions, and an iron-fisted former general manager enabled by a complacent and well-paid board of directors.

Most startlingly, Navigant reported that Fuelberg and Demond had used the co-op’s long-time law firm Clark, Thomas & Winters to funnel $510,000 in PEC funds to lobbyist Curtis Fuelberg and to the son of former director E.B. Price, attorney William Price.

The Navigant Report noted that the co-op spent $1.9 million over ten years for travel expenses for the board of directors and their spouses, including first class airfare and high end restaurants and hotels. Fuelberg charged more than $500,000 in travel and other expenses on the company credit card and more than $10,000 on luxury chocolate, they found.

Shortly after the report, PEC severed ties with Clark, Thomas & Winters, which had done business with the co-op since the 1930s.

Then-future president Lyndon Johnson and area rancher E. Babe Smith founded PEC in 1938 with a $1.3 million loan from the Rural Electrification Administration (REA) as part of the drive to bring electricity to rural homes across the state.

JENNIFER BIUNDO is a senior reporter at the Hays Free Press where this story was originally published. It is reprinted here through a news partnership between the Free Press and the Mercury.