FOR IMMEDIATE RELEASE: Monday, October 30, 2023
For Information:
Mike Kanovitz, Loevy & Loevy, 312.243.5900, [email protected]
Jack Kolar, Government Accountability Project, 202.457.0034 [email protected]
Dan Twetten, Loevy & Loevy, 312.243.5900, [email protected]
Julia Rickert, Loevy & Loevy, 312.243.5900, [email protected]
Frank Newell, Loevy & Loevy, 312.243.5900, [email protected]
Andy Thayer, Loevy & Loevy, 773.209.1187 (cell), [email protected]
Payback Time? Nation’s 2nd Largest Utility Could Finally be on the Hook for Massive Fraud Against Taxpayers
“Clean Coal” Whistleblower Lawsuit Could Cost Southern Company, Inc. $1 Billion+
MISSISSIPPI – A federal court judge recently unsealed allegations of a massive fraud involving Southern Company, the nation’s #2 electric utility, and its subsidiary Mississippi Power. A whistleblower lawsuit filed today alleges that leadership directed employees to doctor budget documents and falsify financial projections in order to obtain hundreds of millions in federal tax dollars.
Southern Company used the false records to deceive regulators and secure $382 million to build a “clean coal” power plant in Kemper County, MS, that was doomed to fail.
Before breaking ground on what became known as the “Kemper Project,” internal Southern Company documents show that senior Company leadership knew that their projections were unsupportable. Yet as the project proceeded and costs quickly spiraled out of control, Southern Company continually represented to state regulators and the federal government that the project was “on budget.”
“It’s Wall Street’s version of Thelma and Louise. Southern Company’s senior managers chose to drive the Kemper Project off a cliff, and they trapped the taxpayers in the passenger seat,” said Mike Kanovitz of Loevy & Loevy. “Federal anti-fraud laws apply here and put the company on the hook three times what they stole.”
Former Republican National Committee chairman and Mississippi Governor Haley Barbour engineered the first $270 million in federal subsidies.
While previous news stories [2] [3] reported on the Kemper Project disaster, the unsealed lawsuit finally exposes the companies’ fraudulent budgeting scheme and false cost reports, utilizing the federal whistleblower statutes to hold the company accountable.
Rather than being a job-creator in the nation’s poorest state, the disastrous project fueled high electricity rates, making local industries less competitive and costing the state jobs. Although the Mississippi Supreme Court ordered Mississippi Power to bear the costs it created, the company threatened bankruptcy and increased electricity rates by 15%. “In February 2015, the state Supreme Court ruled that Mississippi Power had to repay ratepayers roughly $377 million for increasing rates by 15 percent in 2013 and 3 percent in 2014 without proper approvals,” wrote the Times. “Utility officials responded that the requirement would bankrupt it, and several months later persuaded regulators to approve a new increase, 15 percent.”
The current Southern Company chairman and CEO Thomas A. Fanning, reportedly made $24 million last year.
The whistleblower lawsuit is brought by Kelli Williams, who worked for Southern Company for 10 years and rose through the ranks. Her repeated objections were ignored by management.
In 2016, Southern demoted Ms. Williams in retaliation for speaking out about her concerns related to the Kemper Project.
The Kemper Project turned out to be the most expensive power plant in U.S. history in terms of electricity output achieved. By the time the “clean coal” project was scrapped in 2017, the cost to build the Kemper plant had ballooned to $7.5 billion. A comparable power plant could have been built for around $1 billion.
Ms. Williams initially filed this qui tam whistleblower lawsuit in 2018 under seal, meaning that all details were completely confidential; Ms. Williams nor her attorneys could not even acknowledge the existence of this case. After a successful motion by the United States Department of Justice, a federal judge ordered the seal lifted and today Ms. Williams filed an amended lawsuit making these details public for the first time.
Kelli Williams is represented by Mike Kanovitz, Dan Twetten, Julia Rickert, and Frank Newell of the civil rights law firm Loevy & Loevy. Ms. Williams is also represented in this lawsuit by Jack Kolar and Karen Gray of the Government Accountability Project (GAP).
Loevy & Loevy and GAP have previously represented whistleblowers under the federal False Claims Act (31 U.S.C. §§ 3729, et seq.).
A copy of the federal qui tam whistleblower lawsuit, United States of America ex rel. Kelli Williams v. Southern Company, Inc., Southern Company Services, Inc., and Mississippi Power Company, No. 1:18-CV-0680-SCJ, in the U.S. District Court for the Northern District of Georgia, is available here.
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