Green River Nuke Plant Backer Accused Of Scamming Investors
Jan 27, 2012
January 26, 2012
Press Release *** For Immediate Release
GREEN RIVER NUKE PLANT BACKER ACCUSED OF SCAMMING INVESTORS
FEDERAL CHARGES RAISE SERIOUS QUESTIONS ABOUT PROJECT’S FUTURE
Federal investigators have charged a New York hedge fund – a principal backer of the Green River nuclear reactors – with scamming investors, raising serious questions about the nuclear power project’s future.
The Securities and Exchange Commission in December charged LeadDog Capital Markets LLC and its general partners and owners Chris Messalas and Joseph LaRocco with “material misrepresentations and omissions” to investors, among a series of fraud allegations.
Blue Castle Holdings, the company headed by former state Rep. Aaron Tilton, has repeatedly crowed about its June 2010 agreement with LeadDog to provide it with $30 million in financing to pay for developing the reactors on the Green River.
In fact, when State Engineer Kent Jones just last week announced he was approving Blue Castle’s application to secure water rights from the Green River to cool the reactors, he identified the LeadDog funding as key to their plan. Under Utah law, Blue Castle has to prove to Jones that its plan is “economically feasible,” and that the applicant “has the financial ability to complete the proposed works.” LeadDog’s $30 million in financing apparently was a key factor in leading Jones to conclude that Blue Castle “has demonstrated to the satisfaction of the State Engineer an ability to secure funding as needed.”
“Obviously, the State Engineer will need to go back and take a close second look at Blue Castle’s finances,” says Matt Pacenza, policy director of HEAL Utah. “It makes no sense to award so much of our state’s precious water to a project with such a shaky financial foundation.”
The SEC alleges that LeadDog lied to its investors, telling them they were putting their money into relatively safe investments, when in fact they were investing money in risky “penny-stocks,” which the LeadDog principals in fact secretly owned. For example, according to the feds, LeadDog lied to one elderly investor about what they had done with his $500,000 – and then only returned $50,000 of his funds when he asked for them back.
The SEC’s charges against LeadDog were first unearthed by Uranium Watch, a Moab-based watchdog organization which has fought the Green River reactors.
LeadDog’s scams are not the only questionable part of Blue Castle’s financial plans. The company’s only identified customer for the massive amount of nuclear power they hope to generate is the Page Electric Utility in Page, Arizona – a small town of 7,247 which Blue Castle announced in October 2009 had signed a “memorandum of understanding” to buy power from the Blue Castle reactors. According to Blue Castle, Page was interested in 30 megawatts of power – less than 1 percent of what the reactors would produce.
However, even that tiny commitment turned out to be worth little. According to the minutes of the utility’s board meeting that same month, “the City Attorney assured the Board there was no financial obligation” to actually buy Blue Castle power.
“It’s becoming increasingly clear that Blue Castle’s nuclear plans rest on the flimsiest of foundations,” says Pacenza. “It’s time for state officials to step in and pull the plug.”
For more information, call:
Links to key documents
The State Engineer’s Water Rights Order (p. 12 references LeadDog Capital): http://www.waterrights.utah.gov/pressRelease/OSEa35874.pdf
The SEC press release announcing LeadDog actions:
The SEC complaint against LeadDog:
The press release Blue Castle issued in June 2010 announcing the LeadDog financing (which has now been scrubbed from Blue Castle’s Web site.):
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