A former utility executive who lied to ratepayers and regulators costing billions of dollars after he found out a pair of nuclear reactors being built in South Carolina were hopelessly behind schedule will soon be heading to prison for two years.
A state judge Monday accepted the negotiated sentence of former SCANA CEO Kevin Marsh. He is the first executive to go to prison over the project, which lasted nine years and never generated a watt of power.
Marsh has cooperated with investigators, spending at least seven days talking to the FBI, prosecutors said.
“A CEO for a Fortune 500 company is going to prison and is paying $5 million to the people of South Carolina,” state Attorney General Alan Wilson said outside the Spartanburg County courtroom.
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Under the agreement, Marsh is to report in early December to a federal prison in Butner, North Carolina, which includes a large hospital — rather than a state facility. He will serve the entire federal two-year federal sentence.
South Carolina Circuit Judge Mark Hayes suspended a 10-year state sentence, but told Marsh he will have to serve it if he does not keep cooperating or fails to successfully serve three years of probation.
Marsh isn't the only executive facing legal problems. A second former SCANA executive and an official at Westinghouse Electric Co., the lead contractor to build two new reactors at the V.C. Summer plant north of Columbia, have also pleaded guilty. A second Westinghouse executive has been indicted and is awaiting trial.
Prosecutors now are expected to turn their attention to Westinghouse. While Marsh lied about the lack of progress in the final years of construction of the reactors, Westinghouse knew of the problem long before and did not tell Marsh or other SCANA executives, U.S. Assistant Attorney Brook Andrews said at Marsh's sentencing Thursday in federal court.
Marsh's lawyer asked the judge — and by extension the public — to remember that this should not be the end.
“A project like this doesn't go down the tubes because one person was involved,” said defense attorney Robert Bolchoz, who compared Marsh to a captain of a ship who trusted a crew working against him.
Marsh pleaded guilty in federal court in February to conspiracy to commit wire and mail fraud, and in state court to obtaining property by false pretenses.
The nuclear debacle was set up by a law passed in 2007 that allowed utilities to charge ratepayers to build power plants before they started generating power.
“It divorced the risk from the people who were spending the money,” state Assistant Attorney General Creighton Waters said. "You won if you won and you won if you lost. If the project was a failure and you abandoned it, you still got to recoup that cost from customers."
That put a lot of responsibility on Marsh as the leader of SCANA and he failed by keeping his mouth shut when problems mounted and collecting bonuses instead of risking his job, Waters said.
Marsh made $5 million in 2017, the year the utility abandoned the hopelessly behind-schedule project. His plea agreement requires $5 million in restitution, which has already been paid to a fund that provides help to pay electric bills of low income people.
The actions by Marsh and other executives took more than $1 billion from the pockets of ratepayersand investors, authorities said in an 87-page Securities and Exchange Commission lawsuit filed against him and a second executive in 2020.
SCANA and its subsidiary, South Carolina Electric & Gas, were destroyed by the debt and poor management and were bought out by Dominion Energy of Virginia in 2019. State-owned utility Santee Cooper, which had a 45% stake in the project, ended up saddled with $4 billion in debt even though SCANA controlled management of the project.
Marsh read a brief statement in court Monday, similar to the one he read in federal court Thursday. He said not a day has gone by in the past four years where he did not regret that failure of the project.
“I accept full responsibility," Marsh said. “I feel sorry for everything that occurred.”
Marsh's original plea deal said sentencing would wait until the investigation was over to assure his full cooperation. But prosecutors relented after Marsh's wife of 46 years was diagnosed with incurable breast cancer.
Marsh never wavered from saying the two reactors being built at the V.C. Summer site north of Columbia would be finished by the end of 2020 — a deadline that had to be met to receive the $1.4 billion in federal tax credits needed to keep the $10 billion project from overwhelming the utility.
Prosecutors said Marsh lied and presented rosy projections on the progress of the reactors that he knew were false in earning calls, presentations and news releases to keep investors happy and pump up the company’s stock price.
U.S. District Judge Mary Geiger Lewis reluctantly accepted the deal even though she felt prosecutors and Marsh's lawyers made it sound like the executive made mistakes instead of intentionally misleading people for well over a year.
“Your crime was committed with a little more elegance and sophistication than many I see,” Geiger told Marsh on Thursday. “But you don’t get credit for that.”
Follow Jeffrey Collins on Twitter at https://twitter.com/JSCollinsAP.