[Watchdogs] PEC Questions

Mon Sep 1 02:11:55 CDT 2008

Excellent questions, Carlos.

One thing that's been nagging me:  How is it that Bluebonnet and PEC 
put money in, borrowed more from wherever, got it all tangled up in a 
lawsuit with LCRA for 10 years, settled with LCRA, paid everyone back 
and paid all the lawyers off, and *still* had nearly a million bucks 
($565k that sat in the non-interest account, $111k each to B&B, and 
$150k to Morisund = $937k) "left over".  Somehow that doesn't add up. 
If LCRA had to pay some sort of extra fine or fee to Texland as part 
of the settlement, shouldn't that have gone back to the original 
investors?  And as Carlos asks below, were PEC and Bluebonnet paid 
back any interest (and if so how much?) in return for their 10 year 
loan on an admittedly risky venture?

I'm also curious as to who was on the original Texland Board, and 
what were their other alliegances? If I were to guess, I'd say it was 
probably heavily weighted with PEC board members, a smaller number 
from the Bluebonnet board, and AW Morisund and/or one or more of his 
underlings.

At 12:41 AM -0500 9/1/08, Carlos Higgins wrote:
>August 31, 2008
>
>PEC Questions
>
>
>
>We have been admonished to believe in "working on the American premise of
>"Innocent until proven guilty", and   ALL the facts need to come forth
>before a judgment.
>
>
>
>Fair enough.  When do we get the facts?  In matters of malfeasance and
>criminal acts, almost never are the facts freely delivered in neat little
>packages.  Someone has to do some digging.  Who's doing any digging around
>the PEC?
>
>
>
>In an attempt to establish some relevant facts, could we get answers to
>these questions?
>
>
>
>We're told the Texland money was deposited at the JC National Bank.
>
>
>
>1. Was that the only bank, and what was the total amount deposited in
>Texland accounts?
>
>2. How much of that was a loan from PEC and its member/owners?
>
>3. How much of that was borrowed from banks, with repayment guaranteed by
>the PEC?
>
>4. How much of that was borrowed from the National Rural Utilities
>Cooperative Finance Corporation, with repayment guaranteed by the PEC?
>
>5. Were the PEC member/owners aware their money was being loaned to a
>start-up co-op, called Texland, and that they were guaranteeing millions
>more in loans to Texland?
>
>
>
>In one of their letters, B&B (Bennie and Bud) acknowledged that Texland was
>a risky venture, and might not be able to pay back the millions in loans.
>
>
>
>6.  Why would the PEC Board use PEC members' money to loan a risky start-up
>co-op (Texland) millions of dollars, and use the PEC's good credit to
>guarantee loans of millions more?
>
>7.  Was there any written agreement offering any protection for the PEC's
>and their member/owners' investment In Texland?   If so, is that written
>agreement available for PEC members to read?
>
>8.  In arranging the loans and guarantees for Texland from the PEC, did
>Bennie and Bud act as principals for both Texland and the PEC?
>
>9. How much did Bluebonnet loan to Texland, and did Bluebonnet guarantee any
>loans to Texland?  How much?  How much was eventually repaid to Bluebonnet?
>
>
>
>Here's part of what Bennie Fuelberg & Bud Burnett said in their letter to
>the Statesman:
>
>Unfortunately, there were two big problems: The Public Utility Commission
>denied Texland's permit, and the LCRA sued us. It wanted to enforce a
>contract about providing power for PEC, and the ensuing litigation became
>one of the biggest lawsuits in its history.
>
>At this point, Texland had millions of dollars in debt, no prospects of
>making money and a massive lawsuit on its hands. It didn't look good.
>
>But we worked on this for nearly a decade. The settlement of the litigation
>created an opportunity to insulate Texland, PEC and Bluebonnet from
>financial risk. In the end, we entered a settlement that benefited everyone.
>Based on our recollections, PEC and Bluebonnet made money on the deal.
>Neither PEC nor Bluebonnet paid one dollar on Texland debt. Texland's loans
>from PEC and Bluebonnet were paid in full, and Texland fully refunded PEC's
>and Bluebonnet's membership fees.
>
>Once the membership fees were refunded, neither PEC nor Bluebonnet remained
>a member of Texland.
>
>Where did the money in Texland's account come from? About $1.35 million came
>from the LCRA settlement.
>
>
>
>10.  In what way did the settlement insulate the PEC from financial risk?
>
>11.  In a settlement of the lawsuit, why would the LCRA (or anyone)  pay
>$1.35 million (or any amount) to Texland?
>
>12.  Was the PEC a party to the settlement?   If so, did Bennie and/or Bud
>represent the PEC's interests? Did they represent Texland's interests?
>
>13.  Did the settlement include a resolution of the contract for LCRA to
>provide power to the PEC?
>
>14.  Did the settlement affect PEC's electric rates in any way?
>
>15.  Did Bennie and/or Bud represent the PEC in negotiating rates with the
>LCRA?
>
>16.  Did the PEC member/owner/ratepayers end up indirectly paying the $1.35
>million to Texland through their electric rates as part of the resolution of
>the contract for power between the LCRA and the PEC?
>
>17.  As the owner of the Texland co-op, (along with Bluebonnet) did the PEC
>and its member/owners have any knowledge of Texland's financial assets and
>financial arrangements?  Did Bennie and/or Bud represent the PEC's and its
>members' interests when dealing with Texland?
>
>18.  Did the PEC accept the return of its $1000 membership fee in Texland
>and walk away without inquiring about the assets it owned as one of the two
>owners of Texland?  If so, did Bennie and/or Bud represent the interests of
>the PEC and its membership in that decision?  Did they at the same time
>represent the interests of Texland?
>
>19.  What is the amount of interest Texland paid to the PEC member/owners
>for the use of their money?
>
>20.  How much Texland money was in the J.C. National Bank when the account
>was closed, and how much was deposited in Cattleman's National Bank?
>
>21.  Was Texland money used in any way in the creation and establishment of
>Cattleman's Bank?
>
>22.  In the settlement of the LCRA lawsuit, who were the attorneys who
>represented the interests of each party:  LCRA, Texland, Bluebonnet and the
>PEC?  Did any attorney or law firm represent the interests of more than one
>party?  Were there any other parties?  Was the settlement made public?
>
>23.  What is the total amount Texland has paid out in legal fees, and to
>whom?
>
>
>
>As a member of the PEC since 1974, I think I'm entitled to answers to these
>questions because my money was used to create Texland, along with the money
>of all the other PEC member/owners.
>
>             Others of you probably have additional questions.  I invite you
>to post them.  Maybe someone at some point will undertake a serious
>investigation and attempt to answer all the relevant questions.
>
>
>
>Respectfully,
>
>
>
>Carlos Higgins
>
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