Ex-SCANA CEO Kevin Marsh pleads guilty to conspiracy tied to failed nuclear project 

Kevin Marsh, the former CEO of the now-defunct SCANA electric utility, pleaded guilty Wednesday morning in federal court to conspiracy fraud charges involving a cover-up of financial troubles connected to the failure of the company’s $10 billion nuclear project.

He will be formally sentenced at a later date and has agreed to a two year prison sentence. He had agreed to plead guilty in November.

Late Wednesday afternoon, Marsh pleaded guilty in Spartanburg before state Judge J. Mark Hayes to state charges of obtaining goods by false pretenses, according to a press release by State Attorney General Alan Wilson’s office..

The state charges are based on an underlying set of facts similar to those in the federal case. Marsh is also exposed to the same penalties. However, Marsh will serve his state and federal two-year prison sentences at the same time and pay one $5 million fine.

In Spartanburg, Marsh told the judge, “I am sorry it has come to this. I feel responsibility for my actions.”

Marsh’s final sentencing will not take place for months or even years. During that time, he is supposed to cooperate with FBI investigators as they continue gathering evidence for possible charges against others at SCANA, which was the Cayce-based parent company of South Carolina Electric & Gas, and possibly elsewhere involved in the cover-up conspiracy, officials said.

Prosecutors said Wednesday that Marsh has been cooperating with investigators for 6 months. Evidence against Marsh included emails, witnesses and SCANA’s public filings about the status of the project.

Marsh, who held a variety of positions at SCANA before rising to president and CEO, also agreed to pay $5 million in restitution. He was supposed to pay that amount on Wednesday.

Marsh’s positions on his way up included accountant and vice president and after leaving court Wednesday, his SCANA service had given him a new tag: criminal.

“When you plead guilty, you admit the truth of the charges against you. Do you understand that?” Judge Mary Lewis asked Marsh as the hearing began.

“Yes,” replied Marsh, a short, white-haired man in a gray suit and dark tie who stood with his hands clasped in front of him for most of the hearing.

After the hearing, Marsh slipped out of the courthouse and evaded about a dozen reporters and television cameras by walking quickly in back of a group of more than a dozen law enforcement officials — including U.S. Attorney Peter McCoy and state Attorney General Alan Wilson — to a waiting SUV with heavily tinted windows.

During the hearing, federal prosecutor Jim May described Marsh’s crime as one of knowingly failing to disclose substantial “risks and uncertainties” surrounding the nuclear project in Fairfield County rather than a theft or an orchestrated scheme to defraud.

“He was not Bernie Madoff,” May told U.S. District Judge Mary Lewis in court Wednesday, referring to the New York City criminal mastermind behind a Ponzi scheme that defrauded billions of dollars from investors.

However, May made it clear that Marsh and others had participated in an illegal abuse of public trust by engaging in a deliberate plan to hide the extent of SCANA’s financial troubles at the nuclear project from the public, from regulators and from investors in the publicly traded utility.

Marsh’s appearance in federal court came some three and a half years after SCANA acknowledged to the public that it and Santee Cooper electric utility, its partner in the troubled nuclear venture, were giving up on the trouble-plagued project.

At first, the nuclear project’s difficulties were blamed on matters such as construction delays, but as a years-long FBI investigation showed, SCANA executives including Marsh kept the problems hidden from the public, investors and regulators. And deceiving the public by covering up serious problems at a publicly-traded utility such as SCANA is a federal crime.

Marsh, who now lives in North Carolina, helped lead a two-year cover-up, from 2016 to 2018, of the serious financial trouble that was jeopardizing the success of not only the ongoing Fairfield County nuclear project but also the troubled financial health of SCANA, according to records and evidence in the case.

At the time, SCANA — which has since been acquired by the Dominion Energy — was a respected gas and electric publicly traded utility and the only Fortune 500 company in South Carolina. It had 700,000 electric customers and 350,000 natural gas customers. Marsh was one of the state’s most highly respected businessmen.

During the 45-minute hearing before Judge Lewis, assistant U.S. Attorney May summed up the case against Marsh.

The project to build two nuclear reactors in Fairfield County was “the largest capital outlay project in the company’s history,” May told the court.

“The project was to do something that had not been done in the United States since the late 1970s with the idea that this would spark a nuclear renaissance that could reduce the dependence on fossil fuels,” May said.

Under a 2008 law passed by the S.C. General Assembly, SCANA was allowed to regularly increase its rates to its customers to pay for ongoing construction as the project went along, May said. That act changed existing South Carolina law, which up until then only allowed utilities to charge customers for plants that had already been built, May said.

SCANA, which had 55% ownership stake in the project, and Santee Cooper, a state-owned utility, which had 45%stake, had an oversight role in the project. But others — including Westinghouse — were responsible for providing those utilities with “true and accurate information” about the status project, May said.

The government’s investigation showed that much of the information provided to SCANA and Santee Cooper about the progress status of the project by Westinghouse was not accurate or correct, May said.

By late 2016, Marsh and others at SCANA had become aware about poor performance at the nuclear plant and its failure to meet crucial deadlines, deadlines that would allow SCANA to qualify for sizable tax credits, May said.

“In late 2016, disclosure to regulatory agencies and the public was required. But Marsh did not make these disclosures,” May said.

“It is for this failure that he is criminally liable,” May said.

In late July 2017, SCANA and Santee Cooper finally announced they were abandoning the project.

May also told the judge that Marsh’s assistance in providing evidence against other conspirators is important. “As long as they (the FBI) continue to investigate, we are going to need his help to addess the origins of this criminality as well as the additional bad actors.”

Following the guilty plea, U.S. Magistrate Judge Shiva Hodges allowed Marsh to leave under a $25,000 unsecured bond. Hodges asked how long it might be until Marsh is sentenced, but assistant U.S. Attorney Brook Andrews told her officials can’t say when the investigation might end. “At this time, we are unable to estimate the time.”

U.S. Attorney McCoy, in a press conference after the hearing, told reporters that “What is most exciting about today is that justice has been served. For years, institutions and individuals have abused the public trust with little to no accountability. This includes corporations that have increased profits at the expense of their customers.”

Under the law that allowed SCANA to charge customers for the ongoing construction at the nuclear plant, McCoy said, SCANA had an obligation to be truthful but its officials chose to deceive the public.

“Nothing’s more important than justice being served, which is what has happened here today,” McCoy said.

Last July, Stephen Byrne, SCANA’s former executive vice president, pleaded guilty to similar conspiracy charges.

Outside the courthouse, several longtime activists who for years had protested the nuclear power plant construction for years and SCANA’s role in the project said while they appreciated law enforcement’s efforts, they believed Marsh should have had a stiffer sentence.

“The $5 million fine is really like a traffic ticket to him,” said Tom Clements, who held a poster with an aerial view of the nuclear project with the tag “Scene of the Crime.”

“I assume he (Marsh) is going to suffer for two years in prison, but he really deserves a much longer prison sentence for what he’s done to the state of South Carolina,” said Clements, who predicted more people will eventually be charged.

The $5 million Marsh pays go to an existing state program that helps qualifying low income ratepayers with their utility bills, according to an attorney general’s press release.

Assistant U.S. attorneys in the case were Jim May, Emily Limehouse, Brook Andrews and Winston Holliday. Marsh’s defense attorneys were Brady Hair, Robert Bolchoz and Anne Tompkins.

This story was originally published February 24, 2021 at 11:38 AM.