Ex-SCANA chief turned informant gets two-year prison sentence in SC nuclear debacle

Kevin Marsh, who as CEO of energy giant SCANA led one of South Carolina’s economic crown jewels and was one of the state’s top business leaders, was sentenced Thursday to two years in prison for his role in a cover-up of financial and construction problems at the failed V.C. Summer nuclear plant.

Marsh, 66, the former SCANA executive and board chairman, could have gotten five years in prison for conspiracy to commit mail and wire fraud, a federal charge he pleaded guilty to last February. He has already forfeited $5 million to the government as part of his punishment.

Federal Judge Mary Lewis allowed Marsh to report sometime in early December to federal prison in Butner, near Raleigh. The prison has housed other high-profile white collar criminals, including the late Bernie Madoff, who ran a Ponzi scheme, and former 5th Circuit Solicitor Dan Johnson, who converted public money to his personal use.

Marsh’s two-year prison sentence — recommended by prosecutors and defense lawyers — was the result of his “substantial” help in providing information which helped lead to the guilty pleas by former SCANA official Stephen Byrne and former Westinghouse nuclear official Carl Churchman, federal prosecutors said.

Neither Byrne nor Churchman have been sentenced.

Prosecutors described Marsh’s crimes of concealing crucial information to stockholders, ratepayers and regulators about the failing status of SCANA’s billion-dollar nuclear project as a crime not motivated by greed or hopes of gain.

Marsh didn’t plan his crime from the beginning, but he and others gradually became committed to a cover-up of the troubles at the nuclear project and so made a “failure of disclosure, a failure of judgment and a failure of conscience,” assistant U.S. Attorney Brook Andrews told the judge.

Marsh had hoped SCANA would be able to surmount difficulties and finish the project but that was not to be, Andrews said.

“It was a failure to tell the truth when to tell the truth would be fraught with dire financial consequences,” Andrews said.

Lewis said she objected to prosecutors’ “vanilla wafer” sanitized description of Marsh’s lack of initial intentions to commit a crime. She called it a description that “understates the seriousness of non-disclosure” by officials of a publicly-traded company and doesn’t take into account all the victims harmed by intentionally concealing matters that should be public.

The numerous victims hurt by the fraud include investors, SCANA ratepayers and regulators who oversaw the electric utility, she said.

“It hurt a lot of people,” said Lewis, describing the crime as one of “elegance and sophistication” that nonetheless caused “enormous” losses.

Marsh told the judge Thursday, “Not a day goes by when I don’t regret that these nuclear plants were not built for the benefit of South Carolina. I accept full responsibility for my decisions.”

That wasn’t enough for citizen watchdog Tom Clements, who’s criticized the project for years and was in attendance.

“He just can’t bring himself to apologize,” Clements said.

Asked Thursday about Marsh’s sentence, Gov. Henry McMaster told reporters every one involved should be held accountable.

“It’s taken time, but that’s what’s happening,” he said.

Marsh will be sentenced on state charges Monday in Spartanburg County before Judge Mark Hayes.

Kevin Marsh, from powerful to prison

As part of his sentence, Marsh also has promised to testify against Westinghouse former top nuclear official Jeffrey Benjamin, who was senior vice president of new plants and projects.

Benjamin continues to assert innocence and could go on trial in 2022.

Marsh provided crucial information that led to the recent indictment of Benjamin, Andrews told the judge.

“He has met with the FBI seven times in daylong sessions,” Andrews said.

The fallout from SCANA’s failure to complete its nuclear project still haunts the state, acting U.S. Attorney Rhett DeHart said in a statement after the hearing.

“Due to this fraud, an $11 billion nuclear ghost town, paid for by SCANA investors and customers, now sits vacant in Jenkinsville, S.C.,” DeHart said. “Hopefully, this prosecution will deter other corporate fraud in the future.”

The three guilty pleas so far show that the downfall of SCANA — what was a homegrown Fortune 500 company — was due not to mismanagement or lack of planning but to criminal activity on the part of the company’s top officials, prosecutors said.

“Through intentional and material misrepresentations and omissions, the defendant, Kevin Marsh, deceived regulators and customers in order to maintain financing for the project and to financially benefit SCANA,” said the criminal charge to which Marsh pleaded guilty to earlier this year. “The members of the conspiracy’s actions and the associated cover-up resulted in billions of dollars of loss.”

In a pre-sentencing memo, lawyers described Marsh as “a humble, caring man who puts the needs of others ahead of his own. His strong Christian lifestyle is revealed in letter after letter submitted to the Court by those who know Kevin both personally and professionally. These letters also make clear just how much of an aberration the conduct at issue in this case is for Kevin.”

Marsh’s attorney, Ann Tompkins of Charlotte, told the judge that prosecutors did not believe Marsh had pulled off a “theft or a Ponzi scheme.”

“He loved that company. He was a loyal and dedicated leader,” she said.

Marsh, who over 34 years worked his way up from an accountant’s job to SCANA’s top post, wants to serve his sentence so “he can serve his time and then return home to care for” his wife of 46 years who has breast cancer, Tompkins told the judge.

Judge Lewis replied, “There are very few people whom I see in this courtroom who don’t want to be with their families. I know they are remorseful. There is still a price to be paid for this kind of conduct.”

After the hearing, Andrews said he knows some may disagree with the description of Marsh’s crime or the length of Marsh’s sentence.

“I would just say this — Kevin Marsh was one of the most powerful corporate executives in the state of South Carolina,” Andrews said. “He is now going to prison for two years. That is not something that happens every day.”

SCANA’s downfall after VC Summer

In 2008, SCANA contracted with Westinghouse to build two modern nuclear units at the V.C. Summer nuclear facility in Jenkinsville, about 20 miles north of Columbia.

To cover construction, the S.C. General Assembly gave SCANA permission to charge its some 700,000 customers higher monthly rates. If completed, it would have been the first nuclear electricity-generating project built in years in the United States.

As construction on the project continued over the years, Westinghouse and SCANA’s top executives came to realize by 2015 or so that it would not be finished on time to qualify for a billion-dollar federal tax credit. And they realized the price tag would escalate far beyond the original $9 billion to $10 billion initial estimates, according to evidence in the case.

Those executives began to conceal the lack of progress.

In charging documents, government officials wrote concealment started as late as 2016, some nine months or so before SCANA announced in July 2017 it was abandoning the project.

However, numerous documents, dated years before 2016 that have come to light since, indicate that SCANA and Westinghouse knew the project was plagued by cost overruns and was not likely to meet the deadline to qualify for the $1 billion tax credit.

Once SCANA and its junior partner in the project, state-owned Santee Cooper, stopped construction, the FBI and Columbia’s U.S. Attorney’s office launched investigations to see if any federal laws were broken.

SCANA’s stock was publicly traded on the New York Stock Exchange and, as such, the company was under a legal obligation to see that any statement its officials made to the public, investors and regulators was factual and truthful.

After SCANA gave up on the Fairfield County project in July 2017, it was plagued by debt, besieged by lawsuits and its stock price plummeted. In early 2019, it was absorbed by Virginia energy giant Dominion Energy.

Victims in the debacle included SCANA’s 730,000 electric and natural gas customers who for years paid a total of $2 billion in higher monthly electric bills to pay for ongoing nuclear construction.

Some 3,000 construction workers lost their jobs when the nuclear project shut down.

Prosecutors in the case included Andrews, Winston Holliday and Emily Limehouse, as well as Securities and Exchange Commission attorney John O’Halloran. . Marsh’s lawyers included Tompkins, Robert Bolchoz, Brady Hair and Derk Van Raalte.

Reporter Joseph Bustos contributed to this report.

This story was originally published October 7, 2021 at 10:43 AM.