Holtec Agrees To Pay $5M Fine, Avoids Criminal Prosecution In NJ

BUCHANAN, NY — The company that is in charge of decommissioning the Indian Point power plant agreed to pay a multimillion-dollar penalty to New Jersey to avoid criminal prosecution over applications for tax credits.

New Jersey Attorney General Matthew Platkin announced Tuesday that Holtec International, an energy technology company involved in decommissioning nuclear power sites, agreed to pay $5 million in penalties and retain an independent reviewer approved by the state to monitor future applications for state benefits.

In exchange, the attorney general said the state agrees to defer criminal prosecution following a lengthy criminal investigation into applications by Holtec and a related company, Singh Real Estate Enterprises, to the New Jersey Economic Development Authority for $1 million worth of tax credits from the Angel Investor Tax Credit Program.

Platkin said the agreement reinforces the state’s commitment to protecting taxpayers and ensuring fairness by preventing companies from defrauding tax incentive programs.

“Today, we are sending a clear message: no matter how big and powerful you are, if you lie to the state for financial gain, we will hold you accountable — period,” he said.

In a statement, a spokesman for Holtec said the company denies engaging in any misconduct and has admitted no wrongdoing.

“Instead, the current settlement contemplates a payment less than the estimated cost of litigating the matter with the state while proactively resolving any threat of criminal proceedings,” the statement said.

Holtec said it and a related company “appropriately sought, received and relied upon the advice of one of the nation’s largest accounting and tax firms to structure a proper investment and an accurate tax-incentive application. Holtec’s legal counsel oversaw preparation of the transaction documents as well.”

The attorney general’s news release said:

According to the agreements, Holtec is an energy technology company involved in, among other activities, the decommissioning of nuclear power sites. Representatives from Holtec and Eos Energy Storage (“Eos”), which produced batteries and battery systems for energy storage, conducted a series of meetings that resulted in Holtec investing $12 million in Eos in July 2018, in exchange for over 6 million shares of Eos. The President and Chief Executive Officer of Holtec signed the agreement on behalf of the company.

After the investment was complete, Holtec learned about the EDA’s Angel Investor Tax Credit Program, which provides tax incentives for qualified investments in emerging technology companies in New Jersey. Investors can be awarded tax credits of 10% of their investment, capped at $500,000 – meaning, any investment over $5 million would earn only the maximum $500,000 credit.

Despite Holtec having already made its $12 million investment in Eos, and in an attempt to double its tax credit from $500,000 to $1 million, new investment documents were created sometime in September or October 2018 that Holtec and Singh Real Estate Enterprises had each made a $6 million investment “as of” July 2018, the date of Holtec’s original investment. The documents did not reflect anywhere that they had been created sometime in September or October 2018. SRE representatives had not participated in Holtec’s pre-investment meetings with Eos, did not have access to the investor data that was supplied to Holtec, and had no plans to invest in Eos at the time of the July investment.

The applications for tax credits filed with the EDA by Holtec said the $6 million investments by Holtec and SRE had been made “as of” July 2018. At no time did Holtec, SRE, or anyone else inform the EDA that: (a) Holtec alone had made a $12 million investment in Eos in July 2018; (b) SRE had not actually invested in Eos in July 2018; (c) over 3 million shares of Eos owned by Holtec after its $12 million investment had been returned to Eos by Holtec, and then re-issued to SRE by Eos at Holtec’s request in October 2018 despite there being no additional exchange of funds between Eos and either of the two companies; or (d) documents had been created in October 2018 and dated July 2018 or “as of” July 2018 to make it appear as though Holtec invested $6 million and SRE invested $6 million in Eos in July 2018, when in fact in July 2018, SRE was not contemplating an investment in Eos, had done no due diligence for such an investment, and made no investment in EOS.

The EDA relied on the information contained in the applications and documentation submitted to it and approved $500,000 tax credits for each of Holtec and SRE’s purported investments in Eos. Tax credit certificates were issued in the names of various owners of Holtec and SRE. After the certificates were issued, Holtec attempted to persuade the EDA or the State of New Jersey to re-issue the tax credit certificates in the names of Holtec and SRE. The EDA refused to do so, noting that Holtec’s applications to the EDA for various tax credits were under investigation.