Suit filed Tuesday against Grady EMC
Editor’s Note: This article has been revised to reflect the correct amount of the loan made by Grady EMC to Thomas A. Rosser, Sr. The original version posted and published stated the loan amount was $3,750,000. The correct loan amount was $375,000. We regret the error.
A lawsuit against the Grady Electric Membership Corporation, its board of directors, General Manager Thomas A. Rosser Jr., and former general manager Thomas A. Rosser Sr., was filed in Grady County Superior Court this week by members of a group calling themselves the Take Back Our Grady EMC committee.
Members of the EMC Board of Directors named in the suit include Dewey Brock Jr., Caylor Outzs, Lamar Carlton, James Freeman, Lamar Strickland, Robert E. Lee and James Lewis.
The plaintiffs include Gordon Clyatt, Ronald Sellars, C. Seaborn Roddenbery, Jerome J. Ellis and Roy Brock.
The suit was filed in Clerk of Court Debbie Kines’ office Tuesday afternoon by Valdosta attorneys George T. Talley and Edward F. Preston, who are representing the plaintiffs.
In the complaint, the plaintiffs claim the Grady Electric Membership Corporation and its directors and officers failed to return profits in the form of capital credits to plaintiff members and the other co-op members.
The defendants are also accused of a breach of various contractual and fiduciary responsibilities.
In the complaint, it is alleged that Grady EMC has improperly retained profits and used the money to make unauthorized and unreasonable investments, make unauthorized loan(s), and pay excessive compensation to some of its officers and/or employees.
The plaintiffs allege that Grady EMC has not distributed any capital credits to members in decades. The suit alleges there is more than $43,500,000 in capital credits allocated to members of Grady EMC at the time of the court filing.
Each member of the Grady EMC earns a patronage capital credit allocation based on his or her annual electric usage.
In their suit, the plaintiffs state that the $43,500,000 being held by the Grady EMC in capital credits exceeds what is needed to cover all administrative and operating expenses; pay the principal and interest on the obligations issued or assumed in the performance of the purposes for which it was organized; establish and maintain reasonable reserves; and accumulate funds for future capital needs.
The plaintiffs also allege that retaining capital for long periods of time also jeopardizes the tax-free status of a cooperative’s earnings.
The suit filed Tuesday states, “These policies not only violate state law, federal tax law, and cooperative principles, but they deprive current and former cooperative members of the repayment to which they are entitled. The money at stake is substantial and currently exceeds $43,500,000.”
The plaintiffs are seeking a class action on behalf of the current and former members of Grady EMC who have not been paid their capital credits.
Also addressed in the suit are alleged examples of directors and officers of Grady EMC having “personally and unjustly enriched themselves” including:
• Paying Thomas A. Rosser Sr., a commercially unreasonable and excessive salary and compensation package which totaled more than $368,000 and $329,000 in the years 2011 and 2012 alone, and thereafter paying him an excessive salary as a consultant.
• Paying Thomas A. Rosser Jr., a commercially unreasonable and excessive salary and compensation package.
• Making a loan to Thomas A. Rosser Sr., so that he could purchase bank stock for his personal use. Grady EMC acquired stock in United National Bank. According to the tax returns of Grady EMC, Grady EMC subsequently sold this stock to Thomas A. Rosser Sr., for $3,750,000 and allowed him to purchase said stock by extending him an unsecured loan on very favorable terms.
• Allowing Thomas A. Rosser Sr. and Jr., to use Grady EMC assets and employees or contractors employed and paid by Grady EMC to renovate or work on their houses.
• Allowing employees of Grady EMC to work on and maintain expensive sports cars owned by Thomas A. Rosser Sr.
• Allowing sports cars owned by Thomas A. Rosser Sr., to be stored in a climate controlled warehouse owned by Grady EMC.
• Allowing Thomas A. Rosser Sr., to be an officer and/or agent of the following corporations: Grady EMC Holding Corporation, Sowega Power, LLC, Sowega Energy Resources, LLC, Sowega Holding Corporation, Baconton Power, LLC, Gum Pond, LLC, and Sugar Cane Properties, LLC. Such employment not only prevented Rosser Sr. from devoting his full attention to the management of Grady EMC, but may have allowed him to earn additional compensation.
• Allowing Grady EMC to invest in other corporations thereby diluting the profits earned by Grady EMC.
• Allowing Grady EMC to make loans to other corporations, thereby diluting the profits of Grady EMC.
• Allowing Grady EMC, or one of its subsidiaries or affiliated corporations, to enter into contracts for goods and services on less than favorable terms in order to personally benefit one or more of the individual defendants.
• Allowing Grady EMC to purchase land not needed for the generation or distribution of electricity.
The plaintiffs further allege that by failing to return capital credits to its members, Grady EMC has breached its bylaws contract with its members and its contractual obligation to operate on a nonprofit, cooperative basis for the benefit of its members.
The plaintiffs are seeking a jury trial to resolve the suit.
This week’s court filing comes after weeks of paid advertisements being published in The Cairo Messenger and The Bainbridge Post Searchlight by the Take Back Our Grady EMC committee in which many of the issues mentioned in this suit were publicized.
The committee also allegedly sought to purchase advertising space in The Thomasville Times Enterprise, but the newspaper’s publisher refused to accept the ads.
The committee has been circulating a petition in hopes of being able to call for the election of a new board of directors at the EMC’s annual meeting, which will be held on Friday, Oct. 17.
Grady EMC serves 13,143 members in Grady, Decatur and Thomas counties.