- Green Bay Press Gazette: Oneida Tribe targeted in $400 million suit over energy deal
A former business partner is seeking nearly $400 million in damages in a breach-of-contract lawsuit that stems from a failed waste-to-energy venture by the Oneida Tribe of Indians.
The suit filed in Chicago accuses the Oneida tribe and its affiliate, Oneida Seven Generations Corp., of violating agreements to lease equipment and share profits with Generation Clean Fuels LLC, a firm based in the Chicago suburbs.
The suit, filed March 6, states that the tribal-owned company reneged on deals that would have brought Generation Clean Fuels and its affiliates a total of $397 million in lease payments, revenues and other benefits from the failed development.
According to the new lawsuit, then-company President Kevin Cornelius signed agreements with Generation Clean Fuels and its affiliates in May and June of last year. In the agreements, Cornelius agreed to lease “liquefaction machines” for the gasification plant and to give 49 percent of the operation’s proceeds to General Clean Fuels, along with subsidiaries identified as ACF Leasing LLC and ACF Services LLC.
Cornelius subsequently left Oneida Seven Generations [in August 2013] without explanation.
From page 2 of the Complaint:
Generation Clean Fuels, LLC (“GCF) is a limited liability company organized in the State of Delaware and is the sole owner of ACF Leasing and ACF Services with offices in Cook County, Illinois and Door County, Wisconsin.
Green Bay Renewable Energy, LLC, (“GBRE”) is a wholly owned subsidiary of Oneida Energy Blocker Corporation, a Delaware corporation (“Blocker”). On information and belief, Blocker was created to protect the federal tax exemption of Oneida Seven Generations Corporation (“OSGC”).
Blocker is a wholly owned subsidiary of Oneida Energy Inc., a Wisconsin corporation (“OEI”).
OEI is a wholly owned subsidiary of OSGC.
From page 3 of the Complaint:
GBRE AND ACF Leasing entered into a Master Lease Agreement…on or about May 24, 2013 regarding the leasing of specific elements. ACF was the lessor and GBRE was the lessee.
GBRE and ACF Services entered into a Maintenance Agreement…on or about May 24, 2013.
From page 5 of the Complaint:
Kevin Cornelius, at all relevant times the Chairman and Chief Executive Officer of GBRE, acted on behalf of GBRE in executing the Master Lease and the Maintenance Agreement.
Which means that former OSGC & GBRE CEO Kevin Cornelius enetered into agreements regarding plastics gasification/incineration AFTER General Tribal Council voted on May 5, 2013 to prohibit OSGC and its subsidiaries from conducting any kind of gasification/incineration anywhere on the Oneida reservation.
From page 6 of the Complaint:
GBRE, OSGC, and the ONEIDA TRIBE were informed prior to December 15, 2013 that the Project would constitute the launch of the business GCF, ACF Leasing and ACF Services and the consequences to the businesses of GCF, ACF Leasing and ACF Services if the Project did not proceed in accordance with the Agreements.
So GCF, ACF Leasing and ACF Services were entirely new businesses, unproven and with no real track record of ability nor profitability, and General Tribal Council – which is the ultimate decisive shareholder of any and all Tribally-chartered corporations and subsidiaries – was never informed that GBRE & OSGC were entering into agreements to do exactly what GTC voted to prohibit OSGC from doing on the Oneida reservation.
Perhaps in the future companies which consider doing business with the Oneida Tribe should read the Oneida Constitution and relevant GTC Resolutions, such as GTC Resolution 11-15-08-C which says:
Be It Further Resolved, that no “agent” of the Tribe shall enter any agreement with any corporation that prohibits full disclosure of all transactions (receipts and expenditures and the nature of such funds) and that such an agreement is not binding to the Tribe[.]
Obviously OSGC, GBRE and the current Oneida Business Committee should have read them – and abided by them – as well.
From page 13 of the Complaint:
On information and belief, [Green Bay Renewable Energy] did not observe any of the requisite limited liability company formalities, such as acting through its managers or maintaining a separate bank account. Further, GBRE used the offices of OSGC and its officers used business cards, e-mail accounts and stationary identifying them as officers of OSGC when conducting business on behalf of GBRE.
On information and belief, GBRE failed to maintain arm’s length relationships between itself, on the one hand, and OSGC and the ONEIDA TRIBE, on the other hand.
[Green Bay Renewable Energy] is a mere facade for the operations of OSGC and the ONEIDA TRIBE.
At all relevant times, GBRE, OSGC and the ONEIDA TRIBE had such a unity of interest and ownership that their separate personalities no longer exist.
So much for that “corporate veil” stuff.
What was the role of P20 Technologies, LLC, in this endeavor? Readers will remember that Atty. Eric R. Decator of Evanston, IL, who is the General Counsel and CFO of Generation Clean Fuels, stated in a a February 20, 2014 affidavit regarding a lawsuit against Generation Clean Fuels by an investor that the reason investors had not received any returns was due to “a breach of the P20 Contract by P2O Technologies, LLC.”
Is Generation Clean Fuels going to sue P2O Technologies as well?
As Oneida Eye reported, Alliance Construction & Design President Todd Parczick and Vice-President of Operations Mark Verhaagh are respectively a Managing Member and the Registered Agent of P2O Technologies, LLC. Either Alliance Construction & Design or Alliance GC is the 49% shareholder in Oneida-Kodiak Construction, LLC, and OSGC is the 51% shareholder.
Tribal officials have stated that no valuation of Oneida-Kodiak Construction was conducted in the audit & analysis of dissovling OSGC performed by auditing firm McGladdrey & Pullen due to the fact that the Tribe was being denied access to Oneida-Kodiak’s financial records by Alliance Construction & Design over a “dispute” between Alliance and OSGC.
Is the Tribe going to sue Alliance, or vice versa?
The McGladrey & Pullen audit of OSGC cost the Tribe $195,000 and said, “From a quantitative perspective, as of September 30, 2013 the proposed dissolution of OSGC into the Tribe has minimal impact on the Tribe from a creditworthiness perspective. The Tribe would maintain its ability to meet financial commitments.”
Did OSGC withhold information from McGladrey & Pullen about potential financial liabilities created by its agreements with ACF Services, ACF Leasing, and Generation Clean Fuels?
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