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| Cobb Electric Membership Corporation (GA)
Cobb Electric Membership Corporation ("Cobb Electric") was formed in 1938 and is headquartered at 1000 MC Parkway, Marietta, Georgia 30050. It is
the largest Rural Electric Cooperative in Georgia and also one of the largest in the United States.
Cobb Electric has over 193,000 members serving portions of Bartow, Cherokee, Cobb, Fulton and Paulding Counties in the metropolitan Atlanta area and Calhoun, Clay, Quitman and Randolph Counties in Southwest Georgia.
Some of these links take you outside of the Coop Litigation News website so we aren't responsible for the content.
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News
 Cobb EMC faces another Lawsuit
Atlanta Journal Consitution
January 15, 2010
Cobb EMC faces another lawsuit, this one claiming it owes thousands of
former customers up to $300 million. The lawsuit seeks class-action
status for all former customers since 1939.
The lawsuit, filed Friday in Cobb County Superior Court, claims that Cobb EMC, one of Georgia’s largest
electric cooperatives, has kept money owed to former customers in
violation of "longstanding principles" that guide electric membership
cooperatives nationwide.
It also says the co-op used money that should go to former customers
to make periodic rebates to current customers. The company's Web site
says the coop has paid $33 million in rebates since 1996.
The lawsuit, filed by Alpharetta law firm Pierce, Gabriel &
Parker, also claims Cobb EMC has failed to abide by the terms of its
own charter, which calls for repaying current and former customers from
its excess earnings. The excess is credited to members based on power
usage.
"Cobb EMC has kept these capital credits and not returned any," said
attorney Chuck Gabriel. But unlike current customers, former EMC
customers can only seek repayment through the courts, said attorney Sam Pierce. . . .
The co-op settled a lawsuit with suing customers in December 2008, related to a for-profit affiliate, Cobb Energy.
In April last year, the Cobb County district attorney's office executed search warrants at five locations related to Cobb EMC.
Authorities raid Cobb EMC offices
Atlanta Journal-Constitution
Thursday, April 23, 2009
The Cobb County district attorney's office and local and state law
enforcement agencies executed search warrants Wednesday at five
locations related to the Cobb Electric Membership Corp.
"We are being swindled"
The Marietta Daily Journal
September 5, 2008
MARIETTA - Temperatures and tempers were hot Thursday morning at the
70th annual members meeting of the Cobb Electric Membership Corporation
at its headquarters off Cobb Parkway.
A conflict of interest by Cobb EMC's President and CEO Dwight Brown
and its board who also oversee nonprofit EMC's for profit subsidiary,
Cobb Energy, were foremost on the minds of co-op members who voiced
their frustration and asked board members to resign. . . .
Fletcher
Thompson, a Marietta resident who represented Georgia in Congress for
three terms beginning in 1967, was first at the microphone during new
business. . . .
"We are being swindled," Thompson said. . . .
[MORE]
Settlement of lawsuit against Cobb EMC is approved
Atlanta Journal-Constitution
December 2, 2008
A 14-month legal war between Marietta electric cooperative Cobb EMC
and its customers ended Tuesday, when a judge approved a settlement of
the case.
The co-op will spend an estimated $47 million to regain control of
the business it turned over to a for-profit affiliate, Cobb Energy, 10
years ago.
Co-op's chief rewarded with Cobb Energy Stock
Atlanta Journal-Constitution
May 1, 2008
A nonprofit Cobb County electric cooperative and its management company awarded their chief
executive $3 million in stock that pays $265,500 a year in dividends,
according to annual reports and court disclosures.
Dwight Brown obtained 120,000 shares in the management company, Cobb
Energy, in 2002 with interest-free loans that he does not have to repay
if he meets certain conditions.
Brown's dual role as
president of both entities is at the heart of a 2007 lawsuit alleging
he enriched himself at the customer-owned utility's expense. The co-op,
Cobb EMC, once owned all of Cobb Energy, but later transactions shifted
most ownership to investors, including Brown.
Cobb EMC accused of mismanagement in lawsuit
Atlanta Journal-ConstitutionOctober 22, 2007Another group of plaintiffs is taking on Cobb EMC.
Six customers of the Marietta-based electric cooperative, including a former Cobb County commissioner and a prominent local businessman, sued the co-op's officers and board members on the co-op's behalf Monday.
Coop Website
Most Rural Electric Cooperatives maintain websites but they rarely
provide material information about important aspects of their
operations. In fact this failure by a Coop to be forthcoming about its
policies involving patronage or capital credits is a red flag that its
policies and practices are suspect.This is Cobb Electric's website:
IRS Form 990s
As
non-profit corporation the Internal Revenue Service requires Rural
Electric Cooperatives to file an informational return much like a
corporate income tax return each year. These "IRS Form 990s" are
public information and Coops are obligated to provide access to copies
to interested persons.A study of these 990s can reveal
interesting information about these Coops including things like
salaries of executives and ownership of other for profit corporations.
This is a list of the most recently available 990s for Cobb Electric:
Often Coops that are having financial problems or are involved in
litigation do not timely file their IRS 990s as the IRS does little to
monitor compliance or accuracy. So, while our list may be complete,
some Coops may simply have not filed their 990s. | |
Litigation
In the Superior Court of Cobb County, Georgia
Shea et al. v. Cobb Electric Membership Cooperative
Case Number CIV 10-1-0353-48
Brief Summary
This
class action lawsuit was filed in the Superior Court of Cobb County,
Georgia on January 15, 2010. The Plaintiffs seek recovery on behalf of
a
class of former members of Cobb Electric Membership Cooperative for a portion
of more than $300 Million in patronage capital or capital credits owed to former members of the Coop. This lawsuit was only recently filed and in the very early stages of the litigation. For a complete list of all the allegations see the Original Class Action Complaint.
Pounds et al. v. Brown et al.
Case Number CIV 07-1-9408-48
Brief Summary
This
members
derivative action lawsuit was filed in the Superior Court of Cobb
County,
Georgia on October 22, 2007. The Plaintiffs seek recovery on behalf of
the Coop for damages due the Coop from misfeasance, nonfeasance and
malfeasance of certain of the Coop's Board of Directors and management. For a complete list of all the allegations see the Original Member Derivative Complaint.
This litigation looks to have been successfully resolved on behalf of
the Coop and its member owners when the Court approved a complex
settlement agreement on December 2, 2008. The Plaintiffs look to be
taking additional actions in the litigation to enforce and carry out
the terms of the Court's order. For the terms of this settlement see the Final Order and Judgment.
Buyouts
PEC says co-op 'not for sale'
San Marcos Local News
January 20, 2010
Pedernales Electric Cooperative’s (PEC) board of directors made it
clear Tuesday that the largest co-op in America is not for sale.
The board made the declaration after meeting in executive session to
discuss an offer made by New Jersey-based Quentin Capital Management
LLC to purchase PEC. Quentin Capital also made an offer to buy PEC in
2008.
“We remain committed to the position — as previously stated by the
Board on Sept. 15, 2008 — that this cooperative is not for sale,” said
PEC Board President and District 6 Director Larry Landaker.
The board directed staff to create a formal response to Quentin
Capital and to develop a policy for board consideration to address any
potential future offers. . . .
[Editors Note: See Terms of Rejected Offer Below.]
Major Texas, Georgia Coops
Reject Buyout Offers
The Coop Litigation News has recently become aware of an extremely interesting turn of events involving Rural Electric Coops.
A
substantial investor has made credible offers to "buyout" or purchase
for cash at least two major Coops lock, stock and proverbial barrel.
Both offers involve over $500 Million.
To quote Don Corleone from the Godfather these are seemingly "offers that [the Coops] can't refuse."
Reliable sources have told the Coop Litigation News that the terms of both of the offers are virtually identical:
- Pay 100 cents on the dollar to current and former members of the Coop for their capital credits.
- Assume and/or pay all outstanding debt of the Coop.
- Freeze electric rates for three years.
- After three years electric rates would be set by the state public utility commission.
- Not fire any rank and file employees absent good cause.
- Keep the current Coop board of directors.
- Keep
current management of the Coop. (Naturally incompetent or corrupt
managers like those indicted or facing indictment would not be retained.)
We
understand both offers were backed by major institutional investors
with billions of dollars in assets willing to purchase these Coops in a
matter of months.
Such offers look to be one of those cliched "win win" situations:
- This would quickly infuse hundreds of millions of dollars into the local economies from out of state investors.
- Nationwide
the average Coop member has over $1,000 -- many have over $10,000 -- in
capital credits which they would receive in cash in a few months.
Money that it will take decades for the Coop members to receive under
existing Coop management -- if ever.
- The Coop would become a taxable entity adding millions of dollars to state and/or local budgets.
But for some unknown reason the Boards of Directors of both "Buyout
Targets" -- Cobb Electric in Georgia and Pedernales Electric in Texas
-- have rejected the offers.
Our investigation is ongoing and we'll report what we find, when we find out why the offers were rejected.
Service Area
Rural Electric Cooperatives provide electrical service to customers
within a geographical area know as a "Service Area" or "Service
Territory". These Service Areas often look like highly "gerrymandered"
political boundaries and occasionally there will be areas or pockets
withing the boundary where the Coop does not provide service like a
small town or city serviced by another electric utility. Within these Service Areas the Coop typically has an effective monopoly with no meaningful competition. According to its website, this is Cobb Electric's metropolitan Atlanta Service Area:
And this is Cobb Electric's Pataula District Service Area can also be viewed from this link:
And this is a PDF Map of all Suppliers of Electricity in the state of Georgia. | |
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This page was last modified on Sunday, January 31, 2010
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