Miss. lawsuit: Twin Creeks tried to deceive state
Friday, November 30, 2012
JACKSON, Miss. (AP) — A California technology company trumped up a single solar panel sale in August in an attempt to hold onto the $27.7 million in state aid the company received to build a solar plant in Senatobia, Mississippi officials say.
The fraud allegation is contained in a lawsuit that Mississippi officials filed in an unsuccessful effort to block San Jose, Calif.-based Twin Creeks Technologies from selling its patents to GT Advanced Technologies for $10 million. The state was also unsuccessful in blocking creditor Silicon Valley Bank from reaping $7 million from the sale.
Twin Creeks, which is liquidating, tried to erase its debt before Mississippi sued. The firm proposed to repay $1.25 million or less, and give the state rights worth up to 20 percent of any future royalty payments from its technologies, an amount that could be worth up to $8 million. The state described royalty income as "highly uncertain" in the suit.
Gov. Phil Bryant told The Associated Press on Friday that when he met with Twin Creeks CEO Siva Sivaram on Oct. 17, he realized that the company wouldn't be able to live up to the memorandum of understanding (MOU) it had signed with the state, where it promised to begin production or make its first lease payment by Dec. 31, much less ultimately hire 500 employees or invest $132 million.
"It began to be clearer to me that they were not going to be able to meet some requirements of the MOU," Bryant said.
The Republican governor said lawyers advised that the state should sue on Nov. 8. That's three days after Twin Creeks told the state it was selling its assets to GT Advanced Technologies, according to the suit. That same day, MDA spokesman Dan Turner told the AP that Twin Creeks hadn't "missed any contractual obligations with the state."
In the suit, filed in Tate County Chancery Court, the state demands not only the $23.7 million, but damages related to alleged fraud, plus punitive damages against Twin Creeks.
"What I am trying to do now is take a project that has failed and make the people of the state of Mississippi whole by every legal means possible," Bryant said.
The state agreed to loan Twin Creeks up to $50 million at no interest for 20 years, channeling the money through the city of Senatobia. The city was supposed to collect lease payments and pay off its debt to the state. One provision of the contract called for Twin Creeks to start commercial production before Dec. 31.
The lawsuit says Twin Creeks gave the state an invoice showing it had made a sale of panels in August 2012. However, the state claims the panels were delivered to the home of a current or former Twin Creeks employee in California, and that the customer got an 85 percent discount, paying less than $500.
"This 'sale' was generated solely to mislead the state," the suit says.
Bryant declined to further discuss the fraud allegations. Tupelo lawyer Otis Tims, who's defending Twin Creeks, said the company didn't do anything wrong.
"Twin Creeks adamantly denies any wrongdoing or attempt to deceive anybody," Tims said, declining to discuss specifics.
The state won a restraining order the day that it filed suit to block the sale to GT Advanced Technologies. But by then, the sale had already gone through. The state tried again Nov. 9 to prevent Twin Creeks from transferring proceeds of the sale or royalty rights to anyone. That was also too late, as the state acknowledged in a Nov. 16 order noting Silicon Valley Bank had taken its share of the money.
In that later order, the state agreed to let Twin Creeks spend up to another $250,000 to wind down its affairs. It has also agreed not to challenge GT Advanced Techologies' right to two Hyperion machines, highly touted devices that are supposed to make flexible, super-thin solar panels. The purchaser plans to remove the machines.
Tims and state lawyers said a hearing that had been set for Tuesday in Grenada would likely be postponed, and that the restraining order now in effect would likely be extended. Tims said Twin Creeks and the state are having "very productive discussions" that could settle the debt and resolve the lawsuit.