Sunday, July 21, 2019

Federal court confirms probe into Cobra Energy

By on July 12, 2019

Prepa Executive Director Justo González Torres and utility personnel inspect work performed by Cobra Energy at the Mambiche Prieto barrio of Humacao. (Screen capture of Twitter -AEE)

Investigation underway into $1.8 billion in contracts with Puerto Rico power utility

SAN JUAN — An order issued by the U.S. District Judge Jon Tigar, confirms that a federal investigation is underway into the contracts granted to the Cobra Acquisitions Energy, a subsidiary of Oklahoma-based Mammoth Energy Services, to repair Puerto Rico’s electrical grid in the aftermath of hurricanes Irma and María.

The order issued by Judge Tigar on Wednesday is related to a request by former Cobra President Donald Keith Ellison, to have the affidavit of an FBI agent unsealed. It led to the agents seizing nearly $4.5 million of his assets.

The court concluded that Ellison should seek to have the affidavit deferred in the District of Puerto Rico, according to Judge Tigar’s nine-page order.

However, in detailing the circumstances of the case, the judge’s order establishes that the seizure occurred as part of the FBI’s investigation into the contracts awarded to Cobra by the Puerto Rico Electric Power Authority (Prepa) and paid with Federal Emergency Management Agency (FEMA) funds. Cobra’s contracts with Prepa reached $1.8 billion.

The ongoing investigation is related to an alleged fraud scheme in which the former president of Cobra allegedly used his relationship with a FEMA employee to increase his contracts on the island.

The federal government indicated in Ellison’s case that FEMA officials should not be in direct contact or advise contractors, in reference to Ahsha Tribble, a regional FEMA administrator who was supervising the reconstruction of the island’s power grid after Hurricane Maria.

According to the Wall Street Journal, Tribble is under administrative leave.

The lawsuit says Ellison has not been accused of anything.

According to Judge Tigar’s order, on April 26, the FBI obtained an order in the U.S. District Court in Puerto Rico to seize funds in several bank accounts belonging to Ellison, as well as a catamaran and a pickup truck.

One of the orders authorized the seizure of $1 million from Ellison’s Charles Schwab account. Another magistrate judge granted an order to confiscate another $3.4 million in cash and investments.

On June 12, Ellison filed a motion in U.S. District Court in California requesting that the assets be returned and that he be given access to any affidavit or federal government document that has been submitted to request their seizure.

The judge determined that Ellison had not been able to prove damages suffered for not having access to the funds seized and has not proven that if the case is seen in full, it has merit to prevail.

BDO clients

Meanwhile, on Thursday, the Office of the Inspector General executed a search warrant at Prepa related to accounting firm BDO Puerto Rico, whose president, Fernando Scherrer, was charged for corruption and arrested this week.

“Today, [Prepa] received two officials from the Office of the Inspector General of Puerto Rico, who carried out an Information Request in relation to the company BDO Puerto Rico, with which the [Prepa] has maintained a contractual relationship since 2016. [Prepa] is collaborating with the Office of the Inspector General of Puerto Rico and will provide all the information requested,” Astrid Rodríguez Cruz, director of the utility’s legal division, said in a statement.

According to several sources and documents obtained by Caribbean Business, while BDO had contracts with Prepa, it also provided services to Whitefish Energy and Cobra, which were contracted by the island’s public power corporation.