Holtec sues former executives and outside accountant for $70 million in damages, reputational harm from criminal probe

When energy technology firm Holtec International agreed in January to pay New Jersey $5 million to avoid facing criminal charges over a tax incentive dispute, the company denied wrongdoing and accused prosecutors of threatening “unfounded retaliatory” prosecution.

Holtec still maintains it handled everything aboveboard — but now the company is pointing the finger at its accountants, saying an outside firm gave bad advice that led to a costly criminal probe.

And in a twist, Holtec says its own investigation shows the company was the victim of a yearslong embezzlement and self-dealing scheme involving two of its own senior executives that cost it more than $70 million, according to a lawsuit the company filed this month in Camden County Superior Court.

The lawsuit comes as Holtec, which has two manufacturing plants and an engineering facility on a 50-acre campus in Camden, this week won a separate legal fight with the state over the New Jersey Economic Development Authority’s awarding of $260 million in tax credits in 2014. The privately held company specializes in nuclear fuel storage and in decommissioning shuttered nuclear plants.

The New Jersey Supreme Court this week declined to hear an appeal of a lower-court ruling that said the state had to honor its contract with Holtec. The EDA had withheld millions in tax credits that it claimed had been improperly awarded based on allegedly false and misleading statements made by Holtec on its application.

» READ MORE: Holtec wins legal fight over $260 million tax credit award as N.J. Supreme Court declines to review appeal

After enduring years of scrutiny from state authorities, now Holtec is going on the offensive.

Its lawsuit accuses accountant Lonnie Davis, of the Ohio-based firm CBIZ, of conspiring with the company’s former chief financial officer, Robert Galvin, and former general counsel, Andrew Ryan, to siphon funds from Holtec. The trio allegedly directed the company toward bad investments in cannabis companies in which they had undisclosed financial interests.

Those busted investments led to $60 million in losses, according to the complaint.

Davis declined to comment for this article. Galvin and Ryan could not be reached.

“As we allege in our complaint, we should have been able to trust and rely on our accounting and auditing firm, but they led us in a direction that caused significant financial harm to the business,” Kelly Trice, president of Holtec International, said in a statement. “We are committed to pursuing justice and ensuring accountability of CBIZ and former Holtec employees involved in this egregious misconduct.”

Holtec is represented by a team of lawyers that includes former New Jersey Attorney General Christopher Porrino. The attorneys declined to comment.

CBIZ denies the allegations made by Holtec. On the same day it was sued, Oct. 3, the company filed a federal lawsuit against Holtec in the Northern District of Ohio, asking a judge to declare that the statute of limitation had passed on the accounting malpractice allegations.

It also claims that Holtec owes the firm $75,000.

”Holtec owes CBIZ for unpaid work on an engagement stemming from 2023,” the company said in a statement.

The dispute between Holtec and CBIZ arose from a 2018 application for tax credits under New Jersey’s Angel Investor Tax Credit Program, which promotes investments in emerging technologies.

Holtec that year invested $12 million in battery producer Eos Energy Storage, an Edison-based green energy company. Under the Angel Investor program, investors can be awarded incentives of 10% of their investment, capped at $500,000, according to the non-prosecution agreement Holtec signed this year. So even if a company invests more than $5 million, it can receive only $500,000 worth of tax credits.

Holtec, having already invested $12 million, was eligible for only $500,000, according to prosecutors.

But Davis, the accountant, allegedly advised Holtec to split its investment with a Holtec subsidiary, Singh Real Estate Enterprises Inc., such that each entity could receive the maximum $500,000 tax credit — doubling the total award, according to Holtec’s lawsuit.

The complaint says Davis wrote in an email that Holtec shouldn’t “be too cute” and attempt to split the investment further. Prosecutors from the state Attorney General’s Office read that email as evidence of Holtec’s “culpable state of mind” to defraud the tax incentive program, according to the lawsuit.

» READ MORE: Holtec agrees to pay a $5 million fine to avoid criminal charges in N.J. tax credit case

Instead of receiving the tax credits, Holtec was informed that it was under investigation. Davis allegedly never told Holtec that there was risk in splitting the investment.

The company agreed to pay the $5 million penalty because fighting prosecution would have been more expensive, Holtec said in January. But the lawsuit says that even though Holtec didn’t admit liability, its reputation was still damaged by a news release issued by the Attorney General’s Office announcing the non-prosecution agreement.

“Today, we are sending a clear message: No matter how big and powerful you are, if you lie to the state for financial gain, we will hold you accountable — period,” State Attorney General Matthew J. Platkin said announcing the settlement.

While conducting its own internal review of the tax credit matter, Holtec discovered that outside accountant Davis and two of the company’s own executives — general counsel Ryan and CFO Galvin — allegedly formed a shadow company called CBIZ Consulting, which had no relationship to CBIZ despite sharing a name, address, and phone number as the accounting firm’s Plymouth Meeting office, according to the lawsuit.

Davis and the Holtec executives falsely told the company that CBIZ Consulting was affiliated with the accounting firm, allowing the defendants to siphon money and subvert Holtec’s internal controls for registering a new vendor, the complaint says.

From 2017 through 2019, the lawsuit says, Holtec paid CBIZ Consulting $710,000 for services such as “finder’s fees” in connection with investments and “services” that were never actually rendered — without knowing its own executives and outside accountant had financial stakes in that entity.

And to make matters worse for the energy company, the investments that CBIZ Consulting allegedly recommended “turned out to be a disastrous loss,” the complaint says. In total, Holtec says it lost about $60 million on these companies since 2018.

The trio directed Holtec to these investments because they allegedly had personal financial ties to the companies, the lawsuit says.

CBIZ has no relationship to CBIZ Consulting, the accounting company said in a statement.

Finally, the lawsuit accuses CBIZ of concealing Davis’ misconduct to protect its own inflated invoices.

CBIZ “observed hundreds of thousands of dollars in payments to the misleadingly named ‘CBIZ Consulting,’ yet said nothing to Holtec’s management,” the lawsuit says.