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

Holtec International, an energy technology company, has reached a deal with state prosecutors to pay $5 million in penalties related to its application for New Jersey tax credits.

The New Jersey Attorney General’s Office said Tuesday that Holtec has also agreed to retain an independent reviewer to monitor the company’s future applications for state benefits. In return, the attorney general agreed not to prosecute Holtec or a related company as long as they comply with the terms of the settlement.

Under the settlement — labeled a “non-prosecution agreement” — Holtec and Singh Real Estate Enterprises will not receive the $1 million in tax credits they had sought from the New Jersey Economic Development Authority. Neither Holtec nor Singh Real Estate admitted criminal liability.

State Attorney General Matthew J. Platkin said the agreements announced Tuesday “reinforce our commitment to protecting New Jersey’s taxpayers and ensuring fairness and integrity in our economic system by preventing companies from defrauding the state’s tax incentive programs.”

“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,” Platkin said.

Holtec said it agreed to settle “under threat of unfounded retaliatory criminal prosecution,” adding that the agreement allows the company and “its over 500 employees in New Jersey to continue their important work on the forefront of the green-energy revolution in America and beyond.”

The company, which has two manufacturing plants and an engineering facility on a 50-acre campus in Camden, said it likely would have been more expensive to litigate the matter with the state. Holtec also said it won’t need an independent monitor because it has no intention of seeking additional tax credits.

The tax credit program came under scrutiny early in Gov. Phil Murphy’s tenure. The state comptroller in 2019 issued an audit that criticized the state Economic Development Authority’s oversight of the program. A task force appointed by Murphy, a Democrat, concluded that many companies — including several with ties to South Jersey Democratic power broker George E. Norcross III — had misled the state on their tax credit applications. Norcross and the companies denied wrongdoing, and the state later provided tax credits after withholding the benefits for some of them.

In the aftermath of the task force investigation, the EDA refused to certify an annual installment of Holtec’s $260 million tax incentive package — a separate award that is unrelated to the benefits at the center of Tuesday’s settlement. Holtec then filed a lawsuit accusing the agency of breaching its contract. The EDA said Holtec had made “material misrepresentations” on its application, including by failing to note the company had previously been temporarily suspended as a contractor by a federal agency and by allegedly misleading the agency about its consideration of an alternate site location in South Carolina.

A New Jersey appeals court in November sided with Holtec in that civil case, affirming a lower court’s ruling ordering the state Economic Development Authority to pay Holtec $26 million in incentives. Those tax credits are awarded in increments over 10 years.

That tax credit fight is not mentioned in the settlement agreement, but Holtec highlighted that history in its statement Tuesday, accusing the state of seeking a public “win” after losing in court.

The conduct covered by Tuesday’s agreement dates to July 2018, when Holtec invested $12 million in battery producer Eos Energy Storage in exchange for 6 million shares. Months later, Holtec sought state benefits through New Jersey’s Angel Investor Tax Credit Program.

Under the program, investors can be awarded incentives of 10% of their investment, capped at $500,000, according to the agreement. 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 in an effort to double the award to $1 million, Holtec and Singh Real Estate told the state that each company had invested $6 million “as of” July — even though Singh Real Estate had made no such investment at that time, according to the agreement.

“The NJEDA relied on the information contained in the applications and documentation submitted to it and approved $500,000 tax credits for both Holtec and Singh Real Estate’s purported investments in Eos,” the agreement says.

Holtec said in a statement that it “appropriately sought, received, and relied upon the advice of one of the nation’s largest accounting and tax firms to structure a proper investment and an accurate tax-incentive application. Holtec’s legal counsel oversaw preparation of the transaction documents as well.”

Holtec maintained that it didn’t falsify records and that its submissions to the EDA were accurate.