Hamilton chair of National Steel Car U.S. up on fraud charges
Hamilton's Gregory Aziz accused of misleading officials with Alabama's state pension program
An Alabama grand jury has indicted the CEO of National Steel Car on securities fraud charges involving an unfinished factory.
The indictment, made public Friday, accuses company chairman and CEO Aziz of Hamilton of misleading officials with Alabama's state pension program to get financing for a rail car manufacturing plant that was never finished in northwest Alabama town of Cherokee. The 10-count indictment claims Aziz misled officials about how much the plant would cost and how many rail cars it would produce.
Securities Commission Director Joe Borg said Aziz was arrested Tuesday when his private plane landed in Chicago, and he has waived extradition to Alabama. He is scheduled to arrive next week.
Aziz's attorney, Joe Espy, said they are reviewing the charges. "Mr. Aziz will cooperate and is hopeful that these matters can be resolved," Espy said.
The Alabama Securities Commission investigated the case and helped get a grand jury indictment in Colbert County, where the rail car plant was supposed to provide 1,800 jobs.
The National Steel Car plant was supposed to be a major industrial plum for Alabama. The indictment says the state pension fund, the Retirement Systems of Alabama, entered into an agreement with Aziz in 2007 to provide nearly $347 million to construct the plant and provide startup money. The indictment says Aziz knew that wasn't enough, but he planned to hide the actual costs until the project was too far along and he could get more from the Retirement Systems to finish the plant.
The indictment says that "Aziz repeatedly falsely represented to the governor of Alabama that the project was on time and on budget."
To try to keep the project on track, the Retirement Systems agreed to provide a total of up to $625 million in 2009 in return for receiving 20 percent of the stock in the corporation Aziz created to operate the Alabama plant.
Then later that year, the Retirement Systems ended its relationship with Aziz and began steps to take over the incomplete building, the indictment says.
The Retirement Systems' chief attorney, Leura Canary, declined comment Friday, saying the indictment speaks for itself.
Colbert County District Attorney Bryce Graham said residents were excited when the plant was announced because it was supposed to mean good jobs. "It was a huge disappointment," he said Friday.