A Camden-based company that manufactures nuclear reactor parts will pay a $5 million penalty to avoid criminal prosecution related to a 2018 application for a $1 million tax credit under the New Jersey Economic Development Authority’s Angel Investor Tax Credit program, Attorney General Matt Platkin announced today.
Holtec International created false investment documents to double its $500,000 tax credit.
The settlement also requires Holtec, which manufactures nuclear reactor parts and mothballing nuclear power facilities, to pay for an independent monitor selected by the state to review any future government program applications over the next three years in exchange for ending an elongated criminal investigation.
In July 2018, Holtec invested $12 million in Eos, the manufacturer of battery systems for energy storage, in exchange for six million shares in Eos. Later, Holtec found out about Angel Investor Tax Credits for emerging technology companies.
“These agreements 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,” Platkin said. “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.”
The settlement still allows the state to investigate or prosecute current or former Holtec officers, directors, and employees – and possibly others connected to the company- for matters unrelated to the settlement. Holtec agreed to “forever abandon and relinquish any and all claims to tax credits” from its November 2018 submission to the EDA.
Singh Real Estate Enterprises (SRE), a firm operated by Holtec’s founder, Krishna P. Singh, also entered into a non-prosecution agreement requiring an outside monitor. If the state determines that Holtec or SRE “engages in or attempt or conspire to engage in criminal conduct” in violation of the settlement, the agreement would be voided and the state could move to prosecute.
Holtec never informed the EDA that the entire $12 million investment was made before their application; changing their proposal enabled them to obtain an extra $500,000 in tax credits.
“Over three million shares of Eos owned by Holtec after its $12 million investment had been returned to Eos by Holtec and then re-issued to SRE by Eos at Holtec’s request in October 2018 despite there being no additional exchange of funds between Eos and either of the two companies,” the settlement states.
“Documents had been created in October 2018 and dated July 2018 or “as of” July 2018 to make it appear as though Holtec invested $6 million and SRE invested $6 million in Eos in July 2018, when in fact in July 2018, SRE was not contemplating an investment in Eos, had done no due diligence for such an investment and made no investment in EOS.”
After the issuance of the tax credit certificates, Holtec asked the EDA to reissue them in the names of Holtec and SRE.
“The EDA refused to do so, noting that Holtec’s applications to the EDA for various tax credits were under investigation,” the settlement indicates.
Last year, a state appellate court said that Holtec didn’t commit fraud in its 2014 application for $260 million in tax incentives from the New Jersey Economic Development Authority. Holtec constructed a 50-acre technology campus in Camden.
Democratic powerbroker George Norcross serves on the board of directors of Holtec.