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PUCT Staff Still Seeking Revocation of dPi Energy Certificate Despite New Trust Structure
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December 15, 2010
Notwithstanding Zahed Lateef's proposal to place ownership of dPi Energy into a trust over which he has no control, PUCT Staff is still seeking revocation of dPi Energy's REP certificate, with Staff alleging in testimony that, "[i]t appears that Mr. Lateef has been convicted and found liable for theft in Texas."
Staff's original petition to revoke dPi Energy's certificate (Docket 37917) alleged that dPi Energy's certificate amendment to reflect ownership by Lateef had material deficiencies, such as failing to disclose complaint histories of all affiliates. Among other things, Staff also alleged that Lateef's experience as a principal, owner, and/or director of two previous REPs which underwent involuntary mass transitions disqualified him from owning or controlling a REP.
In response, Lateef has proposed placing 100% of his ownership of dPi Energy into a trust, which would result in Lateef having no ownership or control of dPi Energy as both a legal and practical matter (see 11/9). With Lateef no longer seeking an ownership role, the prohibition against a principal of a REP which experienced an involuntary mass transition owning or controlling a REP is not implicated.
In responsive testimony, Staff acknowledged that dPi Energy is no longer seeking
a change in control reflecting Lateef as an owner, and thus the proceeding need only
address issues raised in Staff's counter-
However, Staff's responsive testimony also contained a new allegation of a failure to disclose what Staff said “appears” to be a past judgment against Lateef.
Staff noted that in earlier testimony, Lateef testified that none of dPi Energy's principals have ever been convicted or found liable for fraud, theft, larceny, deceit, or violations of any securities laws, customer protection laws, or deceptive trade laws in any state.
Staff produced with its responsive testimony what Staff said was a true and correct
copy from the Harris County District Clerk Records, "indicating that Mr. Lateef was
convicted of theft in 1993." The record provided by Staff describes the offense
as "THEFT-
Furthermore, Staff testified that this conviction was not disclosed by dPi Energy to the Commission in its application for a REP certificate. Staff said that the Substantive Rules require the, "[d]isclosure of whether the applicant or applicant's principals have been convicted or found liable for fraud, theft, larceny, deceit, or violations of any securities laws, customer protection laws, or deceptive trade laws in any state."
"dPi Energy and Mr. Lateef's false testimony and failure to disclose the theft conviction against Mr. Lateef provide another reason in addition to those previously discussed in [Staff’s] Direct Testimony to revoke the REP certificate of dPi Energy," Staff alleged.
dPi Energy provided responsive testimony to Staff's original allegations, arguing that nothing in Staff's petition rises to the level of revocation. Among other things, Staff alleged that dPi's failure to list Riverway Power's complaint history constituted a material deficiency, since Lateef managed operations at Riverway when it experienced a POLR mass transition.
However, dPi Energy argued that the Substantive Rules require disclosure of complaints
of the applicant's affiliates that "provide" utility-
Subst. R. §25.107(g)(2)(B), "as written, does not require the disclosure of information for a company that no longer exists and is therefore not affiliated with the applicant," dPi Energy said in testimony.
In any event, dPi Energy said that it clearly disclosed Lateef's affiliation with Riverway Power in its initial application, and thus the Commission was on notice that the complaint history of Riverway Power may have been relevant.
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