Lawsuit searches for missing $18M

Published 12:00 am Tuesday, February 17, 2004

J. Doyle Fuller, a Montgomery-based attorney, filed suit against Pioneer Electric Cooperative on Friday on behalf of E. Wendell Phelps, Hoffman Rhyne and Kenneth Stallworth &045; all members of the cooperative.

Breach of contract, negligence and willful and wanton conduct are a few of the allegations made in the lawsuit against the Butler County nonprofit, electrical cooperative.

According to Fuller, the suit stems from the disappearance of more than $18 million of cooperative members’ funds over the course of a year. The suit seeks to discover how the funds disappeared and if the defendants were negligent, wanton or reckless in their management of the cooperative.

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Defendants include cooperative manager J. Malloy Chandler, trustees of the cooperative and the Acme Propane Gas Company’s board of directors.

Attempts to contact a representative of the cooperative were unsuccessful.

Fuller said it appeared that the cooperative’s management was the problem. The cooperative is managed by a board of trustees, members of which are also officers with Acme Propane Gas Company. According to Fuller, it appeared that the cooperative’s assets were used to pay off gas company debts. &uot;If nothing else, it’s gross mismanagement of the cooperative,&uot; Fuller said. &uot;Employees and officers of the cooperative are also officers of the propane company, but the cooperative has no ownership interest in the propane company.&uot;

The suit states that Acme is a subsidiary of Pioneer Services Corporation and that the cooperative manages Pioneer Services and Acme. A series of financial transactions beginning in 2001, which includes an agreement to guarantee up to $20 million worth of loans for Pioneer Services, led to the missing $18 million the suit states.

The suit also states that the cooperative borrowed more than $30 million to pay off a debt of Pioneer Services after the cooperative had written off $17 million worth of bad debt for the group.

Fuller said he expects the defense will file a motion to dismiss, which will bring both sides before a judge in Butler County in about 45 days.

The cooperative is based in Butler County, but the organization serves a number of counties, including Dallas County. Pioneer Electric Cooperative has an office in Dallas County.

Fuller said he hoped the case would reach trial by fall.