For Immediate Release | 2-4-2021
Media Contact | Nick Debus
Direct | 602-542-0728
E-Mail | NDebus@azcc.gov
PHOENIX - The Arizona Corporation Commission held its monthly Open Meeting to discuss and vote on various utilities, railroad, and securities items. Below is a recap of the meeting highlights:
Corporation Commission Receives Confirmation of EPCOR Water Arizona, Inc. Acquisition of Johnson Utilities
EPCOR Water Arizona, Inc. (EPCOR) informed the Arizona Corporation Commission at its February Open Meeting that it had finalized its acquisition of Johnson Utilities (Johnson).
In a 3-2 vote in December 2020, the Corporation Commission approved the purchase agreement between EPCOR and Johnson. The agreement allowed EPCOR to purchase Johnson for $110 million dollars. EPCOR will be allowed to seek $45 million in deferred debit. EPCOR agreed not to recover $21 million from the ratepayers in its next rate case. The company also agreed not to seek recovery of $10.1 million of post-test year plant associated with the pending rate case. Both benefits amount to approximately $60 million in savings for ratepayers, possibly offsetting the $45 million in deferred debit.
In July 2018, following years of complaints and issues with Johnson, the Corporation Commission took the extraordinary step of installing an interim manager to take over day-to-day management of the troubled utility. EPCOR was selected as the interim manager and has been running the utility ever since. This sale will finalize a years-long process and result in safe and reliable water and wastewater service for customers in San Tan Valley.
City of Tucson Granted Extension of Time to Complete Railroad Crossing Improvements related to Downtown Links Project
Corporation Commissioners approved an application from the City of Tucson to allow a time extension for completion of several at-grade crossing projects for Union Pacific Railroad Company (Union Pacific).
On September 9, 2020 the City of Tucson filed a motion seeking to amend previous Commission Decision No. 76706 originally passed in 2018, asking for an extension of time to complete four at-grade crossing improvement projects and a grade separated crossing in Tucson, Arizona. These projects will modify existing at-grade crossings at the intersection of 6th and 9th Avenue, 5th street, Main Avenue, and 7th avenue, and to construct a grade separated crossing at 6th street. The proposed projects are part of a larger project called Downtown Links, which is planned to connect State Route 210 with Interstate 10, including construction of railroad crossing improvements, and the establishment of a downtown quite zone.
The City of Tucson, in its motion for time extension, explains that construction has been delayed because of budget and funding issues and subsequent redesigns, a dispute with the railroad over bridge design elements that has since been resolved, and an exception the City is currently seeking from Union Pacific in a bridge design element that involves track elevation requirements and possible additional changes.
The Commission granted the City of Tucson an extension of time to complete these projects. Originally, the projects were to be completed by May 22, 2021, the City will now have until May 22, 2024 to complete the work.
All documents related to this agenda item can be found in the Corporation Commission’s online docket at https://edocket.azcc.gov and entering docket numbers RR-03639A-17-0310, RR-03639A-17-0311, RR-03639A-17-0312, and RR-03639A-17-0313.
Commission Orders Over $6 Million in Restitution for Hispanic Christian Church Congregations Defrauded by Multimillion-Dollar Investment Scheme
The Corporation Commission ordered Verdugo Enterprises, LLC and other respondents to pay restitution and administrative penalties for defrauding Hispanic Christian congregations in a multimillion-dollar investment scheme.
The Corporation Commission found that Verdugo Enterprise LLC, doing business as Verdugo Gift Company, Isaias M. Verdugo, Maria G. Verdugo, Mario C. Verdugo Jr., Filemon G. Caballero and others raised over $6.5 million from at least 377 investors, most of whom were Arizona residents.
The Corporation Commission found that the respondents fraudulently solicited investments primarily from Hispanic Christian churches and/or their congregations. The Commission found that the respondents claimed that Verdugo Gift Company was raising investment capital to purchase products for the purpose of fulfilling online orders. Investors were promised 10 to -20 percent interest. The Corporation Commission found that the respondents misrepresented that their investments were guaranteed and failed to disclose that a portion of their investment funds were used to pay commissions and/or used to fund the purchase and operations of other companies. Ultimately, they failed to pay most investors back.
The Corporation Commission ordered Verdugo Gift Company and Isaias M. Verdugo to pay, jointly and severally, $6,174,398 in restitution. The Commission ordered Maria G. Verdugo to pay $121,900 in restitution, Mario C. Verdugo Jr. to pay $264,660 in restitution and Filemon G. Caballero to pay $227,185 in restitution.
The Corporation Commission ordered the respondents to pay the following in administrative penalties: Verdugo Gift Company--$150,000; Isaias Verdugo--$150,000; Mario Verdugo--$15,000; Maria Verdugo--$10,000; and Filemon Caballero--$10,000.
Commission Orders Scottsdale Man to Pay Over $385,000 in Restitution for Fraudulent Golf Ball Resale Business
The Corporation Commission issued a default order against Robert Francis Alexander of Scottsdale for defrauding investors with an investment to fund a golf ball resale business. Alexander was ordered by the Commission to pay $382,100 in restitution and a $50,000 administrative penalty.
The Corporation Commission found Alexander pitched the investment program to prospective investors while on multiple Phoenix-area golf courses and club events. The Commission found Alexander told investors that he purchased golf balls at a discount and resold them online for a profit, promising 20 to 30 percent returns within four to six weeks. Alexander was not registered to offer or sell securities in Arizona.
The Corporation Commission found Alexander did not disclose that he was a defendant in a least 12 civil lawsuits in Maricopa County Superior Court and was convicted of committing wire fraud for which he was sentenced to 96 months in prison and ordered to pay almost $10 million in restitution.
Commissioner Orders New Mexico Company to Pay Over $450,000 in Restitution for Offering and Selling Stock in a Dissolved Company
The Corporation Commission orders Wattenberg 1, LLC to pay $453,880 in restitution and a $35,000 administrative penalty for fraudulently offering and selling stock in a dissolved company.
The Corporation Commission found that Wattenberg 1, LLC. fraudulently offered and sold unregistered securities to at least 19 investors while not registered as a securities salesman or dealer. Wattenberg 1, LLC was organized in New Mexico by Sharon Depriest and managed by Michael French. David Paul French, who was sanctioned by the Corporation Commission [see Decision No. 77880] in January of 2021, also fraudulently offered and sold unregistered securities on behalf of Wattenberg 1 and others.
A complete broadcast of the Corporation Commission's February Open Meeting can be found at azcc.gov/live.