Oct. 23-- Oct. 23--Investors who sank $4.5 million into a waste-to-energy project in Augusta and $1.5 million in a solar project have filed a federal lawsuit accusing former University System of Georgia Regent Dean Alford of stealing their money in a racketeering scheme they contend is on par with organized crime.
The lawsuit filed Friday in U.S. District Court for the Middle District of Georgia -- where several of the plaintiffs live -- named Clarence "Dean" Alford and his wife, Debbie Dlugolenski Alford, the former CEO of the Georgia Lottery; Allied Energy Services and Augusta Waste to Energy.
Also named are several Allied senior vice presidents, the investments advisors who help Alford pitch his investment plans, and Evans physician Jitendra Gandhi, who allegedly recruited within the plaintiffs' community to invest in Allied projects.
Alford was arrested and charged Oct. 3 with racketeering and criminal attempt to commit theft. He is accused of using fraudulent documents to sell business accounts receivable to a third party, Versant Funding, for $1.8 million. Versant is also named in the civil suit.
Alford's arrest warrant on the criminal charges said he sent Versant fictitious purchase agreements between Allied Energy and the University of Georgia, Georgia Military College, Synovus Financial Services and Inman Solar, a firm he worked with on several Augusta solar projects.
In the attempted theft, a Sept. 24 document included the forged signature of a UGA representative, it said. Gov. Brian Kemp demanded Alford immediately resign his regent's seat after he was charged with the criminal offenses.
The lawsuit, filed on behalf of dozens of investors, contends Alford, his brother Dan Alford, Gandhi and various investment fund managers withheld facts and lied about other details to elicit investments and loans they promised would safely earn 15 to 20 percent returns in Allied's Augusta Waste to Energy Project and another initiative called the The Georgia Power Solar Farm Project.
"Defendants knew or should have known that the waste-to-energy project was not feasible and/or illusory, and the notes purchased would never be paid," it states.
Alford would have known, for example, the waste-to-energy project needed permitting by the Georgia Environmental Protection Division and "flashed purported phone records" to plaintiffs to indicate he was working with EPD. To date, no permit applications have been filed, according to the lawsuit.
In 2016 Alford consulted for Augusta on construction of three solar arrays -- at the Charlie B. Webster Detention Center, the Augusta Circuit Public Defender's Office and at the Lock and Dam Road, according to prior reports in The Augusta Chronicle. The project was expected to return $3.9 million to the city over 25 years.
The same year Alford pushed the Augusta Commission to approve a state loan application to build a waste-to-energy plant at the Augusta landfill. The city declined, but Alford was able to get the Augusta Economic Development Authority to approve Allied's issue of up to $68 million in industrial revenue bonds for the project.
Allied's financial consultant, Jamie Wilson of K-12 Capital Advisors -- which is also named in the suit -- told the EDA last year Allied would offer the debt "in very large blocks to accredited institution investors" rather than sell the bonds on the open market. At the time Alford was charged, EDA Director Cal Wray said had the bond issue materialized, it would have created no liability for the city or the authority.
Armed with the bond agreement, Alford secured a city lease of a 10-acre landfill tract in September 2017. The plan was to construct a 55,000-square-foot facility leased for $40,000 a year once operational. The city would save space at the landfill and as well as garner five cents per ton of diverted garbage.
Built in two phases, a $38 million plant would convert the garbage to fuel pellets. A second $30 million plant would convert the pellets into building materials. As of Tuesday, the landfill tract showed no sign of activity besides land clearing and a fence. According to city records, Allied has paid the city only $4,167 for three months of land rent -- $833 -- and a $1,667 landfill fee.
According to the lawsuit, the Augusta Waste to Energy project was to be finished by June and Dean would start paying the investors. Dean claimed to have contracts with an European company and Delta Airlines to buy the biodiesel pellets made in Augusta.
In all, according to the lawsuit, 436 individual investors were lured into what the plaintiffs claim was a Ponzi scheme. The lawsuit accuses Dean of repeatedly rebuffing investors' requests for interest payments by claiming not to have their addresses, saying the "check was in the mail", and blaming administrative staff for the lack of payments.
The lawsuit also accuses Dean and the other defendants of violating the state's civil RICO law through a pattern of racketeering activity including wire and mail fraud. The lawsuit further accuses the defendants of conversion, conspiracy, deceptive trade practices and securities fraud.
