In 2018, the nuclear energy technology company allegedly sought to restructure its investment in another tech company to yield additional returns through the Angel Investor Tax Credit program.
By Matt Skoufalos | January 30, 2024
Seal of the New Jersey Office of the Attorney General. Credit: NJ-OAG.
Camden City-based nuclear tech company Holtec International will pay a $5 million penalty to avoid criminal prosecution over allegations that the company and a real estate entity headed by one of its directors applied for state tax credits to which they were not entitled.
An agreement announced Tuesday by New Jersey Attorney General Matthew Platkin comes after authorities resolved that Holtec and Singh Real Estate Enterprises, Inc. (SRE) sought a total of $1 million in tax credits from the New Jersey Economic Development Authority (NJEDA) through its Angel Investor Tax Credit program.
According to tax filings, SRE lists its principal place of business as Jupiter, Florida, but its mailing address as 1 Holtec Boulevard in Camden. Annual reports dating back to 1997 list Martha J. Singh as president of SRE. She sits on the Holtec Board of Directors, and is married to Holtec president, CEO, and board chairman Krishna P. Singh.
The New Jersey Angel Investor Tax Credit Program offers tax credits equal to a portion of “a qualified investment in a New Jersey emerging technology business for the purposes of stimulating investment,” according to NJEDA.
In 2024, that credit is worth 20 to 25 percent of the invested amount; in 2018, when Holtec and SRE applied for tax credits through the program, the tax credit was worth 10 percent of the investment, with a cap of $500,000 per investment.
Office of the New Jersey Economic Development Authority. Credit: Matt Skoufalos.
‘Yes, we are trying to double our credit’
A statement released by the New Jersey Office of the Attorney General alleges that, after investing $12 million in Edison-based Eos Energy Storage through an affiliated company in July 2018, Holtec leadership attempted to double back a month later to leverage that investment into an additional tax credit through SRE.
At that time, the state noted, SRE “was not contemplating an investment in Eos, had done no due diligence for such an investment, and made no investment in Eos.”
But in August 2018, e-mails between a Holtec tax manager and an unidentified, outside advisor to the company, on which the Holtec CFO was copied, revealed a plan to make two separate applications to the Angel Investor Program, thereby doubling the return on the Eos investment.
According to the attorney general, the tax manager wrote: “I’m working through the angel investor credit application and just want to confirm, do we want to complete two separate applications for $6M each? One for Holtec and one for Singh RE?”
The reply from the advisor: “Yes, we are trying to double our credit to 1mm. If we do one app at 12mm, we are limited to 500k.”
Subsequent conversations outlined in the attorney general’s non-prosecution agreement include exchanges among a Holtec tax manager, a vice-president of finance and accounting, and a CFO, which confirm that the outside advisor “would like us to submit application for both entities,” Holtec and SRE.
In late September 2018, a Holtec vice-president of finance and accounting asked Eos to amend its stock certificates “so that half of the shares are owned by Holtec International and the other half of our shares is owned by an affiliated company, Singh Real Estate Enterprises, Inc,” according to the attorney general.
In conversations dated October 5, 2018, Eos seemingly agreed to make the adjustments to the documents, even helpfully suggesting that “we might be better off splitting this $12MM over 3 entities, as the maximum credit is $5MM,” as per an e-mail from a Holtec vice-president of finance and accounting.
In November 2018, the attorney general reported that the Holtec tax manager submitted two separate Angel Investor Tax Credit applications for both Holtec and SRE to NJEDA, each reporting respective $6-million investments in Eos dated “as of” July 25, 2018.
According to the attorney general, nobody involved in the transactions told NJEDA about the initial $12-million Holtec investment in Eos in July 2018, the subsequent return and reissue of its stock shares in October 2018, that SRE hadn’t been part of the original investment, or that the documents created in the fall of 2018 had been backdated to July of that year.
Finally, the attorney general noted that after tax credit certificates “were issued in the names of various owners of Holtec and SRE… Holtec attempted to persuade the NJEDA or the State of New Jersey to re-issue the tax credit certificates in the names of Holtec and SRE.
“NJEDA refused to do so, noting that Holtec’s applications to the NJEDA for various tax credits were under investigation,” the agreement reads.
A 2022 economic development map of the Camden City Waterfront South neighborhood. Credit: Camden County Government.
Terms of the deal
According to the settlement, Holtec and SRE will abandon claims to the $1 million in Angel Investor credits, and will use a state-approved “independent reviewer” for any “new awards, tax credits, loans and other benefits it may seek from any departments, authorities or agencies” in the next three years.
In the next 30 days, the companies also will pay a $5 million penalty that will be treated like a civil forfeiture, but will admit no wrongdoing.
Should the terms of the agreement be violated, both companies and their employees could be prosecuted, “and potentially also individuals connected with the companies,” the attorney general noted in a statement.
“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 wrote in a statement accompanying the agreement.
“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.”
Protesters gathered at the Holtec International campus in 2018 to address its CEO’s remarks about the city’s labor base. Credit: Matt Skoufalos.
Clawbacks and reforms
In a response dated January 29, 2024, Holtec described the settlement with the state as “a payment less than the estimated cost of litigating the matter with the State while proactively resolving any threat of criminal proceedings.”
“Holtec and a related company appropriately sought, received, and relied upon the advice of one of the nation’s largest accounting and tax firms to structure a proper investment and an accurate tax-incentive application,” the company wrote, without identifying that entity.
“Holtec’s legal counsel oversaw preparation of the transaction documents as well,” it noted.
In its reply, Holtec also said that New Jersey has been trying to claw back $260 million in NJEDA incentives that the company was awarded under the Grow New Jersey Assistance Program in 2014.
In 2019, NJEDA alleged that Holtec misrepresented its application for those incentives, failing to disclose a 10-day disbarment by the Tennessee Valley Authority (TVA) in December 2010 (the first in TVA history, which also resulted in a $2 million fine).
But Holtec sued NJEDA in New Jersey Superior Court, and in December 2021, won a $26-million summary judgment against the agency. In November 2023, an appellate court upheld that decision, criticizing “application form deficiencies and the manner in which NJEDA oversaw the application process” that granted Holtec the award.
In the time since that dispute originated, New Jersey Governor Phil Murphy convened a 2019 Task Force on NJEDA Tax Incentives, and in 2022, the agency announced that it had refined its application processes, cutting awards for companies that “did not create or retain the number of jobs they committed to at the time of project approval.”
In 2018, Holtec CEO Krishna Singh previously faced public scrutiny for remarks that broadly panned the labor base in Camden City for its lack of a work ethic. He later apologized, claiming he had been quoted out of context, and emphasized his company’s commitment “to do our share in uplifting the city.”
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