Trial of former Pedernales Directer Fuelberg begins today

Bennie Fuelberg, former Pedernales Electric Co-op GM - AAS Photo

With last week’s conviction of Tom Delay, is it too much to hope that another Texas scoundrel gets justice, too?

Less politically charged but no less important, for PEC Director Bennie Fuelberg will go on trial in Fredericksburg, where the trial was moved because the judge decided Fuelberg was unlikely to get a fair trial if tried in Pedernales territory.  He was probably right.

Patrick George of the Austin American Statesman wrote extensively about the trial and the actvities leading up to the trial  this morning.

From the Austin American Stateman article:

In what is arguably the climax to more than three years of lawsuits, grand jury indictments, legislation, allegations of corruption, congressional hearings, reforms and resignations at the Pedernales Electric Cooperative not to mention newspaper stories detailing it all the utility’s former chief executive will go on trial today in Fredericksburg.

Before his June 2009 indictment on felony theft and money laundering charges, former Pedernales General Manager Bennie Fuelberg was one of the Hill Country’s most prominent citizens. Now, his name is often tossed about by co-op leaders and employees as synonymous with scandal and cronyism.

The trial, prosecuted by the Texas attorney general’s office after a Hill Country district attorney stepped aside, could be the completion of Fuelberg’s fall from grace — or it could result in his exoneration.

Fuelberg, who ran the nation’s largest member-owned electric utility for more than 30 years, is charged with misapplication of fiduciary duty in excess of $200,000, theft of property in excess of $200,000 and money laundering between $100,000 and $200,000. The first two charges are first-degree felonies that carry a penalty of up to 99 years in prison if convicted; the last charge is a second-degree felony that carries up to 20 years.

Fuelberg and the co-op’s former outside counsel, Walter Demond, were indicted on identical charges last year after a five-month grand jury investigation. Demond will be tried after Fuelberg. Both have pleaded not guilty. The grand jury’s term has since expired, and no other indictments have been handed up.

The criminal charges stem from accusations that the men arranged for thousands of dollars of co-op money to be paid to relatives of Pedernales executives. According to the indictments, payments exceeding $200,000 went to Curtis Fuelberg, Bennie Fuelberg’s brother, and William Price, the son of former Director E.B. Price.

The indictments don’t say what happened to the money. Curtis Fuelberg, a lobbyist, has said the payments were legitimate. William Price’s lawyer has said his client did nothing wrong.

Both sides remain tight-lipped before the trial. Officials from the attorney general’s office, whose attorneys Eric Nichols and Harry White are prosecuting the case, declined to comment, as did Fuelberg’s attorney Chris Gunter.

The Johnson City utility has more than 200,000 members in 24 counties, the largest of its kind in America. From its start in 1938, when Pedernales played the starring role in Lyndon Johnson’s efforts to bring electricity to the impoverished Hill Country, the co-op’s history was interwoven with that of powerful Johnson associates.

Fuelberg’s trial caps a saga that began with a 2007 lawsuit by Pedernales members seeking the removal of the board directors and damages for what they said were wasteful expenditures by co-op officials. When testimony in the lawsuit revealed lavish spending by Pedernales officials, the co-op came under increased scrutiny by the Legislature and the media. Top officials stepped down. Reports in the American-Statesman and other news outlets led to a push for more open governing practices and elections.

The coup de grâce was a damning 2008 audit by Navigant Consulting that detailed questionable practices by Pedernales management, a complacent board that rubber-stamped Fuelberg’s decisions and a lack of budget controls. It also found transactions and ventures that had drained the co-op of tens of millions of dollars, with its members having little knowledge of what was going on.

Among the disclosures: $510,000 in unexplained payments from Pedernales to Clark Thomas & Winters, Demond’s former employer. The prominent Austin law firm had longtime ties to LBJ and had represented the co-op for 70 years.

The law firm said some of the money went to Price and Curtis Fuelberg. In 2009, Pedernales dissolved its relationship with Clark Thomas and hired another law firm to investigate the payments and unspecified billing irregularities. The firm later settled with Pedernales for $4.1 million.

Prosecutors have said in earlier hearings that they plan to present evidence that Fuelberg committed acts of “self-dealing” that go beyond the charges against him. But it’s up to a jury to decide whether Fuelberg’s actions violated the law.

His trial was moved to Fredericksburg to secure a jury not made up of Pedernales members, who are also its customers. Though it takes place in a tiny Hill Country tourist destination, the list of people called to testify includes prominent Austin lawyers, lawmakers and utility officials.

At meetings of the Pedernales board, it’s not surprising to hear directors, members or employees mention Bennie Fuelberg’s name, but it’s not often used politely. They speak of rescinding “Fuelberg-era” contracts. They talk about getting rid of policies and procedures from the “Fuelberg days.”

Today, the board is made up of elected officials who have enacted numerous reforms, including approving new bylaws that remove much of the cronyism from the old days just a few weeks ago. These days, most members who speak at board meetings are more concerned with lowering electric rates than with excess and corruption.

Officials at Pedernales are quick to point out that Fuelberg is the one on trial — not the co-op. “These proceedings and any outcome will not have any effect on PEC’s ability to provide members with the service and reliability they expect and deserve,” co-op officials said in a statement.

“There are no current employees on trial here,” board President Larry Landaker said. “We have cooperated fully with the authorities throughout this process.”

But even with all the reforms, Fuelberg’s trial has loomed over Pedernales like a storm cloud. Landaker said the board and workers will be relieved to see it end, regardless of the outcome. “Our employees who wear our logo are eager for this to pass,” he said.

Public Citizen was behind much of the original investigation into PEC and worked to organize co-op members.  Several of us in the office are PEC members or former members. We look forward to swift justice.


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