Alabama Judge Dismisses Securities Fraud Suit Against Canadian CEO

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Alabama Judge Dismisses Securities Fraud Suit Against Canadian CEO

Last week, an Alabama judge dismissed securities fraud charges against Gregory Aziz, the CEO of a Canadian company, after Aziz agreed to pay $21 million in damages to the Retirement Systems of Alabama, which had invested in the company’s plans to build a railcar plant in Colbert County. The RSA, which now owns the plant, invested half a billion dollars to build it.

District Attorney Bryce Graham and Alabama Securities Commission Director Joseph Borg requested the dismissal after they had reached a settlement with Aziz, and Colbert County Circuit Judge Jacqueline M. Hatcher granted the dismissal.

In addition to paying $21 million to the RSA, Aziz will also pay back the securities commission and the Colbert County District Attorney’s Office for costs associated with investigating the case.

Aziz, who remains listed as Chairman and CEO of National Steel Car, was charged in November of last year with securities fraud for making misrepresentations in order to make the RSA invest in the construction of a plant to build railcars in Colbert County, which would have provided 2,200 jobs to the area. The RSA subsequently gave Aziz a three year loan of $350 million to build the plant, and Aziz was supposed to have paid interest on the loan at nine percent.

Aziz, however, failed to reveal to the RSA that before he spent any of the original loan proceeds he knew that the plant would cost well over $350 million, that his company had incurred over $100 million in long-term debt, that he no longer had the $100 million line of credit he told the RSA he had, and that his company had granted liens on the railcar patent rights which would have required him to get permission from a third party to build the railcars in Alabama.

The RSA was forced to spend an extra $215 million to complete construction of the plant. The $21 million paid to the RSA in damages includes reimbursement of the $11.4 million Aziz and others were paid to oversee construction and the remainder is damages. The $21 million will be transferred back to the retirement funds managed by RSA on behalf of teachers and state employees.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.

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