Coming Soon: More Details On PEC's "Mystery" Bank Account

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By Linda Kaye Rogers

The public announcement of a bank account in the name of Texland Cooperative was made about two weeks ago by PEC General Manager Juan Garza. This account was brought to his attention by PEC's Chief Financial Officer, Mike Vollmer, as part of the termination of business with Cattleman’s Bank, where the account is held. Mr. Garza, in the spirit of openness, shared the information with members and the media. However, it seems things quickly moved into speculation and assumption as reports circulated. And there has also been a great deal of accusation and righteous indignation among members as part of the ongoing anger with past management and Board members.

It is anticipated that within 30 days, probably less, PEC members will have the full story regarding Texland and the “mystery” account. And hopefully we will also discover why this entity, Texland, still even exists. This is a big question. PEC Advisory Board Director Robert Reed, who was on the PEC Board in 1979, was dumbfounded to learn that Texland still existed. So for those of you who are sticking to the “secret” theory, you may have some meat on that bone yet!

First, let’s just take a few minutes to clarify this “account” and what we really do and don’t know about it. A little history lesson is in order.

In 1978, PEC and Bluebonnet Electric Co-op joined together and created the entity Texland Electric Cooperative, wholly owned by the two co-ops. The intent was to build their own electric generation facility to meet forecasted growth and to enable a separation from LCRA, PEC's principal source of power. Texland entered into a $2 million contract with Shell Oil Co. in May 1980 to secure a future source of lignite for the proposed plans.

Then in May 1982, Texland filed an application with the Texas Public Utility Commission (PUC) to construct and operate three coal-fired generation plants, which they called the Rockdale Power Project. At about the same time, PEC and Bluebonnet filed a lawsuit against LCRA seeking to be removed from their contractual requirements with LCRA. Three years of legal proceedings resulted in an agreement (Sept 1985) between PEC, BEC and LCRA. However, in December 1985, the PUC denied the application for construction of the Texland plants.

In 1986, LCRA made offers to BEC and PEC to settle any outstanding differences, presumably for the two co-ops extending their existing wholesale power contracts. Part of this agreement was that LCRA would compensate PEC and BEC for their expenditures in connection with the Texland project. The offer was accepted and on May 27, 1987, PEC received $12,903,126.74 and Bluebonnet received $3,754,759.71.

Here is an important fact: LCRA agreed to pay a total of $18,063,110.91 which included various expenditures incurred by the two co-ops, (covered in above amounts) AS WELL as reimbursement for certain accrued expenses or outstanding liabilities of Texland that had yet to be paid (at the time of the settlement). This amount was $1,405,224.46. The records that PEC does have available show that $1.4 million was indeed used by Texland to pay its remaining outstanding liabilities.

So, there was $565,000 left in the Texland account. Note that this is a Texland account, not a PEC account.

Now we have to ask why the account and money, and even Texland, still exist. It appears that Texland may have had continued unresolved claims and obligations after the settlement with LCRA. This includes a potential recovery from Shell Oil Co in relation to the $2 million contract from 1980, as well as some liabilities for costs incurred that were not included in the LCRA settlement. The Shell Oil contract provided for the potential refund, with interest, under certain conditions. The result of this is currently unknown.

Here is what we do know . . . that PEC recouped all its investment, plus interest via the $12 million settlement from LCRA. As such, PEC’s financial statements ceased to reflect any investment in Texland after July 1987.

The only two signatories on the Texland account were former PEC board president and former general manager, Bud Burnett and Bennie Fuelberg. It appears that they may be two of the three Texland board members still living. Initially the account was with Johnson City National Bank, but was moved in the late 80’s when Cattleman’s Bank opened. The monthly statements were sent to Bud Burnett at the PEC headquarters, who had them forwarded to Rory Boatright. He is also shown as a Director of Texland, affiliated with Cattleman’s Bank and the Moursund Law Firm. And he appears to be the accountant and/or treasurer of Texland.

PEC chief financial officer Vollmer, in that position since Oct. 2003, has always been aware of the account, and the entity Texland as a “business” owned by PEC, but since it was not a PEC account, he had no jurisdiction over the account. Note that there was also no business activity between PEC and Texland. On an annual basis, Vollmer communicated with then GM Bennie Fuelberg regarding various business activities of PEC and asked if they were to be continued or not. Each year, Mr. Fuelberg nodded assent for the continuation of Texland.

Available PEC records indicate there has been no activity on the account for at least the past six years. However, it appears that there are Texland records, Cattleman’s Bank records and Moursund Law Firm records that have not been available to PEC.

Cattleman’s Bank put a hold on the account just before the Texas Rangers also intervened recently to have the account frozen. Their preliminary investigation results have been turned over to the Texas Attorney General's office. Cattleman’s has also implemented legal action that disallows PEC, BEC, Burnett or Fuelberg access to the account until rightful ownership of the account is ascertained. Mr Garza has stated that all of these actions are prudent and in the best interest of all concerned.

While Cattleman’s might not mind a non-interest bearing account of more than a half million dollars, there may also be some very good reasons for it. Some quick research shows that this type of account in the 1980’s was not uncommon.

On August 12, both PEC and Bluebonnet boards met and elected three of their own board to the Texland board. On Monday, August 18 these six new Texland board members met and removed all current Texland board directors from the Texland Board and elected new officers. They were given this authority by the two parent boards, PEC and BEC. This new Board has full authority to close the Cattleman’s account, transfer it to another secured banking establishment and named a PEC and a BEC board representative as signatories. They will now also have full access to all Texland documentation which will be gathered at the PEC headquarters. The Navigant group, currently doing an exhaustive audit of the PEC, will act as investigators in cooperation with the Texland board, PEC and BEC.

Linda Kaye Rogers grew up on a small family farm in the Rio Grande Valley. She received her BA and Masters of Science in Social Work from UT Arlington. She has taught smoking cessation, communication skills, stress management and parenting in hospitals, corporations, community groups and churches. Linda Kaye moved to Wimberley in 2000 where she built a straw-bale cottage and immediately established a rainwater collection system as her water supply. That same year she began volunteering at the Katherine Anne Porter School and has worked in various capacities at the school. She is an avid organic gardener, animal lover, conservationist, and environmentalist. In 2005 she spearheaded efforts to defeat a road bond that would have benefited a developer and cost Woodcreek North residents a dramatic and 20-year tax increase.