A Cape Elizabeth investor who was thwarted in his attempt to buy and repurpose a closed pulp mill in Old Town has filed a lawsuit accusing more than 15 entities and people, including the University of Maine System chancellor, of criminally conspiring against him.
Entrepreneur Samuel Eakin said events unfolded last year around the sale and subsequent plans for the mill that deprived him of returns on his investment. The lawsuit he filed in Cumberland County Superior Court alleges that the defendants in the complaint engaged in racketeering acts, such as bribery, mail fraud and theft of trade secrets.
Central to his case is an allegation that Chancellor James Page had undisclosed financial interests in one of the parties connected to plans to redevelop the mill and secure two lucrative, long-term energy contracts with the university system. That conflict of interest, Eakin alleges, tainted the entire process.
The lawsuit asks the court to find that Page and the system trustees committed the alleged actions, and force Page to disclose any financial interest he may have in any bid or contract for products or services with the university system, as long as he’s chancellor. It also asks that he publicly disclose his financial interests every year.
Eakin is the manager of Relentless Capital Co. LLC and its affiliate, Old Town Utility & Technology Park. In a statement to the Portland Press Herald, Eakin said his goal is to recover damages that resulted from the “corrupt bidding process” that he says occurred.
“However,” Eakin said, “I am equally focused on exposing and reforming the corruption inside the University of Maine System, so that management can be held accountable. The new suit seeks to force the University of Maine System to restructure its public bid process, so that university system officials can no longer manipulate it to the public’s detriment.”
Eakin’s lawyer, Clifford Ginn of Scarborough, said the action is being taken now after a year of litigation, discovery and negotiations that have led to confidential settlements with some parties named in a previous lawsuit.
“With settlement of those claims behind us,” Ginn said, “we are now ready to seek justice from the people who have corrupted the University of Maine System’s bidding process.”
ALLEGATIONS ‘SCURRILOUS, UNFOUNDED’
The lawsuit hadn’t been served on the university system as of Tuesday, but the newspaper shared a copy with system officials and asked to speak to Page to get his response.
Dan Demeritt, a spokesman for the university system, said Page wouldn’t participate in an interview on any issue under litigation. But he issued this statement:
“Chancellor Page and the University of Maine System vehemently deny Eakin’s scurrilous and unfounded allegations. Mr. Eakin’s claims against the chancellor and the system are baseless. We welcome the opportunity to confirm the integrity of system staff, policies and business practices as part of the litigation process.”
Demeritt added that Page disclosed his business interests before being hired as chancellor in 2012, and took steps to comply with Maine conflict of interest laws. He also said Page wasn’t involved in any aspect of the energy contracting process or the requests for proposals linked to it.
“The (university system) teams that manage solicitations are program and policy experts who manage the development of requests and the review of proposals to ensure a fair, open and transparent process,” Demeritt said.
The Maine Attorney General’s Office didn’t respond to a request for comment Tuesday afternoon on whether it was pursuing criminal charges in the case.
NOT THE FIRST LEGAL ACTION
Eakin’s allegations against the university system and its denials first surfaced in 2017.
In a previous suit filed by Eakin in November 2017, he said he was illegally pushed out of a $10 million deal to buy the mill, restart a biomass boiler and sell wood-fired energy to the nearby Orono campus. Instead, the mill was sold to a competitor.
University of Maine System Chancellor James H. Page
This month, ND Paper LLC, the U.S. subsidiary of Hong Kong-based Nine Dragons Paper Holdings Ltd, reached an agreement to buy the Old Town pulp mill for an undisclosed cash sum.
Eakin’s latest lawsuit comes as the university system continues to negotiate the terms of a long-term energy contract for the Orono campus estimated to be worth $100 million. Since last spring, the university system has been in talks with Honeywell International for an energy contract that includes building a new biomass boiler on the Orono campus, not using the existing one at the Old Town mill.
On Tuesday, Demeritt said negotiations are continuing and if an agreement is reached, it will be publicly considered by the system’s board of trustees.
The company that initially won the energy bid, a subsidiary of Con Edison Clean Energy Businesses, withdrew from the contract negotiations in February. It abruptly pulled out a few weeks after the Portland Press Herald/Maine Sunday Telegram published stories revealing secret recordings that suggested a university system official had provided inside information aimed at helping the Con Edison team move forward with the contract. Con Edison and top managers also are named as defendants in Eakin’s suit.
Prompted by the newspaper’s coverage, the audit committee of the university system’s board of trustees completed a review of an investigation into the energy-solutions process. It found no improper or unlawful influence.
“The university system stands behind the work and integrity of the dedicated professionals who make up its procurement teams,” Demeritt said Tuesday.
LAWSUIT FILED UNDER THE RICO ACT
The latest legal action stems from discovery conducted during last year’s lawsuit, Eakin said.
The 127-page lawsuit also references information from ongoing media coverage. Overall, the new suit provides greater detail on how Page allegedly stood to directly benefit financially from the energy contract and how other parties conspired to steer the contract in their favor.
Specifically, it charges that the conspiracy centered around the procurement of the two contracts with the University of Maine. The primary one was to meet all the power needs on the Orono campus. The second involved what the suit says was a sole-source contract for the wood supply to fuel the biomass boiler.
The suit alleges the deals went forward “because public entities and officials associated with the University of Maine System failed to follow laws regulating governmental procurement and public corruption.”
The suit goes on: “At the heart of this conspiracy was University of Maine System Chancellor James Page’s substantial undisclosed financial interest in James W. Sewall Co., the significant financial gain or loss Page faced depending on whether the (defendants) succeeded in obtaining the energy performance contract, and his actions to manipulate a public bid process to favor the (defendants).
Page was formerly CEO of Sewall, an Old Town engineering firm that worked with ConEd to secure the contracts. In May, Sewall was sold to a New York development firm, Treadwell Franklin Infrastructure Capital LLC. Treadwell and Sewall, as well as executives with those firms, also are named as defendants in the suit.
Eakin says that Page held a financial interest in Sewall at the time of the negotiations over the two energy contracts.
The university system confirmed that Page signed a personal loan guarantee for an unknown amount to help finance Sewall Co. when he was its CEO. The loan had not been paid off when the energy contract negotiations were underway, the university system’s counsel said. But because Page was not directly involved in the contract negotiations, the university system found there was no conflict of interest.
Eakin further charges that, to keep him from discovering their conspiracy, the defendants deprived him of the chance to purchase and redevelop the Old Town mill, and to participate in implementing contracts with UMaine “procured on the merits rather than through criminal means.”
The defendants accomplished this through a combination of dishonest business dealings, fraud and breach of contract, among other things, the suit alleges.
Eakin is filing the suit under the federal Racketeer Influenced and Corrupt Organizations Act, known as RICO. The 48-year-old law is designed to combat organized crime. It allows prosecution and civil penalties for racketeering activity performed as part of an ongoing criminal enterprise.
Tux Turkel can be contacted at 791-6462 or at:
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