Allegations in civil lawsuit threatens to mar the reputation of Secretary of Transportation Anthony Foxx (Flickr Photo: MTyndall).
He has been sued in the case of defunct DesignLine USA. The Charlotte-based hybrid electric bus-maker declared bankruptcy in 2013 after years of missteps that included maintenance problems, production problems, missed deliveries, lawsuits, and an FBI investigation. Its assets were sold to an investment group and the company now operates with a much lower profile, under the name EPV Corp.
Foxx’s role and responsibilities with DesignLine had been a mystery, and during his confirmation to the Obama cabinet, there was little curiosity about it, despite the company’s many troubles. The lawsuit brought against him this month was initiated by a trustee for DesignLine’s unsecured creditors, who seek to recover whatever losses they can. Other former executives and supporters of the company – including NASCAR team owner Rick Hendrick – were sued as well.
The claim against Foxx, who was the mayor of Charlotte while he held the role of deputy general counsel for DesignLine, is that he performed no work over four years. The trustee lawsuit seeks the repayment of $421,000 he received during that time.
“This is a routine adversary claim that is one of dozens and dozens that have been brought at the last minute as the statute of limitations is about to run (out),” said Mark MacDougall, Foxx’s attorney. “We are very confident this will be resolved in Secretary Foxx’s favor.”
Just what Foxx did do while with DesignLine was never obvious. He was more known as a visible mayor than an active attorney. The trustee’s lawsuit points out that he was rarely at the company’s offices; there was no “general counsel” that “deputized” him; and there was no evidence that he engaged in “lawyering” with attorneys outside the firm.
Those facts aren’t in dispute. Foxx was brought on board after retired Air Force Lt. Gen. Buster Glosson, his son Brad, and other investors bought the company in 2006 and moved it to Charlotte from New Zealand. But instead of handling DesignLine’s legal work, Glosson said he wanted Foxx for his political connections (surprise!).
“He was one of the few people in that company that was underpaid,” Glosson told the Associated Press earlier this month. “They have these big mayors’ conferences once or twice a year, and he would expose the other mayors to this company he had in Charlotte that makes electric buses.”
Glosson added that Foxx was rarely at the office, that other law firms handled the legal work, and that Foxx’s role wasn’t to manage those affairs. But if he was just pitching the company once or twice a year at mayors’ conferences, was that worth nearly a half-million dollars?
According to various past reports, DesignLine won contracts with transit authorities in New York, New Jersey, Baltimore, Charlotte, Denver, Los Angeles, and Antelope Valley, Calif. The degree that Foxx played a critical role in any of those is unclear, although some were consummated before his arrival (but fell apart after he arrived).
What is clear is that – like just about every business that operates in the alternative/renewable energy sector – DesignLine devoted a lot of time and energy to gaining political favoritism and government support. Politico documented much of those efforts in a May 2013 article, in anticipation of Foxx’s confirmation hearings as Secretary of Transportation.
According to that report, DesignLine won the California contracts – which were funded with stimulus money from DOT and worth $14.5 million – before Foxx’s arrival. But the company was unable to fulfill them and returned the $2 million down payment it received. Also, the New York Metropolitan Transportation Authority cancelled its $61 million contract due to technology issues, and the New Jersey and Denver contracts went unfulfilled due to the company’s bankruptcy. The DesignLine buses put into service in Baltimore have been determined to be duds.
Additionally the company was investigated by the FBI in 2013 over allegations that it placed used parts in new buses. While nothing appeared to come of that, it added to the overall taint of the company’s reputation.
Which really ought to be the embarrassment that reflects on Foxx. Rather than build a stellar resume in a key role for a reputable company, he was instead given a fake title with which he could play the crony capitalism game to win corporate welfare, all while “earning” a lot of money.
It’s what we get all-too-often in our “public servants.”
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.