A company whose promises of hundreds of high-paying manufacturing jobs coming to Pikeville dissolved earlier this year is now being sued by local investors, who claim the company’s principals made material misrepresentations to get the locals to purchase $1.2 million in stock.
The lawsuit was filed in Pike Circuit Court on Friday on behalf of Pikeville EB Investors LLC, a company whose agent of service is Utility Management Group president Greg May, against Michael Weber of Nicholasville, and Daniel Elliott of Pasadena, California, who were the principals behind EnerBlu, a company which proposed building a $400 million manufacturing facility which would bring 800 jobs to the Kentucky Enterprise Industrial Park.
The company’s proposal included the construction of a battery cell manufacturing plant, but officials announced in February that the facility would not be moving forward after the company learned that a major investor had backed out.
“EnerBlu’s vision of a multi-gigawatt hour, Made in the USA battery campus to re-empower the Energy Capital of the U.S. is only achievable with the support of prominent partners in the energy sector,” the company’s CEO John Thomas told the News-Express in February in announcing the decision to not build the facility. “We are extremely disappointed with this potential investor’s decision and are well aware of the hope that EnerBlu’s project has generated in Pikeville and the Eastern Kentucky region.”
However, in the lawsuit, the investors claim that Elliott and Weber made misrepresentations to them regarding the existence of funding.
The company made the announcement that it was building the plant in December 2017, after which time Weber and Elliott began efforts to raise the funds needed to construct the manufacturing facility, the lawsuit said. At the time of the project announcement, the lawsuit said, the company did not have the funding in place to construct the facility.
Weber and Elliott, the lawsuit claims, engaged in an “aggressive effort” to raise the capital to construct the facility, which included contacts to Pike County business owners and residents, as well as other individuals and businesses in Eastern Kentucky in an attempt to solicit the funds to be used in the project development.
Pikeville EB Investors, the lawsuit claims, was formed by several individuals and businesses in order to help fund the project’s development, and in March 2018, the Pikeville EB Investors authorized a wire transfer of $1.2 million to EnerBlu’s bank account in exchange for receiving stock in EnerBlu.
In June, the lawsuit said, the company filed for Chapter 7 bankruptcy in Nevada.
“The defendants ... made material misrepresentations to various members of the plaintiff, Pikeville EB Investors LLC, so as to induce them into purchasing stock in EnerBlu, Inc., when they knew or in the exercise of ordinary care should have known that such representations were false or erroneous as to the extent of funding that EnerBlu, Inc., had obtained for the Pikeville project,” the lawsuit said, adding the investors didn’t learn about the lack of funding until shortly before the announcement in February that the project was suspended.
According to the company’s bankruptcy filing, the company, as of June, owed between $1 million and $10 million to an estimated number of creditors between 50 and 99. According to the filing, the individuals and organizations to which EnerBlu owes money include, in addition to the Pikeville EB Investors, AEP Investments Inc., a subsidiary of American Electric Power, the City of Pikeville and Columbia Gas.
However, the filing shows, the company only had, as of the time of the filing, between $50,001 and $100,000 in assets.
The Pikeville EB Investors are being represented by Ray S. Jones II and Kevin Keene.