Coaldale, Tamaqua and Lansford are suing a Lackawanna County firm that they say reneged on a deal that had promised substantial savings by leasing street lights from PPL and kept hundreds of thousands of dollars the struggling towns paid them up-front for the project.
Michael S. Greek, who serves as solicitor for the towns, filed the 86-page lawsuits Monday afternoon against Municipal Energy Managers of Moscow and company principles Robert J. Kearns and Patrick J. McLaine in Schuylkill County court on behalf of Coaldale and Tamaqua, and in Carbon County court on Lansford's behalf.
The suits allege breach of contract, unjust enrichment and fraud, and argue that the company "operates simply as the alter ego" of the two men.
Efforts to reach McLaine and Kearns early Tuesday were unsuccessful.
According to the suits, Kearns and McLaine knew full well they would not be able to fulfill the promises they made to the towns. The towns are asking unspecified amounts in actual damages, compensatory damages, interest and costs.
All three of the financially strapped towns, as well as Nesquehoning and Jim Thorpe, took out hefty bank loans to pay MEM up front for the project. Coaldale borrowed $182,400, and Lansford $306,100. The money must be repaid.
In 2009, MEM promised big savings $31,620 a year for Lansford alone by arranging for them to buy rather than lease their street lights. MEM promised to upgrade the lights and maintain them. But once the up-front money was handed over, MEM failed to follow through and refused to return letters and telephone calls from alarmed borough officials.
After months of futile attempts to contact the company, Greek began drafting complaints to the state Public Utility Commission.
MEM continued to make promises through at least July 15, 2010, when it sent letters to the officials of 18 municipalities, including Lansford, Coaldale, Nesquehoning and Tamaqua. In that letter, the firm said that on July 14, its attorney received an email from PPL saying that a draft contract would be sent within a day or two.
Meanwhile, MEM blamed PPL for the delays. In February, PPL spokesman Michael Wood said the company had not heard from MEM in many months.
Kearns and McLaine already face up to 16 years in jail and $40,000 fines on third-degree felony charges of theft by failure to make required disposition of funds and criminal conspiracy, and misdemeanor charges of misapplication of entrusted property filed in February by Northampton County District Attorney John Morganelli.
Kearns and McLaine allegedly siphoned $832,460 paid them by Bethlehem Township into their own bank accounts instead of following through on the same promise, to save that municipality hundreds of thousands of dollars by leasing street lights from PPL and having MEM upgrade and maintain them.