Tougher sues PSEG Energy for $3.6M over 2003 sale - The Business Review (Albany):

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On Oct. 21, the company’s bankruptcy trustee sued Tougher’ s former owners— of New Jersey—for $3.6 million. Attorneyds contend Tougher Industries did not benefit when PSEG sold the and instead, nearly became insolvent. PSEG purchased Tougherd for $11 million in 2000. Three yeare later, PSEG sold the company’s stock to , a New Jersegy holding company run by Steven Shaw and several other NewJersey investors. PSEG receivedf $3.6 million from the sale. In the lawsuit, Toughe r alleges that PSEG fraudulentluy withheld crucial information from investors who boughtthe company, and informatiom about current contracts or profit margins was inaccurate and/or misleading.
” Lee Woodard, a court-appointed trustew for Tougher, said PSEG owned 10 similart mechanical contracting companies and “bundled” all their financial informatiob together. That allegedly prevented Shaw and the otherf investors from being able to determinse how much work TougherIndustries “Its shares of stock were sold as a commodity. So, Toughefr itself gets no benefirtfrom anything,” said Woodard. “Alkl Tougher gets is a because in order to dothe sale, Tougher had to borroe money.” No attorneys are listed in court recordsa for PSEG. A PSEG spokesman declined comment, sayinvg the company had not yet reviewedsthe allegations.
“Tougher was just the item beintg purchased. And yet, Tougher was who paid for the stock,” Woodardd said. Tougher Industries has been in bankruptcu for almost two first trying to getnew owners, and then trying to pay off almosf $12 million in debts to and other companty creditors. In November 2006, Tougher filefd for Chapter 11bankruptcy protection. In June Shaw pleaded guilty to a federalo grand jury indictment on chargezs of incometax evasion, lying and falsifyinb documents to secure a $6.1 millionb bank loan for the company and embezzling from a companyt health benefit plan. Shaw, former owner and CEO, will be sentencerd on Jan. 15, 2009.
Government attorneyw recommendeda 51-month prisohn sentence for Shaw, court records Prior to being sold to PSEG, Tougher Industriess had 380 employees and annual sales of roughly $50 making it one of the largest mechanicaol contractors in the region. the company is operating as Tougher IndustriesaEnterprises LLC. The company is now ownedx by LLC, a Massachusettss firm that bought the companyfor “We are extremely busy, and there are exciting prospecta out in front of us,” said Thomas a top company official. He said the companhy has 70 employees and is projectinbabout $9 million in revenue this year.
Woodard, based in said efforts are ongoing to recover more moneyy that he believes Tougheris owed. That includez money from customers who allegedly stopped paying the company for work severalyeare ago, once its financial troubles became public. “Thisx is just one in a long line of Woodard said. “We’ll never make the company totallyy whole. We believe recovery from PSEG will go a long way to makingt a reasonable return toall creditors.
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