Beaufort News

Councilman faces ethics allegation

Stu Rodman
Stu Rodman Submitted photo

The former leader of a once-touted local economic development prospect is accusing Beaufort County Councilman Stu Rodman of stealing the start-up’s business plans and funneling the ideas to his own energy company, a charge Rodman denies.

Entrepreneur and former EcoDual executive Scott Myers says he met with Rodman early last year to discuss a business plan Myers had for his new Beaufort company, OptiFuel Systems.

Months later, he says Rodman pitched those same plans to his own company -- AMBAC International -- to enter the railroad market.

Now the S.C. Ethics Commission is investigating whether Rodman used privileged information he learned as a council member to further his personal business interests -- a practice expressly prohibited by state ethics codes.

In the meantime, Myers is calling for Rodman's resignation.

"I don't like that Stu's taking my business plans and starting up (a) competitive business," Myers said this week. "He needs to be gone off County Council if he's willing to take other people's business plans."

Rodman denies the allegations in full.

"I categorically never shared that information with anybody," he said Friday. "Every thing in executive session was when Scott was still with EcoDual. Nothing beyond that point had anything to do with the county."

'INVESTOR'S PITCH'

A month later the county announced EcoDual would be setting up shop.

Shortly before the announcement, Myers and the company parted ways, Myers said. He spun off his own new idea to focus on conversion kits for locomotive diesel engines and began to put a new business plan together, he said.

In closed-door negotiations with the county, Myers provided EcoDual's typical pitch to investors about what markets the company hoped to focus on and what systems it wanted to employ, Myers said this week.

Rodman, then vice chairman of the council, engineered a plan during those sessions in which the county would spend $850,000 to buy a machine the company needed in exchange for promised private investment and "due-diligence" business plans, Rodman said.

The council approved the plan -- code-named "Project Robot" -- in May 2013.

A month later announced EcoDual would be setting up shop.

Shortly before the announcement, Myers and the company parted ways, he said. He spun off his own new idea to focus on conversion kits for locomotive diesel engines and began to put a new business plan together, he said.

EcoDual struggled to find investors and never completed the business plan, Rodman said. The company ultimately moved to Michigan. The business incentive was abandoned and the machine never purchased.

A few months later, in early 2014, Myers shared the new plan with Rodman and Lowcountry Economic Alliance leaders, he and Rodman said.

In two meetings at Myers' Beaufort home, he gave Rodman a new "investor's pitch" about his focus on the rail market, possible partner companies and Myers' plan to submit his new company, OptiFuel, for a contract to install dual fuel converters on 31 Indiana Harbor Belt Railroad cars, Myers and Rodman said this week.

On April 21, 2014, Greenville-based Motor Power & Equipment Solutions Inc. announced it was partnering with OptiFuel to bid for the contract, according to the locomotive service and sale company's website.

BECOMING COMPETITORS

In a letter dated May 8, 2014, Rodman proposed a possible new strategy for his diesel engine manufacturing company AMBAC: Dual fuel systems on rail applications.

The letter was addressed to Motor Power & Equipment Solutions Inc. Vice President Doug McMillan. It detailed how AMBAC partnered with a dual-fuel company called Skygo to build truck engine dual fuel kits and wanted to expand to trains.

"We most certainly have an interest in being considered for the Indiana Harbor opportunity with one option being to conduct the test with one of their locomotives," concludes Rodman, then board chairman of AMBAC.

Myers contends it was his conversations with Rodman about OptiFuel's business plan that led the councilman to direct his own company to compete. What Myers believed had been privileged conversations with an elected official had been inappropriately turned into ammunition to become make AMBAC and Skygo his competitors, he said.

"Where do you think he got those ideas from?" Myers asked. "There's no way he could have thought up that stuff."

Rodman disagrees.

He maintains he never shared OptiFuel materials or the substance of his conversations with Myers with his partners at AMBAC or Skygo. AMBAC abandoned its rail aspirations last year to focus on diesel truck engine conversions with Skygo, he added.

"The other conversation I had with (Myers) was whether I had an interest in investing in his revised business," Rodman said. "He gave me a package of information which I never shared with anybody and he would not return my phone calls."

"It was all to help Scott," he continued. "To this day, I believe that if Scott wants to do the rail business, (AMBAC) would be happy to help him with it."

'TOTALLY WRONG?'

Last month, Myers submitted his claims to county administrator Gary Kubic and S.C. Ethics Commission Director Herbert Hayden, according to Myers' documents.

Kubic said he also forwarded the materials to the ethics commission, but declined to comment further this week .

Attempts to reach the commission on Friday were unsuccessful.

Both Myers and Rodman declined to comment on the status of the investigation, citing ethics complaint confidentiality rules.

Myers' submission, however, outlines a series of other alleged ethical and legal violations by Skygo founder Mike Kilbourne, who worked with AMBAC to build the fuel conversion kits last spring.

Kilbourne and Rodman also formed a new corporation in December -- Skygo Fuel Systems -- to formally partner with AMBAC.

Rodman is no longer on the AMBAC board, but remains a minority shareholder. He is now an investor and board member for the Skygo Fuel Systems corporation, he and Kilbourne said.

Now Kilbourne and all three of those associated corporations are locked in litigation with Kilbourne's former employer -- Columbia-based NGV Systems -- in a Richland County court.

The lawsuit filed by NGV Systems owner Carl Hawkensen claims that Kilbourne's products, sold by AMBAC, are using NGV's proprietary technology in violation of a February 2014 settlement. That settlement included provisions that Kilbourne would not share technology he had created or obtained for NGV, according to the lawsuit.

"A very strong case can be made for the proposition that AMBAC's agents knew, or in the exercise of reasonable diligence should have known, that the intellectual property provided to it by Mr. Kilbourne was owned by NGV," Beaufort attorney and S.C. Sen. Tom Davis wrote on behalf of NGV in a March letter to Kilbourne.

Reached Friday, Davis declined comment on the litigation.

Kilbourne and Rodman also declined comment on the lawsuit's allegations.

But Hawkensen argues his lawsuit and Myers' claims are evidence that Kilbourne, Rodman and AMBAC conspired against NGV and OptiFuel as competitors, Hawkensen said this week.

Rodman at least should have recused himself from the meetings with Myers, and never met with him later, Hawkensen said.

"If (Myers' allegations) truly happened, that's like way beyond not just excusing yourself from a meeting," Hawkensen said. "It's just totally wrong."

OptiFuel Request for Ethics Investigation By Beaufort County

Follow reporter Zach Murdock on Twitter at twitter.com/IPBG_Zach and on Facebook at facebook.com/IPBGZach.

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