Alabama officials dropped securities fraud charges against the chief executive of National Steel Car on Friday in return for the Canadian businessman paying a $22 million settlement.
State officials and Gregory Aziz completed the agreement Friday in Tuscumbia and Aziz was allowed to return to his home in Hamilton, Ontario, after spending about a year in Alabama wearing an ankle bracelet, Alabama Securities Commission Director Joe Borg said.
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A Colbert County grand jury indicted Aziz last November on charges of misleading officials with Alabama's state pension program to get $350 million in financing for a rail car manufacturing plant that was never finished in the northwest Alabama town of Cherokee.
In the settlement, Aziz, chairman and CEO of National Steel Car, paid $21 million to the Retirement Systems of Alabama. That included $11 million Aziz and others got for overseeing the project and $10 million in damages. He also paid $750,000 to the Securities Commission and $250,000 to the Colbert County district attorney to cover the cost of the investigation.
Aziz was originally supposed to build a rail car manufacturing plant that would employ 1,800 to 2,200 people.
In the settlement, he admitted he didn't inform the Retirement Systems that construction costs would be higher than he originally said. He also acknowledged that he told the pension program in September 2006 that he had a $100 million line of credit, but he didn't inform them a few months later when the line of credit was replaced by $100 million in debt and a $60 million line of credit. He also admitted he didn't inform the pension program that for collateral he pledged the intellectual property rights necessary to build railcars.
He also admitted that National Steel Car was paid about $11 million for managing the Alabama project, when the original budget called for $3.6 million. But he said the inaccurate representations were not made with the intent to defraud.
Borg said a settlement was best for Alabama because the state risked getting no funds if it convicted Aziz and sent him to prison. Borg said the settlement "should discourage others in the future from making inaccurate financial representations when doing business in the state of Alabama."
The Retirement Systems took ownership of the plant in 2010.