CoServ Electric members file lawsuit against co-op

by Staff of Lantana Links

A lawsuit filed Wednesday by members of CoServ Electric alleges that the co-op has wrongfully taken $54 million of the members' money for its own use through improper accounting practices.

The suit also alleges that controlling directors of the cooperative's board have subverted democratic control of the organization, conducted their operations in a culture of secrecy, and placed the members' funds at risk in for-profit business endeavors.

The allegations in the lawsuit are based upon information (PDF) provided by Mark Glover, a director of the cooperative.

One of the members suing the cooperative is Janice Brady, who ran for a director position to replace board chairman Jerry Cobb in 2008 and lost by a narrow margin. Specifically, Ms. Brady alleges that CoServ unlawfully provided member lists and daily vote tallies to its incumbent directors while denying the same information to challengers, and as a result, board elections were effectively rigged.

When contacted last fall by The Cross Timbers Gazette about Glover’s allegations, the cooperative issued a response (PDF) saying that CoServ "intends to research and process each of the issues raised by Mr. Glover, most of which have not been previously expressed."

The statement also said that "Mr. Glover’s document contains many misstatements and mischaracterizations of the facts," and that CoServ’s board "realizes that Mr. Glover has been disgruntled over the resolution of certain issues that have arisen recently related to his service as a director."

Headquartered in Corinth, CoServ serves more than 140,000 customers across six counties in North Texas, including Lantana and other areas of Denton County.

CoServ is the second largest electric cooperative in Texas, ranking second only to Pedernales Electric Cooperative near Austin, which was sued by its members in 2007 over similar allegations of mismanagement, waste and a lack of transparency in its affairs.

Because of the problems encountered at Pedernales, Senator Troy Fraser of Horseshoe Bay, TX recently introduced a bill in the Texas Legislature to require open meetings and records at the state's electric cooperatives.