DEMOCRATIC GUBERNATORIAL CANDIDATE Jay Gonzalez said Gov. Charlie Baker should fire MBTA General Manger Luis Ramirez, citing a recent lawsuit against the Texas company he once led that charged Ramirez and other executives with issuing false and misleading financial reports.
“A judge just found that Luis Ramirez knowingly mislead investors of the company he was working at,” Gonzalez said in an interview. “We should not be appointing someone like that to lead the MBTA.”
Gonzalez’s charge relates to a shareholder complaint against Ramirez and other former executives at Global Power Equipment Group, a Texas energy company where Ramirez served as president and CEO from July 2012 to March 2015.
Earlier this month, a federal judge in Texas dismissed a second shareholder complaint against Ramirez and other executives from the company. US District Court Judge Barbara Lynch ruled that the amount of money that could have been involved in a misstatement of financial information by the officials would have been too small to affect any decision to invest in the company.
However, Lynch wrote in her ruling that allegations in the complaint support the claim that Ramirez and Raymond Guba, the company’s chief financial officer, knew they were publishing false information.
“These allegations support the conclusion that Guba and Ramirez knew, starting in April 2014, that Global Power’s 2013 financial results were false or that they were severely reckless as to their falsity,” Lynch wrote in her September 11 decision. “Yet, Guba and Ramirez continued to republish the 2013 financial results in Securities and Exchange Commission findings.”
Lynch’s ruling stopped short of independently affirming the plaintiffs’ allegations. Her decision at this stage of case to dismiss the complaint based on her conclusion about the relatively small amount of money involved in any financial misstatement appears to have ended any further fact finding steps in the case.
In March 2017, Global Power restated financial results for earlier years, resulting in a 20 percent drop in net income for 2013 and a 524 percent decrease in net income for 2014. The company’s stock plunged on news of the restated earnings.
Lynch said, however, that accounting errors were just one of several issues bedeviling the company. She said any knowledge by the defendants of financial misstatements of several million dollars, as alleged in the suit, are “not knowledge of a material falsity, especially considering that Global Power reported nearly $500 million in revenue and $400 million in cost.”
In December 2017, Lynch dismissed an earlier complaint by shareholders against Global Power and its top executives. She ruled that the plaintiffs had not provided enough information to suggest Ramirez and Guba had acted recklessly.
When Ramirez was named to helm the T in August 2017, reports surfaced that Global Power had to restate earnings for several years, including time he was at the company, and that the firm was the subject of a shareholder lawsuit.
T officials said at the time that they were aware of the issues prior to selecting Ramirez to lead the troubled agency. But the news took some of the sheen off his reputation as a private-sector turnaround specialist, the profile the Baker administration touted in defending the hiring of Ramirez despite his lack of any experience with a transit agency.
“A year ago when he appointed him, I said he never should have appointed him,” Gonzalez said of Baker’s hiring of Ramirez. “When the governor hired Luis Ramirez, these allegations existed, and on top that Luis Ramirez had zero experience in the transit sector.”
Baker’s campaign office referred questions about Ramirez to the MBTA. Neither the T nor the governor’s press office responded to messages asking for comment.
Earlier on Wednesday, Gonzalez also called for Baker to fire the head of the State Police. Col. Kerry Gilpin, and Public Safety Secretary Daniel Bennett, saying they have not aggressively clamped down on the overtime scandal that has rocked the department.