Judge dismisses 2d complaint against T’s Ramirez

But says allegations suggest he knowingly reported false information to Global Power shareholders

A FEDERAL JUDGE IN TEXAS dismissed a second shareholder complaint against MBTA General Manager Luis Ramirez for issuing false and misleading financial reports during a previous job. The judge gave him a pass largely because the amount of money involved was so small that it would not have affected an investor’s decision to invest in the company, Global Power Equipment Group.

Judge Barbara Lynn said allegations raised in the shareholder complaint support the conclusion that Ramirez, the president and CEO of Global Power from July 2012 to March 2015, and Raymond Guba, the chief financial officer, knew they were publishing false information about the Dallas company. She said information gathered by the shareholder group indicated a colleague had told the two executives in April 2014 and on several other subsequent occasions that the financial results of a Global Power division called ES Segment were inaccurate because $2 million in revenues had been reported prematurely and $1 million in costs had not been recognized.

“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,” Lynn said in her September 11 decision. “Yet, Guba and Ramirez continued to republish the 2013 financial results in Securities and Exchange Commission filings.”

Lynn ruled, however, that the size of the misstatements was not material, meaning the accounting errors were not big enough on their own to affect an investor’s decision to invest in the company. Global Power, which provides equipment and services to the energy industry, restated its financial results for previous years in March 2017, resulting in a 20 percent decrease in net income for 2013 and a 524 percent decrease in net income for 2014. The restatements sent the company’s stock plummeting.

“This was caused by a number of issues, with accounting errors in the ES Segment being only one of them,” Lynn wrote. “Knowledge of Global Power’s 2013 financial results being off by a ‘couple of million dollars’ due to accounting errors in the ES Segment is not knowledge of a material falsity, especially considering that Global Power reported nearly $500 million in revenue and $400 million in cost.”

The ruling by Lynn was the second time she had dismissed a complaint brought by shareholders against Ramirez and Global Power. In December 2017, she held that the shareholder group had failed to provide enough information to suggest that Ramirez and Guba had acted recklessly.

“Taken together, these allegations do not support the contention that Guba or Ramirez knew that financial reports, at the time they were published, were false or that they were severely reckless as to their falsity,” said Lynch. She invited the plaintiffs to amend and refile their complaint if they could come up with additional information, which they did.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

The MBTA hired Ramirez in August 2017, largely on the strength of his resume and turnaround skills at Global Power. Ramirez had been working as a consultant when the MBTA hired him. The MBTA signed him to a three-year contract that paid him a base salary of $320,000 a year, increasing 1.5 percent each year. He is also eligible for an annual “success bonus” equal to $32,000 the first year, $48,000 the second, and $64,000 the third year.

MBTA spokesman Joe Pesaturo said the judge’s decision was not an MBTA matter and referred questions to Ramirez’s private attorney, who could not be immediately reached for comment. In the past, Ramirez has declined to comment on the shareholder lawsuit.