The shadowy saga of Cobra and its contracts with PREPA

The trail of a $1.8 billion federal fraud.

Amid the frenzy of the first weeks right after hurricane Maria barreled through Puerto Rico, the Puerto Rico Electric Power Authority (PREPA) contracted two mainland companies to deal with the monumental task of restoring the decimated electrical system.

Whitefish Energy Holdings was the first, but quickly lead to uproar after a series of questionable moves. Among them, leonine rates agreed with PREPA for their subcontractors, their speedy contracting and without a bidding process, and at one point, FEMA warned they would not reimburse the contract costs upon learning the contract between Whitefish and PREPA falsely guaranteed that the federal agency approved the agreement.

The Whitefish contract was canceled on October 29, 2017, on a request from then governor Ricardo Rosselló Nevares.

Cobra Acquisitions, in turn, didn't generate a similar public outcry, even though NotiCel reported last year that they had increased their rates, surpassing the controversial rates from the Whitefish contract. More so, the sum of the Cobra contracts exceeds $1.8 billion, all of it paid with FEMA funds.

Here's a summary of all of NotiCel's reporting about Cobra's moves since they arrived in Puerto Rico in October 2017:

  • The first Cobra contract with PREPA was signed on October 19, 2017, for the sum of $200 million. It was valid for 12 months, however, their proposal estimated a total cost of $187,560,000 for four months of labor, along with 250 employees and a barge to accommodate their work force.
  • This first contract was amended in three occasions before 2017. One of the changes to the contract involved the elimination of an article that said FEMA had approved the contract, the same article that was pointed out in the Whitefish agreement.
  • On January 28, 2018, PREPA approved a fourth amendment to the original contract was increased by $245,429,800. However, the Cobra proposal for that amendment stated that the increases would include payment for an additional 550 employees for 77 days. Cobra's parent company, Mammoth Energy Services, reported at that time the increase was for an additional $500 million, but one day later they corrected their statement to indicate the agreed upon raise.
  • On Februrary 27, 2018, PREPA approved another increase, this time for $500 million, increasing the contract ceiling to $945 million. Justo González, then interim Executive Director of PREPA, insisted the Cobra contract would be reimbursed with FEMA funds.
  • In mid April, the Union of Workers of the Electric and Irrigation Industry (UTIER for their Spanish acronym) held Cobra accountable for two major blackouts during the same week. UTIER president Angel Figueroa Jaramillo said at the time one of the blackouts was caused by D. Grimm, a Cobra subcontractor, while they were performing an excavation near a transmission tower. Another one, he said, was caused by Cobra while they were trimming trees near transmission lines.
  • On May 26, 2018, although PREPA had estimated they had energized 90% of the Island, they opted to grant a second contract to Cobra with a ceiling of $900 million, valid until May 25, 2019. Mammoth president Arty Straehla had announced his shareholders an increase in first quarter earnings of $494 million in comparison to the first quarter of 2017, for an increase of 559%.
  • The second Cobra contract ended up being much more onerous in its rates than the original Whitefish contract. NotiCel has analyzed the agreement and found that Cobra linemen would earn $325 per hour, whereas the Whitefish contract provided for $319 per hour for linemen.
  • In August 2018, the Fiscal Control Board (FCB) revised the first Cobra contract along with its amendments as well as the second contract. They found the subsequent increases in the first agreement lacked any analysis to justify the raise and the pointed out that the cost per hour for linemen did not coincide with the average salary for linemen. For the second contract, the FOB alleged that PREPA did not provide the applicable rate structure for that agreement, therefore they did not pass judgment over the new rates.
  • On March 2019, the new PREPA executive director, José Ortiz, told NotiCel he would no renew or grant any new contracts to Cobra for their services. At the time, he said PREPA had not assigned any new jobs to Cobra personnel, and the company had begun to demobilize its equipment and personnel.
  • On May 24, 2019, the Office of the Inspector General for the Department of Homeland Security (OIG-DHS) revealed that FEMA was under investigation of their involvement in the Cobra contracts. The ongoing investigation resulted in the suspension of Ahsha Tribble, a FEMA Deputy Regional Administrator assigned to Puerto Rico for power restoration issues.
  • Late in May 2019, the Center for Investigative Journalism (CPI for its Spanish acronym) reported that a series of emails they acquired from the FCB revealed that Tribble had scheduled a meeting with the Board the 24th of January, 2018. Cobra president Keith Ellison as well as Cobra vicepresident, Ken Kinsey, attended the meeting, as well as PREPA consultant Todd Filsinger and Nathan Pollak from Filsinger Energy Partners. Tribble's lawyer at the time, Leo Aldridge, told CPI that the meeting was to discuss the status of energy restoration in the Island. CPI also revealed that FOB's revitalization coordinator, Noel Zamot, also maintained a close communication with Tribble, having weekly conversations on issues regarding restoration efforts.
  • The first quarter report that Mammoth submitted to the SEC revealed that PREPA owed $25.7 million in delinquent charges, apart from the $221 million the public corporation owed them for rendered services. After NotiCel revealed the delinquent charges, PREPA executive director, José Ortiz, said: "We are not paying Cobra interests and we are paying them as FEMA reimburses us". In that sense, he insisted Cobra had not notified PREPA on the owed delinquent payments.
  • A class action lawsuit was presented by local businessmen against Cobra for their role in the mass blackouts of April 12 and 18, 2018. The plaintiffs are Mammoth and their subcontractor, D. Grimm, however Mammoth contends that the alleged negligent conduct that lead to the blackouts was attributable only to D. Grimm. D. Grimm, for their part, blamed another Cobra subcontractor, A&J Steel, for the acts that caused the mass blackout on April 12. The suit seeks damages of $300 million.
  • Another class action lawsuit was presented by Cobra and Higher Power Electrical employees in the Federal District Court, claiming Cobra has not complied with the payment of overtime. The class contends that Cobra utilized a mathematical equation to calculate employee payment, yet only factored 40 regular hours and 72 overtime hours. This resulted in checks that did not accurately reflect the extra hours worked by some employees. The class claims damages of $300 million.
  • On July 23, 2019, PREPA generation director, Daniel Hernández, and PREPA Transmission and Distribution director, José Sepulveda, went before a Grand Jury to provide testimony regarding the federal investigation against Cobra and FEMA.
  • On September 10, 2019, the FBI and the OIG-DHS, revealed the results of their investigation along with the arrests of Tribble, Ellison, and FEMA official Jovanda Patterson. Federal District Attorney Rosa Emilia Rodriguez, said Tribble was bribed by Ellison who gave her helicopter rides, airline tickets, personal security and access to his personal credit card. In return, Tribble influenced PREPA officials in order to extend Cobra assignments and to force the utility to use Cobra resources instead of PREPA workers. Such an event took place in October of 2018 during an explosion in the Monacillo substation. Patterson was indicted for negotiating an employment contract with Cobra at the same time she was evaluating Cobra-related matters as part of her duties in FEMA, a move that was requested by Tribble directly to Ellison.