Email a friend
  • To include more than one recipient, please separate each email address with a semi-colon ';', to a maximum of 5

  • By submitting this article to a friend we reserve the right to contact them regarding AMM subscriptions. Please ensure you have their consent before giving us their details.

National Steel Car exec faces fraud charges

Nov 21, 2013 | 03:28 PM |

Tags  National Steel Car, Gregory Aziz, Alabama Securities Commission, fraud charges, rail car manufacturing, Retirement Systems of Alabama, Warren Aziz, Navistar Freightcar America

CHICAGO — National Steel Car Ltd.’s top executive is facing 10 counts of securities fraud in Alabama.

In an indictment issued by a Colbert County grand jury earlier this month, the Alabama Securities Commission alleges that Gregory J. Aziz, chairman and chief executive officer of the Hamilton, Ontario-based rail car manufacturer, pledged to build a production plant in Cherokee, Ala., and obtained financing from the state retirement fund, but failed to complete the project or repay the loan.

Between September 2006 and July 2009, Aziz "perpetrated a scheme to defraud the Retirement Systems of Alabama (RSA) by knowingly supplying fraudulent financial information, and making false statements and omissions of material fact in connection with a loan and equity transaction between Aziz and the RSA," the indictment alleges.

Aziz, who was arrested Nov. 12 at Midway International Airport in Chicago on a warrant issued by Colbert County’s district attorney and the director of the Alabama Securities Commission, could face 10 years in prison and fines if convicted, and be ordered to pay restitution to RSA for any loss attributable to his alleged actions.

Aziz’s attorney could not be reached for comment. A spokesman for National Steel Car’s human resources department declined to answer any questions, including whether Aziz was still employed by the company.

A subsidiary of National Steel Car obtained a 36-month term loan in July 2007 from RSA valued at more than $346 million to finance construction and equipment costs for a plant to manufacture 12,000 rail cars per year, according to the indictment. However, Aziz and his brother, Warren Aziz, allegedly never fully disclosed to RSA that the actual and projected costs for the project were far above the loan amount, and Gregory Aziz allegedly told the governor that the project was on time and on budget.

The RSA later agreed to increase the loan to $625 million, but during the first half of 2009 RSA officials were apprised of the problems and sought to seize control of the Alabama subsidiary.

Truck and engine maker Navistar Inc., Lisle, Ill., signed a 10-year lease on the Cherokee plant in September 2011 and converted the bulk of it to production of its LoadStar commercial vehicle.

In February, Chicago-based FreightCar America Inc. subleased part of the plant and spent $23 million to equip and set up a production line to manufacture about 7,000 rail cars per year. The line started up during the third quarter, chief executive officer Joe McNeely said Oct. 30.

Latest Pricing Trends Year Over Year


How will US hot-rolled coil prices fare over the summer?

Rise sharply
Rise modestly
Stay largely flat
Fall modestly
Fall sharply

View previous results