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
Aziz, who was arrested
Nov. 12 at Midway International Airport in Chicago on a warrant
issued by Colbert Countys 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
could not be reached for comment. A spokesman for National
Steel Cars human resources department declined to answer
any questions, including whether Aziz was still employed by the
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
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.
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.