A group that invested $25,000 in a local company that produces plugless power units for electric vehicles is suing the firm for fraud and requesting the return of its investment, plus interest, legal fees and any other relief the court deems appropriate.

The lawsuit alleges that Evatran owner Thomas Hough expected the company to make millions of dollars over the course of five years, from 2010 to 2015, but has only had sales totaling $150,000 during that time.

During the past five years, Evatran has solicited additional investments without notifying the group, diluting the investment, the lawsuit says.

Roger D. Brooks of Independence, attorney for the group Sawyer & Associates Money Purchase Plan, said Evatran did not notify the investors so that they could opt to invest to maintain their percentage of ownership in the company or decide not to invest more money.

The lawsuit, filed in Wythe County Circuit Court on Aug. 3, alleges that Thomas Hough approached the group soliciting investments for a new company he was launching called Evatran.

The company produces a hands-free charging system for EVs (electrical vehicles) and extended-range hybrids. When an electric car is parked within a few feet of the base charging unit, the recharging energy flows from the unit to the vehicle’s battery, eliminating the need to plug the vehicles into a power source.

According to the document, Hough provided the potential investors with a “confidential private placement memorandum,” dated July 22, 2010, which said that Evatran would be self-sustaining by 2012. The memorandum also said that by 2015, sales were expected to be more than $350 million.

In addition, the lawsuit claims that the memorandum said the company would produce $7,860,992 in net profit for 2012 and $108,261,698 for 2015.

The lawsuit lists four defendants: Hough, Evatran Group Inc., MTH Holdings Corp., and NRV-EVA, LLC. It says that with knowledge of the product and market, the defendants “knew or should have known that the representations made in said Memorandum were neither true nor realistic, thereby acting a fraud or deceit upon Plaintiff.”

According to the document, the defendants further diluted the investment by allocating shares of stock to Thomas Hough’s daughter, CEO Rebecca Hough, without notice to the investors, “further acting a fraud or deceit upon Plaintiff.”

Rebecca Hough declined to comment for this story.

The Houghs launched Evatran in Wytheville in 2009. The next year, the company announced that at least 84 new jobs would be created in Wytheville thanks to an expected contract.

Rebecca Hough did not return an email asking about the number of people currently employed in Wytheville, but estimates range from six to 12. Evatran moved its headquarters to Richmond in 2012, but the units are produced in Wytheville.

According to its website, Evatran has received $1.8 million from the commonwealth: a $1.25 million research grant from the Virginia Tobacco Commission and $485,000 in economic development funding. In addition, the company received a $3.5 million U.S. Department of Energy grant to work with General Motors and Toyota to integrate plugless power technology into their vehicles.

In June, the company announced a $1.6 million strategic investment from a Chinese automotive parts manufacturer. China is the second-largest electric car market in the world, behind the United States.

According to a company profile in the Richmond Times Dispatch on July 5, Evatran started selling its devices in the United States about seven months ago and, by early July, had sold 200 devices with sales increasing each month. In the article, Hough said she is encouraged and projects revenue to outpace costs for the first time next year.

The company was named Best of What’s New 2014 in Popular Science magazine and hopes to eventually have its units installed on vehicles on the assembly line.

Electric vehicles make up a tiny portion of the automobile market in the United States, but sales are increasing.

In 2014, a near-record 16.5 million new cars were sold nationwide. During the same time period, 119,710 EVs hit the streets, an increase of 28 percent from the year before and a 128 percent increase from 2012.

A court date to address the lawsuit has not been set. Brooks did not request that Evatran and the other defendants be served with a copy of the lawsuit. By law, the plaintiff has one year to serve the defendants.

To reach Millie Rothrock, call 228-6611, ext. 35, or email mrothrock@wythenews.com.

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