Renewable Energy and Solar Fraud

Solar company fraud: The tip of an iceberg

Most people are probably familiar with solar company fraud. Solar may be the most mainstream of renewable energy sources, and there are companies at every point in the design and production processes getting loans and grants from the federal government.

High-profile cases such as the Solyndra bankruptcy scandal and more recent settlements with SolarCity underline an industry where fraud is not only happening, but likely costing taxpayers hundreds of millions of dollars. And that’s just the fraud we know about.

The truth is that solar is only a portion of the renewable energy movement being subsidized by taxpayer money. Things like wind power and biofuels also receive significant funding, and are not immune from the presence of fraud.

What are some examples of renewable energy fraud?

Sadly, this is an area of government fraud that we suspect is growing rapidly. There are several cases below to give context.³ While only one qui tam case was filed, the opportunity was almost certainly there in the others – someone knew of the fraud as it was happening, if not before. If people stepped forward and these became successful cases, they could have earned up to 30% of the government’s recovery.

Solyndra: The poster child of fraud and lost taxpayer dollars

When Solyndra received more than $500 million in taxpayer dollars from the Department of Energy, it failed to report crucial information – or reported false information to the DoE in applying for the funds. The full investigative report, completed years later, underlines the vital importance of whistleblowers for two reasons.

• The report is critical of the techniques used by the DoE to seek and verify information regarding its disbursement to Solyndra. Translated to plain English, the government’s ability to investigate, oversee, and regulate isn’t typically enough to protect taxpayer dollars from fraud.
• The money given to Solyndra is essentially gone due to the nature of its bankruptcy. This left taxpayers holding the bag. And one whistleblower may have been able to prevent it.

SolarCity: Alleged false statements settled for nearly $30 million

Prior to being acquired by Tesla, SolarCity was accused of falsifying reports of the cost of its solar energy properties and, therefore, receiving an inflated sum of government grants. The government’s program, in essence, provides grants to offset the costs of constructing or acquiring solar energy systems. In this case, SolarCity was alleged to have inflated their costs in order to increase the amount of government funding.

Gone with the wind: WECSREP settles grant fraud allegations

Wind energy is another area of serious investment from both private and government sources. WESREP, Inc., paid nearly $400,000 to settle allegations that, like SolarCity, it inflated its costs in order to obtain more money in government grants. The allegations stated that the company may have inflated its costs by more than 400% while concealing its actual costs. In essence, the company was allegedly having the government pay 100% or more of its costs, rather than 30%.

E-Biofuels: Powered by fraud, paying nearly $70 million judgment

In what is thankfully a case of a whistleblower calling out fraud, E-Biofuels and its co-conspirators defrauded the government by claiming tax credits from the production of biofuels when they were, in fact, making those claims on biofuels they obtained from other sources who already received those credits.

The whistleblower in the case blew open a scam that cost the government millions, and resulted in several fraudsters in prison. He could receive up to 30% of the $69.6 million judgment.¹

Washakie Biofuels: $511 million in payback

In a case as bizarre as it was expensive, several members of a family have been convicted of, or pled guilty to, defrauding the government of more than $1 billion in biofuel credits over the course of many years. The Washakie Biofuels plant was capable of producing some product, but nowhere near what it claimed biofuel credits for.

It’s a monumental case of fraud, but unlike the Solyndra case, the government did win a judgment against the company and its criminal enterprise of $511 million in penalties and restitution. While the government may not recover that sum entirely, we can only wish a whistleblower had brought the fraud to light. They may have been entitled to up to a $153.3 million award.