Rampant Fraud Pervades Rooftop Solar Industry

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Peter Fricke Contributor
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The case for green energy subsidies was dealt a blow recently with revelations that solar companies in Oregon and Arizona misused tax credits and defrauded customers.

The Arizona Republic reported on Tuesday that, “The owners of a Phoenix solar company admitted bilking customers on the sale of energy systems,” and will now have to “repay customers up to $111,000 to settle a consumer fraud lawsuit filed by the Arizona Attorney General’s Office.”

In addition, the manager and president of Going Green Solar, Jesse Gee, “agreed to pay up to $120,000 in fines and $17,000 in attorney’s fees.” (RELATED: SOLAR SCAMS: Arizona Moves to Protect Homeowners)

The fines were imposed after courts determined that sales representatives of Going Green “targeted senior citizens in violation of the federal do-not-call list,” misrepresenting themselves as calling on behalf of something called the “utility savings program,” and then proceeded to make false claims about the savings customers could realize by installing solar panels.

Some customers, for instance, were told “their energy costs would rise from $200 to $1,500 a month over the next 20 years” if they did not purchase solar panels, only to find that, “their energy costs went up after purchasing the Going Green systems.”

Going Green salesmen also “told customers they would be permanently eligible for a program that would lower electric bills from 40-75 percent,” and claimed they could “get as much as $17,000 through state, federal, and utility programs.”

“Going Green is the second solar company in the past month to settle fraud claims with the attorney general’s office,” the Republic says, following a similar case involving a company called Stealth Solar, whose owners were fined $92,000 for “deceptive telemarketing, bogus mailers, [and] untrue promises of savings and government subsidies.”

In perhaps an even more egregious case, The Oregonian reported last Friday on a multi-million dollar boondoggle involving allegations of fraud on the part of at least two solar companies that received tax credits from the Oregon to build a collection of solar arrays. (RELATED: Europe’s Green Energy Industry Faces Collapse as Subsidies are Cut)

The project was the brainchild of officials at the Oregon University System, who “envisioned 14 solar installations spread over seven campuses,” with funding provided by Oregon’s Business Energy Tax Credit program, which the article calls “the most generous state incentive program in the nation.”

The first company selected for the job was Renewable Energy Development Corp., also known as Redco, but just four months after being approved, “Redco was bankrupt.”

Redco’s bankruptcy threatened to derail the project, which faced a looming deadline to either start construction or lose the tax credits, so “project backers submitted phony and misleading Redco documents to keep the project alive.” (RELATED: Solar Industry Demands Extension of Subsidies)

In one instance, they submitted an invoice from a Redco subcontractor, Solar Foundations Systems, purportedly proving that construction had begun two months ahead of the deadline. However, “neither Utah nor Oregon has any record of Solar Foundations Systems,” the Oregonian claims, “and the phone number at one time was a Redco listing.”

The machinations succeeded in saving the project’s tax credits, and the university proceeded to hire Solar City as its new developer. The agreement quickly grew contentious, though, because it called for Solar City to collaborate with one of its fiercest rivals, a company called Solar World.

Solar City officials soon began “telling state officials that they were troubled by Solar World’s shaky financial condition,” and eventually cancelled Solar World’s contract to produce solar panels for the project.

In its place, Solar City settled on a scheme to use prison labor to manufacture the panels, allowing it to pay workers 93 cents an hour, rather than the $11 per hour starting pay for workers at Solar World. Solar City officials “acknowledged that using inmate labor ‘may not have been in the spirit’ of the tax credit program, [but] said state officials knew prisoners were involved.”

State officials, however, denied any knowledge of the use of inmate labor. “They used inmates?” one official asked. “That’s unfortunate.”

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