Green energy firm secured millions in taxpayer funding, now faces SEC investigation
posted at 11:51 am on April 6, 2012 by Rob Bluey
Green energy firm Ecotality won plaudits from President Obama and Energy Secretary Steven Chu. It was supposed to build 15,000 electric-vehicle charging stations in 18 cities across America, a shining success of the economic stimulus and recipient of a Department of Energy grant.
Ecotality collected roughly $115 million in stimulus funding to manufacture these charging stations for electric vehicles. It secured another $26.4 million from the Department of Energy last October as part of the agency’s “Advanced Vehicle Testing and Evaluation project.”
Today, however, the San Francisco-based company is garnering attention in the nation’s capital for a different reason. Ecotality is under investigation by the Securities and Exchange Commission for insider trading. Investigative reporter Lachlan Markay, my colleague at The Heritage Foundation, outlined in a three-part series this week the scale of Ecotality’s problems and the ramifications for taxpayers who were left subsidizing a company that failed to accomplish its objectives.
In short, the company is waist-deep in a federal investigation. And yet the DOE decided to double down on its investment in Ecotality despite the ongoing SEC probe.
Meanwhile, the company is in dire financial straits. Ecotality stock is down almost 84% since May of 2010, and it now sits below a dollar per share. According to Forbes, the company has a five-year average return on invested capital of negative 210.2%.
Ecotality’s latest earnings report shows it posted a quarterly loss of nearly $3.4 million. Its Energy Department grant payouts, totaling $6.8 million, accounted for 60% of its revenues in the first nine months of 2011, up from 38% during the same time period in 2010.
But while DOE funds appear to be keeping Ecotality afloat, the project for which those funds were appropriated is stalling. The company was supposed to install 15,000 charging stations as part of the EV Project, but so far is less than halfway towards emething that goal.
Like so many of Obama’s bets on green technology, Ecotality relied on Washington’s largesse to stay afloat. Obama’s stimulus and the Department of Energy grant provided vital support, even as the company faced the SEC investigation. Without that critical government aide, Ecotality’s future now appears grim.
The SEC investigation has exposed the company’s financial and legal problems. In December, the SEC sent a subpoena to Donald Karner, former CEO of Ecotality North America. It sought all communications with 18 employees of and investors in Ecotality. Among those named: Ecotality CEO Jonathan Read, his daughter-in-law and her father, Kathleen and Gary Weinkauf, as well as Min Zhu and Yuqing Xu, owners of Zhu-Xu Charitable Remainder Trust and founders of the online communication company Webex.
These individuals helped Ecotality secure the taxpayer funding it needed to survive. Read played a significant role in landing federal subsidies and was rewarded handsomely for his work. Just as executives at bankrupt Solyndra were given sizable bonuses, Read saw his compensation increase more than 10-fold from 2008 to 2009. It rose from under $400,000 to more than $4.1 million, mostly due to stock awards.
Politics also played a role. Read’s son Colin was the assistant finance director for the 2006 congressional campaign of then-Arizona State Senator Harry Mitchell (D). Mitchell was elected to the U.S. House in 2006 and sat on two key committees related to Ecotality’s work. While in Congress, Mitchell requested federal funding to replace buses with plug-in hybrid electric vehicles in Tempe, AZ, where Ecotality had installed 19 charging stations.
As more information surfaces about Ecotality’s troubled history, Rep. Andy Harris (R-MD) has begun asking tough questions of the Department of Energy. He called the situation “an apparent major deficiency in Ecotality’s execution of its DOE award.”
Ecotality, meanwhile, becomes the most recent example of the federal government’s dubious policy of subsidizing electric vehicles.
Rob Bluey directs the Center for Media and Public Policy, an investigative journalism operation at The Heritage Foundation. Follow him on Twitter: @RobertBluey
Related Posts:
Blowback
Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.
Trackbacks/Pings
Trackback URL
Comments
Holder will settle out of court.
Liam on May 7, 2013 at 4:04 PM
Dude. There are literally Solar City ADS on this article right now.
LOL.
MikeknaJ on May 7, 2013 at 4:04 PM
As soon as they personally pay back every dollar they donated to Obama’s campaign using salaries subsidized by us taxpayers.
I hate more laws, but any organization being subsidized by the taxpayer should be forbidden to donate to a candidate or political organization.
BacaDog on May 7, 2013 at 4:06 PM
Translation:
We’re incompetent leeches with unproven technology and we would only last a few weeks on our own.
fogw on May 7, 2013 at 4:08 PM
hey, what the hell,
I mean, isn’t Charlie Rangel SUING the US House for
the fact he was Censored??
ToddPA on May 7, 2013 at 4:10 PM
Dreaming is fun, isn’t it? If wishes were horses, we Conservatives would all be a mix of Pegasus and unicorns.
Liam on May 7, 2013 at 4:10 PM
Yet another scummy thing that douche scammer Elon Musk & his cousins are up to.
Paying for their companies with public money.
Venture Socialism.
tetriskid on May 7, 2013 at 4:11 PM
Everybody is on the dole. It’s just a matter of who’s teat your suckling — state or fed. Neither party has clean hands. Washington is money-drunk. They don’t give a crap about you from either side of the aisle. Here’s Chris Christie, our next POTUS. I thought he was promising.
Tea Party knuckleheads are right to focus on government spending. Problem is that they do so selectively. But GOP is feckless against them because I and every other person reading this supported GWB in solidarity after 9/11. He spent us into our demise.
Without the folly of Iraq and initial bailouts and KATRINA we would have a REPUBLICAN in office now. By kowtowing to GWB uber-spending GOP became useless and Tea Party Haters move in. They push the correct message of fiscal-scrutiny but saddle the right with its current minority problem.
Without GWB the Tea Party would just be the Republican Party and America would be better off.
Capitalist Hog on May 7, 2013 at 4:12 PM
SOMEBODY needs to take responsibility for me, and aallll these solar panels.
onomo on May 7, 2013 at 4:12 PM
sick and tired
of being sick and tired
everyday is some effing BS.
bazil9 on May 7, 2013 at 4:14 PM
Crowdfund solar-powered 3D printers.
Capitalist Hog on May 7, 2013 at 4:16 PM
“Solhr pahnhls?”
squint on May 7, 2013 at 4:19 PM
Run all fridges and ACs on solar power. Drain the sun! Lure GOD out to bumpstart the solar system.
I mean come on. He’s got no digital footprint. Hubble selfie?
Capitalist Hog on May 7, 2013 at 4:20 PM
Note to self: Never do drugs. You don’t need them.
Capitalist Hog on May 7, 2013 at 4:21 PM
Heh. Well, we can dream can’t we.
BacaDog on May 7, 2013 at 4:22 PM
When liberals get final control, you might need them just to stay sane.
Liam on May 7, 2013 at 4:23 PM
I didn’t. I was 14. But even then, I knew that invading Iraq was a really, really bad idea. Two of my brothers served with honor over there and in Afghanistan, but even still I never supported GWB.
If conservatives ever want a seat at the table again, it’s time to disavow support for GWB and his evil policies. Stop trying to defend him against the liberals. They have good points. Instead, we need to stake out a new ground and defend what is defensible. And then call out the libs on their support for George W Obama the Second.
JoseQuinones on May 7, 2013 at 4:24 PM
EFF all these Em effers.
Soon, we’re going to be charged to play certain YouTube videos.
Eff em! here you go Dirtbags!!
http://www.youtube.com/watch?v=S0YrXjeRSoE
ToddPA on May 7, 2013 at 4:24 PM
Without GWB means we would have suffered under Al “Incinerator” Gore, the WTC would still have been attacked, and we would be paying the carbon tax simply because we exist.
As to the TEA Party fiscal security/minority (I believe you mean ‘immigrant’) problem? Those two topics are inseparably linked. Solve one, the other self-solves.
BobMbx on May 7, 2013 at 4:24 PM
Keep in mind that liberals will try stealing those from you just as well.
Liam on May 7, 2013 at 4:25 PM
I’m sure Sheila Jackson Lee would say the Constitution implies a right to sue the government for more free money, too.
Marcola on May 7, 2013 at 4:39 PM
More likely to go this way.
hawkeye54 on May 7, 2013 at 4:43 PM
H
Yes, they will keep trying to get everything we have under their complete control, and it is’t stealing to them. They own it all outright and only allow us to have assets to use at their discretion. Until they decide to take whatever we have back into their direct possession.
hawkeye54 on May 7, 2013 at 4:47 PM
“What is this ‘rent-seeking’ those conservatives keep talking about? Sounds like hate speech to me.” -Average Lefty/Dem voter
visions on May 7, 2013 at 4:49 PM
The thing that kills me about these programs is that I’ve installed my own solar electric systems before but I can’t get any state or federal support for doing so. I can only get the rebates and tax breaks if it’s installed by an approved contractor, who will do the work I could have done myself and charge 10 times as much to cover the required “training”, Union-rate wages, and bureaucratic graft. These programs have nothing to do with green energy and everything to do with The Green.
Socratease on May 7, 2013 at 4:50 PM
Sounds like they want a refund on their campaign contributions.
GarandFan on May 7, 2013 at 5:06 PM
…never give in, never give in, never, never, never, never-in nothing, great or small, large or petty – never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy.
Dub C
Capitalist Hog on May 7, 2013 at 5:31 PM
Wow, just about to have this company install our residential and business solar. If they are already out of money after the initial public offering just 4 months ago then I say they will follow 90% of the companies Obama invested our money in and headed for Chapter 11 or 7. SolarCity would not have allowed this information be released if they could survive so we’ll now be looking for a company we know will exist next year. Yes, I’m afraid its once again fork time for another “sharp as tepid butter” Obama entity.
Tangerinesong on May 7, 2013 at 7:17 PM