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


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Have we got a list of these companies going anywhere? How many is this, now? Six, Seven?

dogsoldier on April 6, 2012 at 11:54 AM

How much of that largesse went to Obamas re-election…

PatriotRider on April 6, 2012 at 11:54 AM

How is L4L going to charge that Dolt now???

PatriotRider on April 6, 2012 at 11:55 AM

Here are three indicators a ‘green’ company is about to go belly-up:

1) Obama likes it and says so.

2) It gets loans from the federal government.

3) It can only stay afloat with loans from the federal government.

Pretty simple to figure out, and this is going to be yet another one of those companies.

ajacksonian on April 6, 2012 at 11:55 AM

Meanwhile:

The Energy Department said Thursday it expects to begin tentatively approving new taxpayer-backed loans for renewable energy projects in the coming months.

If I didn’t know better I would swear that the current POTUS is a hackneyed, bloviating, shiite for brains who doesn’t have the business acumen it takes to run a lemonade stand.

Bishop on April 6, 2012 at 11:56 AM

And we should be surprised?
Insider trading – and how much went to Obummer’s campaign and the DNC?

dentarthurdent on April 6, 2012 at 11:56 AM

If Obama had a son he would be green…

PatriotRider on April 6, 2012 at 11:57 AM

It was supposed to build 15,000 electric-vehicle charging stations in 18 cities across America

So each Volt gets it’s own filling station, brilliant.

NoDonkey on April 6, 2012 at 11:57 AM

Stop spending China’s money….

PatriotRider on April 6, 2012 at 11:58 AM

I confronted one of my lib co workers about the Obama Administration’s corruption in regards to Solyndra and other Green Energy companies. Her response was so stupid, I had to sit down:

“Well its just a drop in the bucket compared to trillions Bush & Cheney gave big Oil, and the War profiteering companies for the 8 years they were in the White House.”

You can’t fix stupid,folks.

portlandon on April 6, 2012 at 11:59 AM

Like so many of Obama’s bets on green technology, Ecotality relied on Washington’s largesse to stay afloat.

“Nothing to see here, this is exactly the same as tax breaks for Big Oil!” -Lefty

visions on April 6, 2012 at 11:59 AM

How much of that money circled back to Dem PACs?

faraway on April 6, 2012 at 12:01 PM

And WHERE does the energy come from for those Charging Stations? Freaking idiots. Again, this quote applies: “It would take an intellectual to believe such stuff, an ordinary man could not possibly be such a fool” – Orwell

kirkill on April 6, 2012 at 12:01 PM

Just more multi-million-dollar graft and corruption from the Obama administration. Nothing to see here folks, just move along.

AZCoyote on April 6, 2012 at 12:02 PM

It’s too bad really, this company had a great plan to turn something, not sure what, into a fuel equivalent to petroleum. Unfortunately the money ran out before they figured out what that something was.

Bishop on April 6, 2012 at 12:03 PM

Obama, Chu praised company

Double kiss of death from the O regime. They were doomed.

jwolf on April 6, 2012 at 12:03 PM

The more you stir…the more it stinks.

bntafraid on April 6, 2012 at 12:04 PM

I confronted one of my lib co workers about the Obama Administration’s corruption in regards to Solyndra and other Green Energy companies. Her response was so stupid, I had to sit down:

“Well its just a drop in the bucket compared to trillions Bush & Cheney gave big Oil, and the War profiteering companies for the 8 years they were in the White House.”

You can’t fix stupid,folks.

portlandon on April 6, 2012 at 11:59 AM

Yes, I’ve had the same conversation with a family member. Sigh.

Oil subsidies explained

visions on April 6, 2012 at 12:04 PM

Yeah, but the wolves inspect the sheep, or the foxes the chicken.

See GSA tape from Vegas – the contest winner was a guy who sang/played guitar, mocking the taxpayers for not footing more LV trips.

Talking points from the left “happens under all admins.”.

Two wrongs always make one right…cause logic and math are hard…for the gnats.

Schadenfreude on April 6, 2012 at 12:05 PM

Time to face the simple fact that this nepotism, favoritism, corruption, and wasteful spending by BOTH parties will not stop until the nation is bankrupt.

Probably not far off anyway.

Traitors.

AttaBoyLuther on April 6, 2012 at 12:06 PM

Wow 0-3 dear leader, heckuva job

cmsinaz on April 6, 2012 at 12:07 PM

Hope Romney carries a list of Obama’s Government projects, the ones which have made America great (in debt) to quote every time Obama tries to bring up divisive issues. It is something we can all agree on. If we are going to waste money, most are like myself, I would rather do it myself.

Zelsdorf Ragshaft on April 6, 2012 at 12:10 PM

If Obama had a son he would be green…

PatriotRider on April 6, 2012 at 11:57 AM

If Obummer had a son, he would look like Bernie Madoff – with a hoodie and prison jump suit….

dentarthurdent on April 6, 2012 at 12:10 PM

One of the final stages in the decline of an Empire is the looting of the treasury, it`s being done right under our noses under the guise of “Green”.

NY Conservative on April 6, 2012 at 12:11 PM

And yet the DOE decided to double down on its investment in Ecotality despite the ongoing SEC probe.

It seems that being under investigation by the SEC, having stock downgraded to junk status, and having the loans/grants previously turned down by the Bush administration are prerequisites for getting the nod from Chu.

iurockhead on April 6, 2012 at 12:11 PM

“But the business model worked in the classroom…!” - the Left

Seven Percent Solution on April 6, 2012 at 12:16 PM

I picked the wrong business to go into…

right2bright on April 6, 2012 at 12:16 PM

Almost $8000 per charging station. It could have been $20,000 so I guess we got a real good deal.

THANK YOU Presidebt 0bama!!

jukin3 on April 6, 2012 at 12:17 PM

The sound you hear is the SEC investigation fading off into the distance.

clippermiami on April 6, 2012 at 12:18 PM

Oil subsidies explained

visions on April 6, 2012 at 12:04 PM

Thanks for the link, I will be sending that out a lot. I’ve been saying the same thing, ad nauseum, there are no such thing as oil subsidies for US oil companies. Now I have all the numbers that show it.

iurockhead on April 6, 2012 at 12:20 PM

+1 7%

cmsinaz on April 6, 2012 at 12:20 PM

It’s really all about green energy, means greenbacks for the eco-hustlers on the left(but I repeat myself there)

Don L on April 6, 2012 at 12:21 PM

It was supposed to build 15,000 electric-vehicle charging stations in 18 cities across America
So each Volt gets it’s own filling station, brilliant.

NoDonkey on April 6, 2012 at 11:57 AM

Hey, every FIAT once had its own mechanic named Tony….

Don L on April 6, 2012 at 12:25 PM

Those that can do.

Those that can’t teach.

We have teachers in control of the government.

jukin3 on April 6, 2012 at 12:27 PM

My new investment strategy: Go short on all green energy companies receiving government funding.

a capella on April 6, 2012 at 12:28 PM

No! Really?! You don’t say?!

Bmore on April 6, 2012 at 12:31 PM

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.

….those two are Nobel winners, what could possibly go wrong? Where is President Present’s Parrot Press?

KOOLAID2 on April 6, 2012 at 12:33 PM

So help me, if Obama decides to talk up my business, I’m bailing faster than a Liberal can fake an intelligent discussion….

ProfShadow on April 6, 2012 at 12:37 PM

A little off topic…

… I have the local AM radio on listening to Rush, and when the news comes on at the top and bottom of the hour, the newscaster in a cheerful voice just said:

“Gas prices were DOWN a penny… settling at $4.29/gal!” in an upbeat and cheerful voice like this was the best news ever and I should be thanking Obowma…

This has been going on for the past few weeks…

“Gas prices have gone down 2/3rds of 1 cent…!!! HORRAY!!!”

… Is anyone else hearing this propaganda across the country…?

Seven Percent Solution on April 6, 2012 at 12:39 PM

I am starting to think that “green” has nothing to do with the environment and everything to do with moolah.

You can’t go wrong with this stuff. Start a “green” company, raise money not to do any actual work, but to throw at the Democrat Party.

Use a small percentage of the taxpayer money the Democrats throw at you, to produce a dog and pony show for our idiot president and the press corps. Send the rest to overseas banks, prior to the company declaring bankruptcy.

Live happily ever after. The American dream, 2012.

NoDonkey on April 6, 2012 at 12:41 PM

DOE is going full board, doling out more monies… maybe they realize they are going to lose, so they are going to give away as much money as they can

cmsinaz on April 6, 2012 at 12:41 PM

One of the final stages in the decline of an Empire is the looting of the treasury, it`s being done right under our noses under the guise of “Green”.

NY Conservative on April 6, 2012 at 12:11 PM

“Well, yes but I will never vote for Romney”

*many of the conservatives here at HA

VegasRick on April 6, 2012 at 12:42 PM

Who is John Galt?

redguy on April 6, 2012 at 12:43 PM

Ecotality = Economic Fatality

Bitter Clinger on April 6, 2012 at 12:49 PM

$141.4 Million in taxpayer investment and the ROI is “According to Forbes, the company has a five-year average return on invested capital of negative 210.2%.” This is over five years!
.
-210.2%
.
(210.2%)
.
Losah! Negatory!
.
The Energy Department bureaucrats have more investments down the road? Congress should jump on this and stop it now until such time as DoE can show they have any positive results from investment in “green” companies. “Green” now just means “money pit.”

ExpressoBold on April 6, 2012 at 12:50 PM

Who is John Galt?

redguy on April 6, 2012 at 12:43 PM

The fellow with the little gold $ signs on his cigs.

Bmore on April 6, 2012 at 1:02 PM

Add one more to the massive “green” sinkhole of FAILED companies run into bankruptcy by OBOZO crony capitalists: Solyndra, Evergreen Energy, Beacon Power, Ener1, Amonix, Solar Trust…..

American taxpayers get shafted while OBOZO’s bundlers and cronies walk away with BILLIONS of our tax dollars (minus the share of the loot they kick-back to the OBOZO campaign.)

The OBOZO / d-cRAT socialist “energy policy”= NO ENERGY except that from taxpayer-funded, eco-nut, crony capitalism/socialism companies (which, of course, ALWAYS waste all of the taxpayer money, go bankrupt and produce NO ENERGY).

OBOZO has become the equivalent of Seinfeld’s Soup Nazi, only with him it’s: “NO ENERGY FOR YOU!”

TeaPartyNation on April 6, 2012 at 2:31 PM

Ecotality, meanwhile, becomes the most recent example of the federal government’s dubious policy of subsidizing electric vehicles Democrats and their campaign contributors.

FIFY

GarandFan on April 6, 2012 at 3:09 PM

SEC rules are for the little people, don’t cha know?

jclittlep on April 6, 2012 at 4:30 PM

“Democrat” is what, Greek for “slimebag”?

shaken on April 6, 2012 at 7:32 PM

“Democrat” is what, Greek for “slimebag”?

shaken on April 6, 2012 at 7:32 PM

DEMOS +KRATOS =

The word democracy literally translates into the power or rule of the people, whereas democrat translates into a person who advocates rule by the people.

Sounds like the 99% Occupiers to me.

AesopFan on April 6, 2012 at 7:48 PM

Let’s paint the coal green and the knock up Washington for green energy grants.

Slowburn on April 7, 2012 at 5:09 AM

to build 15,000 electric-vehicle charging stations in 18 cities across America

But electric cars are not selling, so there’s no market for the charging stations.

Oh wait, Volts can be part of the individual mandate.

petefrt on April 7, 2012 at 6:28 AM

… Is anyone else hearing this propaganda across the country…?

Seven Percent Solution on April 6, 2012 at 12:39 PM

I know the feeling. Until Fox bought stations in my area, when the news would come on, it sounded like news from another planet. I couldn’t understand why a station would run such brazenly revisionist news to a conservative talk radio audience.

petefrt on April 7, 2012 at 6:35 AM