Generally, when we hear stories about the federal government ripping off the businessman, we tend to think of tales of tax increases or burdensome regulations. But a different type of story crosses our desk this weekend, as a solar power consortium – who already received a quarter billion in grants and tax incentives – takes Uncle Sam to the courthouse because they feel they should have gotten millions more.
Federal investigators will spend the next year going through the books of two solar-energy companies tied to billionaire Elon Musk in an effort to show the businesses overvalued sales contracts in order to claim millions in federal assistance.
The government action comes in response to a lawsuit brought by the two companies, subsidiaries of Musk’s San Mateo, California-based Solar City.
SolarCity builds and leases solar-energy systems, and already has received more than $244 million in federal tax incentives. In its lawsuit, the companies say the feds shortchanged them $14.6 million.
“The Treasury has failed to pay Plaintiffs cash grants in the amounts that they are entitled to, thereby materially frustrating congressional intent (of solar grants),” the complaint said.
This one may lead to an example of the Law of Unintended Consequences if there’s any sort of honest work going on here. The feds will now be combing through 4,204 of SolarCity’s grant applications filed in recent years and examining the amounts of money received and how it was used. One of the questions already being asked in Washington is whether or not SolarCity intentionally and artificially inflated costs to drive up the amounts of money they could cash in on from the taxpayer.
Amazingly, even with all of that sweet government cash flowing in, as of the end of last year SolarCity reported that they were more than $160M in debt. Clearly, like any good business entity, the only thing to do at that point was to try to pry some more cash out of the government. This, of course, leads to another question… is this a private company which is intended to show a profit in the marketplace or a non-profit charity which is only expected to live off the teat of the taxpayer? Well, okay… the “non-profit” part is probably pretty obvious.