Ohio

Another Solyndra? Ohio Finally Plans to Investigate Deadbeat Taxpayer-Funded “Green Jobs” Company

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The Ohio Department of Development recently announced plans to audit Perrysburg solar-panel manufacturer Willard & Kelsey Solar Group LLC — also known as WK Solar — after the company failed to make regular debt payments on money it borrowed from taxpayers.  The company borrowed $5 million in taxpayer funds from Ohio’s Air Quality Development Authority “green jobs” program, as well as another $5 million in funds lent by the Department of Development itself.

The Air Quality Development Authority is a separate state commission but often collaborates on projects with the Department of Development.

As early as 2009, the Ohio Department of Development and the Air Quality Development Authority were aware of the company’s financial woes.  Company records provided to the state showed that WK Solar ran up $4.2 million in debt. Nonetheless, taxpayer funds continued to be pumped into WK Solar’s coffers.

At that time, state and federal officials had great expectations for the Perrysburg “green energy” company. Vice President Joe Biden joined then-Governor Ted Strickland to tour the plant, where Biden said the now-failing company was key to “our folks getting back in the game.” Massive taxpayer funding of the foundering green energy company has led critics to deride WK Solar as “Ohio’s Solyndra.”

In 2010, WK Solar executives — including CEO Michael Cicak and president James Appold — donated almost $25,000 to Gov. Ted Strickland’s re-election campaign. Cicak also donated to Lt. Gov. Lee Fisher’s US Senate campaign. Fisher served as director of the Department of Development under Governor Strickland.

Later that year, in July of 2010, the Department of Development lent WK Solar an additional $10 million in taxpayer dollars. Strickland’s administration also approved multiple deadline extensions for required financial reports, as well as deferrals for required loan repayments.

Records show that department officials were very aware of WK Solar’s financial woes but forged ahead with loan negotiations anyway. However, Strickland and Fisher both claim that they were not aware of any financial problems with the company whatsoever.

Promoting the growth of “green energy jobs” was a pillar of both Strickland’s 2010 re-election campaign and Fisher’s campaign for the U.S. Senate.

Ohio Department of Development spokesperson Katie Sabatino refused to comment on the connections between the department’s seeming past generosity towards WK Solar and its executives’ political ties to the Strickland administration. Sabatino did, however, note that the current administration is placing more emphasis on return on investment, as compared to past administrations.

In total, the company was loaned over $10 million and was offered $3.4 million in conditional tax breaks if it met certain job-creation goals. Because the company never directly employed more than 72 workers, it was ineligible to receive the additional tax breaks.

“I can’t speak as to the past administration’s decision-making, but we have continually been in dialogue with the company,” Sabitino said. “We’ve previously visited the company in order to understand the challenges that they’re going through.”

Sabitino noted that the Department of Development will be sending auditors to WK Solar’s premises this week in hopes of unraveling the mystery of how the company burned through so much money so quickly.

In December of 2011, WK Solar reported that it could not meet its promise to create over four hundred permanent jobs, a condition of the loan agreement with the state. Instead, as of this year, the company has created only fifty-one new jobs and has laid off forty employees. As reported by the Blade, no more than 72 people were employed by the company at any point in time.

William Mitchell, the company’s former chief executive officer, alleged that the company violated its contract by using Department of Development funds to pay other executives and to lend them money. Mitchell was fired in 2009, and died in 2011.

According to the Toledo Blade, before his termination, Mitchell copied company records showing that the firm spent thousands of dollars of taxpayer funds on entertainment expenses, including sports games in Detroit and Pittsburgh.

In the past few months, WK missed two monthly debt payments — $466,000 each — and has only made incomplete payments towards interest owed. The missed payments prompted the state to investigate.

According to a public records request conducted by the Toledo Blade, state officials attempted to withdraw the company’s due payment via automatic debit on May 10, but the transaction was rejected due to insufficient funds in the company’s account.

When contacted by Department of Development officials, Mossie Murphy, WK Solar’s vice president of development, claimed that the company had recently switched banks as an explanation for why the company’s account did not have sufficient funds to cover its loan payment.

As of May 21, the company had not contacted the state with the requested banking information, and the Department of Development continued to be unable to collect its money.

[Editor’s note, 09/20/2012: Corrected loan amounts listed in paragraphs 1 and 10; the total amount loaned by the Department of Development was roughly $5 million as opposed to the $10 million previously listed.]

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