Bank­rupt en­ergy com­pany probed

Got $100M in fed­eral stim­u­lus

The Washington Times Daily - - Politics - BY JIM MCELHATTON

Se­cu­ri­ties reg­u­la­tors are in­ves­ti­gat­ing a green en­ergy com­pany that won a $100 mil­lion fed­eral grant un­der Pres­i­dent Obama’s stim­u­lus pro­gram, only to end up bank­rupt this fall.

Ac­cord­ing to bank­ruptcy court doc­u­ments filed this week, San Fran­cisco-based Eco­tal­ity is be­ing in­ves­ti­gated by the Fi­nan­cial In­dus­try Reg­u­la­tory Au­thor­ity, the in­de­pen­dent, in­dus­try- fi­nanced se­cu­ri­ties reg­u­la­tor that can levy fines and refers hun­dreds of cases of fraud and in­sider trad­ing each year to the Se­cu­ri­ties and Ex­change Com­mis­sion.

The probe came to light in in­voices at­tached to a more than $1 mil­lion bill sub­mit­ted by a law firm work­ing on Eco­tal­ity’s bank­ruptcy case. One of the hourly le­gal charges in­cluded notes, “FINRA ques­tions in trad­ing in­ves­ti­ga­tion.”

Nei­ther of­fi­cials from FINRA nor a bank­ruptcy lawyer for the com­pany re­sponded to mes­sages Wed­nes­day.

The com­pany had al­ready dis­closed in a reg­u­la­tory fil­ings that it had re­ceived sub­poe­nas from the SEC “in con­nec­tion with a fact-find­ing in­quiry as to trad­ing in shares of com­mon stock” from Au­gust 2008 through Au­gust 2009. But that fil­ing made no men­tion of a probe.

The SEC sub­poena probe ap­pears to re­late to trad­ing lead­ing up to when Eco­tal­ity won $100 mil­lion from the En­ergy Depart­ment to de­ploy charg­ing sta­tions for elec­tric cars in the U.S. At the time, the com­pany had big plans.

“Eco­tal­ity is com­mit­ted to en­hanc­ing Amer­ica’s en­ergy in­de­pen­dence, ac­cel­er­at­ing the mar­ket ac­cep­tance of elec­tric trans­porta­tion and sup­port­ing Pres­i­dent Obama’s goals for job cre­ation and ad­vanced elec­tric drive ve­hi­cle de­ploy­ment,” Jonathan Read, then CEO of Eco­tal­ity, said in an Au­gust 2009 an­nounce­ment. He re­signed in Septem­ber 2012.

Last month, three com­pa­nies an­nounced plans to ac­quire some of Eco­tal­ity’s prime as­sets, in­clud­ing a $3.3 mil­lion pur­chase of the com­pany’s net­work of charg­ing sta­tions by Florid­abased ri­val The Car Charg­ing Group.

The en­ergy com­pany’s demise has drawn com­par­isons to the bank­rupt so­lar panel maker Solyn­dra, which col­lapsed ow­ing tax­pay­ers more than $500 mil­lion in fed­eral loans.

Eco­tal­ity, which lists just four em­ploy­ees, filed monthly op­er­at­ing re­ports in the bank­ruptcy case on Wed­nes­day show­ing to­tal as­sets of just over $5 mil­lion.

“The com­pany has sold all as­sets as of 10/15/13 and is in the process of wind­ing down op­er­a­tions,” the re­port states.

The billing records in the Eco­tal­ity case don’t spec­ify the na­ture of the FINRA in­ves­ti­ga­tion, but the in­voices make clear that reg­u­la­tors have sought board meet­ing min­utes among other records.

This week, Nas­daq delisted Eco­tal­ity, whose stock was sus­pended in Septem­ber. The com­pany went bank­rupt on Sept. 16.

Mean­while, a re­cent au­dit by the En­ergy Depart­ment’s in­spec­tor gen­eral has raised ques­tions about whether depart­ment of­fi­cials failed to re­port con­cerns about the com­pany in the months be­fore it went broke.

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