SolarCity (SCTY), another “green energy” company and recipient of millions of dollars of taxpayer funds, in under investigation by the Internal Revenue Service (IRS), sources reveal.
The company, which recently filed for its initial IPO, has disclosed that it received subpoenas in July from the U.S. Treasury Department. The Treasury Department is investigating whether companies overstated the market value of solar panel arrays they installed when claiming the 30% federal cash grant. The IRS also notified SolarCity that it is auditing two of its investment funds and reviewing the claimed value of solar systems submitted to receive the federal cash grants.
The story of SolarCity is different from that of Solyndra, Evergreen Solar, Beacon Power, and the host of other companies that gave big political contributions to the Obama campaign and received taxpayer loans and grants in return because it’s worse.
Like the other scandals, SolarCity’s founder is Elon Musk; the high-profile billionaire has a history of giving lots of money to the Obama campaign. Musk is a big donor to Obama, having given $35,800 to the Obama Victory Fund and another $30,400 to the Democratic National Committee. The relationship has paid huge dividends for the billionaire.
But unlike the other scandals, he has been able to parlay his relationship with the president to creating not one but three Solyndra-type companies.
The National Legal and Policy Center discovered that SolarCity spent $535,000 in 2009 and 2010 to lobby Congress and the Department of Energy on climate legislation, the Recovery Act, “green workforce training and development,” and provisions in various legislation “relevant to solar development.” SolarCity has sought to extend a program, due to expire at the end of 2012, that delivers to manufacturers an upfront cash grant in lieu of a 30 percent Investment Tax Credit (called the Section 1603 grant program). So far, according to DOE reports, SolarCity has received more than $66 million from that program.
SolarCity also received a $344 million loan guarantee from the Department of Energy. Most suspiciously, much of the company’s revenue is generated from a partnership with military housing developers with a goal of installing solar panels on 120,000 rooftops of military housing units across the country
This is not Musk’s first foray into the Washington, DC swamp. His electronic car company Tesla received a loan guarantee for $465 million. Thanks in part to Obama’s DOE, Tesla went public, enriching Musk by nearly $1 billion on his $35 million investment. His other company SpaceX relies on over $1 billion in NASA funding.
Musk symbolizes the Obama entrepreneur — someone who relies on government to make their riches as opposed to the marketplace.
During his debate with President Obama, Mitt Romney quipped that the president was not picking “winners and losers”, but “losers and losers.” This certainly appears to be the case with SolarCity.
Photo credit: Kevin Krejci (Creative Commons)