No answers to lessons learned from shuttered solar project

AP file photo

THAT WAS THEN: Vice President Joe Biden, left, answers questions during his 2009 visit to Willard & Kelsey Solar Group in Perrysburg, Ohio. The company has shuttered it doors and is being sued by the state.

By Maggie Thurber | for Ohio Watchdog

Willard & Kelsey Solar Group LLC isn’t just another solar company that couldn’t cut it, as details of two lawsuits against the company show.

But just what lessons did two state agencies learn from the potential loss of nearly $11.5 million in taxpayer funds? They can’t – or won’t say.

At first glance, the failure of Willard & Kelsey looks like just another in the long line of green energy companies that couldn’t find success. The company was established in 2007 by several men with extensive experience in the glass and solar panel industries.

In 2009, Vice President Joe Biden toured the Perrysburg, Ohio, facility touting it as a potential cornerstone of the area’s future economy. In February 2011, the company hosted then Labor Secretary Hilda Solis.

But later in 2011, Willard & Kelsey idled most of its operations. In January 2012, it laid off most of its workers. On June 30, the company closed its doors without telling the state or the agencies that had advanced it millions in loans.

Today, WKS and its principles are facing lawsuits from the state of Ohio totaling $11,495,205.47 in loans and interest owed by the company, in addition to late charges, collection costs and attorney fees.

Attorney General Mike DeWine filed a lawsuit against the company in Hamilton County Commercial Court alleging multiple counts of breach of contract, breach of fiduciary duty, civil aiding and abetting, and civil conspiracy. Also named as defendants in the lawsuit are James M. Appold of Rossford, the company’s president; Michael J. Cicak of Perrysburg, the chief executive officer; James E. Heidner of Bowling Green, the chief technical officer; Gary T. Faykosh of Perrysburg, the chief operating officer; and other unknown defendants.

One lawsuit DeWine filed is on behalf of the Ohio Air Quality Development Authority, which is owed $5.1 million from a $10 million line of credit granted in 2010. The OAQDA lawsuit also seeks liquidated damages of more than $20 million for jobs promised but not created. Per the agreement, the liquidated damages are twice the expected salary of the 450 positions promised.

The second lawsuit filed on behalf of the Ohio Development Services Agency, as successor to the Ohio Department of Development, seeks collection of a 2009 $5 million loan plus interest that stands at nearly $1.4 million. E-Z Pak of McComb, a separate company owned by Appold that received money from WKS, also is named as a defendant. The lawsuit claims two counts of fraudulent and unlawful transfers.

Dan Tierney, a spokesman for DeWine, declined to speculate on how much the state hopes to actually recover.

“We’re seeking to collect from the company and the shareholders individually,” he said.

So the state is following its procedures to recover the money loaned and not repaid, but have the state agencies changed their accountability processes to make sure similar breaches won’t happen in the future? Have they modified their monitoring methods so they can catch such misdeeds before millions of taxpayer dollars are lost?

Ohio Watchdog tried to find out, but officials at the two state agencies weren’t talking.

The only thing OAQDA would say is that they would send a statement, which they did, on behalf of Chad Smith, the executive director:

“Questions about Willard & Kelsey and the company’s current standing regarding loans from the State of Ohio are referred to the Ohio Attorney General. OAQDA addressed the loan in accordance with the loan agreement, including its eventual referral to the Attorney General’s office for collection. The Advanced Energy Job Stimulus Program, through which the Willard & Kelsey loan was processed no longer accepts new projects.”

Ohio Watchdog did not ask any questions regarding Willard & Kelsey’s current standing.

The only response to the follow-up question asking if there were any lessons the agency learned or any policy or procedures implemented or changed as a result of their experience with WKS, was an email from Smith:

“The statement addresses your question since the program no longer takes new projects. Furthermore, it has always been the policy of OAQDA to ensure projects adhere to the terms set forth in the agreements under any program.”

No, the first statement didn’t address the question, but apparently all OAQDA is going to say is that they aren’t going to say anything at all.

Todd Walker, chief communications officer for ODSA, sent this statement:

“At the end of the day this is about Willard & Kelsey receiving a loan and not following through on its commitment to the state of Ohio. The Development Services Agency is committed to holding companies accountable for the promises they make to the state. We have a team tracking state incentives and ensuring companies are compliant with the terms of their agreement. We work with companies when they face challenges and determine the best course of action. The Development Services Agency will hold job creators accountable and ensure the best return on the state’s investment.”

OK, but did the agency learn anything and did they modify their procedures as a result?

Walker wouldn’t say. He did take our phone call but when asked about policies or procedures, just repeated that the ODSA holds companies accountable to the terms of their contracts. However, he said he would reply to emailed questions that he couldn’t answer.

So we emailed him and asked if the agency changed, modified or added any new policies, procedures or requirements relating to “holding companies accountable to the terms of their agreements” in the past 18 months?

Both lawsuits claim that WKS borrowed money to purchase property and a building to house their operations. Both are listed as collateral for the loans. However, Willard & Kelsey don’t own the building or the land on which it sits. Appold and Cicak, through a separate company, Spring Grove Trading Company, do.

We thought taxpayers would want to know how the agency tracks and verifies that money for the purchase of specific items has been spent according to the terms of the loan. We also asked if the way the agency monitors such commitments had been changed or modified since January 2011.

The lawsuits also claim that intellectual property, including copyrights and patents, were supposed to be transferred to the company by two of the principles. We wanted to know how the agency monitors or track the purchase or assignment of intellectual property when they are listed as assets or collateral on any loan agreement documents or applications.

Appold is accused of loaning WKS $5 million loan at the “unconscionable rate” of 50 percent interest. Do loan agreements contain any sort of restriction on interest rates that members or shareholders of a company can charge for any loans or advances they provide their company?

But we’ve received no answers, nor any other response, from Walker or ODSA, despite sufficient time in which to reply.

Apparently, these public servants are all about holding companies accountable. But themselves? Not so much.

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