FBI Investigating Solyndra for Accounting Fraud
The FBI is investigating charges of accounting fraud at solar-panel maker Solyndra LLC, which filed for bankruptcy protection after having received a $535 million U.S. loan guarantee in 2009. The FBI is looking into the possibility that Solyndra misrepresented itself in financial statements submitted to the Energy Department, according to one anonymous official involved in the investigation.
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The Obama administration approved Solyndra’s loan guarantee, which the company in turn used to build a $733 million factory in Fremont, California, that opened in January. When construction first began, the company said it had $2 billion in backlogged orders for its cylindrical solar modules for commercial rooftops, but only two months after executives extolled the company’s prospects, Solyndra filed for Chapter 11 on September 6, firing about 1,100 employees with little notice. Two days later, the FBI raided the company’s offices. The Justice Department has not yet disclosed the purport of their investigation.
The Obama administration issued final approval of the loan, which originally won support from officials in President George W. Bush’s administration. Republicans on the House Energy and Commerce Committee, which has been investigating the loan since February, have accused the Obama administration of pressuring federal loan officers to expedite the approval process so that Solyndra could be held up as a symbol of the stimulus program’s success. Solyndra was the first company to receive a guarantee under the stimulus act, and received the largest award given to a solar manufacturer under the program.
Solyndra CEO Brian Harrison has also come under fire, by both Democrats and Republicans, for having misrepresented the company’s finances when meeting with lawmakers. “When Mr. Harrison was in my office in July, he said that Solyndra’s future was bright, with sales and production booming,” said Representative Henry Waxman of California, the top Democrat on the Energy committee. “I’d like to know why he told me that in July, and then filed for bankruptcy one month later.” Both Harrison and CFO Bill Stover have invoked their Fifth Amendment right not to self-incriminate themselves and have refused to answer questions at the hearing.
When applying for guarantees, companies were required to estimate project costs, list private investors, and provide a model detailing projected cash flow. Solyndra submitted its application in 2006, and added details in October 2007. It is illegal for applications for federal loan guarantees to make untrue, misleading, or incomplete statements, which are “very common in terms of fraud investigations the FBI looks at, whether it’s bank fraud, which is more common, or it’s government fraud,” said Daniel D. Roberts, a retired FBI assistant director.
Harrison joined Solyndra in July 2010 after the company had already received its loan guarantee, and its auditor has already warned that its financial difficulties threatened its survival. In June 2010, the company had withdrawn a planned initial public offering, citing adverse market conditions, only a month after President Obama toured the new manufacturing factory that U.S. aid had helped build. By December, the company was almost completely out of cash and looked to the Energy Department to restructure the loan agreement. But a last-ditch effort to save the company failed.