Attorney General Rosenblum Announces Settlement with SolarCity and Novogradac over Oregon’s Business Energy Tax Credit Program

October 11, 2018
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Oregon Attorney General Ellen Rosenblum today announced the State of Oregon received $13 million in a major settlement with both solar developer Tesla Energy Solutions (formerly known as SolarCity) and its accounting firm, Novogradac & Company LLP. The settlement resolves allegations that SolarCity and Novogradac together submitted false applications to the Oregon Department of Energy (ODOE), resulting in more than $10 million in unjustified Business Energy Tax Credits (BETC).

“The BETC program was meant to channel public funds to help local businesses, create clean energy jobs, and stimulate the economy during a period of economic uncertainty. Unfortunately, some companies abused the program,” said Attorney General Rosenblum. “In this case, we have been able to claw millions of tax dollars back from those who sought to cheat the system.”

Between 2010 and 2014, SolarCity used Business Energy Tax Credits to finance fourteen commercial-scale solar arrays across the state.  Six of the projects were erected as part of the former Oregon University System’s “Solar by Degrees” initiative.

Oregon’s BETC program permitted solar developers to apply to the Department of Energy for state tax credits worth up to 50% of the costs incurred to build commercial solar projects in Oregon. SolarCity’s BETC applications reported project costs of $36.7 million, and Novogradac submitted reports purporting to certify the accuracy of those figures.  DOJ’s investigation confirmed, however, that the costs had been inflated by more than 100%.

This settlement follows successful DOJ prosecutions of BETC-related crimes. In 2017, Joseph Collelo, a former employee of DOE who received hundreds of thousands of dollars in kickbacks from the BETC program, pled guilty to racketeering, receiving bribes, aggravated theft, tax evasion and official misconduct. And earlier this year, energy consultant Martin Shain pled no contest to forgery, bribery, racketeering and grand theft, and pled guilty to tax evasion, for his role facilitating BETC kickbacks.

“This is good news for Oregonians and an important reminder that DOJ is watching out for our state’s best interests,” said Janine Benner, ODOE Director. “Our agency has worked closely with the DOJ team since 2015, and throughout they’ve been thorough and professional. As we close the chapter on these legacy incentive programs, we are thankful for their commitment to accountability.”

Oregon DOJ’s civil investigation was led by Senior Assistant Attorney General Brian de Haan and Special Counsel Tim Nord.