ECOtality Scandal: Corrupt Bankruptcy!
The formerly high-flying ECOtality, Inc. is the latest in a long line of very expensive Obama backed green energy company failures coming out of 2009’s “stimulus”.
On 8/8/2013, under DOE investigation, ECOtality lost its DOE funding. The next business day, 8/11/2013, ECOtality filed an SEC action announcing suspension of operations.
Another $115 million in taxpayer “stimulus” money goes down the drain…
not counting the State of California’s $8 million investment and $100+ million in other losses.
This personally endorsed Obama green company, like so many others, has mismanaged public funds. This time, though, allegations of criminal wrongdoing and insider trading are part of the stench.
An angry beehive of lawsuits against ECOtality have swarmed in recent days.
The Obama Connection
Economists on the left and the right say that this bill (ARRA – the “stimulus”) has helped saved jobs and avert disaster. But you don’t have to take their word for it. Talk to the small business in Phoenix that will triple its work force because of the Recovery Act.
President Barack Obama, 2010 State of the Union, 1/27/2010
The small, unnamed Phoenix business is ECOtality.
ECOtality founder, Don Karner, was Michelle Obama’s specially invited guest at President Obama’s 2010 State of the Union Address.
VP Biden ranked ECOtality #33 on his top “100 Recovery Act Projects”.
It all began innocently enough on November 6th 2008, just two days after Barack Obama was first elected President. ECOtality (then called eTec) congratulated the President-elect on his campaign commitment to put 1 million electric vehicles on the road by 2015.
Early in the Obama presidency, 8/5/2009, ECOtality was awarded a $98.8 million DOE contract to undertake “the largest deployment of electric vehicles (EVs) and charging infrastructure in U.S. history”.
At last count, according to Recovery Act public records, ECOtality created 68 jobs on a $100 million investment. That’s $1.5 million per job for those keeping track. It peaked at 144 jobs.
Today ECOtality knocks at bankruptcy’s door.
The SEC Filing
On 8/11/2013, ECOtality made a Securities and Exchange (SEC) filing where it said it may go bankrupt.
Translated into plain English their listed reasons are:
|i||ECOtality can’t make any money|
|ii||ECOtailty’s next generation Minit-chargers have serious problems|
|iii||ECOtality can’t raise private funding to continue operations|
|iv||The DOE cut off its funding… the cads!!|
|v||The DOE told ECOtality it can’t spend a single penny more of its money
Prior to this latest filing, CBS News previously reported that ECOtality was the target of an October 2010 SEC investigation alleging insider trading by, among others, CEO Jonathon Read. That investigation is still pending.
Unmentioned in any SEC filing is that ECOtality’s currently installed Blink chargers sometimes burn up in operation and damage a car’s connector. All Blink chargers have to be repaired.
Since its 8/11/2013 SEC filing, class action lawsuits have sprung up faster than Iowa corn in spring.
Among the hungry sharks circling the hapless swimmer are:
- Zeldes Haeggquist & Eck for shareholder and consumer fraud
- Glancy Binow & Goldbery in a class action suit for California purchasers of ECOtality stock
- Gainey McKenna & Egleston for securities fraud
- Holzer Holzer & Fistel for compliance with federal securities laws
- Robbins Geller Rudman & Dowd for violations of federal securities laws
- U.S. District Court of Northern California for a shareholder class action suit for concealing wrongdoing and shareholder fraud
- Brower Piven on behalf of purchasers of ECOtality common stock
- Levi & Korsinsky in Northern California District Court on behalf of ECOtality stockholder
Most lawsuits seek compensation for stockholder losses after its stock plunged to $0.32 from $1.46 per share after the SEC filing. Current stock price is 20¢.
Among the allegations of the various lawsuits are:
- A serious overheating problem with the Blink Charger concealed
- Lack of commercial sales volume
- Not on track to release next generation Minit Charger
- Unable to secure short and long term financing
- Unable to meet its DOE obligations under the EV Project
- Company liable to DOE for $855,000 in back wages and damages
- Making false and misleading statements
- Violating the Securities Exchange Act of 1934
It is alleged ECOtality concealed all this while painting rosy pictures in stockholder meetings and SEC filings.
Nobody likes lawyers. But when that many sharks surround one company with those reasons then their clients usually have a solid case.
“We can break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015. (Applause.)“
– President Barack Obama, 2011 State of the Union, 1/25/2011
The President has an uncanny knack for backing the wrong horse.
Even in 2011, Obama was still insisting there could be a million electric vehicles by 2015. That was long after it became apparent the goal could not be met.
At the time DOE cut off ECOtality funding for failure to meet its DOE obligations, it had already burned through $95 million of its initial $100 million award. It was still 11,000 installed chargers short of its DOE obligation of 15,000.
The problem with 2009’s Recovery Act is that $90 billion in tech cash was thrown at the green energy wall in the wild hope something would stick. Outside wind power, not much has.
Public funds were spent foolishly by unwatched companies with predictable results. For the enormous cost, few jobs have been created.
ECOtality is the President’s latest green energy meltdown. It’s a flame-out due to mismanagement and alleged fraud and insider trading.
This is serious stuff for EV car owners and the electric car industry. Without ECOtality’s national network of charging stations, electric cars will become the Edsel of the 21st century.