Crabb cover-up: 1800 words, Evaluation Report not mentioned
Sussex County WatchdogGiving unprecedented access to its pages, the New Jersey Herald permitted Freeholder Director Phil Crabb to pen an 1,800 word apology in today's edition that presents itself as an explanation of the solar mess, while it slyly attempts to blame Parker Space.
So let's see, you have a lawyer, a bureaucrat, an accountant, a talk show host, a pharmaceutical salesman, and a union boss... and they want us to believe that the farmer did it. Really?
Space was one of the Freeholders who voted for the concept in 2011. He was an Assemblyman when the project went bad and required a taxpayer-funded bailout. Space opposed the bailout and joined Freeholders Phoebus and Graham in asking the state Attorney General to initiate an investigation. That investigation has begun.
As reported in the Herald, the Star-Ledger, the Advertiser, and Sparta Independent, the Express-Times and other media, a document called the Solar Proposal Evaluation Report was the sales document used to convince the Sussex County Freeholders that the solar plan was viable.
Why then -- in his 1,800 word statement in the Herald -- didn't Freeholder Crabb mention the Solar Proposal Evaluation Report even once?
Because Crabb is trying to mislead the Herald's readers. Because Crabb is attempting to protect the guilty.
Here is what really happened:
How it was sold to the Freeholders
In 2011, the Sussex County Board of Chosen Freeholder was composed of the following members: Freeholder Director Rich Zeoli, Deputy Director Sue Zellman, and Freeholder members Phil Crabb, Rich Vohden, and Parker Space. Vohden and Space were new to the Board. On November 14, 2011, the Freeholder Board voted unanimously to take the solar deal offered by SunLight General. How did it happen?
Watchdog has uncovered the document used to sell the deal to the Freeholders, but first, let's look at the committee that was formed to sell the solar scheme. It was called the Sussex County Evaluation Team and it was composed of the following people/organizations:
- John Eskilson Sussex County Administrator
- Dennis McConnell, Sussex County Attorney
- Bernard Re, Sussex County Treasurer
- Steve Pearlman, a lawyer with Inglesino, Pearlman, Wyciskala & Taylor
- Deb Verderame, a lawyer with Inglesino, Pearlman, Wyciskala & Taylor
- Gerry Genna, Birdsall Services Group
- Tom Brys, Birdsall Services Group
- Douglas Bacher, NW Financial Group
- Heather Litzebauer, NW Financial Group
- Steven Gabel, Gabel Associates
- Richard Preiss, Gabel Associates
- Cadence Bowden, Gabel Associates
This is the committee that recommended to the Freeholder Board that they agree to the solar scheme. These are the promises they made to the Board:
"The SunLight/MasTec team possesses high quality management, installation capabilities, and sound solar development experience. In addition, the SunLight/MasTec proposal provides Sussex benefits in the following key areas:
- It provides substantial direct energy cost savings;
- It provides the Local Units the potential for additional savings through the sharing of revenues from the sale of Solar Renewable Energy Certificates (SRECs) and other environmental benefits;
- Due to SunLight/MasTec's proposed capital investment, which reduces the required size of the Authority bonds, it provides a strong level of protection for Sussex from financial risk;
- It provided additional financial protection for Sussex in the form of a debt service reserve fund; and,
- It includes a restoration security providing for additional Local Unit protection at the end of contract."
The entire process was open to public bid, but only one bidder showed up. Another showed up late and was disqualified. Some wanted to redo the bid, but that suggestion was brushed aside. Only one bidder?
The Aftermath
While Sussex County continues to pay these lobbyists and consultants, neighboring Morris County has taken action.
Lawyer Pearlman and his firm were asked to resign by Morris County and they complied. Gabel Associates was also asked to resign and complied. That is 5 of 12 members of the Sussex County Evaluation Team .
In 2013, Birdsall Services Group pleaded guilty to charges of public corruption and was ordered to pay $1m in penalties, as well as $2.6 million to settle a civil forfeiture action brought by the attorney general’s office. Individual cases against seven executives are pending.
That makes 7 of the 12 members of the Sussex County Evaluation Team.
But while they have suffered sanctions from Morris County or from the New Jersey Attorney General, Sussex County Freeholder Director Phil Crabb continues to be more than happy to do business with these people.
Maybe Sussex County taxpayers should think about recalling some of these Freeholders who continue to do business with the people who ripped off Sussex County?
Watchdog is read by 11,000 residents in Sussex County, either by email or online. Let us hear from you. Tell us what you think we should do...
Do you want your tax dollars to continue to pay the Sussex County Evaluation Team members who have been fired by Morris County or who have pled guilty to actions brought by the New Jersey Attorney General?
Let us know: info@sussexcountywatchdog.com
Reader Comments (3)
J. Wellington Wimpy: "I'll gladly pay you Tuesday for a hamburger today".
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We were taught in childhood not to do business with J. Wellington Wimpy.
Yet in the solar deal, the Freeholders did. And the Freeholders continue to not correct for this mistake.
While Freeholder Director Crabb outlines his case using peripheral issues like the goodness of solar, we should look at how the taxpayer was not served in the legal and financial design of this deal. That is the overriding problem affecting anything else.
Sunlight, the banker, was a hollow corporate shell, an SPE. When Sunlight presents they are financially strong, what motivates a Govt to sign a deal with a shell company that the parent, Sunlight, explicitly won't support?
What Sussex professionals, and we paid high fees for the many layers of legal and financial professionals in this deal, didn't make sure the SPE was constructed properly? Who later covered this up?
It is the single most important reason this project imploded.
It also seems this Sunlight problem was known to some on the Government side from the very start.
On page 27 of the Bid Evaluation Report it states "The SunLight/MasTec Proposal reduced the bond size from $33.6 million to approximately $26.0 million by proposing to "self finance $7.6 million."
We approved the only bidder, Sun light, and agreed to guarantee the bond.
I don't find this Sunlight $ commitment listed in the bond document. "Self finance" in the context of this deal means upfront and from Sunlight's pocket. After all, this promise convinced Sussex to provide the bond guarantee.
The arbitrator said Sunlight was using MasTec for funding. Another sign of a missing $7.6M.
Then, when the first bond payment came due, Sunlight was given access to protected construction funds.
We had a "bait and switch" between the bid evaluation and the bonding. A promise in the bid, then absence in the bonding/contracts. A dodge made ever more egregious by this being an SPE deal that took advantage of both the contractor and Sussex.
An SPE with no skin in the game is a toxic construct for the taxpayer. Good for those that drive a Bentley.
We also have:
pg 26 of Bid Evaluation Report: "SunLight’s current equity is over $10 million and they recently launched the SunLight General Solar Fund Two in the amount of $30 million."
Yet in the Bond Prospectus, pg 15, it states: "The [Sunlight parent] Company has no responsibility for Holdco's [Sunlight General Sussex Solar] obligations"
Another bait and switch in the SPE relationship. How could this also be missed?
We paid big, big money for professionals. Administrators. General Counsels. Bond Counsels. All sorts of finance advice. Risk Managers. ...so that basic simple reviews are done.
The bond document should reflect the bid evaluation and bidder's commitments and representations.
Funny how Sussex' bond guarantee wasn't forgotten.
Who knew that Sunlight had no money and these changes were needed? Who was supposed to establish protections for the Sussex taxpayer in the bond document and contracts? And who was supposed to confirm the protections were proper and present?
Before Amendments I and II (Bailouts 1 and 2), Sussex was already being grifted.
“Please, don’t drive a school bus blindfolded.”
― Nassim Nicholas Taleb
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Let's achieve a proper perspective for a key part of what went wrong and what causes the problems now.
SPE chicanery requires the assignment of risk to a rube.
We need to think about the birthing of this deal.
This deal was not about "solar", it was a rake-off vehicle. For Sunlight General to remove its risk exposure to this foolish deal, it needed a hollow SPE. And this was facilitated.
A hollow SPE needs a bond guarantor.
The guarantee of the bond is not about the pennies it saves for Sussex, it is about creating an unaccountable, hollow SPE shielding the wolves.
But Sussex had legions of professionals who are well paid to prevent the looting of the taxpayer (or so we are told). Yet the bidder was switched.
Who in Sussextucky allowed the bid approval of a supposedly financially strong Sunlight General to be switched in the contracts to a financially hollow SPE with no recourse to the financial capital of the parent corp?
"Hollow" and "no recourse" is a terrible combo that did not exist when Sunlight General presented its financial health in the deal.
A bond and contract review is basic "meat and potatoes" stuff for the Sussex Bond Counsel and General Counsel. Nothing complicated here. Contract risk management, fiduciary responsibility and legal assigment wording - all part of the job. Nothing exotic - just look and make sure who you contract with has what was presented in the bid.
And if MCIA was working for Sussex, ever more so for them.
So who wrote:
Bond Prospectus, pg 15, it states: "The [Sunlight parent] Company has no responsibility for Holdco's [Sunlight General Sussex Solar] obligations"
And then approved the deal with a hollow SPE.
Thank you for giving us the score card of players that made up this great team of star slam dunkers of our tax dollars into the flusher. We have forgotten or we were not aware of all the support team players and their efforts that helped score these perfect dump downs. Of course, there were a few determined floaters that needed the assistance on this pass with a steady tank handle hold down to reach it's final goal. But, all in all it was awesome tax funded exhibition game.