The Solar Scam continues under Graham

For months Harvey Roseff has been pushing the Sussex County Freeholder Board to answer a few basic questions about the troubling direction the Sussex County solar program is taking.  Freeholder George Graham, the boss of the Freeholder Board, has been less than forthcoming.  Why?

In July, Freeholder George Graham engineered a no-bid contract for a law firm that he and then Freeholder Gail Phoebus identified as being at the very heart of the solar scam that has cost Sussex taxpayers upwards of $30 million.  Here is what Freeholder boss Graham said in 2015 about the lawyers he turned around and gave a no-bid contract to in 2016:

"It's all the same people that dug the hole, and every time I ask for a clear, third-party fresh set of eyes, they throw in somebody else that appears out of the past. How many times can you recycle the same names? Are they protecting specific people, or are they protecting the county?” (NJ Herald, March 28, 2015)

This is what then Freeholder (now Assemblywoman) Gail Phoebus said:

"Mr. Weinstein had clear conflicts of interest. Far from recommending ‘independent' counsel to guide us through a complex negotiation, you led us to the partner of the attorney who shares responsibility with you for failing to obtain a performance bond... All of this raises serious questions.  (While) Mr. Weinstein negotiated the solar project settlement and rendered advice to the freeholder board, whose interests was he serving”? (NJ Herald, March 28, 2015)

So why -- under Freeholder boss Graham -- is Weinstein back?

...in September 2014, the county freeholder board appointed Weinstein as special counsel to guide it through that process.

The appointment of Weinstein -- whose law partner, John Cantalupo, had been on retainer to the county since 2011 for legal services related to county-backed bonds issued on the solar project -- was criticized last year by then-Freeholder Gail Phoebus, now a state assemblywoman, who called it a conflict of interest.

While offering praise for Wednesday's presentation, Roseann Salanitri -- also of Sandyston -- tempered her praise with criticism over the fact that a large portion of it was given by Weinstein.

"He was the same counsel that represented us on (last year's) settlement, and that settlement contained ‘hold harmless' clauses for just about everybody and their grandmother," Salanitri said. "I don't know Mr. Weinstein and have nothing against him personally, but I believe this presentation is not as credible as it could have been if it had been conducted by someone (else)." (NJ Herald, July 29, 2016)

Freeholder Director George Graham defended the appointment of Weinstein, saying:  "He's the only one who has institutional knowledge after all the other people who ran out the door." (NJ Herald, July 29, 2016)

Has Graham -- a one-time critic of the solar scam -- become its enabler? 

When Graham was on the outside, as a minority member (with Phoebus) of the five member board, Graham did one thing, now he does the opposite. Now, as the boss of the Freeholder Board (controlling three of its five members) Graham is comfortable with those he used to call the bad guys and has even taken campaign contributions from them.

Roseff poses the following questions for Freeholder boss Graham and his Board:

1. Why have solar farms, promised to be finished by the end of the year by contractor Jingoli and the Freeholders at a public meeting on July 27th, been cancelled?  Why was there no explanation about this broken promise and what affect will it have on the project's cost to taxpayers? 

2. Have there been any payouts to taxpayers on the performance bond for the build-out?

3. Why has the July 27th financial plan become so terribly distorted in just a handful of weeks?  Just how worse off are the taxpayers of Sussex County?

4.  How much of the construction funds will be returned to the taxpayer because of the cancellations?

5.  What portion of the cash flow hit from not reaching the 3300 kW level of solar generation will Sunlight corporation now be responsible for?   Remember that Sussex County taxpayers bailed Sunlight out based on this promise.

6.  Why didn't the Freeholders' new $3,100,000 bond (debt), used to pay off a Sunlight corporation loan from contractor Mastec, state what it was for?  Isn't this an ethical issue for the County?

7.  Which specific Freeholder Board resolution stated that Sussex County taxpayers were guaranteeing Mastec's loan for deadbeat Sunlight? If it doesn't exist, how can the Freeholders ethically do it and why did they?

Freeholder boss Graham's actions are questionable.  He has some explaining to do.

Freeholder boss Graham (center) and his Board (allies are to the right).

Questions on Solar for Wed. night Freeholder mtg.

Here is what Freeholder George Graham said in 2015 about the people who he intends to give a no-bid contract to at Wednesday night's Freeholder Board meeting:

"It's all the same people that dug the hole, and every time I ask for a clear, third-party fresh set of eyes, they throw in somebody else that appears out of the past. How many times can you recycle the same names? Are they protecting specific people, or are they protecting the county?” (NJ Herald, March 28, 2015)

This is what then Freeholder (now Assemblywoman) Gail Phoebus said:

"Mr. Weinstein had clear conflicts of interest. Far from recommending ‘independent' counsel to guide us through a complex negotiation, you led us to the partner of the attorney who shares responsibility with you for failing to obtain a performance bond... All of this raises serious questions.  (While) Mr. Weinstein negotiated the solar project settlement and rendered advice to the freeholder board, whose interests was he serving”? (NJ Herald, March 28, 2015)

Solar activist Harvey Roseff has followed this issue for some time.  Below is taken from what he publicly posted today.  Roseff first provides some background before he asks specific questions:

In 2011, Sussex County was one of three counties (with Morris and Somerset) recruited into a solar program by the Morris County Improvement Authority (and its equivalent in Somerset County).  The MCIA facilitated a solar program that had local government units contract directly with a developer for solar power.  Some believed it was for low cost solar power.  What they were not told was that Somerset County's rate in the same program was 4.1cents/kwH, while Sussex County's rate was 9.35cents/kwH (both escalate similarly each year).  So the Freeholders allowed Sussex County taxpayers to be taken from the start.

Sussex County guaranteed the developer bonds, the developer promised self financed equity of $7,800,000 and referred to its $30,000,000 solar fund to confirm its financial stability.

The developer, Sunlight corporation, A SINGLE BIDDER, was about to miss its first bond/lease payment in 2012/3.  This was a FIRST bond payment. Where was Sunlight's skin in the game?  The private money was a mirage.

Sussex County and local governments then changed the solar project special purpose entity contracts (which also impacts bonding) -- allowing the developer to raid previously protected taxpayer construction funds to hide that Sussex County taxpayers had been baited and switched.  It turned out Sussex County had contracted with hollow shell companies.  Taxpayer protections were ripped away, yet taxpayers had done no wrong.  Where was County management?  The SEC? Our Archer & Greiner bond counsel?  County counsel?  MCIA counsel?  MCIA?

Some may say the project strife in 2012-4 was caused by awful preparatory engineering.  One of the key engineering companies was Birdsall, then enmeshed elsewhere in a huge pay-to-play scandal encompassing large parts of New Jersey. Birdsall was associated with Sussex County's bond counsel, who is still on the county payroll.  This same law firm gave a political contribution of $2000 to Freeholder Director Graham for the June 2016 primary election.

Sussex County was never found in Court to be at fault.  It was the developer, Sunlight corporation, who lost in arbitration to its former "partner", the contractor Mastec corporation.  Sussex County won, all the way through to the NJ Supreme Court.  But even after Sussex County won every case, the county's legal team, its Freeholders, and administrators allowed the bill to go to the taxpayers of Sussex County.  Why?

Sunlight corporation was found to be at fault primarily because it allowed too many changes to the solar program's engineering and siting.  This happened again in 2015/16.  Are we once again paying for the same shoddy program management and engineering?

Mastec corporation now had a problem to collect from Sunlight corporation.  Mastec discovered, as Sussex County and local governments did in 2013, that Sunlight's promise of $7.8million and a $30million "solar fund" was, well, it wasn't there.  Sussex County negotiated the contracts -- where was the money and why did it escape unnoticed? 

So after years of solar program strife, County then hired a special counsel for settlement negotiations from the same firm responsible for oversight of the original deal.

Sussex County agreed to bailout the private corporations involved by raiding our "Homestead" piggy bank for $7million.  We capped Sunlight's maintenance costs for the rest of the 15 year program.  Sussex taxpayers assumed Sunlight's project risk.  The public was told "only" $7million more, but there was a hidden $3million risk -- Sussex County had guaranteed a new 1 year loan from Mastec to the hollow shell of Sunlight.

Nobody in county government can seem to produce the Freeholder Resolution that guaranteed this loan.  Sussex County can't provide the Mastec - Sunlight loan agreement. 

How do you guarantee a loan without seeing it?

Then, in May 2015, when Sussex County issued a bond to pay this "guarantee" on the 1 year loan between Sunlight and Mastec, the County didn't declare in the Resolution that there was a loan default by Sunlight. 

HOW CAN THE COUNTY PAY OFF A LOAN GUARANTEE WITHOUT DECLARING THE BORROWER IS IN DEFAULT AND STATING THIS IN THE BOND RESOLUTION?

The same law firm that is set to receive the no-bid contract this evening, negotiated this bailout, and was bond counsel.  While Freeholder Director Graham has publicly proclaimed he wants "new eyes" at tomorrow's Freeholder Board meeting he will bring back the same old set of eyes. 

As for the public's eyes, Roseff hopes Sussex taxpayers get a thorough, detailed presentation from the County.  Roseff claims that the County has ignored teh state's Open Public Records Act.  The County even denied "previously released" financial forecasta and the raw data to back them up. 

Documents like SREC certificates earned, in inventory and sales contracts; federal 1603 applications, audits, bank statements, lease payments, bond payments, ... have all been denied for two months.  

So here are some questions, posed by Harvey Roseff, but limited because some information has been withheld legally or illegally.  The questions are:

1. Why is the same law firm, responsible for the solar mess, getting a no-bid contract? Is it the $2,000 political donation? Where are our managers?

2. For months, why does county government not release documents that OPRA says must be released?

3. Where is the $375,000 security for tearing down the solar farms at the end of their life? Is it supposed to be in "Account # 156291009" named the "Restoration Security Fund"?  It was ridiculously small to begin with, however, did Sussex County allow Sunlight corporation to yet again use funds that were meant to protect the taxpayer?

4. Who was responsible for the accounting and when did these errors occur?  Please detail how the loss zoomed from $900,000 in 2015 to $2,600,000 in 2016. The county government passed this loss to residents in our property taxes, yet in 2016 the program is the same half built program it has been for years with only an additional ~ $423,000 in debt payments.  Sussex County Freeholders refused to discuss this at the budget meeting, please detail the $2.6million loss in 2016.

5. Did Sunlight corporation install "net metering" and how are these cash flows accounted for?  In the program documents provided to Harvey Roseff, he curiously couldn't find mention of "net metering", but he has been told by those at high levels, that net-metering is in place.  If so, in which Trustee bank account is this money placed?  Has this money been going to the taxpayer?

6. Who pays anew for Sunlight corporation's 2015/16 management failures? Sunlight promised a December 2015 build-out to gain its taxpayer bailout. With the bailout, we paid for Sunlight's business mistakes and failures in the past. Sunlight once again failed, after being able to prepare for this build-out moment for 3 years.  Remember, they are the "solar experts" with the $30million solar fund. 

Is the taxpayer being compensated for the approximate $120,000/month cost for Sunlight's failure to deliver on its promises in the bailout?

7. Freeholder Rose has publicly stated that Jingoli corporation has no real authority.  When did the Freeholder Board vote on Jingoli corporation to replace our contracted party in project discussions?  Who in county government approved that the interloper should be Jingoli?

8. Taxpayers provided an immediate bailout to Sunlight in 2015, while Sunlight promised future performance.  Who is paying for Sunlight's new failures? There were 3 years to determine correct sites, inspect for strong roofs, establish power studies.  What are the numbers?

a. Will Sunlight meet the solar program's contracted for power generation target? If not, who pays for 15 years of revenue shortages?

b. Does Sunlight bear the cost of the 2015-16 years of constantly changing, wasteful solar program management and engineering?

c. Who ultimately pays for Sunlight's new "owner's rep", Jingoli? 

d. Where are the Restoration security funds?  What account?

e. Are there net-metering fund flows to Sunlight?  Is this proper as the taxpayer has been paying for Sunlight bond payment defaults since 2013 (Consents 1, 2 and 3)?

Bilik spokesman at the center of solar scandal

For anyone who has been following the Sussex solar scandal, today's story in the New Jersey Herald is a must read.  Here are some of the highlights:

The Sussex County freeholder board was told by its top professionals last September about possible collusion, criminal activity and the fraudulent use of money from the county's $28 million solar initiative to pay for lawyers, debt service and other expenses unrelated to the actual project costs.
However, rather than bring the evidence to the attention of law enforcement, county officials — under then-Freeholder Director Richard Vohden — proceeded toward a settlement with a “hold harmless” provision that exempted the architects of the deal from having to make restitution for damages or misspent funds.
Under the provision, the county would have no means of seeking redress or recovering further damages even if laws were broken. While the controversy over the settlement's “hold harmless” clause is not new, the revelation that county officials considered that federal and state laws may have been violated is.

Richard Vohden has appeared in commercials and campaign literature for Marie Bilik.  He is also a frequent Bilik spokesman.

However, the concerns about misuse of funds were enough that Freeholders George Graham and Gail Phoebus inquired during the September closed session as to whether the diversion could be considered criminal in nature.

... Acknowledging the concerns about criminal activity raised by Graham and Phoebus, County Counsel Dennis McConnell responded that “it (Sussex County) is aware of the potential and that complicates everything.”

Vohden called the criminal investigation into the wrongdoing "political theater."

You can read the entire article here:

http://www.njherald.com/story/29199152/2015/05/31/solar-project-payments-may-have-skirted-federal-law

Give us our money back, Bernie

Bernie Re is Sussex County's longtime, well paid Treasurer.  The finance officer of Sussex County.  Bernie Re pockets $148,060 every year, plus benefits, health care, and a nice fat pension when he retires, aged 62, this year.

The average property taxpayer, doesn't have a pension, or paid benefits, or free health care.  And if he or she retires before 66 on Social Security, it is subject to a penalty.  Oh, and the average family income (husband and wife together) in Sussex County is just $87,335. 

Bernie Re was one of three Sussex County bureaucrats who were part of the Sussex County Evaluation Team.  This is the committee that recommended to the Freeholder Board that they agree to the solar scheme.  These are the assurances, Bernie Re and the other bureaucrats 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.

Back in 2011, Bernie Re and the other county bureaucrats gave their assurances as professionals, their word, as men of honor.  Apparently his word isn't worth much and his professional standards are simply nonexistent. 

In today's New Jersey Herald, Bernie Re -- a man who Sussex County taxpayers have paid handsomely year after year -- essentially laughed in their faces and said "let the buyer beware".

Here is Bernie Re's exact quote: 

Re, though, acknowledged that he had been upset by the political storm surrounding the solar issue. He said county officials provided thorough information and that decisions were always up to the freeholders.

“Elected officials have a job to do. Nobody put a gun to anybody's head,” Re said.

"Nobody put a gun to anybody's head."  Isn't that what scammer Bernie Madoff said about his victims?  Yes, and scammer Jordan Belfort, the Wolf of Wall Street himself, said it too.  Isn't that what every scumbag scammer says?

Yes, elected officials do have a job to do.  They should have been better judges of character in selecting the county's top bureaucrats.

We've just been through tax time.  Imagine if something was really wrong and you got audited and the person who you trusted to advise you on preparing your taxes said, "Nobody put a gun to anybody's head." 

Of course, that wouldn't happen because the IRS holds the tax preparer to account.  Unfortunately, the majority on the Sussex County Freeholder Board of Crabb, Vohden, and Mudrick will not be holding Bernie Re to account.  If they did hold him to account, they would ask for their money back for the years 2011 through 2015.

Bernie Re will soon be retiring.  Laughing at the taxpayers.  Laughing all the way to the bank.  "My advice was crap," but they still paid me.  "The Freeholders should have never trusted a thing I wrote  or said, ha, ha... but they still paid me."

But there still is something we can do to make sure that a lesson is learned and that others with the same professional attitudes as Bernie Re holds are not allowed to prey on people who look at their credentials and forget to examine their character.  We can file a professional complaint against Bernie Re. 

Filing a complaint cannot undo what Bernie Re did to the taxpayers of Sussex County.  But it will stand as a rebuke to every financial officer who says of the people he is supposed to provide honest advice, "Nobody put a gun to anybody's head." 

Phoebus and Graham were right

An important news story by Ben Horowitz and Seth Augenstein of the Star-Ledger.  A new report shows that the companies behind the Sussex solar mess were culpable.  They do not deserve to be protected by the terms of the bailout, including the "hold harmless clause" and the gag order (non-disparagement clause).

Morris County got the resignations of Gabel and Pearlman.  Sussex County had the opportunity to follow their leadership at Wednesday's Freeholder Board meeting and didn't.  When will they?

Official: Solar project design flaws and site changes led to millions in cost overruns

"Significant" cost overruns occurred in the solar project at the County College of Morris, according to the county's construction administrator. (Courtesy of Sunlight General Capital)

By Ben Horowitz and Seth Augenstein | NJ Advance Media for NJ.com
on April 10, 2015 at 9:05 AM, updated April 10, 2015 at 12:32 PM

MORRIS COUNTY — Design drawings that had to be changed, construction that had to be redone and the changing of sites contributed to cost overruns that led to lawsuits resulting in a $66.3 million arbitration award in a three-county solar project that fizzled, according to a report by the project's construction adminstrator.

The cost overruns were part of a 71-project, $88 million solar project bonded by Morris, Somerset and Sussex counties in 2011.

In 2013, the contractor, MasTec, sued the developer, SunLight General, saying it had performed more than $79.2 million worth of "construction services" for solar projects, but had been paid only $33 million by Sunlight, leaving it short by $46.2 million, according to court documents.

In 2014, an arbitrator awarded an even greater sum -- $66.3 million -- to MasTec. That included $59 million SunLight owed MasTec following cost overruns, along with interest.

SunLight was declared in default and the counties, which held the ultimate responsibility for the project, were on the hook for the debt. They settled with MasTec for $21 million in February, effectively bailing out the project.

Earlier this month, Steve Gabel, the head of energy consultant Gabel Associates, and Stephen Pearlman, the Morris County Improvement Authority's attorney who advised on the projects setup, both submitted letters of resignation, effective June 1.

But before leaving, Gabel Associates prepared a report summarizing the causes of the cost overruns. The report was intended to be confidential but was released by the Morris freeholders on Wednesday.

Gabel, describing its role as "liaison" between the various parties to monitor the status of construction, said it did not have authority to approve design drawings or direct the projects.

Discussing problems that led to cost overruns, Gable said in some cases, sites that had been expected to get solar panels could not be included in the program for reasons including "structural inadequacy" and some areas that did not meet SunLight's "shading tolerances."

Cost overruns resulted from the elimination of carport structures at the Randolph Board of Education building and from the Morris School District's decision not to proceed with the program, Gabel said.

Those decisions required the developer and contractor to identify additional projects that could generate another 2 megawatts of electrical power, Gabel said.

There were also problems with MasTec's initial design drawings, Gabel said.

MasTec hired the same engineering design professional, Innovative Engineering Inc., to complete the designs in all three county-wide projects, Gabel said.

That workload "stressed IEI's resources" and "some drawings were in conflict with elements of the National Electrical Code," Gabel said.

Some of the problems included improper sizing of conductors and the running of unfused conductors for lengths greater than permitted by local inspectors, Gabel said.

As a result, proposed changes were sent to IEI and site drawings had to be updated. That resulted in delays in submitting updated drawings to SunLight and delayed the start of projects, Gabel said.

Because "time was of the essence," MasTec directed its contractors to start the field work, "which it did at its own risk as it elected to proceed without approved construction drawings" from SunLight, Gabel said. However, the report added, at no time did electrical contractors perform work that violated standard industry practices or the electrical code.

As a result of these design issues, work was frequently started without approved construction drawings and that led to much of the work "having to be redone" due to SunLight's requirements for material and equipment, Gabel said.

While MasTec had sometimes worked without construction drawings, SunLight was insisting on "enhanced standards" that "went above the normal, accepted practices of the industry," Gabel said.

"Use of the enhanced standards led to cost overruns, especially in light of the fact that much of the work had been completed using other methods and required redoing," according to Gabel.

A "significant" cost overrun occurred at the County College of Morris, Gabel said.

That project had "inadequate design drawings, issues with material delivery (caused by the canopy manufacturer) and problems in the construction of the canopy structures," Gabel said.

Gabel concluded that is findings are "not intended to disparage any party in the Morris Renewable Energy Program, nor does it ... assign fault to any party."

"The report is only intended to provide factual information in response to the request of Morris County for information on the basis of cost overruns," Gabel said.

Morris Freeholder David Scapicchio, who voted against the settlement, called the situation "unbelievable."

"What led to the bulk of the cost overruns was building specifications that were not approved," Scappichio said. "When they finally did get a set of approved drawings, they had to start over."

Scappichio agreed that even though SunLight owed MasTec money, and the counties wound up paying, MasTec was "absolutely at fault" in many areas.

"A lot of stuff was designed improperly," he said.

Scappichio reiterated that it was unfair that the counties wound up "holding the bag" for the mistakes of others, but he acknowledged that was how the contracts were structured.

Officials at SunLight were unavailable for comment on Thursday and officials at MasTec could not be reached.

Ben Horowitz may be reached at bhorowitz@njadvancemedia.com. Follow him on Twitter @HorowitzBen. Find NJ.com on Facebook.

http://www.nj.com/morris/index.ssf/2015/04/official_says_problems_with_design_drawings_and_ch.html#incart_river