California-based 350Green LLC was supposed to build an extensive network of car charging stations around Chicago and other cities, putting them ahead of the electric vehicle curve. Instead, federal investigators now say, the company's CEO and president defrauded Chicago and other governments out of nearly $3 million in grants for work that was never done.
The Chicago Tribune has an extensive report on the indictments of 350Green's Mariana Gerzanych and Timothy Mason, who were charged with five counts of wire fraud in a federal indictment made public on Wednesday.
The newspaper reports 350Green was contracted by Chicago in 2010 to pave the way for an electric future in the Windy City. The company was given $1.9 million in grants from the U.S. Department of Energy to do this for Chicago, Pennsylvania and California, but they had to put up $6.8 million of their own money to complete the project.
But Mason said the the expiration of an alternative fuel tax credit at the end of 2011 torpedoed the project's financing, the Tribune reports, effectively dooming it before many of the promised charging stations could be built. (And many that were built didn't work at all.) Work on the project stopped in 2013. After 350Green stopped paying their bills, the FBI began investigating.
Here's where the fraud charges come in: Prosecutors allege Gerzanych and Mason would send copies of checks that showed their subcontractors had been paid to the city in order to receive reimbursement money for the project.
But one of the subcontractors, a supplier of charging stations called Actium Power, was actually a front company created by Gerzanych and they were "billed" for far more than what the stations should have cost. From the story:
According to an FBI search warrant obtained by the Tribune last year, a bookkeeper for 350Green told authorities that Mason and Gerzanych would ask the employee to submit copies of checks to the city of Chicago as evidence that payment had been made to subcontractors. The city would then reimburse 350Green the money. The problem, according to the search warrant, was that Mason and Gerzanych then instructed the bookkeeper not to mail the checks to the subcontractors.
The bookkeeper told the FBI she kept the signed checks in a green folder at work, according to the search warrant. A search of 350Green's California headquarters revealed $4.3 million in unsent checks for projects around the country, according to the FBI.
Yeah, billing a city for work you didn't actually do to get reimbursements you don't deserve is definitely what the government considers fraud. Other actual subcontractors weren't paid by 350Green, and when they complained, the company alleged it was Chicago's fault for not paying invoices on time.
The green startup world has been, and continues to be, a shady place.
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