Wednesday, May 31, 2023 | Back issues
Courthouse News Service Courthouse News Service

Energy Company Accused of Bailout Boondoggle

LOS ANGELES (CN) - A geothermal energy developer defrauded the United States of $122 million in bailout money, artificially inflating its assets to maintain the appearance that its ventures were viable, two former employees say in a qui tam lawsuit.

Tina Calilung and Jamie Kell sued Ormat Industries and subsidiaries under the False Claims Act to recover money the Israel-based corporation allegedly obtained illegally from the American Recovery and Reinvestment Act of 2009.

The lawsuit was filed under seal in February 2013 and released this week.

The economic stimulus package distributed $831 billion in assistance, for businesses that included renewable energy, according to the 48-page lawsuit.

"One of the unintended consequences of The Recovery Act was the creation of opportunities for abuse and fraud on the government," such as Ormat, the complaint states.

Calilung, an economist who was Ormat's asset manager, claims the company and its subsidiaries defrauded the United States by submitting fraudulent applications and certifications of compliance under the Act, to receive "hundreds of millions of dollars in payments to sustain nonconforming geothermal energy projects."

Ormat applied for money for projects that not qualified "in order to decrease the carrying value of failing geothermal projects, artificially inflate the value of Ormat's energy assets, and maintain the appearance of viability of certain geothermal ventures," according to the lawsuit.

Calilung claims that Ormat misrepresented the dates that projects were placed in service, their energy output capacity, the nature and purpose of expansion projects, and the property value basis upon which the grant payments were based.

"But for these purposeful misrepresentations, Ormat would no have received section 1603 funds to support these projects and such funds could have been invested by the U.S. Treasury into truly viable geothermal projects actually qualified to receive the funds," Calilung says in the complaint. (paragraph 6)

Ormat has received at least $122 million in payments by submitting false applications for its Puna Geothermal and North Brawley Geothermal power plants, neither of which qualify for the funds, according to the complaint.

Ormat received an additional $58 million for two other geothermal properties and has three applications pending, according to the lawsuit.

Plaintiff Kell was an administrator in Ormat's business development department.

The relators seek treble damages and civil penalties.

They are represented by Christopher G. Paulos with Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor in Pensacola, Fla.

Ormat did not immediately respond to a request for comment.

Named as defendants are Ormat Industries, Ormat Technologies, Ormat Nevada, Puna Geothermal Venture II, Orni 18 LLC, and First Israel Mezzanine Investors Ltd.

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.