Energy Company Receiving Obama Stimulus Funds Under Investigation for Fraud

By: Jim Turner | Posted: July 24, 2012 1:25 PM
Adam Putnam

Adam Putnam speaks to reporters Tuesday in the Capitol | Photo: Jim Turner

A Florida-based energy company that received money through President Obama’s stimulus package is under investigation by state and federal officials for fraud, Agriculture Commissioner Adam Putnam said Tuesday.

The unnamed company was one of two based in Florida awarded state and federal grants for energy development programs that are now being looked at for criminal fraud by the FBI and Florida Department of Law Enforcement.

The fraud was uncovered as part of an operational audit conducted by the state Office of Inspector General of the grants administrated by the Office of Energy, created in 1975 and moved under the state Department of Agriculture in July 2011.

Putnam deferred comment when asked to compare the fraud to the Solyndra loan controversy -- a fast-tracked stimulus loan from the Obama administration in 2010 to a company that later declared bankruptcy. Nor would he say fraud was pervasive within the state grant programs. But Putnam inferred there was a strong lack of leadership in the office when the federal money was coming through.

Most of the state grant programs, including the federal stimulus allocations, were begun when the office was under the watch of former Gov. Charlie Crist.

Putnam said the state halted pending payment on the two grants -- collectively $2.26 million -- once the fraud was detected.

One of the companies was nothing more than a post office mail box involved in fraud in multiple states, with fake holding companies, buying from themselves with various addresses.

“It was a very complicated scheme to defraud taxpayers,” Putnam told reporters Tuesday during a sit-down in his office.

The audit also uncovered $198,000 in grants that went to companies now in bankruptcy.

“One of the programs in the stimulus funds was supposed to build E-85 gas stations around the state; there were 20 grants issued, not one penny was spent, not a single outcome of that program,” Putnam said.

Eight of those grants are still ongoing but no money has been sent out. The other 12 have been halted.

Putnam said part of the problem was a lack of oversight in the state agency that had little training, little staff and less direction from leadership in overseeing $44 million in state investments and $176 million in federal stimulus funds.

“They were awarding $200-plus million, yet the previous administration had a travel ban on visiting the sites that were collectively getting more than $200 million, so they were never physically visiting any of these sites,” Putnam said.

“There was a complete absence of leadership. The office was rudderless,” Putnam said.

The travel ban was lifted when Putnam’s office took over.

The audit also found there was no requirement for companies to provide status updates that job and economic impact goals were reached.

Putnam plans to send letters to every company that received grants through the state to provide updates on what has been accomplished so the state can determine its return on investment.

The letters will request follow-up information that goes above and beyond what was agreed to “so we can continue to build a complete picture of what we got for the money,” Putnam said.

“There are successes if you look at programs in terms of popularity with the public, defined as oversubscriptions,” Putnam said. “The energy appliance, the solar rebates, it was clearly an example of something the public was interested in.”

Putnam said his agency inherited a “pile of coathangers” with the solar rebate program, in which 12,000 applications were filed and left sitting on a desk until his department took over the office.

Prior to the Department of Agriculture going in, employees received only three training sessions on how to handle the paperwork for all the various programs receiving grants. In fact, grants ranged from energy appliances to solar energy to public building conservation improvement.

In the past year, 17 training sessions have been conducted, Putnam said.

“I think we now have a blueprint moving forward to make better policy and, frankly, to learn from mistakes of the past,” Putnam said.

Putnam said he still supports grants to assist research and development, but requiring outcomes before money is awarded, as with his 2012 energy program approved by legislators earlier this year.

“This reaffirms the importance of not just dropping a lot of cash from a helicopter and hoping that some of it works, which essentially what the stimulus was,” he said. “It was $176 million that came into the state that was intended to stimulate the economy, that we’re still administering three years after the fact."

For clearly shovel-ready projects, Putnam said, "it was a three-year-long shovel.”

Reach Jim Turner at jturner@sunshinestatenews.com or at (772) 215-9889.

Comments (4)

Geraldine Bryant
11:09AM AUG 9TH 2012
Thanks for article....The detection of this fraud seems to have come to light in a complicated, complex system and someone along the way was not doing their job. Too many cooks stirring the pot.
10:53AM JUL 25TH 2012
Actually the real news is a Republican administration directed by a Republican legislature once again proved it is incapable of efficient governance. When the Republicans say government does not work , they have more than satisfied me that when they are in office, government does indeed not work. Note that the lack of oversight was at the State of Florida level.
8:45AM JUL 25TH 2012
No surprise here.
Franklin Thompson
5:11PM JUL 24TH 2012
I'll bet this is the 'smart meter' company located in Bradenton.

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