Weld County District Attorney Ken Buck has launched a three-pronged criminal investigation into officials at Abound Solar, which filed for bankruptcy last July, for possible instances of:
- Securities fraud, "based on allegations that officials at Abound Solar knew products the company was selling were defective," and continued to mislead investors about the quality of the modules it manufactured;
- Financial misrepresentation connected to a bridge loan received by Abound Solar, which was used to keep the company afloat until it received federally guaranteed loans. That investigation centers on whether lending institutions were misinformed when Abound Solar applied for the bridge loan; and
- Consumer fraud, if officials at Abound Solar knowingly sold defective products to the public.
Abound Solar, a manufacturer of thin film cadmium telluride (CdTe) photovoltaic modules, was incorporated as AVA Solar in 2007 and was rebranded as Abound Solar in March 2009. In 2010, the company received a US$400 million loan guarantee from the U.S. Department of Energy (DOE) for construction of solar panel manufacturing lines in Colorado.
At the time of the bankruptcy filing, Abound had used $70 million of the awarded DOE loan guarantee, but had not drawn down any further DOE funds since August 2011, when the DOE determined that challenging market conditions in the solar industry did not merit additional funding risk.
DOE spokesman Damien LaVera said on Thursday that Abound's loan package was canceled because the company failed to meet "milestones" stipulated in the loan agreement. He would not disclose which benchmarks were missed, but said typical guidelines include technological, financial and scheduling measures. The DOE has estimated that U.S. taxpayers will be on the hook for about $40 million to $60 million after Abound's liquidation.
Abound also reaped $300 million in private investment and had been in discussions with potential buyers in the month before bankruptcy, but ended negotiations when the involved parties were unable to come to an agreement on terms.
A document probe recently launched by members of the U.S. House Energy and Commerce Committee is unrelated to the DAs investigation, according to Buck.
In a follow-up to the Solyndra probe and to the "No More Solyndras Act," which has been shelved by the U.S. Senate Congressional Republicans, including U.S. Rep. Cory Gardner of Colorado, are investigating to determine whether the DOE was aware of Abound's alleged technical problems before it authorized the loan-guarantee package in 2010.
Abound blamed its financial failure on the "aggressive pricing actions from Chinese solar panel companies," which, the company said, "have made it very difficult for an early stage startup company like Abound to scale in current market conditions."
To protect the integrity of this active and ongoing investigation, the Weld County District Attorney said that no additional information will be released at this time.
Edited by Becky Beetz.
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