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PGV parent company settles stimulus fraud lawsuit

Updated: 
November 1, 2016 - 12:05am

HILO — Puna Geothermal Venture’s parent company agreed last week to pay the U.S. government $5.5 million to resolve a civil lawsuit alleging it fraudulently applied for and received millions in federal clean energy grants, according to the federal district attorney for Nevada.

The settlement by the federal government with Ormat Technologies Inc., Ormat Nevada Inc., Puna Geothermal Venture II LP, ORNI 18 LLC, and Puna Geothermal Venture GP avoids the delays, uncertainty and expense of protracted litigation, according to Daniel G. Bogden, the Nevada district U.S. attorney. He said the agreement is neither an admission of liability by the defendants nor a concession by the government that its claims are not well-founded.

“The False Claims Act is an effective civil tool to ferret out fraud in federal taxpayer-funded programs,” Bogden said in a statement. “The settlement monies … will be deposited into a federal fund used to help crime victims and for a variety of other law enforcement purposes.”

The whistleblower suit was filed on Feb. 4, 2013, by former Ormat employees Tina Calilung and Jamie Kell. It alleged Ormat defrauded the federal government of $13.8 million in stimulus funds to cover an expansion at the Puna Geothermal Venture plant.

An amended complaint filed in May 2014 said Ormat “engaged in a scheme to obtain federal grant money under (the American Recovery and Reinvestment Act of 2009) for geothermal energy projects which did not qualify for payment, and have misused and abused the federal funds they have received in order to falsely support geothermal energy projects that the government never intended, or would allow.”

The suit alleged PGV’s original 30-megawatt capacity plant was advertised as generating 30 megawatts of electricity, but in actuality was producing “no more than 17 MW and that this inhibited production was causing Ormat’s revenues to decline by $1 million per month.”

In an effort to stanch those losses, the complaint alleged, Ormat undertook an 8-megawatt expansion of the geothermal facility near Kapoho, which it then misrepresented as a standalone plant to qualify for the federal stimulus funds.

The suit also claimed Ormat has sought to “artificially inflate” the value of its energy assets in order to “maintain the appearance of viability” of its geothermal ventures, creating the appearance, “on paper,” of profit.

Calilung served as the company’s asset manager, and Kell was an administrator in the Business Development Department.

In the complaint, Calilung said she helped draft the grant application for the Puna plant’s expansion.

Also covered in the settlement is an allegedly fraudulent grant for the North Brawley Geothermal Power Plant in Imperial County, California.

The $787 billion federal stimulus program was designed to spur economic growth while creating new jobs and saving existing ones.

Email John Burnett at jburnett@hawaiitribune-herald.com.

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