A whistleblower accused one of the Biden administration’s top energy loan recipients of maintaining a “hidden” set of financial records while defrauding investors and tax authorities. The Biden administration guaranteed a $3 billion loan to the company anyway, the Washington Free Beacon has learned through interviews and whistleblower reports.
The Securities and Exchange Commission (SEC) and the IRS received multiple reports about Sunnova Energy, a residential solar company, between 2018 and 2024. Even as the whistleblower sounded the alarm about the business’s misconduct, the Department of Energy (DOE) moved forward on a record-breaking loan guarantee to Sunnova in 2023, which the Biden administration billed as “the single largest commitment ever made by the Federal Government to solar power.”
The federal government ended up backing over $300 million in bonds issued by Sunnova under the terms of the deal before the Trump administration canceled the agreement. Sunnova filed for bankruptcy in June, months after warning investors that it had run out of money.
The news raises questions about whether the Biden administration ignored warning signs about the solar panel company while promoting it as a major partner in its green energy agenda.
The whistleblower, who told the Free Beacon he initially discovered discrepancies in Sunnova’s disclosure reports in 2018, is a longtime financial industry insider who has not worked directly with Sunnova but has accessed some of the company’s previously undisclosed financial records. He could also benefit monetarily under laws that allow whistleblowers to collect a percentage of recouped taxes and SEC fines.
The longtime financial executive told the Free Beacon in an interview that Sunnova had inflated its numbers and overstated the values of its solar systems in order to score “counterfeit” tax credits, which it then sold to other corporations.
“There’s a higher probability that a Tyrannosaurus rex will walk down Fifth Avenue than their numbers are correct,” he said.
According to a 22-page memo the whistleblower filed with the IRS in May 2023, Sunnova reported a “massively higher” number of rooftop solar systems to the government than it did to its investors, based on public financial disclosures and Sunnova’s reports to the U.S. Energy Information Administration, a semi-independent agency that operates under the DOE.
The author also obtained California energy productivity numbers showing that Sunnova’s “system count seemed too high for what appears to be low productivity” in the state.
He said the discrepancies suggested Sunnova was “over-reporting system count and may be improperly selling tax credits where the systems are not yet placed into service (or do not exist).”
The IRS confirmed that it received the report in a letter to the whistleblower.
In September 2023, four months after the IRS received the report, the DOE finalized its $3 billion partial loan guarantee to Sunnova to help finance rooftop solar panel loans targeted at low-income households. Two months later, the DOE also selected Sunnova as part of a $440 million program to expand residential solar power in Puerto Rico.
The whistleblower also submitted a 29-page memo to the SEC in June 2024 in which he claimed that Sunnova understated the maintenance cost of its solar panel systems while overstating the systems’ fair market value to obtain surplus government tax credits. It then sold these tax credits to major corporations.
He told the Free Beacon he discovered additional discrepancies in Sunnova’s numbers after downloading the company’s quarterly spreadsheet it publishes online for investors. The spreadsheet included password-protected “hidden” cells, which he was able to view after copy-and-pasting it into an unprotected Microsoft Excel file.
The tens of thousands of hidden cells allegedly revealed a set of “raw hidden data”—with different numbers than the public spreadsheet—and formulas that Sunnova officials could use to manually alter metrics, such as operating costs and customer counts. For example, one hidden formula included the instruction “include battery-only and roof-loan customers in total system counts,” which appeared to instruct analysts to inflate the number of rooftop solar systems by including solar batteries in that category.
Metadata from the spreadsheet indicated it was created by former Sunnova CFO Robert Lane, who left the company in 2024.
The findings suggested that Sunnova was “deliberately misrepresenting many critical financial metrics,” according to the whistleblower.
“These are not slight errors open to interpretation, rather they are shocking in their deliberateness, complexity and audaciousness,” he told the Free Beacon.
Officials with the SEC’s Dallas-Fort Worth office met with the whistleblower and his legal team to discuss the report in June 2024, a few months before the election. The whistleblower told the Free Beacon that SEC officials expressed interest in opening a case during their conversation. He sent them video tutorials about how to access the hidden spreadsheet record. The officials appeared to watch the videos multiple times after the meeting, according to viewer counts.
The whistleblower told the Free Beacon that the SEC “ghosted him,” speculating that this could be because officials “didn’t want to rock the boat” ahead of the 2024 election.
Forbes reported on the whistleblower’s discovery of Sunnova’s “hidden” spreadsheet in April, but his reports to the IRS and SEC have not been publicly disclosed, nor has his meeting with the SEC’s Dallas-Fort Worth office.
Though the DOE Loan Programs Office has said it conducts “rigorous” due diligence of all borrowers, using “financial, technical, legal, and market analysis by the DOE’s professional staff, including qualified engineers and financial and legal experts as well as third-party advisors,” the decision was not without criticism at the time. Republican lawmakers noted that the company had been the focus of numerous consumer complaints over its lending practices and maintenance issues.
In 2023, the Free Beacon found over 50 consumer complaints filed against Sunnova in Texas alone, including accusations that door-to-door salesmen were pressuring elderly and senile people into signing five-figure, multi-decade solar panel loans and leases.
Sunnova, the IRS, and the SEC did not respond to Free Beacon requests for comment.
Original News Source – Washington Free Beacon
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