Gone With the Wind: Carbon Millionaires Arrested for Fraud (Four Winds)
November 15, 2009
Italian Wind Fraud Investigation Extends to the Netherlands, UK, Ireland, and Spain.
For some carbon millionaires, lining their pockets legally through taxpayer subsidies and hand outs is not enough. They choose to cheat even though they’re playing a game that’s already rigged.
The Financial Times reports that:
Oreste Vigorito, head of the IVPC energy company and president of Italy’s National Association of Wind Energy, was arrested on Tuesday in Naples. Vito Nicastri, a Sicilian business associate, was arrested in Alcamo, Sicily.
Two other men were arrested in Sicily and the Naples area, while 11 others were charged but not arrested.
“Gone with the wind”, mounted by the finance ministry’s anti-fraud police, started in 2007 and began by blocking public subsidies worth €9.4m ($14m, £8.4m) granted by the ministry for economic development. Last year, police confiscated seven wind farms with 185 turbines in Sicily linked to IVPC.
Anti-mafia prosecutors in Sicily have launched a parallel investigation.
FT reports that these saviors of our planet were building wind farms that were “BUILT WITH PUBLIC SUBSIDIES BUT HAD NEVER FUNCTIONED.”
Vigorito had ties to BRIAN CAFFYN, founder of the controversial “CAPE WIND” project planned for Massachusetts’ Nantucket Sound, which has been criticized as a poor investment for taxpayers for the energy it will produce. Vigorito was not an investor in Cape Wind...
http://cfact.eu/2009/11/15/gone-with-the-wind-arrests-for-massive-fraud-in-italy/
Ospraie, D.E. Shaw, Developer to Build Rhode Island Wind Farm
By Jim Polson - September 25, 2008 15:22 EDT
Sept. 25 (Bloomberg) — Ospraie Management LLC, D.E. SHAW & Co. and a development company were SELECTED to build a $1 BILLION offshore wind farm that will provide 15 percent of Rhode Island’s power.
Construction is dependent on negotiation of a formal agreement and approval by state and federal regulators, Governor Donald L. Carcieri said today in a statement. DEEPWATER WIND, a venture OWNED BY OSPRAIE, SHAW and a development firm called FIRST WIND, was SELECTED from among seven groups that proposed doing the project.
The state put the project out for bids in April. Deepwater Wind plans to build the wind farm without state funding, the governor said.
FIRST WIND, based in Newton, Massachusetts, has 92 megawatts of wind turbines in operation, according to the statement. First Wind’s backers include investment firms MADISON DEARBORN PARTNERS LLC and SHAW, according to its Web site.
Ospraie is the New York investment firm that shut down its biggest hedge fund this month because of losses on commodities investments.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_iLNJiO0VBU&refer=us
[...]In September 2009, after FIRST WIND AFFILIATES received $115 MILLION in federal stimulus money, $74.6 million of which for the Cohocton NY project, U.S. Rep. Eric J. Massa (D-N.Y.) wrote to President Barack Obama, calling the grants “very alarming” and saying the company “abused the public trust. “No electricity has been produced for sale out of the projects,” but the company “has already collected production rewards for non-existent energy,” Massa told Obama.
Back in the First Wind SEC IPO application is the acknowledgement that hedging on REC’s was a common practice. One of the projects inclusive in non-existing electric production hedging was the proposed Prattsburgh, NY development. That venture was never built and the developer ultimately made a formal withdrawal from the town and terminated their land leases.
Will the public get an accurate account if those hedges were legal or complied with government regulations? Do not expect federal authorities to keep First Wind honest. THE FINANCIAL OWNERSHIP OF FIRST WIND RESIDES WITH MADISON DEARBORN and D.E. SHAW HEDGE FUNDS, 42% for each firm. Madison Dearborn has friends in high places, RAHM EMMUEL being one.
After leaving the Clinton Administration. Emanuel, engaged in investment banking at WASSERSTEIN PERELLA. Madison Dearborn did business through Emanuel.
Madison Dearborn Partners, a Chicago private equity firm is located is in the same building as Wasserstein’s offices.
The New York Times writes,
“Back in 1998 John Simpson, who ran the Chicago office of the investment banking boutique Wasserstein Perella & Company, had flown to Washington to meet with Mr. Emanuel at the behest of Mr. Simpson’s boss, Bruce Wasserstein, a major Democratic donor and renowned Wall Street dealmaker who had gotten to know Mr. Emanuel. “I had this idea that this could work and that it had upside,” Mr. Wasserstein, now chairman and chief executive of LAZARD, the investment bank, told The Times. “It worked out better than I could have hoped.”
“And better than Mr. Emanuel could have imagined as well. Over the course of a three-hour-plus dinner, Mr. Simpson and Mr. Emanuel discussed how they might work together.”
Upon leaving the private sector, Emanuel received campaign contributions from Madison Dearborn Partners, in the amount of $98,200 from 2002-2010.
Larry Summers did even better....
http://batr.org/reactionary/042510.html
I don’t know that the Emanuel implication can be proven but there’s certainly a link though D.E. Shaw has no need him anyway. certainly didn’t need him as he’s got friends that are a lot higher in the corrupt pyramid.
“UPC (FIRST WIND) has been working in China since 2006, and we have seen this market go from a standing start to one of the largest in the world for wind energy. We expect to see sustained long term growth in the wind market in China, and UPC, with support from GEF, is looking forward to participating fully in this market,” said BRIAN CAFFYN, CEO and Chairman of UPC.
http://batr.org/view/052310.html
5/01/2008: They changed their name from UPC to Four Winds
7/21/2009 First Winds gets 115 million loan from investor - Alberta Management Corporation (AIMCo) and another from HSH Norbank for Four Winds Stetson Project – the largest Windmill Farm in New England.
9/03/2009 First Winds (gets first Recovery Act grant) awarded $115 million in grants from the US Department of Treasury and Energy via The American Recovery and Reinvestment Act.
http://www.cohoctonwind.com/cohocton/news.cfm?ID=4a6350cf%2Db75b%2D4ba5%2D847d%2D6e2baf3d6bfa&test
http://www.cohoctonwind.com/cohocton/news.cfm
First Wind warns of possible loan default
Date: Friday, May 14, 2010
...First Wind’s projects come with heavy up-front capital costs. In the first quarter, the company’s net loss more than doubled to $10.6 million, compared with a net loss of $3.5 million in the year-ago period...
Over the past 18 months, though, First Wind has proved adept at accessing capital. Since the beginning of 2009, the company said it has refinanced, raised or received about $2 billion for First Wind and its projects.
The company’s investors include Chicago-based private equity firm Madison Dearborn Capital Partners and hedge fund heavyweight D.E. Shaw.
http://www.bizjournals.com/boston/stories/2010/05/10/daily47.html
2008: Lehman’s was their initial financier (which makes one wonder why Lehman’s wasn’t “saved” - why not?):
http://www.cohoctonwind.com/cohocton/news.cfm?ID=4670bd36-5d3d-403c-af6e-3358f759a6c1&test
D.E. SHAW & CO LP:
In 1994, Shaw was appointed by President Clinton to the President’s Council of Advisors on Science and Technology, where he was chairman of the Panel on Educational Technology.
In 2000, he was elected to the board of directors of the American Association for the Advancement of Science served as its treasurer 2000-2010.
In 2007, Shaw was elected as a fellow of the American Academy of Arts and Sciences.
In 2008, Forbes estimated his wealth to $2.5 billion.
In 2009, he was appointed by President Obama again to the President’s Council of Advisors on Science and Technology.[3]
In 2007, David Shaw sold a 20% minority stake in the Shaw group to LEHMAN BROTHERS, as part of a broader strategy to diversify his personal holdings.[citation needed] At the time of its bankruptcy in September 2009 Lehman Brothers Holdings Inc., had holdings in D.E. Shaw & Co.[15]
In 2006, Lawrence Summers became managing director at D.E. Shaw & Co. and left in 2008, receiving $5.2 million in compensation for that period.[9]
http://en.wikipedia.org/wiki/De_shaw
MADISON DEARBORN PARTNERS
Madison Dearborn Partners (MDP) is a private equity firm specializing in leveraged buyouts of privately held or publicly traded companies, or divisions of larger companies; recapitalizations of family-owned or closely held companies; balance sheet restructurings; acquisition financings; and growth capital investments in mature companies.
MDP invests through a series of private limited partnerships and its investors include a variety of PENSION FUNDS, endowments and other institutional investors:
1993 - Madison Dearborn Capital Partners ($550 million)
1997 - Fund II ($925 million)
1999 - Fund III ($2.2 billion)
2000 - Fund IV ($4.1 billion)
2006 - Fund V ($6.5 billion)
2010 - Fund VI ($4.1 billion)[11]
http://en.wikipedia.org/wiki/Madison_Dearborn_Partners
Madison Dearborn Partners - John Canning - board members (I think this is the bunch who got Obama elected):
http://investing.businessweek.com/research/stocks/private/relationship.asp?personId=74410
D.E.Shaw Co., LP - board affiliations - one of them is Jonathan Silver from the DOE (Silver ...
http://investing.businessweek.com/research/stocks/private/relationship.asp?personId=232164
Shaw was a major contributor to Obama’s inaugural and he’s a fund raiser for his 2012 election...the Blackstone Group has popped up - it was only a matter of time....
http://www.muckety.com/D-E-Shaw-Co-LP/5012812.muckety
Senator Wyden’s Son Starts Hedge Fund After D.E. Shaw Stint
February 24, 2011
...Before graduating last year from Columbia University’s business school in New York with a master’s degree, Adam Wyden worked as an intern at the $19 billion hedge fund founded by David Shaw, a Democratic fundraiser who backed Ron Wyden’s campaigns in 2004 and 2010....
Ron Wyden received contributions totaling $9,600 from Shaw and his wife, Beth, during 2009, with each giving the maximum $4,800 that individuals are allowed to donate for any election cycle, OpenSecrets.org said. Shaw gave $5,000 last year to Holding Onto Oregon’s Priorities, a political action committee set up by Wyden to help other Democratic candidates, and $33,500 to the party’s senatorial and congressional campaign committees...(he’s also a friend of BIll and Hill)
http://www.businessweek.com/news/2011-02-24/senator-wyden-s-son-starts-hedge-fund-after-d-e-shaw-stint.html
Merkley, Wyden Announce Nearly $150 Million in Recovery Act Funding for Oregon Wind Farms
Sep-01-2009
http://www.salem-news.com/articles/september012009/wind_farms_9-1-09.php
One wonders who got our money this time.
“Merkley, Wyden Announce Nearly $150 Million in Recovery Act Funding for Oregon Wind Farms
Sep-01-2009
http://www.salem-news.com/articles/september012009/wind_farms_9-1-09.php
One wonders who got our money this time.”
It certainly wasn’t the people of Oregon yet they have to tolerate those grotesque windmills and give the socialist ventures their hard-earned tax-money. Well, at least Wyden got his son in the door of his venture buddy D.E. Shaw.
How many jobs from Oregon’s green energy incentives? No one knows
March 13, 2011,
Labor leader Tom Chamberlain decided some basic research was in order before the Oregon AFL-CIO could lend its support to the state’s increasingly expensive subsidies for green energy projects.
“We wanted to know what we were getting for the money,” he says. “How many jobs? What do they pay? Like any tax incentive program, you want to make sure you’re getting bang for your buck.”
Instead of numbers, Chamberlain says, he got the equivalent of a blank stare from the Department of Energy, which administers and approves the subsidies.
That was two years ago.
Today, little has changed. Despite claims by supporters that the subsidies have led to “thousands” of jobs, no one can say with any certainty what impact the Business Energy Tax Credit, or BETC, has had on the state’s stubbornly high unemployment rate.
To get a better handle on the link between the incentives and jobs, The Oregonian examined Energy Department records, talked to economists and looked at individual projects that received the incentives. Among the conclusions:
The Cost of Green
Green energy isn’t just a moral imperative, politicians say. It creates jobs. But how much do Oregon’s green energy subsidies really cost? And what do we get for our money?
Reporters Ted Sickinger and Harry Esteve have examined those questions over the last several months, plowing through records, interviewing experts in government and business, and analyzing what they found.
This series builds on their earlier reporting the past two years.
Day 1: The world’s largest wind farm gets $1.2 billion in subsidies and will generate 35 jobs.
Day 2: No one can say how many jobs Oregon’s energy tax credits have created.
Day 3: Bipartisan support makes rollbacks of the subsidies unlikely. With the exception of solar equipment manufacturing companies, such as SolarWorld and Sanyo, the state has no firm data on the number of jobs that can be attributed to the subsidies.
The subsidized cost of each job varies dramatically. For example, Horizon Wind Energy received $11 million in tax credits for an eastern Oregon wind farm that, after construction, created 36 full-time maintenance and operation jobs. Solaicx, a Portland solar manufacturer, got $9 million in tax credits and employs 127 full-time staff.
In some cases, the state has spent millions of tax dollars and gotten only a handful — or no — jobs in return because the companies didn’t perform as billed, were sold and shut down, or went bankrupt and folded.
Examples include Cascade Grains, a biofuel start-up that received $12 million in state subsidies before going bankrupt and out of business, and Reklaim Technologies, which got $3.4 million in state subsidies to recycle tires into oil. After two years, the recycling plant employs eight people, according to the Port of Morrow, and has yet to deliver a marketable product.
The examples above include only state incentives. Green energy projects often qualify for much bigger federal grants and tax breaks as well, vastly increasing the subsidized cost per job.
Scrutiny of Oregon’s tax credits intensified in recent years because their cost to the state has skyrocketed.
Since 2007, state spending on the incentives has gone from about $30 million a year to nearly $150 million a year.
Much of the increase results from an aggressive expansion of the incentives four years ago. In 2007, at the urging of then-Gov. Ted Kulongoski, the Legislature allowed wind and solar companies to claim credits for half their project costs, a tax break of up to $20 million for manufacturing plants and $10 million for wind projects. The rules were written loosely enough that many companies qualified for multiple tax credits.
What was once a small conservation program became one of Kulongoski’s top economic development strategies. He and other supporters of the expansion said it would lead to a new wave of industry and jobs in Oregon, helping the state pull itself out of its economic tailspin.
Yet until two years ago, THE STATE KEPT NO RECORDS OF JOBS ASSOCIATED WITH THE SUBSIDIES. In 2009, the Energy Department began asking for job information on the application forms. But few applicants included the information, causing the department to rewrite the forms with more explicit directions on how to calculate job numbers, says Diana Enright, spokeswoman for the department.
“It’s something new to think of this as a jobs program,” Enright says. “We’re learning as we go along what questions to ask.”
The exception has been solar manufacturing plants. Business Oregon, the state’s economic development agency, has closely tracked those jobs since 2009, says agency director Tim McCabe.
A spreadsheet provided by McCabe lists 1,482 jobs at three plants — 1,140 at SolarWorld and the remainder at Solaicx and Sanyo. Another 500 jobs are expected when SoloPower opens its flexible solar panel factory in Wilsonville, and another 94 when Solexent opens a promised plant in Gresham. Combined, the five companies are on track to receive about $180 million in state tax subsidies and even more in federal subsidies.
McCabe’s office produced a study for the Legislature that estimates the spinoff effect of the new solar plants at 7,000 additional jobs in the state. It used a modeling tool called “Implan” to assess the full impact of the incentives. Implan is widely used to calculate the multiplier effect of new jobs in the economy.
“Certain industries bring in more money than others and spend more money than others,” McCabe says. “Manufacturing has a substantial multiplier effect.”
Tying the tax incentives to job creation becomes more problematic, however, in other parts of the green economy. Oregon gives incentives based on how much it costs to build a solar factory or a wind farm — not on how many people get jobs as a result.
Wind farms are massively expensive facilities to build, but they employ few people once they’re up and running. They also have a smaller indirect economic impact than manufacturing plants. They buy few supplies, produce a smaller pool of wages to wash through the economy, and generate less personal income tax revenue for the state.
Consider the giant SHEPHERDS FLAT WIND FARM in eastern Oregon. The project’s developer has applied for and been pre-certified by the Department of Energy for three business energy tax credits totaling $30 MILLION. BUT it is only projected to create 35 permanent jobs.
Contrast that with SoloPower’s projection of 500 jobs for its $20 million tax credit.
The goal of Oregon’s green energy incentives has become somewhat nebulous, says Tim Duy, an economist at the University of Oregon. There is a kind of BLIND FAITH AMONG POLICY MAKERS, he says, that if Oregon develops the green energy cluster, and develops a brand as the green energy state, that untold riches will flow in the future.
That may or may not pay off, Duy says. Green jobs are mobile, easily poached by other states or countries dangling richer incentives or cheaper labor costs.
Technology and markets change, bankrupting some companies that Oregon has heavily subsidized.
Every dollar that Oregon taxpayers spend on the energy subsidies is a dollar they don’t have to spend elsewhere, Duy notes. That forgone spending would have its own economic impact, creating jobs, wages and taxes.
“We’re not asking the questions about the economic efficiency of the tax credits,” Duy says. “Those questions are being swept under the rug or ignored. My sense is that we’ll do anything for green energy in this state and we’re not doing a cost benefit analysis of what we’re getting out of it.”
McCabe, the state economic development director, says it might be time to take a new look at the incentives and link them more closely to companies that would have a bigger impact on the state economy.
DON’T TIE THE TAX BREAKS TO A SPECIFIC INDUSTRY, he says. Among the companies he suggests that might move here with the right incentives would be clothing manufacturers and food processors.
“I would change it,” he says. “Make it a broader-based incentive that’s tied to wages and to jobs.” http://www.oregonlive.com/politics/index.ssf/2011/03/how_many_jobs_from_oregons_gre.html
A few comments:
“I just returned from camping in the Columbia River Gorge, and the visual pollution in the form of Windmills, the noise they generate and their blinking red lights at night has made it less much less attractive than any development could have. We can’t build on or develop our property, yet we subsidize the construction of ugly windmills that look far worse than any clear-cut made in the forest by the Timber Industry. We are defiantly not better off, nor has any of this infrastructure development been an improvement, or noble in its accomplishments.”
“The people who claimed to be protecting Oregon and promoting sustainability have ruined the natural beauty of the Columbia Gorge. I can’t imagine what it’s like to live there and constantly be reminded of how Oregon officials duped the taxpayers into selling-out homeowners there.”
“Horizon Wind is trying to build a big Wind Farm in Union County. They are threatening the local city counsels. They tell them they have two weeks to agree to a SIP and a Memo of Agreement or they will get NOTHING from the state suppliments. The Memo of Agreement says they will verbally support the Wind Farm, say the SIP pays off for all their concerns about damages, and that they will have no future claim to damages from views, wildlife damage, property value losses, health problems of citizens, etc., etc. So long to Free Speech. Our tax dollars are being used to buy gag orders from local governments that are supposed to be protecting the citizens. Check out the City of Union Wind Farm Committee and click on the MOA. It will curl your hair that our tax dollars are being used to force local governments to give up their role of protecting the citizens. This particular city had a vote and the people voted over two to one against having the wind farm built. So much for elected officials representing the people who elected them! Even worse, when, not if they are voted out, the newly elected officials will have their hands tied and they too will be unable to speak for the citizens. THIS HAS TO BE ILLEGAL!!!! Havent these people heard of FREE SPEECH!!!!”
“I am guessing that Horizon Wind is talking about the Elkhorn Wind Farm when they claim 35 jobs. I live here and there are only 2 full time positions at that wind farm. They have some contractors, but it is flat out a lie to say they are employing 35 people full time . If they are, they live somewhere else as they are not here in Union County. It would not be the first time that Horizon Wind has chosen to distort the truth. They said they would not build wind towers within 3 mileas of a sage-grouse lek at the Elkhorn site in their application. Now, in their application to build another adjoining Antelope Ridge Wind farm, they are saying they should be able to build a bunch of wind turbins within 2 miles of the lek as it is already compromised by, guess what, the wind turbines they built there when they built the Elkhorn Wind Farm. Gosh, lets reinforce them for lying to the Energy Facility Siting Counsel by letting them finish destroying this nesting site for a bird that is already endangered.”
“There is a bill in Salem that would require information to be posted online about the BETC and other economic development tax incentives. It’s HB 2825 and it has bipartisan support, and it has a hearing this Thursday. If this bill passes, the dept. of Energy would have to send info to the state transparency website that says who gets the credit, how much they get, what they promised (jobs or energy production) and what was actually produced. We need to know what kind of return on investment we are getting for our tax dollars. I wrote about this a little and other transparency issues here “- http://www.blueoregon.com/2011/02/major-advances-oregon-transparency-and-many-challenges-too/
Because photovoltaic technology is advancing so rapidly, it also means that a factory you build today could be obsolete within 2 or 3 years. It is not unreasonable to assume that solar manufacturing jobs subsidized with government funds may thus only have a lifespan of 2-3 years.
“I think another big problem, however, is that photovoltaics are not a full-fledged energy source, because of their intermittency. I can imagine that within a few years production of photovoltaic panels will vastly outstrip demand, and we will see inventory pile up, prices plummet, and factories go out of business.”
“A whole lot of emotional fertilizer. The end result is the the common citizens is forced to pay higher power fees for these feel good projects. If all these green energy projects are so neat why in the Hell do they need tax credits? More BS from our incompetent legislature. What happens when the wind don’t blow and the sun doesn’t shine?”
“So it’s only after the fact that someone does an actual cost benefit analysis? I only have one thing to say about this, “follow the money!” Figure out not only who got the benefits of the tax credits, but did they influence in any way the politicians who voted for them ie; massive campaign donations or issue advertising that supports candidates position? After all if they weren’t paid off then the only other option is they aren’t smart enough to continue to represent the citizens who voted for them because they couldn’t do a cost benefit analysis before they spend taxpayer money. They certainly didn’t in quite a few of the reported benefits wasted in this article for wind farms...stupid or paid off, what other choice is there?”