Owners Of Colorado Biomass Plant Pay $2.6 Million To Resolve Allegations They Defrauded A Renewable Energy Program

DENVER – Three companies and two individuals have agreed to pay a total of $2.6 million to resolve allegations that they violated the False Claims Act by obtaining reimbursements from a federal renewable energy program to pay for costs they never actually incurred, U.S. Attorney Jason Dunn announced today. 

Under a program created by Congress in the American Recovery and Reinvestment Act of 2009, companies that place into service “renewable energy properties,” including biomass power plants, can apply to get reimbursements for up to 30 percent of the costs they incurred in placing those properties into service.  Companies submitted applications for these payments to the National Renewable Energy Laboratory (“NREL”) in Golden, Colorado.  The funds for the reimbursement came from the U.S. Treasury.  Those funds were set aside under section 1603 of the 2009 Act, under a program commonly known in the renewable energy industry as the “1603 Program.” 

The resolution at issue involves three companies that developed a biomass power plant in Gypsum, Colorado.  The companies were Eagle Valley Clean Energy, LLC (“Eagle Valley”), its parent company Evergreen Clean Energy Corporation (the “Corporation”), and Evergreen Clean Energy, LLC (“Evergreen”).  Dean Rostrom and Kendric Wait were principals and had ownership interests in the three corporate entities. 

The United States contends that in 2014, Eagle Valley applied to the 1603 Program, seeking reimbursement for its investment in the Gypsum plant.  As part of its application, Eagle Valley contracted with Evergreen to perform “development services.”  The contract entitled Evergreen to a fee based on a percentage of the cost of building the plant.  Based on this contract, Treasury reimbursed Eagle Valley 30 percent of the costs associated with the fee Eagle Valley would pay Evergreen under the development services agreement.  After receiving these funds from Treasury, Eagle Valley did not pay the fee.  Instead, it wrote off the development fee owed to Evergreen, and Evergreen never requested or demanded payment of the fees Eagle Valley owed Evergreen under the contract.  Because the fee was written off, Treasury, in effect, reimbursed Eagle Valley for 30% of a payment Eagle Valley never made.  Once Eagle Valley decided that it would not be paying the Evergreen the fee for the development services, Eagle Valley was required to notify Treasury and return the money it received.  But Eagle Valley never notified Treasury, and the United States alleged that this conduct violated the False Claims Act.

Under the terms of the settlement agreement, Eagle Valley paid $2,350,000, and Dean Rostrom and Kendric Wait each paid $125,000 to the United States.

“This program had important goals: jump-starting the economy during the Great Recession, and helping companies that took real steps to move our renewable energy industry forward.  Taxpayers paid for that program.  Companies and individuals who get taxpayer money from government programs like this one, but don’t do what they promised to do, will be held to account and will face consequences,” said U.S. Attorney Jason Dunn. 

Treasury Inspector General Eric M. Thorson thanked the U.S. Attorney’s Office and the U.S. Department of the Treasury for their hard work and partnership on this case and previous cases involving the American Recovery and Reinvestment Act.  He stated, “this settlement reinforces the commitment of the Treasury OIG to pursue cases against those who defraud the U.S. Treasury Department and misuse public funds.”

The claims resolved by this settlement are allegations only.

This matter was investigated by the U.S. Department of the Treasury’s Office of Inspector General.  It was handled by Assistant U.S. Attorney Zeyen Wu.