Sussex Solar Scam: What’s happening?

Good question…

Harvey Roseff has a legimate question. “What is the hold-up?”
Mr. Roseff’s Facebook post in full:


ARE WE WAITING FOR CERTAIN PLAYERS’ STATUTE OF LIMITATIONS TO EXPIRE?
END THE SOLAR BOND GUARANTEE/PAYMENTS!
~~~
It’s time the MCIA sorted this out with their investors. This never was a Sussex County taxpayer problem. We did nothing wrong. Cut off the payments now.

See page 21 of Boxer’s report. All three County Execs claim their names were forged to a most salient document – the Solar Bid Evaluation Report. That speaks to fraud, misrepresentation, malfeasance issues. The bid eval report underlies the Freeholder vote to proceed – why now is it claimed that the Sussex taxpayer had no representation on this bid review? If true, when were the Freeholders told of the deception? This document is part of the bonding which we guaranteed – is this now securities fraud? After all, the County Execs were the only ones representing the county taxpayer – the other 9 members knew they were to receive contracts if they voted ‘yes’. If the County Execs were not part of the bid eval – the bond guarantee was given in bad faith and we should stop payments now.


Last year The Skylands Patriot ran two well researched posts; Sussex Solar Scam – Introduction, and Sussex Solar Scam – Follow the money. David Danzis, formally of the the NJ Herald also ran an article; Breaking down solar project’s ‘perfect storm’.

John Inglesino

All of the articles laid the blame squarely in the laps of a pair of greedy, politically connected and seemingly protected attorneys, John Inglesino and Stephen Pearlman. The Boxer Report smoked out the scam with the scammers own words and Mr. Roseff goes to the heart of the matter. But the Freeholders aren’t talking and the NJ Herald has lost any objective reporters to cover the story. 

The Solar Bid Evaluation Report that the entire Solar project was predicated on was a lie. Full report below…

Stephen B. Pearlman

This is a fact that was verified in interviews of the three county executives named in the report, Administrator John Eskilson, Treasurer Bernard Re and County Counsel Dennis McConnell as well as Stephen Pearlman.

Following up on Mr. Roseff’s point we thought that we should re-examine what went down and why it seems that nobody has pursued the culprits that swindled Sussex County out of millions of dollars.

Quoting from our Introduction post; 

“Just one day after the 2010 general election, Sussex County Freeholder Richard Zeoli met former Morris County FreeholderJohn Inglesino for a casual dinner to discuss politics and the future. Zeoli was interested in moving up and Inglesino was interested in making more money, much more.

At the time, Inglesino was doing quite well as Chief Counsel for the Morris County Improvement Authority. His partner, Stephen B. Pearlman, in the firm of Inglesino, Webster, Wyciskala & Taylor, LLC was Bond Counsel for the same agency. Obviously no conflict of interest. Inglesino had brought Pearlman into the MCIAand into his firm, to push the most lucrative money making scheme around; Solar.”

But the scam needed to be ushered through without any competition or too many questions.

According to the Boxer Report:

“In terms of why only one proposal was received, Pearlman stated in his investigative interview that getting the attention of solar developers at that time was challenging, especially for a complex program like this one.  He stated that solar companies were generally very busy at that time.  Pearlman also noted the uncertainty at the time associated with the market for solar energy credits, which is described more fully below.  The attorney for another company that had considered submitting a proposal, but did not do so, told us that his client determined after a thorough analysis of the RFP that the finances on the project would not work as the project was framed.”

But what appears to be significant evidence of a fraud came in the paragraph that Mr. Roseff seems to be alluding to.

“Documentation indicates that a “Sussex County Evaluation Team” was created to evaluate any proposals received and make a recommendation as to the contract award.  The members of that team were: Stephen Pearlman, another attorney at Pearlman’s law firm, two individuals from the MCIA’s engineering firm, two individuals from the MCIA’s financial advisory firm, three individuals from the MCIA’s solar consulting firm, and EskilsonRe, and McConnell.  Thus, 9 of the 12 members of the Evaluation Team stood to gain financially if the County were to move forward with the project.”

Moreover, despite being listed as Evaluation Team members on the Evaluation Team’s October 2011 “Evaluation Report,” in their investigative interviews Eskilson, Re, and McConnell each stated that they had no awareness that they supposedly had been part of such a team. “

“For example, McConnell stated that he did not have a role in putting the Evaluation Report together, he never reviewed it, and he did not attend any Evaluation Team meetings.  He stated that he is disappointed that his name is listed on the document as being part of the Evaluation Team when he was not.  Similarly, Re stated that he does not remember being a part of the Evaluation Team or ever meeting with other team members.  He stated that he does not know why his name is listed on the document.”

Pearlman stated that he believed that the report was probably drafted by someone at the MCIA’s solar consulting firm.

“Thus, the County’s assessment of the proposal received, including the benefits and risks of going ahead with the Solar Project, was put together by individuals who were County outsiders who stood to gain financially from the project proceeding.

The Evaluation Report stated that the proposal that was received contemplated the MCIA issuing $26 million in bonds on behalf of and to be guaranteed by Sussex County, combined with “self-financing” by Sunlight through an equity capital investment of $7.6 million.  Ultimately, however, that equity consisted of PPM’s agreement to defer payment on 30 percent of its estimated construction price until receipt of certain federal grant funds.  The Evaluation Report stated that by including that self-financing, the “Respondent provided a financial structure limiting the financial risk to Sussex (as the guarantor of the bonds).”  Protections such as the self- financing and other project investments made by Sunlight would, the report stated, “virtually eliminate the potential for a Sussex deficiency should Sunlight/MasTec default.”  The report recommended accepting the proposal, noting that the project would result in energy cost savings for participating local government units.”

The Bottom Line:

Dennis McConnell, the former County Counsel states that he never reviewed a document that he circulated to the Freeholders on several occasions to make decisions that reaped millions of taxpayer dollars in profits for a select few.

  • It is obvious that Stephen Pearlman was the principal architect of both the Solar Scam and of the Bailout Settlement that protected himself as well as his co-conspirators.
  • It is obvious from the Boxer Report that Stephen Pearlman perpetrated a fraud against the Morris County Improvement Authority, and against Morris, Somerset and Sussex Counties.
    At his own admission he states that he knew the evaluation was fraudulently proposed and executed.
  • It is obvious that John Inglesino used his political clout to prey on his former colleagues on the Morris County Board of Chosen Freeholders and the incredibly naive Sussex County Board of Chosen Freeholders.
  • It is obvious that Dennis McConnell lied to the Sussex County Freeholders about evaluating the Solar Proposal or he lied about not knowing he was on the Evaluation Committee.
    Put him under oath. He probably lied both times.

It is time to hold these greedy attorneys accountable for the massive fraud that they committed against Sussex and Morris Counties. All of these attorneys and their conflicts of interest should be brought before the NJ Office of Attorney Ethics.

Moreover Dennis McConnell should be brought before the State Ethics Board for his conduct, in his capacity as County Counsel, for not properly evaluating and defending the County of Sussex at the inception of the fraud and again when he protected himself at all costs while pushing for a hold harmless for himself at the bailout.

We are running out of time!

 

More to come…

002 Sussex Solar Evaluation Report Public
Sussex County Renewable Energy Project - Report of Investigation

1 thought on “Sussex Solar Scam: What’s happening?”

  1. The below was posted 3 years ago, and was posted 2 years before we received a costly, $500,000 study of how Sussex County was taken to the cleaners in the solar deal (summer of 2015). Every year 2% of our county tax payment goes for losses – we get nothing in return.

    J. Wellington Wimpy: “I’ll gladly pay you Tuesday for a hamburger today”.
    ~~~~

    We were taught in childhood not to do business with J. Wellington Wimpy.

    Yet in the solar deal, the Freeholders did. And the Freeholders continue to not correct for this mistake.

    While Freeholder Director Crabb outlines his case using peripheral issues like the goodness of solar, we should look at how the taxpayer was not served in the legal and financial design of this deal. That is the overriding problem affecting anything else.

    Sunlight, the banker, was a hollow corporate shell, an SPE. When Sunlight presents they are financially strong, what motivates a Govt to sign a deal with a shell company that the parent, Sunlight, explicitly won’t support?

    What Sussex professionals, and we paid high fees for the many layers of legal and financial professionals in this deal, didn’t make sure the SPE was constructed properly? Who later covered this up?

    It is the single most important reason this project imploded.

    It also seems this Sunlight problem was known to some on the Government side from the very start.

    On page 27 of the Bid Evaluation Report it states “The SunLight/MasTec Proposal reduced the bond size from $33.6 million to approximately $26.0 million by proposing to “self finance $7.6 million.”

    We approved the only bidder, Sun light, and agreed to guarantee the bond.

    I don’t find this Sunlight $ commitment listed in the bond document. “Self finance” in the context of this deal means upfront and from Sunlight’s pocket. After all, this promise convinced Sussex to provide the bond guarantee.

    The arbitrator said Sunlight was using MasTec for funding. Another sign of a missing $7.6M.

    Then, when the first bond payment came due, Sunlight was given access to protected construction funds.

    We had a “bait and switch” between the bid evaluation and the bonding. A promise in the bid, then absence in the bonding/contracts. A dodge made ever more egregious by this being an SPE deal that took advantage of both the contractor and Sussex.

    An SPE with no skin in the game is a toxic construct for the taxpayer. Good for those that drive a Bentley.

    We also have:

    pg 26 of Bid Evaluation Report: “SunLight’s current equity is over $10 million and they recently launched the SunLight General Solar Fund Two in the amount of $30 million.”

    Yet in the Bond Prospectus, pg 15, it states: “The [Sunlight parent] Company has no responsibility for Holdco’s [Sunlight General Sussex Solar] obligations”

    Another bait and switch in the SPE relationship. How could this also be missed?

    We paid big, big money for professionals. Administrators. General Counsels. Bond Counsels. All sorts of finance advice. Risk Managers. …so that basic simple reviews are done.

    The bond document should reflect the bid evaluation and bidder’s commitments and representations.

    Funny how Sussex’ bond guarantee wasn’t forgotten.

    Who knew that Sunlight had no money and these changes were needed? Who was supposed to establish protections for the Sussex taxpayer in the bond document and contracts? And who was supposed to confirm the protections were proper and present?

    Before Amendments I and II (Bailouts 1 and 2), Sussex was already being grifted.

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