This article originally appeared on watchdog.org.
Solar companies financed by billionaire entrepreneurs Tom Steyer and Elon Musk remain under investigation by the U.S. Treasury Department more than two years after subpoenas were served reportedly seeking evidence the companies inflated the value of solar systems in order to increase government payouts.
A retired IRS special agent told Watchdog.org the IRS generally issues subpoenas in criminal rather than civil inquiries. Based on the knowledge of a 28-year career, he speculated federal agents are zeroing in on the individuals who oversaw policies that allegedly inflated the prices leading the companies to reap increased tax benefits.
???Ninety-five percent of the IRS is civil, not criminal,??? said Raymond Sherrard, who retired in 1994 from the Criminal Investigation Division of the IRS and now is a consultant in the motion picture industry. ???Usually if they want documents, they will issue a summons for you to come in with the documents. When it comes to criminal cases ??? particularly if the Justice Department is involved ??? they will issue a subpoena.???
The subpoenas were served in July 2012 on Sungevity, the company funded by a business venture of Democratic operative Steyer, and SolarCity, where Musk is chairman, according to the Treasury Inspector General of Tax Administration. Neither has been named in the probe.
TIGTA spokesperson Richard Delmar would not comment on the nature of the investigation, the timing, or which agencies are involved. Neither Sungevity nor SolarCity responded to requests for comment. A third solar contractor, SunRun, also received subpoenas.
The U.S. government offers a 30 percent tax break on the cost of installed solar systems, an amount that will decrease to 10 percent in 2017. The three solar contractors began leasing systems in order to remain the owner and reap the financial rewards.
Customers typically are charged for their systems per kilowatt. The average system costs about $4 to install. SolarCity ??? and presumably the others ??? billed their work at more than $6 a watt, according to U.S. Sen. Jeff Sessions (R-Ala), who became interested in the company after reading a Barron???s expose in 2013. The companies also received federal grants, reaping an estimated $500 million in taxpayer funds, theWashington Post reported.
The Barron???s article prompted Sessions to write to Treasury Secretary Jacob Lew in November 2013, demanding an investigation.
What Sessions didn???t know is that TIGTA was one step ahead of him and already had been looking at the companies for a year. So far, very little information has come to light on the case.
???You have people in different states and a lot of paperwork ??? tens of thousands of pieces of paper. And probably 100 witnesses,??? Sherrard said. ???It???s very, very complicated.???
Typically, investigators will start interviewing people at the bottom of a corporation and work their way up, Sherrard said.
???You never go straight to the kingpin because they are too well insulated,??? he said. ???You go down the ladder and say, ???OK, the train is leaving the station and if you want a seat out of prison, we will help you. The first person to crack gets immunity.
???Someone in TIGTA is undoubtedly getting someone who is giving them information,??? Sherrard continued. ???Who is in charge of the decisions, who is benefitting and whose idea was this????
Steyer, a hedge-fund manager who backs green energy issues and uses his clout to defeat Republican Party candidates, has given Sungevity some $33 million through Greener Capital, a company that is backed by one of Steyer???s hedge funds. SolarCity has received $15 million from Musk, the creator of Tesla Motors, SpaceX and PayPal.
Two subsidiaries of SolarCity have sued the government, claiming that a recalculation of its per-watt payout is flawed and has cost the company $14.6 million.