Last Thursday, CBS News reported that Ecotality, a company that makes chargers for electric cars and received millions from the stimulus bill, is under investigation for insider trading:
The company received a subpoena from the Securities and Exchange Commission in October of 2010.
The president of Ecotality North America Don Karner was sent an additional subpoena in December of 2011, which specifically asks for any and all documentation surrounding the public announcement of the first Department of Energy grant to the company for $99.8 million on August 5, 2009.
The government also wants all communication regarding the federal grant from at least four Ecotality employees and two board members including the company’s CEO Jonathan Read. Karner was required to supply documents to the SEC by early January.
A company spokesperson told CBS News in an email, “We are cooperating fully with the SEC and have no further disclosures or updates that we are able to provide outside of our public filings.”
Ecotality was awarded $99 million in 2009 and an additional $26 million in October 2011. Since the beginning of the grant period in October 2009 the company reported creating 144 jobs according to Recovery.gov .
That’s right. Despite receiving hundreds of millions of dollars in federal taxpayer dollars, the company has only created 144 jobs in the more than two and a half years since first receiving stimulus funds. Yet, in his 2010 State of the Union address,President Obama praised the company and the head of the company’s subsidiary, Don Karner, was First Lady Obama’s guest to the address. At the time of the speech, the company had created fewer than 30 jobs from the funds they had received. However, the Obama administration shows further poor judgment in providing the additional $26 million of funding this past October–when the company had been under investigation for insider trading for a year.
The CBS story notes also that the company’ s CEO, Jonathan Read, is one of the individuals under SEC investigation. (As a side note, CBS’s story indicates the laziness and incompetence of the old media, as the Heritage Foundation originally reported the first SEC investigation in October 2011). Read’s son Colin, who also worked for Ecotality as VP of Corporate Development, was the finance director for former Democratic Congressman Harry Mitchell of Arizona in 2006. Additionally, Jonathan Read donated $3,600 and Ecotality board member Slade Mead donated $4,200 (the maximum) to Mitchell’s Congressional bid. Mitchell served in Congress until he was swept out in 2010 by Republican Rep. David Schweikert (R-AZ). Additionally, the National Legal and Policy Center notes:
Besides voting for the stimulus bill, Mitchell served on House committees that oversaw Science and Technology, and Transportation and Infrastructure – both key interests for Ecotality. But whether he had any influence in Ecotality’s receipt of $115 million from the Department of Energy via the stimulus is unclear.[Jonathan] Read has not made any political contributions to federal candidates since 2006, according to Center for Responsive Politics.
It is unknown if Mitchell’s closeness to Ecotality’s management was the source of insider trading information. However, it should be noted that the SEC requested correspondence from the days leading up to the initial grant funding which was potentially influenced by committees on which Congressman Mitchell served. Aside from the massive waste of taxpayer dollars on another “green” energy project, this serves as another lesson both in the relationships of trading favors between Congress and their donors and the Obama administration providing taxpayer dollars to companies who are under investigation for unethical behavior.