VIDEO: Audit Finds Fraud in Energy Office Programs

By: Brandon Larrabee, The News Service of Florida
By: Brandon Larrabee, The News Service of Florida


Brandon Larrabee, The News Service of Florida

An audit of the state office charged with administering grants meant to encourage energy efficiency and alternative fuels turned up nearly $3 million in potential fraud along with other financial mismanagement, according to a report issued Tuesday by the Department of Agriculture and Consumer Services.

Florida Agriculture Commissioner Adam Putnam says he has uncovered blatant examples of companies trying to rip off millions of tax dollars from energy programs administered by the office of former Gov. Charlie Crist.

The Office of Energy took in about $220 million in federal stimulus cash and state money several years ago during the Crist administration, but Putnam says the office managers made bad decisions that contributed to waste and inefficiency.

One of the troubled energy programs was supposed to award rebates to homeowners and businesses that installed solar panels. But the rebate program was so popular in 2009, it became overwhelmed with nearly 10,000 applicants and they ended up on a waiting list.

When Putnam came into office and inherited the Office of Energy in 2011, he ordered an audit of the $220 million in energy grants and discovered two companies tried to steal $2.5 million. A total of $700,000 was awarded before the contracts were terminated.

Putnam says the Energy Office was mismanaged during the Crist administration. One example included a travel ban that prevented the state from checking locations cleared to receive the $220 million.

The inspector general's report, which comes a little more than a year after the department took control of the Office of Energy, also says nearly $200,000 had been awarded to a company that had filed for bankruptcy.

Most of the funds were stopped before they reached their destinations, including almost $2.3 million in the alleged fraud cases; the bankrupt company also didn't get the $198,000. And auditors found that the Office of Energy didn't have invoices for $800,000 in reimbursements from $17 million in requests they examined.

Agriculture Commissioner Adam Putnam blamed a lack of leadership at the office, which has been housed at various times in the current Department of Management Services, what is now the Department of Economic Opportunity, the Department of Environmental Protection and the governor's office before going to Putnam's department.

"This audit really reveals the consequences of an agency that has bounced around five different places in the course of its existence," Putnam said.

That became an even greater issue when almost $176 million came pouring into the state's energy initiatives from President Barack Obama's stimulus package. Combined with state funding, the office was charged with spending more than $219.7 million in a bit more than three years.

"You had a limited staff with a lack of training and absolutely no direction, who were inundated in a very short period of time by $200 million and orders to get it out the door as fast as possible," Putnam said.

State officials said two companies were under investigation for the fraud, though company names were not released Tuesday. One of the projects was purportedly to manufacture and store equipment for wind and solar energy systems; $700,000 of the $2.5 million awarded to the program had already been given to the initiative before officials stopped it.

The other program, aimed at farm equipment using biodiesel, never received the $500,000 allocated for it.

But those were not the only failures, Putnam said. A drive to install new gas stations using ethanol-heavy fuel around the state has stalled; of the 20 grants for E-85 sites, 12 have already been terminated.

The audit also knocked the office for not sending grant administrators to renewable energy sites often enough to check up on the projects they were overseeing. In a response to the audit, Office of Energy Director Patrick Sheehan -- who was appointed by Putnam after the office's transfer -- said former Gov. Charlie Crist barred staff members from traveling when he oversaw the office.

Sheehan said the office has already carried out 120 site visits over the last year.

By contrast, Putnam said, a new energy policy he pushed through the Legislature would focus on providing corporate income tax credits for renewable energy -- meaning a company would have to turn a profit before receiving any benefits.

"Unlike these programs, it is only a reward for performance," he said.

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