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Ecotality Examined: SEC Subpoena for Stimulus-Backed Company Revealed

Posted By Lachlan Markay On April 2, 2012 @ 2:11 pm In Featured,Ongoing Priorities,Scribe | Comments Disabled

Part one of a three-part series.

Scribe has obtained a copy of a Securities and Exchange Commission subpoena sent to Donald Karner, former CEO of Ecotality North America (formerly called eTec), the subsidiary of a company that recieved roughly $115 million in stimulus grants to manufacture charging stations for electric vehicles.

Despite its federal funding, and shout-outs from both President Obama and Energy Secretary Steven Chu, Ecotality fell on hard financial times in 2010. It is now under investigation by the SEC. The company recently failed to file its fourth quarter earnings report [1] with the SEC, citing the “unreasonable effort or expense” that would be necessary.

In all, Ecotality looks to be yet another stimulus-backed green energy company backed by strong political ties, but with limited financial viability outside of its large government-enabled revenue stream. Rep. Andy Harris (R-MD) has started asking questions [2] of Chu regarding Ecotality’s substantial federal funding.

Scribe will further explore Ecotality, its backing from the Energy Department, and the SEC investigation in a three-part series this week.

In the interests of public knowledge, we first present a copy of the subpoena sent to Karner on December 15, 2011 It requests reams of information, including all communications with 18 employees of and investors in Ecotality. (Note: procedural documentation unrelated to the SEC investigation has been removed from the end of the document.)

Ecotality Subpoena [3]

As the subpoena makes sure to note, the SEC has not accused anyone at Ecotality of doing anything illegal. Rather, the agency is requesting information that may be used in its investigation.

The list of employees and investors on page 12 merits particular attention. Ecotality CEO Jonathan Read, one of 18 individuals named in the subpoena, joined the company in 2006 (more on him tomorrow). His son Colin is the company’s vice president of corporate development. While Colin Read is not named in the subpoena, his wife and father-in-law, Kathleen and Gary Weinkauf, are.

There are other family connections on the list of individuals. Harold Sciotto was formerly Ecotality’s treasurer, secretary, and director. He and nephew David Sciotto are both listed in the subpoena.

Another pair of names stick out: Min Zhu and Yuqing Xu, the owners of┬áZhu-Xu Charitable Remainder Trust, part of a group of investors that together hold 9.99% of Ecotality’s stock. Zhu and Xu, husband and wife, founded online communication company Webex, which was later purchased by Cisco Communications.

Zhu has something of an interesting history: he has been named in numerous lawsuits by a former business partner, Michael Zeleney. Citing sworn deposition by Zhu’s daughter Erin that her father raped her at the age of 14, Zeleney claims [4] that he was threatened by anonymous individuals claiming to represent Zhu and Webex in response to legal action filed against Min Zhu relating to those rape allegations.

Daryl Magana, also named in the subpoena, is both an Ecotality board member and a partner at Cybernaut Capital, an investment firm founded by Zhu.

Many of these individuals will be explored in greater detail in part 2 of this series.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2012/04/02/ecotality-examined-sec-subpoena-for-stimulus-backed-company-revealed/

URLs in this post:

[1] failed to file its fourth quarter earnings report: http://marketbrief.com/ecty/nt-10k/notice-under-rule-12b25-of-ina/2012/3/30/9343136/filing?s=st?s=st?s=st?s=st?s=st?s=st?s=st?s=st?s=st?s=st?s=st?s=st?s=st?s=st?s=st?s=st?s=st

[2] started asking questions: http://blog.heritage.org/2012/03/28/congressman-seeks-answers-on-stimulus-backed-company-ecotality/

[3] Ecotality Subpoena: http://www.scribd.com/doc/87673753/Ecotality-Subpoena

[4] Zeleney claims: http://blog.heritage.org/wp-content/uploads/Zeleny-complaint.pdf

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