Thursday, March 05, 2015

Fraud Allegations that Close to $3,000,000 paid by City of Chicago to Car-Charging Startup Company

Owners of a green tech startup company that installed and maintained charging stations for plug-in electric vehicles were indicted for allegedly engaging in a scheme to fraudulently obtain federal and state grant funds, from the City of Chicago, the State of Pennsylvania Department of Environmental Protection, and two California entities: the Bay Area Air Quality Management District, and the Association of Bay Area Governments.

Defendants Mariana Gerzanych, 36, and Timothy Mason, 58, both of California, were coowners of 350Green LLC of Los Angeles, California, which purported to install and maintain charging stations for plug in electric vehicles. Between 2010 and 2012, 350Green obtained over $2.9 million in grants from the City of Chicago, the Pennsylvania Department of Environmental Protection, the Association of Bay Area Governments, and the Bay Area Air Quality Management District, to install and maintain public electric vehicle charging stations.

Gerzanych and Mason were each charged with five counts of wire fraud in an indictment returned by a federal grand jury. They will appear before U.S. District Court for arraignment at a later date. According to the indictment, between August 2010 and September 2012, as principals of 350Green, Mason and Gerzanych applied for and received over $2.9 million in grants from the City of Chicago, the Pennsylvania Department of Environmental Protection, the Association of Bay Area Governments, and the Bay Area Air Quality Management District. The grant funds were intended to support installation and operation of charging stations for electric vehicles. In particular, the indictment alleges that, in order to obtain grant funds, Mason and Gerzanych falsely claimed that a company called Actium Power had supplied Level 3 DC fast chargers to 350Green and that 350Green had paid Actium Power for those chargers, when in fact Actium Power did not supply the chargers, and the actual manufacturer of the chargers was never paid. Further, the indictment alleges that, in order to obtain the grant funds, 350Green submitted claims to the City of Chicago falsely representing that subcontractors and vendors had been paid when in fact, they had not.

As a result of Mason and Gerzanych’s false claims, the City of Chicago and the State of Pennsylvania Department of Environmental Protection paid 350Green. In order to cover up the scheme, the indictment further alleges that Mason and Gerzanych made false statements to 350Green’s governmental partners regarding 350Green’s financial status and reasons for 350Green’s financial difficulties.

Each count of the indictment carries a maximum penalty of 20 years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines. The indictment also seeks forfeiture of approximately $1.9 million.

“These grant funds were intended to help communities live in a more eco-friendly way. The Department of Justice will not tolerate fraud at the expense of such an important mission,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois.

“There will always be those who see innovation as just another mark for fraud and deception, so we are gratified by the continuing collaboration with our federal partners in stopping old school exploitation of new programs directed at tomorrow’s challenges,” said Inspector General Joseph Ferguson.

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