Renewable Energy SD said it will address customers' problems. State says former alarm system salesman lived large as he cheated farmers trying to use federal stimulus money.
Farmer Mark Schroeder of Elgin, Minn., knew something was seriously wrong when he heard a noise from his new windmill that sounded like a helicopter landing on the roof of his house.
"You could hear the noise 2 or 3 miles away," he said.
The windmill shook furiously atop its 160-foot tower. Black smoke billowed from the control unit. Schroeder said he tried shutting off the power, but the windmill's three 25-foot-long blades continued spinning furiously. One of the 500-pound blades eventually sheared off and flew about 100 yards into a field, bringing Schroeder's dream of energy independence crashing to earth.
That was last February. Schroeder said the Excelsior company that sold and installed the unit, Renewable Energy SD, promised to replace it but never has, and no longer responds to his calls.
Minnesota Attorney General Lori Swanson introduced Schroeder and other farmers Friday while announcing that she had filed a lawsuit against the company and its owner, Shawn Dooling, 46, of Shorewood, seeking to hold them accountable.
Swanson alleges that they sold farmers in Minnesota and elsewhere faulty windmills utilizing federal stimulus money aimed at helping the country during the recession.
Dooling and his sales staff promised state-of-the-art wind turbines that would last up to 25 years and qualify for federal grants under the American Recovery and Reinvestment Act of 2009.
Dooling, who formerly sold security systems in Minnesota and Missouri, formed Renewable Energy SD in South Dakota about two months after the law took effect. The law provided grants to cover 30 percent of each turbine's cost.
Swanson's lawsuit says farmers were told that the windmills would produce excess energy that could be sold to the power grid, earning them $700 to $1,300 a month that they could use to repay their initial costs in five to 10 years. The company promised to quickly obtain the necessary permits, apply for stimulus funds and bank loans, and build and maintain the windmills.
The lawsuit is illustrated by the stories of 15 farmers who paid $119,000 to $536,000 for the windmills. Swanson said her office knows of others, and is getting a steady stream of complaints.
She said Renewable Energy SD broke its promises over and over. It failed to deliver the turbines on time, if at all. Many of the turbines failed to work. When the farmers complained, she said, the company refused to refund their money and pressured them to buy upgraded equipment to salvage their initial investment. In some cases, the more expensive replacements also failed or produced just a fraction of the promised energy.
As a result, farmers were left paying interest on the money they borrowed to install the units. And because the federal stimulus money requires that the equipment work for at least five years, they could be forced to repay the grants.
Lawsuits and luxury cars
Dooling has been sued repeatedly over his business practices and his alleged failure to pay his personal debts. Meanwhile, he lived in expensive homes and drove luxury automobiles. Swanson's suit says he and Renewable Energy SD spent about $1.1 million in the past few years on two Bentleys, a Lamborghini, a Ferrari and two Audis.
Investigators also found a 37-foot boat named "Under Surveillance" registered to Dooling.
The company said in a statement that it will address its customers' concerns. It says the company looks forward to a "meaningful discussion" with Swanson's staff so that "we can continue to pursue our mission of making clean, renewable wind energy available throughout Minnesota and across the Upper Midwest."
That's a different position than the company took earlier. Swanson showed a letter to her staff, signed by Dooling, which said, "We would appreciate not receiving further correspondence from your office." She said the company's Minnesota registration has lapsed so it's operating illegally.
Swanson said she filed the lawsuit seeking to stop Dooling's sales of windmills in Minnesota while the investigation continues. The matter also will be referred to criminal authorities, she said.
Swanson said her staff is investigating another company, which she would not identify, on similar allegations. Similar suits have been filed against other companies in Illinois, Massachusetts and California, she said.
'I got a $200,000 deer stand'
Several of the farmers who bought the windmills from Renewable Energy SD said they did so because they wanted to help wean America from foreign oil.
One of them was Marv Jensen, 72, who raises corn and soybeans in Kensington, Minn. He was told he could expect to get $732 a month by selling the excess energy his turbine would produce to a local utility company. Minnesota's "net metering law" requires utilities to pay farmers retail rates for electricity generated by small wind turbines.
Jensen and his wife of 46 years, Marlys, paid $126,000 for their turbine in April 2010. It took six months to get it working, and then it operated for less than a month, they said. Renewable Energy SD refused a refund, but said they could upgrade to a better product for $119,000 more. The Jensens said they reluctantly agreed, but have never received the new unit.
"I got a $200,000 deer stand, I guess," Marv Jensen said.
Swanson alleges that Dooling's company obtained powers of attorney from his customers to process the federal grant and private loan applications. The loans were obtained through Bridgewater Bank in Excelsior. Calls to the bank were not returned Friday.
Some farmers learned that they could get grants from the Department of Agriculture (USDA) to help pay for the turbines. To qualify, they had to apply before signing a contract with Renewable Energy SD. Eugene and Rita Dorn, who farm in Nicollet, Minn., say that Dooling told them that they could get around that restriction if they lent him $100,000, which he would later repay.
They bought two turbines in 2010, but the USDA denied them grants, saying the units were not "proven technology," according to Swanson's lawsuit. Their machines still have not been delivered.
Gerald Crowell called a reporter after reading about the lawsuit on startribune.com. He said he agreed to pay Renewable Energy SD $200,000 for a windmill in 2010. He paid half upfront.
"I have a tower, but no turbine," Crowell said glumly. "I put a flag on top of mine. I've got the tallest flagpole in Jackson County. "But maybe I'm lucky, too. I talked to a guy over by Dexter. He had a couple [of the turbines]. One's not working at all. The other one makes about half of what it's supposed to."
Crowell said another neighbor paid $265,000 for one of Dooling's windmills. "All he's got is a cement base."
Asked what the company said about the delays, Crowell said, "They don't pick up their phone very often."
Crowell said he plans to call Swanson's office for help.
"It would be nice to get a little something back. I know very well I'll never get it all back," he said. "I'm 76 years old. Should've been old enough to know better."
Dan Browning 612-673-4493