Wind firm sued by state of Minnesota files Chapter 7 bankruptcy

  • Article by: STEVE ALEXANDER , Star Tribune
  • Updated: June 24, 2013 - 8:51 PM

Renewable Energy SD had been prohibited by a court from continuing to sell in Minnesota.

Renewable Energy SD, an Excelsior seller of wind energy equipment that was sued for fraud by the Minnesota attorney general’s office, has filed for Chapter 7 bankruptcy.

In its Friday filing for liquidation in U.S. Bankruptcy Court, Renewable Energy listed $15.9 million in debts and $6.2 million in assets.

The attorney general’s lawsuit, filed in Hennepin County District Court in January, alleges that the company and its sole owner, Shawn Dooling, 46, of Shorewood, sold farmers in Minnesota and elsewhere faulty wind turbines using federal stimulus money aimed at helping the country during the recession.

The company either failed to deliver many of the turbines or, in some cases, erected turbines that failed to perform properly or at all, the suit says. About 15 civil lawsuits have been filed against Renewable Energy SD by its customers or suppliers.

Renewable Energy SD was forced to stop selling wind generators in Minnesota after the attorney general’s office obtained an injunction against the sales, said spokesman Ben Wogs­land of the attorney general’s office. The suit is pending until a judge determines whether the company should pay restitution or fines, and whether the company will have any funds with which to pay them, Wogsland said.

A spokesman for Renewable Energy said the state’s lawsuit forced the Chapter 7 filing.

“The bankruptcy filing was unavoidable because the company was out of business and had no way to fund its defense in multiple court cases,” Renewable Energy attorney Michael McGrath, of Ravich Meyer in Minneapolis, said in an interview Monday.

Most of the assets listed in the Renewable Energy bankruptcy filing appear to be speculative. About $6 million of the reported $6.2 million in assets are in the form of anticipated proceeds from a $6 million breach-of-contract and fraud lawsuit that Renewable Energy filed against wind turbine manufacturer Polaris America LLC of New Jersey and its CEO, Christopher Filos.

Polaris and Filos have denied all claims in the case, said their attorney, Jeffrey Paulson of Edina, in an interview Monday.

McGrath, Renewable Energy’s attorney, said: “This [bankruptcy] filing will allow the court-appointed trustee to prosecute the Polaris and Filos case.” The first meeting of Renewable Energy’s creditors will be July 26, McGrath added.

In its suit, the attorney general’s office said farmers were told by Renewable Energy SD that the wind turbines would produce excess energy that could be sold to the power grid, earning them $700 to $1,300 a month — money that could be used to recoup their initial costs within 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 turbines.

But the company broke its promises repeatedly, the attorney general’s suit alleged. When farmers complained, 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, the lawsuit alleged.

McGrath disagreed. Renewable Energy SD “did not admit any wrongdoing in the attorney general’s action,” he said.

But one Renewable Energy customer recalls it differently.

“I’ve never run into a scam this big, and I hope never to run into another one like it,” said Gerald Crowell, a farmer near Windom, Minn., in an interview Monday.

He bought a windmill from Renewable Energy for $200,000 in 2010, and paid for half of it in advance. A tower for the windmill was constructed, but he never received a wind turbine to put on it.

Crowell suspected something was wrong when Renewable Energy asked him last year for another $100,000 payment in advance of the project’s completion.

But Crowell refused: “I figured they were going to go belly up.”

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