Second St. Joseph Business Owner Pleads Guilty to Solar Company's $1.4 Million Fraud Scheme
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a second owner of a solar energy installation company in St. Joseph, Mo., pleaded guilty in federal court today to his role in a fraud scheme that totaled nearly $1.4 million in rebates through state and federal programs.
Trevor Dryden, 36, of St. Joseph, waived his right to a grand jury and pleaded guilty before U.S. District Judge Beth Phillips to a four-count information that charges him with one count of participating in a conspiracy to fraudulently obtain state and federal solar rebates and with four counts of making false statements related to state and federal solar rebate programs.
Dryden was an owner of US Solar in St. Joseph, which sold and installed solar-powered panel systems to businesses and home owners in northwest Missouri. In a separate but related case, US Solar co-owner Richard Schonemann, 38, of St. Joseph, pleaded guilty on Sept. 2, 2015, to his role in the conspiracy and to one count of making false statements.
By pleading guilty today, Dryden admitted that he was involved in three separate fraud schemes: first, a fraud related to KCP&L state rebates; second, a fraud related to the federal rebate program; and third, a fraud related to annual updates for the federal program. The total loss from the fraudulent schemes, determined by the government, is $1,396,956, although the total loss acknowledged by Dryden is $993,506.
KCP&L State Rebate Program
From July 23, 2011, to Dec. 31, 2013, US Solar obtained fraudulent rebates from KCP&L by overstating the number of solar panels installed at approximately 27 homes or businesses so that a larger rebate would be paid to KCP&L customers, who signed the rebates over to US Solar.
KCP&L administered the state’s Solar Photovoltaic Rebate Program, which was created in 2008 by the state of Missouri and funded by a tax on power customers. The rebate allowed for a payment of $2 per watt, not to exceed $50,000, to customers that installed solar powered panel systems on their homes or businesses. US Solar was one of the larger solar powered panel system installation companies that utilized this rebate program through KCP&L. To utilize the state rebate program, US Solar submitted applications and schematic drawings on behalf of their customers via email to KCP&L. Once the application process was completed, funds were disbursed to US Solar by checks mailed from KCP&L.
As a result of this fraud scheme, US Solar was paid a total of $464,080 more in rebates than the company was entitled to receive.
Dryden was, at a minimum, involved in the fraudulent rebate payments related to his father’s home and his personal home. Dryden pleaded guilty today to two counts of making false statements related to these rebate payments.
One of the fraudulent rebate payments related to the St. Joseph residence of Dryden’s father. Fraudulent paperwork was submitted requesting payment for 75 extra panels not installed, resulting in a rebate overpayment of $35,250. Another fraudulent rebate payment under this program was related to Dryden’s personal home. Fraudulent paperwork was submitted to KCP&L requesting payment for 54 extra panels not installed, resulting in a rebate overpayment of $25,380.
During the investigation of the state rebate scheme, the FBI uncovered unexplained payments from the federal government to US Solar that led to the discovery of a second fraudulent scheme that was part of the conspiracy.
American Recovery and Reinvestment Act of 2009
US Solar also obtained fraudulent federal rebates authorized by the American Recovery and Reinvestment Act of 2009. Under the federal program, the government reimbursed 30 percent of the cost of the installation of a solar-powered panel system leased to the property owner. US Solar received federal funds under this program from August 2011 to September 2013, because Dryden and US Solar certified they installed systems and leased those systems to the property owners. The certification was false because the systems were owned by customers rather than leased.
US Solar submitted forged lease contracts in order to receive the federal rebates. Dryden created false paperwork and computer entries using US Solar customer information. The conspiracy involved the use of false paperwork and computer entries, including lease agreements, certification that US Solar retained ownership of the solar powered panel systems, detailed cost breakdowns on each system and usage reports.
US Solar received 34 payments from the federal government, totaling $932,876. US Solar was not eligible to receive any of the $932,876 paid under the federal program.
In order to participate in the federal rebate program, US Solar was required to certify that the installed systems were still running and report the systems’ output each year after installation. Dryden provided updates showing kilowatt usage on each property to the federal government in 2012 and 2013.
During the course of the conspiracy, Dryden and Schonemann, received payments from US Solar that were described as profit distributions. A significant source for those profit distributions were funds received by US Solar from the federal rebate program.
Under the terms of today’s plea agreement, the government will recommend a maximum sentence of five years in federal prison without parole. Dryden must pay between $60,630 to $464,080 in restitution to KCP&L for the state rebate fraud, as determined by the court, and no more than $932,876 in restitution for the federal rebate fraud (less any amounts paid by Schonemann), as determined by the court. A sentencing hearing will be held at 11 a.m. on June 16, 2016.
This case is being prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the FBI.