Solar group audit finds $1.3M shortfall

Taxpayer-funded loans for Perrysburg’s Willard & Kelsey scrutinized

Willard & Kelsey Solar Group closed its doors on June 30 after it ran out of funding. It owes the state more than $12 million because it defaulted on two loans.

A state-mandated audit of Willard & Kelsey Solar Group revealed the defunct solar-panel manufacturer could not account for how it spent $1.3 million of a $5 million loan funded by Ohio taxpayers.

The 15-page audit, which took more than a year to complete, was released to The Blade on Friday and states “the company could not provide documentation that payment was made for several expenses.” The Perrysburg firm did record the $1.3 million in a ledger but could not produce receipts or invoices that relate to those payments.

The money was paid to two companies owned by Willard & Kelsey President Jim Appold.

The company closed its doors on June 30 after it ran out of funding, and owes the state more than $12 million because it defaulted on two loans.

Bill Mitchell, former Willard & Kelsey chief executive officer, had claimed that executives were compensated with funds from the $5 million state loan that was later examined by state auditors. Those payments would violate the company’s loan contract with the Ohio Department of Development, which now operates as the Ohio Development Services Agency.

Mr. Mitchell was fired from the company in October, 2009, and died in July, 2011.

Willard & Kelsey’s executives have denied misusing state funds. They have until Aug. 12 to provide the state with information about the expenditures in question, in addition to explaining why the company used $510,324 from its loan to purchase equipment not covered under its state contract.

Richard Kerger, a Toledo attorney who represents Mr. Appold and spoke on behalf of the company, said the state will receive documents to address the issues highlighted in the audit. Willard & Kelsey’s executives thought they fulfilled the state’s request for information, he said.

“Their understanding was they had given what they were asked for,” Mr. Kerger said.

Obtaining the documents shouldn’t be a problem because of Mr. Appold’s role as an owner of the two companies funded with state dollars, Mr. Kerger said. The companies are listed in the audit as E-Z Pak Co. and Consolidated Biscuit Co.

The Ohio Attorney General’s Office is reviewing the audit, spokesman Dan Tierney said. The attorney general’s office, with the help of Joseph Shea of the Cincinnati law firm Shea, Coffey & Hartmann, is working to recoup the more than $12 million Willard & Kelsey owes the state.

Mr. Tierney would not comment on whether the audit would alter the next step in that process.

It is unlikely the state will be able to redeem its investment in the solar company. Although the state has collateral rights to the company’s holdings, Willard & Kelsey doesn’t own its building and rents about half its equipment.

In addition to owing the state millions, Willard & Kelsey is on the hook to pay 125 vendors $2.4 million and has faced a slew of lawsuits. The Blade was able to determine that Willard & Kelsey has been sued for about $700,000 by 10 companies since 2012.

Willard & Kelsey’s executives received millions from the company in the form of compensation and loans. They received regular $30,000 to $40,000 payouts before Willard & Kelsey ever sold a solar panel. And, from May through August, 2009, executives expensed more than $20,000 for spending that included tickets to the Detroit Tigers and Pittsburgh Steelers and airline tickets for family members.

State development officials were unaware the company laid off most of its work force in January, 2012, and only learned of the layoffs when called by The Blade.

Todd Walker, a spokesman for the Ohio Development Services Agency, said the state’s next course of action regarding the audit would depend on if and what it hears from Willard & Kelsey. Mr. Walker declined to go into the specifics of that process at this time.

Contact Kris Turner at:

kturner@theblade.com

or 419-724-6103.