VENTURE CAPITAL FIRMS BENEFITED FROM LOAN RESTRUCTURING THAT VIOLATED FEDERAL LAW REQUIRING TAXPAYERS HAVE PRIMARY CLAIM IN RECOVERING FUNDS

WASHINGTON, SEPT. 21, 2011 – Rep. Cliff Stearns (R-FL), Chairman of the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations, today sent three letters requesting additional information regarding the Solyndra loan guarantee.  One letter was sent to Secretary Chu of the U.S. Department of Energy asking for all documents containing communications between DOE and the White House.  The other two letters,  seeking all documents and communications relating to the loan guarantee, went to Madrone Capital Partners of Menlo Park, CA; and to Argonaut Private Equity, Tulsa, OK.  These two firms were the primary investors in Solyndra.

Said Stearns, “So far, our investigation has uncovered that during the restructuring of the Solyndra loan, DOE allowed these two venture capital firms to have primary claim on any funds recovered if Solyndra failed – a clear violation of the Energy Policy Act of 2005.  This act states, ‘The obligation shall be subject to the condition that the obligation is not subordinate to other financing.’  Yet, DOE lawyers drafted a tortuous legal opinion over the meaning of the word ‘is’ to justify the subordination of taxpayers.”

Added Stearns, “We know that one DOE employee projected in August of 2009 that Solyndra would run out of money in September of 2011 – exactly what happened.  Other red flags underscored the serious risk of this loan, yet it was rushed through to closure.  These documents will help the panel determine how this loan was approved that resulted in the loss, most likely, of $535 million in taxpayer dollars.”

Letters attached