Wind energy exec indicted 

A federal grand jury has indicted a Twin Cities wind energy developer for mail fraud and money laundering, accusing him of overbilling Xcel Energy for electricity and collecting wrongful incentive payments from the state of Minnesota.

Gregory Jaunich, 46, of North Oaks, was charged with 33 counts of mail fraud, three counts of lying on loan applications and six counts of money laundering, according to the indictment filed Tuesday in U.S. District Court in Minneapolis.

The state Commerce Department estimates the total allegedly bilked from Xcel and the state may have been around $500,000, with another $2 million in allegedly false loan applications.

However, the charges are serious ones and target a renewable energy industry not known for financial hijinks.

Jaunich (pronounced YAW-nick) did not return telephone messages. He is scheduled for his first court appearance Oct. 3.

Jaunich’s attorneys acknowledged accounting errors but said Jaunich never intended to defraud anyone. Employees who handled the billing at one of his power companies made the mistakes, the lawyers said.

When Jaunich learned about the discrepancies, he repeatedly asked Xcel and the state Commerce Department to tell him what he owed so he could reimburse them, the attorneys said, but neither would respond. Jaunich estimated what he owed Commerce, they said, and paid it back.

Jon Hopeman, Jaunich’s attorney at Felhaber Larson Fenlon & Vogt in Minneapolis, called Jaunich a pioneer in Minnesota’s wind energy industry. Jaunich is “disappointed and distressed” by the indictment, Hopeman said.

“There weren’t a lot of lenders when he started in this business in promoting wind energy,” Hopeman said. “The last thing this guy would do is jeopardize all of that in order to intentionally defraud the state or anybody else.”

According to the indictment, Jaunich founded NAE Shaokatan Power Partners LLC around 1999 and had an arrangement to generate electricity for Xcel Energy. Between September 2003 and 2005, he allegedly submitted numerous inflated invoices to both Xcel and the state Commerce Department, which runs an incentive program subsidizing alternative energy projects with direct payments.

Jaunich also is accused of lying on $2 million worth of loan applications to Anchor Bank in North St. Paul in 2004, using as collateral wind turbine generators he didn’t own, for instance. He allegedly used part of the ill-gotten gains to write a $20,000 check to Kline Volvo in Maplewood, according to the indictment.

The payments from the Commerce Department came out of its Renewable Energy Production Incentive program, at the time using money from the state’s general fund, Commerce spokesman Bill Walsh said. Commerce was paying NAE Shaokatan 1.47 cents per kilowatt-hour it generated and paid the company about $140,000 before Commerce investigators got involved, Walsh said.

“Our energy folks auditing the program saw results from this wind project that were so good they questioned whether it was possible under the laws of physics,” Walsh said. Walsh confirmed NAE Shaokatan returned $144,561 to the department.

NAE Shaokatan Power Partners is in Vadnais Heights, according to records at the Minnesota secretary of state’s office. Jaunich’s legal team would only say he has been a president there.

Jaunich also co-founded at least one other company at that address: Boreal Energy Inc., where he is a strategic consultant.

He also founded at least two other companies, Northern Alternative Energy Inc. and Minneapolis-based Navitas Energy Inc. Jaunich apparently is no longer involved with either company.

The companies Jaunich currently is involved with together have more than 100 turbines on wind farms across the Upper Midwest, his attorneys said. That would make him a relatively small player, said Lisa Daniels, executive director of Windustry, a Minneapolis nonprofit promoting wind energy for rural economic development.

Daniels said she wouldn’t describe Jaunich as a pioneer but agreed he was an early wind developer in Minnesota.

“He was one of the first people who was actually putting together projects in Minnesota – one of a handful of local wind developers,” Daniels said. When informed of the indictment, Daniels said she was surprised at the extent of the charges but had been aware Jaunich was having financial difficulties.

Daniels called Jaunich’s case “rare” and said she hopes it doesn’t taint investors interested in wind energy.

By Jennifer Bjorhus

Pioneer Press

twincities.com

21 September 2007