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SolarCity to pay $29.5 million to settle federal probe

SolarCity has agreed to pay $29.5 million to settle allegations that it lied to the federal government by submitting inflated claims through a solar energy stimulus program, the Justice Department said Friday.

The settlement resolves a federal investigation that has been underway since 2012 into allegations that SolarCity submitted thousands of claims that overstated the value of solar energy systems that it had installed under a federal stimulus program. By inflating the value of the solar projects, SolarCity was able to collect bigger grant payments that it otherwise was entitled to receive, the Justice Department alleged.

"This program expired, but this settlement demonstrates that the government will still hold accountable those who sought to take improper advantage of government programs at the expense of American taxpayers," said Chad A. Readler, the acting assistant attorney general of the Justice Department's Civil Division, in a statement.

A SolarCity spokesperson denied those allegations and said the company was entitled to receive the full value of the grants it sought through a federal program run by the Treasury Department that allowed solar installers to convert tax credits, worth 30 percent of a qualified solar power project's eligible costs, into a cash grant.

“SolarCity accurately valued the solar energy systems in the applications it submitted for cash grants under the Treasury’s program, and it was entitled to the full amounts that Treasury ultimately approved and paid to the company after reviewing its applications," the spokesperson said in a statement.

SolarCity said it installed 29,000 solar energy systems from 2009 to 2013 that were eligible for grants under the Treasury program. The company said those projects were valued at about $1.8 billion by "independent appraisers, accountants and investors." The Treasury Department, after conducting its own review, valued the projects at $1.7 billion and paid SolarCity $510 million in cash grants.

"As SolarCity has said all along, its projects were valued correctly, and the methods used to value its projects were sound,” the spokesperson said. "It is telling that after an exhaustive five-year investigation, the government did not bring any lawsuit accusing SolarCity of any wrongdoing of any kind, and that it has agreed to drop all its claims upon SolarCity repaying approximately 5 percent, or $29.5 million, of the cash grants that Treasury previously reviewed, approved, and paid."

SolarCity, in turn, had sued the federal government. SolarCity dropped its lawsuit as part of the settlement.

Electric vehicle maker Tesla Inc. acquired SolarCity last November in a deal worth about $2.1 billion. The rooftop solar installer, which has started to sell a new solar roofing product in addition to conventional rooftop solar arrays, started early production this month at a sprawling 1.2 million-square-foot factory in South Buffalo that received $750 million in taxpayer subsidies through the state's Buffalo Billion economic development program.

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