Attorney General DeWine, State Agencies Seek Recovery of More than $10 Million in State Loans to
Defunct Solar Company
(CINCINNATI)—Ohio Attorney General Mike DeWine, on behalf of the Ohio Development Services Agency and the Ohio Air Quality Development Authority (OAQDA), today filed
two separate lawsuits against a defunct solar power company which defaulted on
more than $10 million in state loans. The lawsuits against Willard
& Kelsey Solar Group and its shareholders seek to recover loans made by the former Ohio Department of Development and the OAQDA.
A lawsuit was filed in Hamilton County Commercial court on
behalf of OAQDA against Willard
& Kelsey Solar Group, LLC, of Perrysburg; James M. Appold of Rossford; Michael
J. Cicak of Perrysburg; James E. Heidner of Bowling Green; Gary T. Faykosh of
Perrysburg; and other unknown defendants. The lawsuit alleges three counts of
Breach of Contract, one count of Breach of Security Agreement, one count of Shareholder
Liability, one count of Breach of Fiduciary Duty, one count of Civil Aiding and
Abetting, and one count of Civil Conspiracy.
A separate lawsuit was also filed in Hamilton County
Commercial Court on behalf of the Ohio Development Services Agency as successor
to the Ohio Department of Development (ODOD). Defendants include Willard & Kelsey
Solar Group, LLC; Appold; Cicak; Heidner; Faykosh; E-Z Pak of McComb; and other
unknown defendants. The lawsuit alleges two counts of Breach of Contract, one
count of Breach of Security Agreement, one count of Shareholder Liability, one
count of Breach of Fiduciary Duty, two counts of Fraudulent and Unlawful
Transfers, one count of Civil Aiding and Abetting, and one count of Civil Conspiracy.
Willard & Kelsey Solar Group was a startup company in
Perrysburg that was founded to manufacture solar panel products. Willard &
Kelsey was granted loans in 2009 with ODOD worth $5 million and in
2010 with OAQDA worth $5.1 million on a $10 million line of credit. The
lawsuits allege that Willard & Kelsey sought these loans despite the fact
they were severely undercapitalized. Additionally, the lawsuits allege that the
operators of Willard & Kelsey engaged in several improper business practices,
including transferring $1.8 million from Willard & Kelsey to two other
companies operated by Appold, E-Z Pak and Consolidated Biscuit Company of
McComb. Other alleged improper practices include failure to maintain distinct
checking accounts for Willard & Kelsey separate from the shareholders,
failure of Willard & Kelsey to obtain the necessary certifications to
legally sell its products, and failure of the shareholders to transfer promised
intellectual property and patents to Willard & Kelsey. Appold is also
alleged to have given Willard & Kelsey a loan from his personal funds at an
unconscionable interest rate.
The lawsuits seek to recover the uncollected debt owed on
the loans plus 10% interest, currently valued at $6,395,205.47 for the ODOD
loan and $5.1 million for the OAQDA loan. The lawsuits also seek to recover
equipment used as collateral for the loans, as well as late charges,
collections costs, attorneys’ fees, and any future damages. The OAQDA loan also
contains a liquidated damages provision, where the state is due damages for
each promised job not created, valued at twice the expected salary of each
promised job; the OAQDA lawsuit asks that these liquidated damages be awarded
for all 450 jobs promised but not created, valued at more than $20 million.
Copies of the ODOD and OAQDA lawsuits are available on the
Ohio Attorney General’s website.
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