Ormat Geothermal Hit With $5.5M Fraud Settlement

LAS VEGAS, Nev. – A Reno-based geothermal power plant operator, Ormat Technologies, Inc., and its associated companies, will shell out $5.5 million to the U.S. Department of Justice to settle civil fraud allegations. The companies unlawfully applied for and received millions in federal clean energy grants, according to federal prosecutors.

The settlement involves Ormat Technologies, Inc., Ormat Nevada, Inc., Puna Geothermal Venture II, L.P., ORNI 18, LLC, and Puna Geothermal Venture, G.P. (hereinafter referred to as Ormat). U.S. Attorney Daniel G. Bogden for the District of Nevada announced the agreement, stating it avoids “the delay and uncertainty and expense of protracted litigation.” Notably, the agreement explicitly states it’s not an admission of guilt by Ormat, nor a concession by the U.S. that its claims were unfounded.

“The False Claims Act is an effective civil tool to ferret out fraud in federal taxpayer-funded programs,” Bogden stated bluntly. “The settlement monies announced today will be deposited into a federal fund used to help crime victims and for a variety of other law enforcement purposes.” The alleged scheme centered around applications for grants under the American Recovery and Reinvestment Tax Act of 2009, impacting power plants in Hawaii and California.

The case originated from a civil lawsuit filed back on February 4, 2013, by Tina Calilung and Jamie Kell, former employees of Ormat Technologies. They alleged the company knowingly submitted false applications for federal clean energy grants related to the 8MW Puna Geothermal Power Plant and Puna KS-14 Well on Hawaii’s Big Island, and the North Brawley Geothermal Power Plant in Imperial County, California. These weren’t honest mistakes; they were allegedly deliberate attempts to siphon federal funds.

This settlement is just a small slice of a larger trend. Since January 2009, the Justice Department has clawed back over $26.4 billion in cases involving fraud and false claims against the government. The False Claims Act, bolstered in 1986 to incentivize whistleblowers, allows individuals like Calilung and Kell to file lawsuits on behalf of the government, potentially receiving up to 30% of any recovered funds. In fiscal year 2015 alone, whistleblower suits recovered $2.8 billion, with awards totaling $597 million.

Assistant United States Attorney Roger Wenthe spearheaded the investigation and negotiation on behalf of the U.S. Attorney’s Office for the District of Nevada. While Ormat avoids a potentially lengthy and damaging trial, the settlement sends a clear message: federal funds are not free money, and those who attempt to defraud taxpayers will be held accountable. The full details of the settlement agreement remain under seal, but the financial penalty is a stark reminder of the consequences of alleged fraud.