Phoebus and Space call for investigation

By Nathan Mayberg
NEWTON — Sussex County Freeholder Gail Phoebus (R-Andover) and Assemblyman Parker Space (R-Wantage) have called on the Securities and Exchange Commission, Department of Justice, and the state Attorney General's Office to investigate a New York City-based company which took nearly $90 million in funds from Sussex, Somerset and Morris counties and is now insolvent and unable to pay back the bonds.

Sussex County bonded $27.7 million and gave the funds to SunLight General Capital to install solar panels on municipal buildings and schools across the county.

While half the project was completed only $2.7 million of the funds were paid back to the county and now the company is unable to pay back the remainder of the bonds.

In a statement issued Wednesday, Phoebus and Space cited the lawsuit filed by Power Parners Mastec, which was hired by SunLight General Capital to purchase and install the panels. The contractors claim that SunLight General Capital owes them tens of millions of dollars.

Millions of dollars in liens have been placed against SunLight General Capital as the case drags on.

The Sussex County Board of Freeholders are scheduled to meet on Thursday to discuss a potential settlement in the case.

The Republican-dominated Board of Freeholders, including Space, unanimously approved the bonding in 2011. Phoebus was not on the board at the time.

Sussex County Administrator John Eskilson said a potential settlement could include having the contractor finish the solar panel work, which could potentially bring the county $1 million in revenue through the sale of the solar power.

In their statement on Wednesday, Phoebus and Space cited the lawsuit in which it is alleged that Sunlight Entities "participated in an additional scheme to draw down over $6.3 million in Public Bond Funds and misdirected more than $2.7 million of such funds for non-trust purposes."

SunLight General Capital and its subsidiaries were formed "with virtually no assets, such that they were undercapitalized at the time of formation."

Those who controlled the SunLight Entities treated corporate assets as "their personal piggy banks, repeatedly transferring assets from one entity to the next for the purpose of ensuring that there would be insufficient assets in each entity to satisfy its obligations to Power Partners."

In addition to citing the lawsuit, Pheobus and Space stated they are "concerned about the lack of transparency surrounding this matter."

Brendan Walsh, an attorney with PashmanStein of Hackensack, is representing the company.

In an emailed statement sent out Thursday, Walsh stated that " “SunLight General Capital strongly disputes the allegations made by Power Partners MasTec, LLC nearly two years ago in the context of a civil lawsuit. Both MasTec’s complaint and the statement issued by Freeholder Phoebus and Assemblyman Space, which blindly repeated MasTec’s allegations, ignore the indisputable facts that the proceeds of the public bonds have always been held by a trustee for the benefit of the bondholders and that the public bond funds may only be disbursed to pay properly documented project costs relating to the solar projects. MasTec has not alleged – and there is not a scintilla of evidence to support an allegation – that any public bond funds were improperly used to pay costs unrelated to the solar projects. To be clear, all of the payments made out of the public bond funds were expressly authorized by the governing bond documents and approved by a third-party trustee. No New Jersey court has ever interpreted the Trust Fund Act to impose liability where, as here, all of the public funds at issue were used for the public project for which they were intended, as opposed to unrelated projects. Context matters and it is important to recognize that MasTec’s statements were made in the context of a commercial dispute over which expenses to be paid from the public bond funds had priority; valid project expenses, including lease payments that allowed the counties to make their bond payments on time, or MasTec’s alleged cost overruns.”

Reporter Nathan Mayberg can be reached at comm.reporter@strausnews.com or by calling 845-469-9000 ext. 359