Ohio Attorney General Mike DeWine, on behalf of the Ohio Development Services Agency and the Ohio Air Quality Development Authority (OAQDA), has 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. (NOTE - To read the lawsuits, scroll down to the end of this story and click on the links.)
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.