Update desk: Proterra

By Dick Hughes  

APRIL 14, 2011 12:59 p.m. (0)

Proterra, the company building electric buses in Greenville, is enmeshed in a Ponzi scheme through a funding deal with a company controlled by the perpetrator of the fraud. There is no allegation of wrongdoing on Proterra’s part.

The money for the $20-million loan to Proterra was among investments the Securities and Exchange Commission charged were misappropriated from investors, including the pension fund of the PDVSA, Venezuela’s state-owned oil company.

The loan to Proterra came from MK Energy and Infrastructure, one of about 15 companies owned or controlled by Francisco Illarramendi, all of which have been seized by a court-appointed receiver.

Illarramendi, 42, plead guilty March 7 to two counts of wire fraud, one count of securities fraud, one count of investment advisor fraud and one count of conspiracy to obstruct justice and one count to defraud the SEC.

The U.S. attorney for the District of Connecticut said Illarramendi “admitted that he used money provided by new investors to the funds to pay out the returns he promised to earlier investors” along with other fraudulent actions and false representations.

Jeff Granato, president and chief executive officer of Proterra, said the company “and its investors are taking measures to aggressively negotiate a new funding plan.”

The company appears to be running short of cash, and at least one vendor, Hendricks Fabrication of Piedmont, said Proterra is delinquent on $140,000 for parts provided for the construction of buses.

According to WSPA, Channel 7, which first reported on the past-due bill, Hendricks was told to “get in line” when a Proterra officer was asked about payment.

Last June, Proterra announced with great enthusiasm that it had “won $20 million in funding” from MK Energy and Infrastructure, which was described as a “clean tech investment” firm.

Granato described the relationship as a partnership with MK E+I and said “together we will drive the transit industry into the next era of clean commuting.”

He said the MK E+I investment would accelerate Proterra’s construction of a plant in Greenville with a capacity to produce 1,500 electric buses a year.  Until a new plant is built at Clemson University’s ICAR, Proterra assembles Eco Ride buses in temporary space in a warehouse on Whitlee Court rented by the City of Greenville.

According the complaint filed by SEC in federal court, Illarramendi used $20 million from a fund he controlled to buy shares in Proterra, identified as a “Clean Transportation Manufacturer” in court papers.

In truth, the SEC said, the money given to Proterra and other companies ­– $53 million in total – was not equity investments but rather loans and that all of them were unsecured and undocumented with the single exception of the loan to Proterra.

The court documents state that the SEC “learned that loan documents only exist for the investment” in Proterra or, as it is identified in court papers, the Clean Transportation Manufacturer.