Last month, Vermont-based company iSun — the largest solar installer in the state — declared bankruptcy. That's after leadership invested millions of dollars in the company in recent years, on its way to becoming one of the few publicly traded firms in Vermont.
Now, a former executive with iSun has filed a whistleblower complaint alleging the company misled shareholders with extensive wrongdoing, including fraud and misappropriating money.
Reporter Derek Brouwer, who broke that news for Seven Days, joined Vermont Public's Mary Williams Engisch in-studio to share more details on the latest chapter of this story. This interview was produced for the ear. We highly recommend listening to the audio. We’ve also provided a transcript, which has been edited for length and clarity.
Mary Williams Engisch: First of all, this story has got a lot of moving pieces, a lot of different players. Can you begin by just giving us an overview of iSun's growth in the last few years up to when the company declared bankruptcy last month?
Derek Brouwer: iSun began as Peck Electric in the 70s, actually, as an electrical contractor, and during the Great Recession, pivoted to solar. Then, sort of seeing the growth in the solar industry, decided that the way to capitalize on that was to try to go big. And the way they went big was by becoming publicly traded. And they took kind of a fast track measure to become publicly traded, which allowed them to gain a lot of capital very quickly.
And then they started buying other companies; iSun was one of them, and then they adopted that name. Suncommon, the largest residential solar installer in the state, was another iSun purchase. They purchased Suncommon a couple years ago for $40 million. So, they were really on this growth trajectory, trying to install solar at sort of every scale — up and down the east coast. And then when things started slowing down, they started running into trouble and got upside-down.
Mary Williams Engisch: In this piece for Seven Days, it centers on alleged allegations from a whistleblower — former iSun CEO Robert Zulkoski. Can you get us up to speed on his complaint?
Derek Brouwer: As iSun was struggling — and it had been struggling for some time before the company filed for bankruptcy — its board of directors actually brought in Zulkoski as a guy who they thought could right the ship with the company. And then they hired two other consultants. They called them the triage team, as I understand it. And that's what their mission was, to try to turn this thing around and avoid something like bankruptcy — if possible.
So, Zulkoski was only there for six weeks with the company. And during that time, he claims both in a lawsuit and in this whistleblower complaint, that he had identified some problems in the company, brought them to the Board of Directors' attention, wasn't satisfied with the response. And at one point, he says he had actually refused to sign the annual report to shareholders, which publicly traded companies have to produce each year, because he didn't think it disclosed enough of these issues. The triage team was then terminated in April, and the company then began preparing for its bankruptcy filing.
Mary Williams Engisch: What's iSun's response to these allegations from the whistleblower?
Derek Brouwer: Well, the company itself and its executives wouldn't say anything. They declined to comment.
I did speak, however, with the former Chief Financial Officer, John Sullivan, for the company, who had stepped down earlier this year. His name appears in this whistleblower complaint many times. He is alleged to have been responsible for some of the misappropriation by Zulkoski. And Sullivan denies that. He said that the complaint contains inaccuracies and misrepresentations of things that had taken place before Zulkoski came on at the company. He specifically denied being aware of any fraud at the company while he was there.
Mary Williams Engisch: At the heart of this story, there are local people who lost their jobs. What are iSun workers or their representation saying about this whistleblower filing?
Derek Brouwer: Well, the thing to remember is that actually very few people are aware of this filing. It was submitted to the Securities Exchange Commission through a confidential whistleblower tip line, basically. But, I did speak with the finance manager, the business manager at IBEW, which has represented about 75 or so of the employees at the company. He told me that they had been frustrated with the management at the company for some time.
[He was] not aware of the specific things that are mentioned in the whistleblower complaint, but had an understanding that some good employees had left the company over the years over some frustrations with the management. And he was, specifically, also frustrated, I think that over the last year, as the company was struggling, executives at iSun continued to get bonuses — six-figure bonuses. And then in May, dozens of employees were laid off overnight, without any notice, ahead of the bankruptcy filings.
Mary Williams Engisch: And as for iSun customers, will anything happen to their solar installments after the bankruptcy?
Derek Brouwer: It's really unclear what the future holds right now. So the plan, at least — this is a Chapter 11 bankruptcy filing, which is an attempt to reorganize the company rather than liquidate. But, the plan they went into the Delaware bankruptcy court with is to sell the company through an auction. They've already identified a potential buyer, somebody who says they're interested. Somewhat ironically, they seem to have a lot of investments in fossil fuels. There are several paths forward from here. I think until that auction takes place — if it does take place — and there's a new buyer, we really won't know.
Mary Williams Engisch: Renewable energy is top of mind for a lot of Vermont residents. Does this bankruptcy filing and whistleblower complaint signify anything about the state of the solar industry here? Or was this more of just like a perfect storm for this one particular company?
Derek Brouwer: Over the long term, the solar industry is still projected to grow. It has, however, been hit with some harder times than were expected. Particularly with interest rates, which is what iSun's leaders point to as the reason behind their bankruptcy.
At the same time, many states, including Vermont, but not to the extent of some others, have been rolling back subsidies for solar. The people I've spoken within the Vermont solar industry say that the other companies in this space here are largely doing OK. And they don't face the same pressure, given the current market conditions, that a company like iSun did, because their success isn't tied up to to growing constantly, like iSun was.
Mary Williams Engisch: What happens next with with iSun and with these whistleblower allegations?
Derek Brouwer: The next step is an anticipated auction that the court will oversee. Right now, it appears that it's just been scheduled, maybe tentatively, for later this month. In the meantime, the company is continuing to operate. In terms of the whistleblower complaint, we really don't know what this will mean. It could put some pressure and more scrutiny on the company at a very sensitive, delicate time, right now. But also, the SEC, its enforcement processes, is all confidential. So, the SEC will not even confirm that this complaint exists.
So we really won't know what the ramifications of that might be until — and if — the SEC would bring some kind of enforcement action. This complaint was filed with the help of a law firm that specializes in these sorts of complaints, and it's coming from a former executive of the company. So it seems like the kind of complaint that would be taken seriously by regulators.
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