Bundlers on the inside

Introduction

Several of Barack Obama’s top campaign supporters went from soliciting political contributions to working from within the Energy Department as it showered billions in taxpayer-backed stimulus money on alternative energy firms, iWatch News and ABC News have learned.

One of them was Steven J. Spinner, a high-tech consultant and investor in energy companies who raised at least $500,000 for Obama. He became one of Energy Secretary Steven Chu’s key loan programs advisors while his wife’s law firm represented a number of the companies that had applied for loans.

Recovery Act records show Allison Spinner’s law firm, Wilson Sonsini Goodrich & Rosati, received $2.4 million in federal funds for legal fees related to the $535 million Energy Department loan guarantee to Solyndra, a solar company whose financial meltdown has prompted multiple investigations. She pledged to take no portion of the money and did not work on the loan applications.

As House Republicans step up their probe of the Obama administration’s green energy loan program in the wake of Solyndra’s bankruptcy, a key focus – and open question – is whether the president’s political supporters had any hand in influencing which companies received the taxpayer support.

“There is great concern over political influence contaminating the DOE loan guarantee program,” said Rep. Cliff Stearns (R-Fla), who chairs the House Energy and Commerce’s Oversight and Investigations Subcommittee. “The prevalence of fundraisers and bundlers scattered throughout DOE is cause for alarm and is a subject our investigation does not take lightly – we are looking into this and will see where it leads us.”

The administration has repeatedly said that politics has played no role in deciding which companies received federal loans.

Spinner declined requests to be interviewed. Representatives for Spinner, his wife, and for the Energy Department all told iWatch News and ABC News that Spinner and his wife took elaborate steps to avoid conflicts between his government work and her legal work. Spinner obtained a waiver that promised he would not work on cases involving clients of his wife’s firm. And she pledged not to take proceeds from her firm’s work with companies that had applied for loans.

Damien LaVera, an Energy Department spokesman, described Spinner as someone who had “no role” in evaluating loan applications or selecting recipients.

Spinner described his job differently. His online bio for the Center for American Progress, the left-leaning think tank he joined after leaving the administration, states that he “helped oversee the more than $100 billion of loan guarantee and direct lending authority” for the department’s green-energy loan program.

And in a speech at a “Green Tech” conference in June 2010, Spinner described how he “worked very, very closely with all the various organizations, the various offices, in trying to streamline operations and … move the funding opportunity announcements out, get the solicitations out on the street.”

“What the secretary really cared about was he wanted us to get the money out fast, he wanted us to pick and select fantastic projects,” Spinner said.

Spinner was not the only Obama political supporter to play a role at the Energy Department. California venture capitalist Steve Westly, who raised more than $500,000 for Obama, has Secretary Chu’s ear on green energy issues as a member of a high-level volunteer advisory panel. Mackey Dykes, who was a finance manager for the Obama campaign, was hired to be the liaison between the Energy Department and White House. Each declined interview requests.

Obama’s political supporters were also investors in companies that had applied for loans. Westly has had a stake in at least five companies that have won DOE support; four won funding before he joined Chu’s board. While it is common for presidents to reward top donors with ambassadorships or other political posts, the Sunlight Foundation’s Bill Allison said it is unusual to see a major donor such as Spinner given a position inside a relatively obscure government loan program.

“For an administration that won’t hire lobbyists to be hiring fundraisers for that role, that seems to be a bit of contradiction,” said Allison. “Obviously you want to keep all people who are involved in political influence out of positions of responsibility.”

The Energy Department said Spinner brought experience working with startup companies – the type of firms lining up for green energy funding intended to aid the environment and economy.

“Spinner is a Harvard MBA and an experienced business executive with more than 15 years advising innovative start-up companies in the technology, media and retail industries. He advised over 50 start-up companies over the last 10 years,” the Energy Department’s LaVera said.

Both Spinner and Westly were among a California contingent of green energy executives who put their money, and energy, behind Obama.

When President Obama won the White House in 2008, Spinner was one of several Silicon Valley executives to help vault him to victory. Spinner was one of just 52 fundraisers to raise more than half a million dollars for the president. He served the Obama-Biden Presidential Transition Team focused on technology innovation and government reform.

In February 2009, San Francisco Magazine quoted several local Obama backers reflecting on the campaign.

“In May, about 120 of us had an Entrepreneurs for Obama video teleconference with Barack. Afterward, Steve Westly and some other senior Silicon Valley executives stayed and put forth their ideas on tech issues and initiatives and the campaign,” Spinner was quoted as saying. “I really loved that I could help differentiate this campaign’s technology from any others in history. I knew most of the venture capitalists and entrepreneurs, and if there was something good, I could bubble it up to the campaign.”

In April 2009, Spinner joined an Energy Department poised to unleash billions of dollars, becoming a “small business loan guarantee advisor,” a title that later shifted to “loan program advisor,” focused on financing start-up green energy firms and cutting edge car makers. He held the job for 17 months.

The move turned a hearty presidential supporter and frequent energy investor into a DOE insider.

Spinner’s financial disclosure forms showed that was an active investor in energy-related companies. On his final disclosure report signed Oct. 15, 2010, Spinner listed at least 15 purchases and 14 stock sales of energy related stock earlier that year.

An initial review of financial disclosure records by iWatch News and ABC News showed one investment in an energy firm whose subsidiary received funds from the Energy Department while he was working there, and investments in three others that landed Energy Department support after he sold his stakes. Energy officials said they considered his portfolio small enough to fall “within the Executive Branch-wide de minimis exception for interests in securities.”

Spinner reported making $12,155 from a 2008 investment in Atheros Communications. In June 2010, Atheros announced it would receive up to $4.5 million in DOE grant funding. DOE said Spinner sold his Atheros stock before joining the department. On another form, Spinner reported selling off his $1,001-$15,000 investment in Air Products & Chemicals Inc. in February of 2010, four months before Air Products announced it landed $253 million in stimulus funding. “To the best of our knowledge, he had no involvement” with the award, a company official said. Spinner invested $1,001-$15,000 in Exelon. A subsidiary of Exelon was awarded a $200 million DOE grant in late 2009. A spokeswoman said the company never dealt with Spinner as their grant was being considered.

His wife’s role in a law firm representing corporate clients seeking energy funds prompted Energy Department ethics officials to take a closer look, according to documents obtained under the Freedom of Information Act. The law firm has represented several companies that had applied for Energy Department loans and loan guarantees.

On August 18, 2009, four months into his tenure at the Energy Department, Spinner received an ethics opinion involving that connection. Matt Rogers, then a senior advisor to the energy secretary, wrote that Spinner could continue in his duties, but “not participate in any discussion regarding any application involving Wilson [Sonsini].” The opinion said his wife would forgo pay “earned as a result of its representation of applicants in programs within your official duties.”

Rogers said Spinner’s conflict was minimized because his role at the Energy Department was supervisory – “to embrace strategic objectives, inquire on overall progress of applications to the program staff, anticipate and help senior management clear any institutional roadblocks to accomplishment of the program’s objectives.”

Courtney Dorman, a spokeswoman for Allison Spinner’s law firm, Wilson Sonsini, said the firm also took strides to avoid conflicts, establishing a wall between her and client matters involving the Energy Department while Spinner was in office.

One of those law firm clients, SEC records show, was Solyndra – the California solar panel firm whose collapse put half a billion dollars of taxpayer money at risk and prompted an investigation by the FBI and other agencies.

The law firm worked on the solar company’s failed public offering, the records show. And it also provided Solyndra with outside counsel on the DOE loan guarantee transaction. The company was paid $2.44 million for its Solyndra work, records show – money generated by the Energy Department’s stimulus loan guarantee to the solar panel firm.

Allison Spinner “was not involved with that transaction, nor has she ever worked with Solyndra in any capacity,” Dorman said.

The law firm’s website cites Allison Spinner’s work with other clean tech firms – including Amyris Inc. and HCL CleanTech. Both companies had engaged in the time consuming process of applying for green energy grants. Amyris Biotechnologies won $25 million from DOE in late 2009 to develop a diesel substitute and went public the next year – with Spinner’s wife helping handle the IPO. After Spinner left the department, HCL CleanTech landed a $9 million Energy Department grant to convert biomass feedstocks into fuel and chemical products.

Dorman, the firm spokeswoman, said in an email that Wilson Sonsini “established an ethical wall around Allison with respect to WSGR representation of clients in matters involving DOE loan programs.” Dorman also said that Allison Spinner’s clients had DOE loans or grants “that fell outside of Steve’s jurisdiction.”

Steven Spinner was not with the department when Solyndra won a conditional commitment for the loan guarantee in March 2009. But he was on board when the loan closed that September. A few days later, at a clean tech forum in Boston in September 2009, Spinner spoke of the virtue of the DOE’s support.

“We liked the taste of it,” he said, telling the Boston group the company would bring thousands of jobs.

After leaving the department last September, Spinner has continued to cheerlead for its mission. This July, he co-authored an article for the Center for American Progress titled “Don’t Let Clean Energy Funding Die on the Vine.” The House committee’s investigation of the Solyndra financing was just heating up.

“This ‘embattled’ program has by all business metrics proven an outright success,” he wrote. “Even the most controversial loan guarantee recipient—Solyndra, a solar manufacturer—is seeing an operational turnaround…”

Little more than a month later, Solyndra fired 1,100 workers and filed for bankruptcy.