C. Box - Cold Wind

She said, “Are you getting to the point soon?”

Joe said, “Believe me, I don’t like to talk this much, either. But you need to know Alden’s background before you can understand what he did and who was affected by it.”

“Okay,” she said, unconvinced.

“Anyway,” Joe said, “with this wind energy deal, he saw a way he could cash in. The money was phenomenal, and he figured out a way to keep it coming from all sides.

“First,” Joe said, “he heard about Orin Smith and Rope the Wind. I don’t know who told him, or if Earl figured it out on his own. You know how fast word spreads in the county, and no doubt some of the ranchers Smith approached talked to each other over coffee or at the feed store. He might have even heard something from Missy or Bud Sr., for all we know. However he found out, The Earl met with Smith after every other rancher in the county had turned Smith down. Earl saw the value in a three-year-old wind energy company even if the three years was nothing more than incorporation records sitting in a file at the secretary of state’s office. So Earl offered not to buy Rope the Wind for cash, but to make Smith a partner in the effort. In effect, Earl told Smith he’d get forty percent of the profits once the wind farm was built and producing electricity. Since Smith had struck out everywhere else and he knew Earl Alden was this legendary cashgenerating machine, he agreed to the deal.”

“I don’t get it,” Schalk said. “Why would Earl want to cut Smith in on the profits? Couldn’t he have just bought the name on the cheap and done it all himself? Or just started his own company without this Smith guy?”

“He could have,” Joe said, “but he was ten steps ahead of Smith and everybody else. See, Smith also had contact with a firm down in Texas he’d help incorporate several years before. The Texas company wasn’t all that big, but they specialized in buying old or malfunctioning wind turbines and remanufacturing them into working units. There’s been a market for legitimate wind turbines for years, I guess. These guys down there were sort of scrap dealers who fixed the turbines and put them back on the market. But because of the big money suddenly available for new wind farms, the new companies that went into the business didn’t care about buying old turbines at a discount. You’ve got to forget about things like supply and demand, and free markets, when it comes to wind energy. All the incentives were designed for new companies building new turbines and putting people to work so the politicians could crow about what they’d done for the economy and the planet. So this Texas company was floundering and sitting on over a hundred pieces of junk they couldn’t unload.”

“O- kay ,” she said, drawing the word out, making Joe feel like a crank.

“Listen,” he said, “you don’t know all the pieces to this yet.”

“Go on. So when do we get to the Cubans on the grassy knoll?”

Joe ignored her. “With the information Smith had given him about that big ridge where the wind blew all the time that bordered Earl’s ranch, Earl bought the acreage from the Lees. Those poor Lees got the short end of the stick in every regard. So Earl owned the windiest place in the county and the one perfect spot for a big wind energy project. That was the first piece to fall into place.

“Once he had that ridge secured, Earl locked in the agreement with Orin Smith for the company, and suddenly Earl Alden had a three-year-old wind energy operation and land with almost constant Class V to Class VII winds. The reason that was important was because those two things were essential to start working the system-to kick-start a skimming operation on a big scale.”

Schalk said, “Skimming whom?”

“You, me, all the other taxpayers,” Joe said. “Here’s how it worked, according to Smith. Like I said, The Earl was connected. He knew which banks across the country were going to receive federal bailouts because certain politicians didn’t want them to fail. Earl approached those banks with the package for financing a massive wind farm called Rope the Wind. He knew at least one of them would go for it because the banks were being encouraged to lend to renewable energy schemes with bailout dollars, and they knew that even if the deals went bust, they’d be taken care of by the federal government. So no need for caution for these bankers-just open the floodgates to federal money, take their fees, and funnel it right back out the door to the right kind of company. In particular, and you may want to write this down, Smith said Earl got almost all of his financing through First Great Lakes Bank in Chicago. Heard of it?”

“You’re kidding,” she said. “Everybody’s heard of it. This is the one they call the Mob Bank? The one with all the questionable loans that just disappeared? Haven’t they been shut down?”

“They have now. But not before everybody got paid off in fees,” Joe said. “They were connected, too.”

“But that’s not The Earl’s fault,” she said.

“No, it isn’t. But that’s how he financed his company. And he was just getting started.”

He heard her take a long breath on the other end. He said, “Earl took the loan-which was backed by the Feds-and bought a hundred old wind turbines from the Texas remanufacturing company. He paid a million dollars each, Smith said, but applied for tax credits and incentives for new turbines, which run four to five million apiece.”

“Jesus!” Schalk said. “That’s outright fraud. That’s what, three or four million per turbine? Or four hundred million dollars in the clear?”

“You bet,” Joe said. “But who is checking on these things these days? There’s so much of it going on, and so much bureaucracy in the process, no one knows what’s what. I mean, how likely is it the Feds would send out an inspector to make sure the wind turbines were brand-new? And keep in mind, the profits are all paper profits at this point. They’re on a balance sheet, but that’s all. That’s how a guy like the Earl skims. Everything is under the surface.”

“I see your point.”

Joe consulted his notes and said, “So The Earl doesn’t stop there. He’s like a junkie when it comes to skimming. He got a fifty-million-dollar grant in federal stimulus funds from the Department of Energy because his project was about wind. That’s why he bought Rope the Wind, because it had been around for three years on paper and that was one of the criteria for receiving the grant-that the company have a track record. Then he has his people go out and secure power contracts with a bunch of cities and states who have passed laws that mandate that certain percentages of their power must come from renewable energy. With the farm going up and the contracts in place, Earl now owns a genuine electric utility, which gives him the right to condemn the private land owned by the Lees to create a corridor for transmission lines. Even though these places are buying power at a loss and there wasn’t any way of getting the power to them yet, it makes them feel good. So The Earl takes advantage of that .”

“I’m getting lost,” she said.

“Here’s how Smith explained it to me,” Joe said, looking at his scribbles. “It’s like Earl figured out a way to have someone dig a gold mine for him using their money and mining equipment, but he gets to sell all the gold he produces to others at an inflated cost that’s guaranteed by the government. Then he uses grants and new federal programs to guarantee that the mine will always make money or at least never lose it. Then he signs deals with people to buy his gold at a preset price, because they’re do-gooders and market prices don’t matter to them. He used all the grants, subsidies, incentives, and tax credits to bail out the losses of all of his other interests.”