Charlotte Observer Pulls Story On Hagan Stimulus Controversy

Matt Vespa
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Posted: Nov 02, 2014 8:19 PM
Charlotte Observer Pulls Story On Hagan Stimulus Controversy

The Charlotte Observer pulled a story that reported on Sen. Kay Hagan’s husband being reported to the North Carolina state auditor by the Department of Environmental and Natural Resources (DENR). The DENR called for a “legal review” of the $260,644 in stimulus money the company Hagan’s husband received (via Charlotte Observer):

State officials say a stimulus grant given to a company run by Kay Hagan's husband needs "further legal review."

WBTV obtained a memo written by the Department of Energy and Natural Resources which includes a letter to the state's auditor from last month. The memo states that NCDENR is looking into potential conflict of interest claims involving Senator Kay Hagan.

According to the NC Department of Energy and Natural Resources, the grant agreement included provisions prohibiting family members from receiving incentive payments, “these rules require, among other things, that no one with direct lineal relations may receive incentive payment. For example, the mother, father, brother, sister, son or daughter or a contractor working in this Program cannot receive Awards, contracts and subcontracts.”

The federal Department of Energy Assistance grant agreement had similar regulations that included members of the immediate family, partners, or people who has a financial interest in the firm selected for the grant.

The $250,644 grant in question went to JDC Manufacturing LLC. JDC Manufacturing is managed by John Hagan, David Hagan, and Charles “Chip” Hagan.

Chip Hagan is Senator Kay Hagan's husband.

Now, thanks to webcache, I can still access the original story, but it’s currently a dead link.

Additionally, as reported in the Carolina Journal, there was “significant activity” on behalf of Hagan’s son, Tilden, who co-founded SolarDyne/Green State Power with his father:

[T]he review notes significant activity by Kay and Chip’s son Tilden, who along with Chip co-founded SolarDyne/Green State Power, a solar company that documents show had a role in the project.

If so, these arrangements would appear to violate provisions in both state and federal law prohibiting self-dealing and conflicts of interest in the handling of the stimulus grants. DENR Secretary John Skvarla and Commerce Secretary Sharon Decker have asked State Auditor Beth Wood to investigate this and other stimulus-funded projects handled by the State Energy Office and the Weather Assistance Program, which were housed in the Commerce Department before moving to DENR in 2013.

The stimulus grants were administered during the administration of former Democratic Gov. Bev Perdue.

The review also offers another contradiction of repeated statements by the Hagan campaign and spokesmen operating on behalf of the senator that there was nothing improper about the handling of the stimulus grant and that no family members benefited or profited from the tax-funded payments to the Hagan family’s businesses.

The documents include a copy of the staff review of the JDC grant along with a letter, dated Oct. 21, from Skvarla and Decker to Wood asking for a “thorough review and audit” of all the energy and weatherization stimulus grants. The stimulus bill became law in 2009, and the state administered roughly $812 million in energy grants, with $76 million handled by the energy office and $132 million by the Weatherization Assistance Program.

The DENR review states that JDC applied for the grant in 2010 and that Tilden Hagan “approved a JDC purchase order to Solar Electric Distributor, and was also listed as a staff representative of JDC on a Site Visit and Monitoring Report.”

The review suggests these actions may pose legal problems for the Hagan companies, based on “several provisions regarding self-dealing” in the grant agreement. One notes that “the state requires compliance with self-dealing rules for grantees and their contractors and subcontractors. These rules require, among other things, that no one with direct lineal relations may receive incentive payment. For example, the mother, father, brother, sister, son or daughter of a contractor working in this program cannot receive awards, contracts, and subcontracts” (emphasis in original).

As for the documents relating to a $50,000 solar power grant given to JDC Manufacturing by the U.S. Department of Agriculture, the Journal did receive those documents with one little caveat; they were redacted:

The head of North Carolina’s USDA Rural Development office, Randall Gore, is the custodian of the information in the solar grant file. He was recommended for the position (which is a political appointment) by Hagan not long after she took office in 2009. Gore and Hagan live in Greensboro. President Obama nominated Gore and the Senate confirmed him.

According to the application (32 MB PDF), signed by JDC’S co-owner and Kay Hagan’s husband, Charles “Chip” Hagan, among the missing documents should be a “Copy of all estimates to calculate total project cost or Turn-Key Quote.” Those documents had to be included with the application before the USDA would consider awarding the grant, but they were missing from the file the USDA provided to CJ.

The missing documents — which also could include invoices, purchase orders, and work records — might explain the involvement of businesses owned by Chip Hagan, the Hagans’ son Tilden, son-in-law William Stewart, and possibly other family members in the installation of solar panels at the JDC building in Reidsville.

When asked about the omitted documents, Gore said in an email, “Please note that the information you have requested is part of the proprietary information that has been redacted.” When CJ followed up, asking if the redactions were made by JDC Manufacturing or the USDA, Gore did not respond.

In the meantime, Bill Clinton visited the Tar Heel State last Friday to get Democrats fired up for Hagan.