More than 1,000 local school systems have hired Cenergistic, a green company that says it will reduce their power bill in exchange for a large cut of the savings.
The company says it has saved local governments and schools $5.5 billion, but local officials have repeatedly questioned its numbers, saying it refuses to explain how they’re calculated.
Cenergistic is linked to Enron, has quietly put school officials on its payroll to help it get contracts, and is known for quickly ramming through large contracts with no competition.
Fairfax County, Virginia’s former schools auditor said that when a whistleblower brought her evidence that implicated Cenergistic as well as top school officials, both the whistleblower and the auditor were fired by those same officials.
A major “green” firm called Cenergistic says it’s saved more than 1,000 schools and local governments $5.5 billion in energy costs, taking portions of those savings as fees.
But a new lawsuit, a decade of government investigations, and news reports show that Cenergistic is an Enron-linked, for-profit company that has allegedly talked its way into no-bid contracts after secretly putting school officials on its payroll, then billed districts for questionable savings whose basis it refuses to explain.
The contracts are typically awarded by school board members who want to make a statement about environmentalism, and are sometimes exempted from scrutiny on the basis that the money being paid is “free.”
The company teaches “employees how to save money on utility costs by monitoring and assessing usage, and making recommendations for energy conservation such as turning off computers when not in use; turning out the lights when rooms are vacant; reducing the plug load; and turning off vending machine lighting,” the Alabama Advance-Local reported in 2013.
In a lawsuit filed Nov. 1, 2019, the former auditor for Fairfax County Public Schools (FCPS) in Virginia, Goli Trump, said she was fired by school board president Sandy Evans in retaliation for pursuing an investigation into Cenergistic that implicated superintendent Karen Garza as well as Evans herself.
As soon as FCPS created an independent auditor’s office, an employee of FCPS — one of the largest school districts in the country — told her “Cenergistic’s purported energy savings were not true and were in fact costing FCPS considerable sums of money,” the lawsuit said. The whistleblower, known as John Doe in the lawsuit, said he faced retaliation after reporting his concerns to supervisors.
“Moreover, John Doe pointed out that Cenergistic was supposed to receive payments in an amount equal to 50% of the realized energy savings by FCPS; although Cenergistic said it had saved FCPS $5 million, it had billed FCPS $4 million, and John Doe had been unable to find anyone who could explain this result,” the lawsuit said.
He also said “that the Cenergistic contract did not comply with public procurement requirements.”
Trump attempted to obtain a copy of the contract “from the FCPS contract register, which is supposed to contain a copy of all contracts entered into by FCPS. She learned, however, that the contract with Cenergistic was not available through the contract register, nor could anyone in the procurement office explain why an important contract of this nature for millions of dollars would not be available,” the suit said.
Trump informed the school board’s lawyer, John Foster, about her concerns but requested confidentiality because the ongoing investigation could involve top managers. Foster immediately tipped off Garza, the lawsuit said.
Trump then informed the school board that she intended to audit the Cenergistic contract, but Garza, school board member Janie Strauss, and chief operating officer Susan Quinn told her not to, which she found “suspicious,” given that “the Cenergistic contract presented all or many of the classic indicia of a contract at a high-risk of fraud, waste and abuse,” according to the lawsuit.
On June 17, 2016, a second whistleblower who worked in FCPS’ facilities department contacted Trump and made virtually identical allegations to the first whistleblower. He had no knowledge of the first whistleblower and also provided documents to support his claim, the suit said.
The second whistleblower said he had spent hundreds of hours trying to ascertain the basis for Cenergistic’s bills, but that Cenergistic had refused to explain. “He had no choice but to conclude that the bills and invoices submitted to FCPS by Cenergistic were, in fact, false,” the suit said.
The whistleblower’s supervisor, assistant superintendent for facilities Jeff Platenberg, “harassed him and ordered him to approve payment to Cenergistic despite the fact that Cenergistic’s invoices could not be reconciled or even understood,” it added.
Trump then obtained access to school system emails which showed that “it appeared that Platenberg had been paid to take numerous ‘marketing trips’ on behalf of Cenergistic.”
The emails also showed that “only days after Garza began her employment in 2013, she had been in touch with Cenergistic to discuss hiring them at FCPS.”
Days after Trump obtained the emails, FCPS fired the second whistleblower, and Trump was called in by the human resources department, who told her that an anonymous complaint had been filed against her, according to the suit.
Evans then ordered her not to investigate Cenergistic without approval from superintendent Garza, the lawsuit alleged.
“In a phone call on Aug. 1, 2016, [Trump] informed Evans that she felt she could not do that because Garza was a subject of the investigation and to do that would compromise the integrity of the investigation,” it said.
HR then attempted to physically remove confidential investigative material from the office of the auditor, which is supposed to be entirely independent from the school bureaucracy, the suit said.
“Plaintiff realized the situation was truly becoming critical and began contacting outside law enforcement agencies, including the Virginia State Police,” the lawsuit stated.
Evans prevented Trump from speaking with other members of the school board — collectively Trump’s immediate boss — and Garza told the board that Trump was being placed on leave, according to the suit.
An outside law firm then took over the Cenergistic investigation. “That investigation ended on or about Sept. 19, 2016. Two days later, on Sept. 21, 2016, Garza suddenly resigned from FCPS only two weeks into the new school year and only three months after signing a new contract with FCPS that would last through 2020,” the lawsuit said.
Even so, Trump was fired the next month, leading to the lawsuit filed against FCPS in Fairfax County Circuit Court.
FCPS spokesman John Torre declined to comment for this story, telling the Daily Caller News Foundation: “This matter involves active litigation and is also related to a personnel matter so our policy is not to comment.”
Cenergistic spokeswoman Jan Smith did not respond to questions.
The company has become a major player in the green energy sector. Its website says it “is the EPA’s most active Service and Product Provider for ENERGY STAR building certifications.”
Cenergistic has handled purported billions of dollars in energy for local governments despite years of red flags about its numbers and its relationship-driven sales system that sometimes involves payments to school administrators.
Katz was previously superintendent of the Beaverton, Oregon school district, which also hired the company. She entered a side deal to be personally paid $500 for every meeting she helped set up between Cenergistic and other school districts.
When she took the new job with Spring Branch in Texas, she steered it to hire Cenergistic within four months of her arrival. She did not disclose her relationship with the company to the school board. She received money from Cenergistic during her tenure at Spring Branch, but it wasn’t for arranging that contract, she said, the Houston Chronicle reported.
Massachusetts’s state inspector general issued an 18-page warning to local governments about Cenergistic. It said that it essentially convinced school districts to let the company write its own requests for proposal (RFP) for the government, and that it wrote them so the only company who would meet the criteria was itself.
It said that Cenergistic required clients to purchase software called EnergyCAP Professional from a company called Good Steward Software LLC, which is run by Steve Heinz, a former vice president of Enron, the energy company at the center of one of the largest accounting frauds in history.
It said that Cenergistic’s founder and owner, William Spears, created a company to purchase the software from Enron and assigned it to Good Steward.
When the Massachusetts inspector general’s office attempted to determine how Cenergistic calculated the purported savings for government agencies, Cenergistic referred it to Good Steward, and Good Steward referred it to Cenergistic.
The watchdog wrote, “Financially strapped school districts find the EEI program option appealing because it precludes capital investment in equipment, retrofits or upgrades,” the inspector said. But “contracts paid for through energy savings are not ‘free’ or ‘no cost.’”
“Since many of EEI’s ‘proprietary measures’ are also ‘common sense’ measures, a public entity should carefully evaluate the consequences of entering into a contract that restricts their option to employ an individual to direct common sense, cost saving and energy conservation measures,” it said.