PASCO -- When Green Power owner Michael Spitzauer recently convinced Port of Pasco commissioners to renew his previously terminated lease, he said he had straightened out his financial affairs.
But three former Green Power investors and state officials said that's not the case.
Those investors have unpaid judgments pending against Spitzauer totaling almost $16 million for never-built projects that he claimed would convert municipal waste into biofuel.
Spitzauer also owes about $62,000 in unpaid wage claims, state fees and fines.
"Spitzauer reminds me of the lead character in The Music Man," said Brad Jones, an attorney for an Australian couple who claim Spitzauer defrauded them of more than $8 million.
Jones said he was referring to the character in the musical who promised to reform the town's youth by forming a band, if the residents would buy instruments and uniforms. Once he got the money, the Music Man "intended to leave there and never to return," Jones said.
Spitzauer, of the Seattle area, could not be reached for an interview despite repeated attempts by the Herald during the past week, but he said in e-mails that he intends to meet his financial obligations.
"As I stated in the Port (of Pasco) meeting, we will make sure that all valid claims are paid and settled very soon," he wrote.
He also said his company has enough orders for its product that it will be able to pay off those judgments. And he said he had thought unpaid wage claims former employees filed against his company had been resolved.
The outstanding judgments and other claims appear to contradict the picture Spitzauer painted before a divided port commission agreed Feb. 10 to offer Green Power a new lease.
This past August, port commissioners evicted Green Power from a port-owned building after becoming fed up with Spitzauer missing deadlines, making late rent payments and paying with bad checks.
Spitzauer was leasing the port site to build a demonstration plant to show potential buyers that Green Power's technology to convert garbage to biofuel will work. He has said he intends to build the plants he sells in Pasco.
Before the port commissioners' Feb. 10 vote, Spitzauer provided about 40 letters that he said were from previous creditors, saying his company had repaid its debts.
He also provided copies of letters from representatives of four cities around the world -- including Mexico City, a Chinese city and two Spanish cities -- who said they were interested in buying a Green Power unit and willing to collectively pay more than $150 million for them.
The commissioners then voted 2-1, with Commissioner Jim Klindworth dissenting, to offer Green Power another six-month lease, with a potential six-month extension.
Wary port commissioners, however, required Spitzauer to pay $155,000 upfront for rent, utilities and taxes -- which he has done. The new lease also limits how much garbage Green Power can bring to the port and how long it can remain.
Before voting against a new lease, Klindworth said he was not convinced the port wouldn't continue to have issues with Green Power. And he later said he had voted no partly because he learned Spitzauer was convicted in 1992 of fraud in Austria.
Klindworth said he understood that his fellow commissioners wanted to offer Green Power another chance. "But in my judgment, we'd (already) given them that chance."
$15.7 million owed
It wasn't until after their Feb. 10 vote that port commissioners learned Spitzauer owes millions to creditors.
A day after the vote, Rajan Babaria, a principal of Texas-based Chakra Energy Corp., told the Herald that Green Power, Spitzauer and his wife still owed his company a $2.4 million judgment awarded in King County Superior Court in January 2010.
Chakra's lawsuit claimed it gave Green Power $2 million to form a joint venture to build a facility in India.
But the lawsuit states that Chakra asked for its money back after learning of pending litigation against Green Power, and that its Pasco plant was not operational. Chakra alleged Spitzauer never refunded the money.
"Spitzauer has not paid a single cent after the judgment was issued," Babaria wrote in an e-mail to the Herald, a fact verified by a King County Superior Court clerk.
King County Superior Court records also show no payments have been made on an almost $10.4 million judgment the court awarded against Green Power, Spitzauer and his wife.
That judgment was won by an Australian couple, William and Mandy Francke, who alleged Spitzauer convinced them and other Australian investors to pay $1 million for a mobile Green Power unit, which Green Power never produced, and then never returned their deposit money.
The Franckes also allege Spitzauer convinced them to loan him $1 million to buy shares in a bank to assist the project, and that he made tens of thousands of dollars in unauthorized charges on one of their credit cards.
In March 2010, court documents show that a King County Superior Court commissioner awarded a Slovenian-based company, Exoterm Holding d.d., a $3 million judgment against Green Power, Spitzauer and his wife. That also has not been paid.
Exoterm said it paid Green Power a $2.2 million deposit to negotiate a joint venture to build plants in Slovenia. The lawsuit claims that after negotiations with Slovenian officials failed, Green Power did not return that deposit.
Port Commissioner Ernie Boston said he was "flabbergasted" to hear about the outstanding judgments after the Feb. 10 vote.
But he said he didn't think the port faced any financial risk from a new lease to Green Power because Spitzauer had to pay upfront, and that by getting the money, the port could clean up the site later if the project fails.
Commissioner Bill Clark said he was disappointed to hear about Green Power's continuing troubles, but said approval of the lease was "just a business decision really." He said the new lease protects the port, and that if Spitzauer's project succeeds, it could allow him to pay creditors.
Asked about the judgments, Spitzauer wrote that he did not dispute them, but said they were not admissions of wrongdoing. He wrote, "... the fact is sometimes it is easier to settle even if you disagree with a claim, and that's what we did in some cases."
Spitzauer also claimed he had spoken to principals of two of the creditors that sued, and they had verbally agreed to settlement proposals, but he would not identify them.
Babaria said in an e-mail that Spitzauer had contacted a Chakra principal, but his company had not agreed to settle. "We stay away from verbal agreements," he wrote.
And in an e-mail Wednesday, the chairman of Exoterm's board of directors, Janko Cevka, said Spitzauer called the Slovenian company about a week ago and asked if it would agree to a settlement.
Exoterm officials did not agree to a settlement, Cevka wrote. He said the company was waiting to collect on the court judgment.
Port officials were surprised to learn from a Herald reporter after their Feb. 10 vote that Spitzauer had filed for Chapter 13 bankruptcy protection four times between Feb. 5 and June 2, 2010, after losing the three lawsuits.
Port Executive Director Jim Toomey said staff members "knew there were either judgments pending or other lawsuits out there." But, he added, "We were aware there was one bankruptcy filing. We weren't aware there (were) four."
All three creditors have filed court documents claiming Spitzauer still is obligated to pay the judgments despite his bankruptcy filings.
And after the fourth filing, attorneys for the Franckes, Chakra Energy and Exoterm asked the bankruptcy court to convert Spitzauer's case to a Chapter 7 bankruptcy.
Jones, the Franckes' attorney, said that's because in a Chapter 7 case, the court appoints a trustee, who could investigate if Spitzauer is hiding assets.
Spitzauer said in an e-mail that he filed as an individual, and not as the owner of Green Power, for Chapter 13 bankruptcy protection "to see what needed to be done as people tried to go after me personally."
He wrote, "I can tell you lots of others would have gone into a bankruptcy just to discharge or adjust claims, but me personally, as well as Green Power Inc., are committed to pay what we owe legitimately."
Spitzauer said he had filed to dismiss the bankruptcy case and plans to repay his creditors. Court records verify he filed for dismissal.
Unpaid fines, wages, fees
Also at the Feb. 10 port meeting, Spitzauer told Pasco commissioners that he had settled wage claims with two former employees.
But Elaine Fischer, a spokeswoman for the state Department of Labor & Industries, said five employees still have unpaid wage claims totaling almost $17,000 against Green Power.
The department also has assessed a $3,000 fine for the unpaid claims, Fischer said, and it has not been paid.
In an e-mail, Spitzauer said an L&I employee had sent him an e-mail saying the office had no record of any open unpaid wage claims against Green Power.
Fischer later confirmed her department had no open claims against Green Power. But she said that's because the department had not received any payments from Spitzauer, so it closed the cases and sent them to collections.
She said Spitzauer has told L&I he will work to clear up the claims.
Another state agency, the Department of Ecology, said Green Power owes it $42,000 in fines and fees. Ecology shut down the Pasco plant in August 2009 because Spitzauer started construction before getting an air quality permit.
As part of that action, Ecology also fined Green Power $24,000, said Ecology spokeswoman Jani Gilbert. And she said Ecology assessed an $18,000 fee for staff hours spent reviewing an incomplete 2008 permit application from Spitzauer for the plant.
Spitzauer wrote in an e-mail that he plans to re-apply for the air quality permit and is prepared to pay the fines and fees.
Lease began Tuesday
In a closed session at a subsequent port meeting Feb. 24, port attorney Dan Hultgrenn showed commissioners copies of the Chakra Energy and Exoterm judgments, Toomey said.
Then, with little discussion in an open session, the commissioners voted 2-1, with Klindworth abstaining, to authorize Toomey to sign a lease if Green Power met all requirements.
Toomey has since signed the lease, which took effect Tuesday.
After that Feb. 24 vote, Boston explained, "We already had agreed to give (Green Power) the lease. ... We had a contract with him, and we had to honor that."
In an e-mail, Spitzauer said he remains hopeful about the Pasco facility, as well as two other plants he said he's working on.
He said he plans to break ground by June on an $82 million plant in Fife on the Puyallup Indian reservation. He said he couldn't say where the other plant would be because of a confidentiality agreement.
"Large-scale orders are pending and now Green Power Inc. is ready to go operational. Green Power will be setting up payment plans with vendors and apologizes to those it has hurt by being unable to make timely payments," Spitzauer wrote.