Grand jury begins probe of Solyndra

A grand jury has begun investigating Solyndra LLC, the failed California solar-panel maker that lost more than a half-billion dollars in federal loans, according to law-firm billing records.

Weeks after Solyndra filed for bankruptcy in September, a judge allowed the company to hire a law firm to represent it in what court records at the time called a “federal criminal investigation.”

Now the firm, K&L Gates, has filed with the U.S. Bankruptcy Court in Delaware a detailed, hour-by-hour account of how attorneys have been spending their time. Most of their efforts have focused on what the firm called the U.S. attorney’s office and Department of Justice investigation of Solyndra.

In an 18-page invoice from the law firm dated Dec. 9, the words “grand jury” appear numerous times: “Prepare response to grand jury subpoena,” one entry reads. Another said, “Review and prepare documents to respond to grand jury subpoena.”

The invoices also point to a meeting on Oct. 14 between K&L Gates attorney Jeffrey L. Bornstein, a former federal prosecutor in San Francisco, and an assistant U.S. attorney identified in the billing records only as “J. Nedrow.”

Jeffrey Nedrow is an assistant U.S. attorney for the Northern District of California, which is the same office overseeing the Solyndra investigation. Mr. Nedrow was a prosecutor in the criminal trial against former San Francisco Giants slugger Barry Bonds.

Yet another entry refers to a telephone call with “AUSA” — an abbreviation in legal circles that refers to assistant U.S. attorney — “regarding grand jury subpoena.”

The formation of an investigative grand jury would mark a significant development in the criminal investigation into Solyndra, which saw its offices raided by the FBI within days of its bankruptcy filing in September.

“The subpoenas would be just the tip of the iceberg,” said Laurie Levenson, a former federal prosecutor and now a law professor at Loyola Law School in Los Angeles. “The first things to happen in grand juries are subpoenas to collect every possible document you can.”

Federal authorities aren’t commenting on the probe. Jack Gillund, a spokesman for the U.S. attorney’s office, declined to comment Tuesday when asked about a grand jury.

In an email Tuesday, Mr. Bornstein said, “Solyndra is continuing to cooperate with the United States Attorney’s Office in connection with its investigation.”

Grand jury subpoena

When Solyndra first sought to hire K&L Gates as special counsel, attorneys for the solar company cited the firm’s familiarity with the federal investigation and “many of the potential issues that may arise in the context of that investigation and potential litigation.”

K&L Gates attorneys reported 326 hours of work from Sept. 12 to Nov. 30, with rates ranging from $310 per hour for a paralegal to $640 per hour for Mr. Bornstein, who worked just over 80 hours. Another attorney worked about 50 hours at a rate of $525 per hour.

In recent court papers, the law firm described its work representing Solyndra as being “in connection with the United States Attorney’s Office & Department of Justice investigation of debtors.” The firm said in the filings that it worked with Solyndra on the production and review of documents, as well as responding “to subpoenas and other law enforcement requests.”

The first mention of a grand jury in the billing records came on Oct. 9, when Mr. Bornstein reported nearly an hour’s worth of work that included reviewing “grand jury subpoena.” The next day, another attorney worked on drafting correspondence to “AUSA regarding grand jury subpoena.” Records also refer to “AUSA’s expedited request for materials.”

Customer contracts

The law firm’s billing records shed little light on the nature of the investigation, but it’s clear federal authorities are interested in contracting issues.

In October, Benjamin Schwartz, a vice president and lawyer at Solyndra, testified in a bankruptcy hearing that customer contract matters were “called out” in the FBI search warrant. During the FBI raid, he also said the federal agents had copied the company’s electronic database, and so investigators would have access to any information at Solyndra in an electronic format.

Mr. Schwartz’s testimony came after the U.S. Office of the Trustee, an arm of the Justice Department, accused Solyndra of refusing to discuss the company’s contracts in a bid to have a trustee take over the failed company. A judge denied the request.

Contracts also surface in the K&L billing records.

On Oct. 13, Mr. Bornstein participated in a conference call with “B. Schwartz regarding customer contract,” while another attorney reported participating in a conference “regarding customer contract” that same day, records show.

The attorneys’ hourly bills make apparent reference to the ongoing investigation into Solyndra by the House Committee on Energy and Commerce. K&L Gates attorneys reported reviewing congressional testimony and discussing “congressional issues,” billing records show.

The committee has been investigating Solyndra since early this year. So far, committee hearings have exposed sharp partisan divides on Solyndra. Republicans have pushed to learn whether politics played any role in the award of federal loans to the company or in the failed efforts to keep the company afloat. Democrats have said the loans were given based on the merits.

Either way, elected officials from both parties have questioned whether Solyndra executives misled Congress when assuring key lawmakers that the company’s prospects were good just weeks before going bankrupt.

The company remains a political headache for the Obama administration. Solyndra was awarded more than a half-billion dollars in loan guarantees from the Department of Energy in 2009.

The bankrupt company’s troubles have been magnified by the public backing it won from the top reaches of government, including a tour of the company last year by President Obama and remarks by Vice President Joseph R. Biden and California Gov. Arnold Schwarzenegger at a 2009 ceremony announcing the federal loan guarantees.