*Alert: Joaquin Alternberg must pay $1.72 million in legal fees for egregious fraud and misrepresentation

Early this year, a Delaware court came to a decision regarding lawsuits brought against Joaquin Altenberg, VERT Solar Finance, and VERT Solar Fund I, LLC, by HOMF II Investment Corp., OBD Partners, LLC, and Brett Jefferson.

The lawsuit detailed a series of investments by HOMF, Jefferson, and another investor, James Murphy, into Altenberg's business ventures in solar energy.

The plaintiffs alleged that Altenberg fraudulently induced Jefferson and Murphy to invest in VERT Solar Fund, that he committed fraud during the life of VERT Solar Fund, and that he breached his fiduciary duties. They also alleged that VERT Solar Finance breached contractual obligations to VERT Solar Fund.

The court found that the plaintiffs failed to prove fraud, though they proved Altenberg engaged in self-interest actions that were not entirely fair. The court also found that Altenberg breached his duty of loyalty but that further proceedings were necessary to determine a remedy.

Soliciting investments

According to background information in the Memorandum Opinion, Altenberg originally approached the plaintiff, Jefferson, in 2015 about investing $15 million in VERT Solar Finance. Jefferson later convince Murphy to also invest.

Altenberg's business plan included solar projects for commercial and smaller scale industrial users in what he called "the middle market." He proposed a complex financing scheme for these projects that included a tax-equity investment, traditional debt financing, and traditional equity financing.

During his solicitation of funds, Altenberg represented that Solar Finance was "a leading tax equity expert." He also represented that he had tax equity relationships with "industry players" including Google, JP Morgan, US Bank, MetLife, and Bank of America -- relationships he did not actually have.

Altenberg also represented that he had similar relationships to cover the debt financing component of his financing scheme. Again, those relationships were not as Altenberg represented them. Jefferson and Murphy took into account the pre-existing relationships Altenberg told them of in their decision to invest.

Altenberg needed investments from Jefferson and Murphy to cover the equity financing and get his business model off the ground. And it was supposed to be a short-term, high return investment that took advantage of "revolving equity."

Altenberg's business model represented a 3 to 6 month turnaround "from project selection to commercial operation." All of which hinged on refinancing equity, once projects reached commercial operation, into long-term debt, which would then pay off construction financing and allow the equity investor to regain their capital plus a potential return. The return would then be reinvested in the next project.