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.
The business model relied heavily on moving debt and equity from one project to another. And Jefferson and Murphy were skeptical, but agreed to invest in a single project, giving Altenberg the opportunity to prove his business model.
They did this through a dedicated fund, VERT Solar Fund I, LLC, to maintain control over how their investments were used. The initial project the plaintiffs expected to be funding was a project (Project Cali) in California City being developed by another company, American Solar Utility LLC.
Because Altenberg represented that the project was “lined up” and needed funding immediately, the plantiffs and Altenberg rushed the drafting of an operating agreement, taking only 11 days of negotiation. Jefferson and Murphy expected a $325,098 return on their initial $1 million investment.
