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Thursday, June 9, 2022
Volta Securities Fraud: Did Latest Hawaii High Tech Fail Take a Bite out of ERS?
By Andrew Walden @ 10:05 PM :: 1317 Views :: Ethics, Tax Credits

VLTA stock crashing....

by Andrew Walden

Securities fraud, insider trading,  $26.7 M in hidden executive stock awards?

Yes.  Hawaii’s high-tech tax credit schemers are at it again.

Meet Volta. 

Just nine months ago, Volta was hyped by the usual High-Tech cheerleaders:

Civil Beat, September 13, 2021 exclaims: “…because Volta was born here, funded by Hawaii investors: Hawaii Angels and Blue Startups….its success shows Hawaii can produce innovative, successful companies.”

Chenoa Farnsworth, managing partner of Blue Startups, gushes: “(Volta CEO Scott Mercer) is a visionary. If you read through his original business plan from 2012 (as I just did), you would see that the essential plan has not changed. This is not to say that pivoting is necessarily bad, but Scott is just one of those rare founders who got the business right from the beginning. While Scott had vision, he was also willing to put in the work to learn and understand every detail of the business. I remember sitting at a coffee shop in Manoa with him on a Sunday morning going over financials that he had painstakingly spent the weekend constructing himself. Having a leader with vision, and can pay attention to detail, is an exceedingly rare combination, but one that I have never seen fail.”

Never fail?

Are you laughing? 

Remember Act 215/221? HokuSopogyCode RebelMBloom?

Add Volta to the list. 

Motley Fool, May 18, 2022 reports:

Last week when Volta announced its quarterly numbers, it also said something shocking in a separate regulatory filing: Having prepared its financial statements as of March 31, management concluded "that there is substantial doubt about the company's ability to continue as a going concern in the next 12 months" given its financial standing. 

To put that into context, Volta ended March 31 with cumulative losses of $476.9 million and a cash balance of only $205 million.

Volta is burning through cash rapidly, and its cash balance is not sufficient to support existing operations as well as expansion. In short, it is facing a cash crunch that might only get worse. 

There's another concern investors have to worry about now: the chances of Volta stock being delisted. As per listing rules on the New York Stock Exchange, Volta's stock price should ideally be around $4 per share for it to meet market capitalization requirements to remain listed. 

The ‘visionary’ Mercer was forced out March 28, 2022, leading to a sharp drop in stock prices.

Legions of lawyers are now suing Volta for securities fraud, alleging company management failed to disclose to investors:

(1) that Volta had improperly accounted for restricted stock units issued in connection with the Business Combination (with shell company ‘Tortoise Acquisition II’, thus allowing VLTA entry to the NY Stock Exchange);

(2) that, as a result, the Company had understated its net loss for third quarter 2021;

(3) that there were material weaknesses in the Company's internal control over financial reporting that resulted in a material error;

(4) that, as a result of the foregoing, the Company would restate its financial statements;

(5) that, as a result of the foregoing, Legacy Volta's founders would imminently exit the Company;

(6) that, as a result, the Company's financial results would be adversely impacted; and

(7) that, as a result of the foregoing, Defendants' positive statements about the Company's business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

Volta has amended is initial prospectus and restated its financials multiple times, according to documents filed with the SEC EDGAR system.

Did the Employee Retirement System or Kamehameha Schools sink money into Volta?  According to Hawaii Business, January, 2011:

“Kamehameha Schools is an investor in Startup Capital (and) ERS is investing up to $25 million in VC funds that may include exposure to local portfolio companies through its Hawaii Targeted Investment Program (HiTIP).”

The Star-Advertiser, May 23, 2022, reveals:

“(In 2010) Hawaii received and invested $13.2 million in that first go-round entirely focused on venture capital investments. Among companies that received funding was the free electric vehicle charging station developer Volta Inc., which in August got listed on the New York Stock Exchange in a transaction that raised about $400 million for the company, in which the state owns some equity.”

“No comment” was the answer from the State Attorney General’s office when asked if they plan to join stockholder lawsuits against Volta. 

Pump n Dump?

Frontrunning?

But before Farnsworth’s ‘visionary’ Mercer fled his sinking ship, there were profits to take.

Pacific Business News, September 2, 2021:

“Blue Startups originally invested $70,000 in Volta in 2013 and members of the Hawaii Angels invested over $700,000 between 2012 and 2016. ‘At current stock prices, these investments have increased in value by more than 10x,’ Farnsworth said….  Volta was trading at $8.94 per share at end-of-day (September 2, 2021).”

That would give them a $7M profit if they cashed out that day, but it was not the peak.  Were they riding a wave created by a politically-motivated investment of your retirement dollars?

Did the ERS lose money helping Hawaii’s devilish ‘Angels’ make a buck?

ERS did not respond to a request for comment.

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