In the aftermath of Moxie Solar closing its doors, lawsuits are progressing throughout the Iowa court system.
Lorentzen Investments, material supply companies, warehouse owners, individual customers and the city of North Liberty are all seeking damages.
To understand how and why, It’s important to be aware of the history of ownership between Jason Hall and Moxie Solar — as well as a separate LLC named Ralos Eixom, which spells Moxie Solar backward. It is also necessary to understand Mr. Hall’s rationale for using Ralos Eixom as the registered manager.
Read the three previous installments of the multi-part investigation into Moxie Solar’s business dealings.
Moxie Investments LLC vs MSI Diversified and Jason Hall
Counts: Breach of contract (vs. Old Moxie); Fraudulent misrepresentation (vs. Old Moxie); Negligent misrepresentation; Fraudulent misrepresentation (vs. Jason Hall)
On May 5, 2022, Moxie Solar Inc. changed its name to MSI Diversified Inc. This is, in effect, “Old Moxie.”
Mr. Hall was named the registered agent of New Moxie Solar LLC on June 14, 2022. He was CEO of the Lorentzen Investments-owned company for a short stint before the certificate of authority was amended in October to name COO and President Travis Eichelberger in his place, according to documents filed by the Iowa Secretary of State’s office.
Moxie Investments LLC, owned by Lorentzen Investments, filed a lawsuit against MSI Diversified and Jason Hall on Dec. 29, 2022.
It claims Old Moxie, Moxie Investments and New Moxie executed an Asset Contribution Agreement on Jan. 31, 2022, and Moxie Investments contributed more than $3 million in cash to New Moxie.
Once the Lorentzens were in charge, they say they realized Old Moxie failed to disclose that many contracts were not in effect, financial statements were not prepared in accordance with generally accepted accounting principles (GAAP), and they misrepresented the value of assets and liabilities by more than $6.5 million.
The lawsuit also alleges Mr. Hall received payments on account of New Moxie accounts and applied payments to settle debts of Old Moxie that were not disclosed prior to the acquisition, and Mr. Hall commingled assets and liabilities with fraudulent intent.
“We are sickened by what we’ve learned about Mr. Hall’s treatment of customers and investors,” said David Lorentzen, member at Lorentzen Investments, in an email.
Attorneys representing MSI Diversified could not be reached for comment.
Section 1031 reverse exchange transaction
To further complicate matters, in 2015 the Hall family purchased its original headquarters at 230 Sugar Creek Lane — a now defunct address with a Casey’s General Store in its place — for $525,000 using a lesser-known entity called Ralos Eixom LLC.
When Moxie decided to relocate to its 323 W. Cherry St. location in 2020, it purchased the property under IPE 1031 REV352 LLC for $855,000, public records show. This appears to be a Section 1031 reverse exchange under a qualified intermediary that facilitates these transactions called IPE 1031, a real estate agency based in west Des Moines.
A 1031 reverse exchange is when an intermediary (IPE 1031) acquires and holds a new property until the taxpayer (Ralos Eixom) is ready to transfer the original property. Typically, 1031 exchanges are used to avoid a hefty tax bill when two exchanges are similar or offer “like-kind” value. 1031 exchanges enjoy nonrecognition, meaning any gain or loss is deferred, said Diane Dick, professor of law at the University of Iowa.
She explained the benefits of 1031 reverse exchanges, generally speaking, in an email to the CBJ: “The idea is that the taxpayer has not really terminated their initial investment in real estate – they’ve simply swapped the initial property for something similar in order to continue the same or similar business or involvement activity. And sometimes unique opportunities come along and the taxpayer has an opportunity to acquire desirable property before it is ready to relinquish the original property.”
On Feb. 19, 2021, REV352 LLC sold the new headquarters to Ralos Eixom for $0 under a quit claim deed. In April, Ralos sold 230 Sugar Creek Lane for $1,030,000, seemingly completing the criteria of a valid reverse exchange.
Just seven days later, Moxie Investments LLC formed.
So, why does this matter?
City of North Liberty vs. MSI Diversified, Ralos Eixom, Jason Hall
Counts: Breach of contract by MSI; Fraud by MSI Diversified and Hall
In 2020, Mr. Hall approached the city of North Liberty with a project that would redevelop 323 W. Cherry St. into a mixed-use district including retail facilities, restaurants, entertainment venues and more.
North Liberty agreed to provide a $50,000 interest-accruing loan that would be forgiven if the company provided a site plan by Jan. 1, 2022, and began construction within 12 months of city council approval. No site plan was ever submitted to the city, the lawsuit alleges.
“Critically, Jason Hall represented in the loan agreement that Moxie Solar Inc. was owner of the property; ultimately, either Moxie Solar and Ralos Eixom are the same company or Jason Hall made a material misrepresentation when he signed the agreement,” said Nick Bergus, communications director for North Liberty, in an email.
“The city has not been repaid, and discovery is ongoing, but we believe the city will prove each of the elements of all its claims in due course,” he added.
Two attorneys for the defendants withdrew counsel in January 2023.
CED Greentech vs. MSI Diversified, Jason Hall, Ralos Eixom
Counts: Breach of contract – suit on open account; Voidable conveyance; Fraudulent misrepresentation theft, or fraudulent scheme; Alternative oral contract, quasi contract or unjust enrichment
CED Greentech is a solar energy equipment supplier also alleging Mr. Hall, MSI Diversified and Ralos Eixom are “insiders and affiliates of each other,” according to a court petition.
The lawsuit argues the Section 1031 reverse exchange transfer is “not fair to Moxie and Moxie’s creditors were taken when Moxie was insolvent or were made with an intent by Mr. Hall and Moxie to hinder, delay or defraud creditors, including CED Greentech.”
CED Greentech claims Moxie began ordering products from CED Greentech in 2018 but Moxie stopped paying bills in August 2021. They say they are entitled to more than $700,000. The lawsuit says Moxie and Mr. Hall ordered products knowing they did not intend to pay for that product.
Lawyers for CED Greentech did not release a statement.
Hieronymi Partnership LLP vs. Ralos Eixom, Jason Hall, Jennifer Hall, Central State Bank
Counts: Breach of contract; Permanent injunctive relief; Landlord’s lien
On May 1, 2021 — after Ralos completed the 1031 reverse exchange — Hieronymi Partnership said Ralos entered into an agreement to rent 38,500-square-feet of space in the northeast corner of a warehouse for three years.
Ralos would store “very large, bulky, heavy equipment” for $4,812.50 a month for the first six months and $12,833.33 for the remainder of the lease, as well as utilities, taxes and more, the lawsuit alleges. The plaintiffs claim Ralos missed monthly payments and paid several months late, plus never paid taxes owed to Hieronymi.
It is another lawsuit that argues the duties, obligations and liabilities of Ralos are the same as Jason — and in this case, Jenn Hall — stating, “Defendant Ralos is a sham corporation.”
The lawsuit alleges Hieronymi is owed $94,636.98.
“I am only part of the Hieronymi Partnership lawsuit,” said Siobham Briley, the defendant’s attorney. “Right now, that one is kind of dormant. The plaintiff obtained a writ of attachment for the equipment that is stored in the warehouse that Ralos was renting from Hieronymi, but they can’t really do anything with it unless and until there is a judgment.”
Trial is set for Sept. 26.
A writ of attachment is a “form of prejudgment process in which the court orders the seizure or attachment of property,” according to the U.S. Marshals Service office.
It appears Mr. Hall is storing a 300MW solar manufacturing line — critical for finally launching his solar manufacturing brand long in the works — at this warehouse location, as shown on an Empower Innovation webpage.
Ms. Briley previously represented MSI Diversified in the city of North Liberty case. She withdrew as counsel in November.
Attorneys for Hieronymi Partnership were not able to be reached for comment.
Axiom Consultants vs. MSI Diversified and New Moxie Solar
Counts: Breach of contract; Unjust enrichment, in the alternative
Axiom Consultants, an engineering consulting firm, alleges Moxie owes Axiom more than $40,000 for structural support products and electrical line evaluations.
In a July 2022 letter to Axiom and other creditors, Moxie sent a mid-year financial report, indicating it would resume payments on debts by September.
Axiom responded in August: “Historically, Moxie Solar and Axiom Consultants had a long and productive relationship. So it is shocking to Axiom that they are now required to hire an attorney in an attempt to be paid for services Axiom completed and provided to Moxie quite some time ago.”
Moxie never resumed payments with Axiom Consultants, the plaintiffs allege.
Attorneys could not be reached for comment.
Euler Hermes North America Insurance Company vs. MSI Diversified
Counts: Open account; Account stated; Quantum meruit
Euler Hermes is a Maryland company providing trade credit insurance to Hanwha Q Cells America (a producer of solar cells and modules). They alleged Moxie owed Euler more than $300,000 for ordered goods.
On Jan. 25, 2023, a motion for default judgment ruled in favor of the plaintiff against all defendants.
Attorneys could not be reached for comment.
Crescent Electric Supply Company and Womack Electric & Supply Co. Inc. vs. Moxie Solar d/b/a New Moxie Solar LLC d/b/a MSI Diversified
Claims: Breach of Contract (Crescent and Womack); Action on account stated, alternative (Crescent and Womack); Unjust Enrichment, alternative (Crescent and Womack)
Crescent Electric Supply has offices in Dubuque and Cedar Rapids. Womack Electric & Supply is a subsidiary of Crescent in Virginia. Both companies are distributors of electrical supplies and materials.
Moxie owes Crescent nearly $475,000 in supplies, materials and equipment purchased between August 2021 and April 2022, the lawsuit alleges.
Between September 2021 and November 2021, Moxie owes Womack almost $100,000 in supplies, materials and equipment, the lawsuit alleges. In total, Moxie is said to owe $573,606.83.
An acknowledgment of debt and payment plan was sent from Mr. Hall to Crescent in November 2021, admitting it owes the company hundreds of thousands of dollars in materials not yet paid.
Attorneys could not be reached for comment.
