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COMPLAINT
Plaintiff Clipper Windpower, LLC (“Clipper”), by and through its counsel Howard &
Howard Attorneys, PLLC, and for its Complaint against Defendants Bruce Papiech, Joyce
Papiech (Bruce and Joyce Papiech collectively, the “Papieches”), and Michael Bednar
Introduction
orchestrated by the Papieches through their various entities and made ultimately to enrich
5. Venue is proper because this action is filed in the judicial district in which at least
General Allegations
A. The Parties
4601 Bowling St. SW, Cedar Rapids, Iowa and whose sole member is incorporated in the State
of Delaware. At the times relevant to the fraudulent transfers described in this Complaint,
8. Defendants Joyce Papiech and Defendant Bruce Papiech are a married couple
maintaining a residence with the same address as GSG 7 and FPC, i.e., 39W641 Bealer, Geneva,
Illinois 60134.
9. The Papieches are the sole officers of, and own and control, Defendant GSG 7.
As such, the Papieches are defined as GSG 7 “insiders” by the Illinois Uniform Fraudulent
10. The Papieches are also the sole officers of, and own and control, FPC. As such,
the Papieches are defined as FPC “insiders” for purposes of the UFTA.
11. Defendant Michael Bednar is a resident of Illinois, and was related by marriage to
the Papieches.
12. GSG 7 was formed to develop a wind energy system for the production and sale
of electric power in Sublette, Illinois (the “Wind Energy Project”). Although formed as a limited
liability company in 2007, during the period relevant to this Complaint, GSG 7 did not hold
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liquid assets in its name, including bank accounts. In addition, GSG 7’s sole officers, Defendants
Papieches, have never maintained any separate books or records for GSG 7.
13. On or about October 25, 2011, Clipper and GSG 7 entered into a Turbine Supply
Agreement (the “TSA,” and October 25, 2011 the “Effective Date”). Pursuant to the TSA,
Clipper was to deliver to GSG 7 one Clipper Windpower 2.5 MW Liberty™ series C-96 wind
turbine, including a tower and certain other parts (all as defined in the TSA and collectively, the
“Turbine”). The construction project for the installation of the Turbine was completed on June 6,
2012 (the “Project Completion Date”). In return for the Turbine, GSG 7 was to pay Clipper
14. Defendant Bruce Papiech, a GSG 7 insider, executed the TSA and a Security
15. As an officer of GSG 7, Defendant Bruce Papiech knew that GSG 7 lacked any
assets to pay the obligations to Clipper created by the TSA as those obligations became due.
16. Although GSG 7 made a down payment towards the Project Cost to Clipper in the
amount of $250,000, GSG 7 failed to pay the balance when it became due.
17. By September 13, 2012, GSG 7 owed Clipper a remaining balance of the Project
Cost in the approximate amount of $3,133,381. On that date, because this amount was overdue,
Clipper issued a demand to GSG 7, indicating, among other things, that Clipper would take avail
itself of legal remedies to obtain payment from GSG 7 if the default was not cured.
18. In 2009, the U.S. Congress passed the American Recovery and Reinvestment Tax
Act (“ARRTA”). Section 1603 (“Section 1603”) of the ARRTA was a green energy subsidy
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program that included cash grants for certain types of energy projects. The purpose of a grant
under Section 1603 is to reimburse eligible applicants for a portion of the cost of installing
specified energy property used in a trade or business or for the production of income.
19. In connection with the Wind Energy Project, GSG 7 applied for a grant under
Section 1603. On November 23, 2012, GSG 7 was awarded a Section 1603 grant in the amount
of $2,352,007.00 (the “1603 Grant”). Instead of having the 1603 Grant deposited into a GSG 7
bank account, GSG 7 directed the 1603 Grant to be delivered to a bank account held in the name
of FPC from which it was subsequently transferred, in whole or in part, to the Papieches
20. The Turbine has been operated by or for GSG 7 since on or about the Project
Completion date. The electricity generated by the Turbine has been and is being sold to
Commonwealth Edison. The sales to Commonwealth Edison and other sources of revenue
21. GSG 7 is entitled to the payment of money derived from an asset which GSG 7
owns, including the sale of electricity to Commonwealth Edison. GSG 7 never received any such
electricity generated by the Turbine with the electricity generated from another wind turbine
located nearby and operated by GSG 3, LLC (“GSG 3”). GSG 3’s Manager is FPC. Defendant
Bruce Papiech has directed Commonwealth Edison to pay all proceeds, including those
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23. Some or all of the revenue derived from the electricity generated by GSG 7’s
24. Some or all of GSG 7’s revenue from Commonwealth Edison is eventually
transferred through to the Papieches personally (the “Electric Power Revenue Transfers”).
25. The Papieches, as FPC insiders, have also transferred over $150,000 of GSG 7’s
26. The purported purpose of the transfer in the immediately-prior paragraph is to pay
Defendant Bednar for time expended in the operation, maintenance and service of GSG 7’s
Turbine, but no time records related to Mr. Bednar’s purported work have been kept and
maintained.
COUNT I
(Fraud)
28. At TSA Section 12.3, GSG 7, through insider Defendant Bruce Papiech,
represented and warranted to Clipper that the Agreement constituted a valid and binding
29. Insider Bruce Papiech knew that the aforesaid representation and warranty was
30. Clipper did, in fact, reasonably rely upon that misrepresentation in entering into
31. Clipper requests entry of judgment in its favor and against Defendant Bruce
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COUNT II
33. Each of the Grant Transfer, the Bednar Transfers, and the continuing Electric
34. On or before the dates of each of the Grant Transfer, the Bednar Transfers, and
35. The Defendants Papieches, through FPC and GSG 7, made the Grant Transfer, the
Bednar Transfers, and the continuing Electric Power Revenue Transfers with the actual intent to
COUNT III
37. Each of the Grant Transfer, the Bednar Transfers, and the continuing Electric
38. On or before the dates of each of the Grant Transfer, the Bednar Transfers, and
39. GSG 7 received less than reasonably equivalent value in exchange for each of the
Grant Transfer, the Bednar Transfers, and the Electric Power Revenue Transfers.
40. On the dates of each of the Grant Transfer, the Bednar Transfers, and the Electric
Power Revenue Transfers, GSG 7 was insolvent or became insolvent as a result of such transfer.
41. To the extent that each or any of the Grant Transfer, the Bednar Transfers, and the
Electric Power Revenue Transfers was made to one or both of the Defendants Papieches for an
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alleged antecedent debt, GSG 7 was insolvent at the time of each such transfer, and one or both
of the Defendants Papieches had reasonable cause to believe that GSG 7 was insolvent.
WHEREFORE, Clipper respectfully requests that this Court enter judgment in its favor
and against Bruce Papiech, Joyce Papiech, and Michael Bednar and order the following relief:
(i) on the First Count, against Bruce Papiech in an amount not less than $3,133,381; (ii) on the
Second Count, against Bruce Papiech and Joyce Papiech jointly and severally, in an amount not
less than $3,133,381; and against Michael Bednar in an amount not less than $150,000; (iii) on
the Third Count, against Bruce Papiech and Joyce Papiech jointly and severally, in an amount
not less than $3,133,381; and against Michael Bednar in an amount not less than $150,000; (iv)
attachment or other provisional remedy against the assets transferred or other property of the
transferee in accordance with the procedure prescribed by the Federal Rules of Civil Procedure;
(v) an injunction against further disposition by GSG 7, Bruce Papiech, Joyce Papiech, and
Michael Bednar of the assets transferred or other related property; (vi) appointment of a receiver
to take charge of the assets transferred or of other property of the Papieches; and (v) such