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Hebert fired over role in sour solar deal (05/07/2014)


Winona County Adminstrator Duane Hebert was fired and accused of gross misconduct and malfeasance by a unanimous vote of the Winona County Board on Tuesday. He may already have a new job with the solar company that threatened legal action against the county and led the county to conduct an outside investigation into his conduct. The outside report found that Hebert made false statements to the County Board and failed to meet the county's ethics policy.

By asserting that Hebert committed gross misconduct and malfeasance, the County Board stripped Hebert of nearly $60,000 in severance pay and six months of benefits, a severance package that would otherwise be paid under his contract.

Winona County Sustainability Coordinator Anne Morse, who was also investigated in connection to the solar project, will return to work.

According to the outside investigation, Hebert failed to disclose the fact that his wife worked for or was part-owner of a solar energy company that attempted to win a contract with the county, then intervened with the project several times on behalf of his wife's company. The investigation concluded that Hebert's action "arguably creates a violation of the public trust."

The solar project

Last February, Morse presented to the County Board a proposal to install solar panels on the roof of two county buildings and the board granted approval to seek grants from Xcel Energy for the project. County Attorney Karin Sonneman expressed trepidation about financial arrangements, but Morse told the board, "We've been trying to shoot holes through this because it's a pretty amazing proposal, but it seems like it's here."

Former county commissioner Mena Kaehler's family's solar company, Novel Energy Solutions (NES), was involved in the project, but another solar company, Innovative Power Solutions (IPS), served as the public face of the project. "NES chose to remain in the background publicly so that the project would stand on its own merits and not be positively or negatively impacted by Mena Kaehler and [Duane Hebert's wife] Theresa Hebert being involved with the company," explained Mena Kaehler's son and NES CEO Cliff Kaehler in a statement.

Duane Hebert's wife, Theresa Hebert, worked for NES as a bookkeeper during 2013 and is or is about to become a part-owner of the company. According to the outside investigation, witnesses said that Duane Hebert was also recruited to work for NES potentially while NES was negotiating with the county on the project in 2013. Hebert himself, in an interview with investigators, admitted that NES courted him as a potential employee after he was put on administrative leave last month.

Spearheaded by Morse, dealmaking for the project advanced, but the full board only learned the details of the Kaehler's involvement in the project and Hebert's connection to the company when Hebert emailed the board announcing that his wife was employed with NES on March 18, 2014. That same day, NES sent a letter threatening to sue the county that accused county staff of releasing trade secrets related to the solar project to competitors and snubbing NES in favor of a less attractive offer for the project.

In the flurry of confusion and legal threats that followed, the County Board put Hebert and Morse on administrative leave and hired an outside law firm to investigate their conduct.

Report: Hebert's 'malfeasance'

At the heart of the investigation and the accusations of malfeasance against Hebert is whether or not he properly disclosed his potential conflict of interest in the solar project.

In interviews with the investigators, Hebert claimed that he told his subordinates, Planning and Environmental Services Director Jason Gilman, Special Project Coordinator Jill Johnson, and Personnel Director Maureen Holte, as well as County Attorney Karin Sonneman and county commissioners Jim Pomeroy and Wayne Valentine that his wife worked for NES. According to the investigation, all of those people deny that Hebert disclosed his relationship to the firm in October.

The earliest witnesses said Duane Hebert told them of his wife's involvement was December, when Pomeroy said that Hebert told him in passing that his wife worked for the Kaehler firm, but, Pomeroy said, Hebert never mentioned the firm was vying for a county contract.

Morse told investigators that she first learned of Theresa Hebert's involvement with NES in December 2013, when Chris Gamer, an NES employee who was terminated that month, told her that Theresa Hebert was a part-owner of NES. Morse said that, up to that point, she did not know Theresa Hebert worked for NES.

Sonneman told investigators that she found out on January 10, when Morse passed on the news that Theresa Hebert was currently an investor in NES.

In their report, investigators wrote that because of "the preponderance of the witnesses' testimony contradicting Mr. Hebert's claims" they believed the other witnesses, not Hebert.

The investigators stated that Hebert's assertion that his disclosure on March 18 had nothing to do with legal threats from NES that surfaced the same day was "specious." They wrote, "Not coincidentally we believe, March 18 was the date the county was threatened with a lawsuit by NES."

Hebert also claimed that he contacted Sonneman in October 2013 seeking an opinion on whether a conflict of interest existed and that she advised him that none did exist, according to the report. "Ms. Sonneman categorically denies that Mr. Hebert ever told her about his wife's employment, much less solicited her advice," investigators wrote. They noted that Sonneman's notes corroborate her statements that the first she heard of Theresa Hebert's connection to NES was when Morse told her in January of the following year. The investigators stated that they believe Sonneman, not Hebert, and wrote, "we find that Mr. Hebert never solicited an opinion from Ms. Sonneman and that his written statements to the board on March 20, [2014, when he wrote to board members and asserted he had both disclosed his wife's employment with the company and received an opinion from Sonneman that the situation did not present a conflict], are false in this regard."

According to the report, Mena Kaehler approached Hebert regarding the solar project in January of 2013, prior to the board meeting during which Morse and IPS presented the project to the County Board. At that meeting, commissioner Marcia Ward asked if there were any local companies involved in the project. Morse said no. Hebert remained silent.

"The facts are undisputed that at the time Ms. Morse and IPS presented the solar project to the Board Mr. Hebert believed NES and the Kaehlers were involved in some way in the project. Yet, Mr. Hebert did not disclose NES' possible involvement to any board member," the investigators wrote. Investigators called that decision "curious" and a violation of county ethics policy. "The County Administrator's omission of potentially relevant information regarding a proposal submitted to the board arguably creates a violation of the public trust," they wrote. "His nondisclosure is only exacerbated by his affirmative and false allegations regarding his disclosure to and advice received from the County Attorney."

Duane Hebert recruited by NES?

The report was unable to confirm disputes over how closely tied the Heberts were to the Kaehlers' firm; however, statements by witnesses allege the extensive connections early on in the project.

Chris Gamer initially worked for IPS and joined the NES team last summer. He told investigators that NES awarded Theresa Hebert a half share of stock when she began as an employee last year and another half share by November 5, 2013. Hebert himself told board members in March that his wife was negotiating part-ownership of the company.

The dispute over exactly when and if Theresa Hebert became an investor cannot be resolved, investigators wrote; however, "as Mr. Hebert admits, however, Ms. Hebert's potential and likely imminent ownership interest in NES was known to him at least since August 2013, if not earlier."

Gamer also told investigators that Ralph Kaehler had actively tried to recruit Duane Hebert to work for NES and had discussed the salary that would be required for him to join the company. Morse also told investigators that Gamer informed her this March that Ralph had worked to recruit Duane Hebert. According to the report, Morse subsequently informed her union representative of the situation.

According to the report, Gamer was fired from NES last December; he told investigators that NES was unhappy that he told Morse that documents submitted to NES were the property of the county.

Duane Hebert denied having any discussion with the Kaehlers about a job opportunity; "however, he speculated that the Kaehlers were probably interested in hiring him into the company at that time," stated the report, referring to the 2013 period during which NES was working to land the county contract.

Trade secrets

NES claims the county disclosed its trade secret information to its competitors after the county decided to seek proposals from other companies for the project.

The investigators stated that, per Minnesota case law, companies must make an effort to impress upon the other the secrecy of information in order for information to be considered trade secrets. "The facts are undisputed that NES engaged in no efforts whatsoever to maintain the secrecy of any information at issue."

Furthermore, investigators argued that the information always belonged to the county. They also noted that Morse was told by Gamer that the documents were the property of the county.

The investigators rebuffed accusations by the Kaehlers that county staff mislead NES, improperly shared project data with competitors, and pursued proposals by those firms that would save less money. "The reservations [about working with NES] felt by both Ms. Sonneman and Ms. Morse were not about the ultimate cost of the project, but more about the financing model, experience, and comfort level with Mr. Kaehler," investigators wrote. They explained that Sonneman had serious concerns about the legal and financial arrangements, the Kaehlers' inexperience the report states that the Kaehlers acknowledged this would be their first project and "Mr. [Cliff] Kaehler's increasing aggressiveness." Investigators wrote that, in meetings with him, Morse found Cliff Kaehler "agitated and presumptuous, assuming the decision has been made to work with NES and pushing to get before the board."

Morse back to work

Morse was invited back to work following the investigation's closure and board meeting Tuesday.

The investigative report examined Morse's role in the solar panel project. While Morse claimed she did not know that NES was working behind the scenes and another firm IPS was the public face of the project, investigators revealed several energy rebate documents which listed NES as the contractor as early as July 2013. Morse said she must have skimmed those documents and did not know NES was involved until October 2013, and did not know Theresa Hebert worked for the company until December 2013. "Although the fact that Ms. Morse did not notice Novel Energy Solutions identified on the Xcel application documents reflects a significant inattention to detail, her denial of knowledge about NES' early involvement is credible. And unlike Mr. Hebert, the identification of NES did not raise or create any conflict or other issue for Ms. Morse that would affect her decision-making on the project," wrote investigators.

Investigators also concluded that Morse, Sonneman, Gilman, and other county employees did not overstep their authority in pursuing project details or soliciting information from various companies. The report suggested that, since no agreement had been made with NES, the county was not bound to contract with the firm for the project.

What's next

Board members made little comment about the situation Tuesday. Winona County Personnel Director/Assistant County Administrator Maureen Holte has been acting as administrator since Hebert was placed on leave. The board is expected to discuss how to replace Hebert in the coming weeks. 


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