On Friday, September 22, 2017, the Justice Department announced that SolarCity had agreed to pay $29.5 million to resolve claims that it violated the False Claims Act. The company was accused of submitting inflated claims on behalf of itself and affiliated investment funds. Pursuant to the agreement, SolarCity and its affiliates will release all pending and future claims against the United States for other Section 1603 payments. Tesla Motors Inc. purchased SolarCity in November of 2016.

Under the Section 1603 program, the United States Treasury paid a cash grant of 30% of the cost basis for qualified solar energy systems constructed or acquired before December 31, 2016. Applicants were required to ensure that grant applications contained accurate costs and supporting information. Since 2009, SolarCity submitted thousands of Section 1603 claims. It was alleged that the company overstated the cost basis of its solar energy properties. In return, this allowed SolarCity and its associated investment funds to receive inflated grant payments.

In accordance with the settlement, SolarCity will dismiss a lawsuit submitted by two investment funds claiming that the Treasury underpaid certain Section 1603 applications. The company will also release other potential claims for more Section 1603 payments. SolarCity has agreed to pay $29.5 million to settle the allegations.

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