Politics For Happy People
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Politics For Happy People
Energy Fraud and Attempted Murder
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Joseph Backholm and Ashley Vaughan unpack two stories raising serious questions about power, accountability, and political ethics. First, they examine the allegations surrounding an energy company accused of a billion-dollar fraud scheme and its connections to a North Carolina state senator. Then they turn to the federal case against former FBI Director James Comey, asking whether his controversial "8647" social media post was protected political speech or something more serious. From government transparency to prosecutorial discretion, this episode explores where politics ends and the law begins.
Welcome to Politics for Happy People, where we have fun conversations about serious issues. I'm Joseph Backholm, joined as always by Ashley Vaughan. Ashley, good to see you.
SPEAKER_00Good to see you, Joseph.
SPEAKER_01Today we are going to cover a couple interesting North Carolina stories. Fraud and attempted murder. Intrigue. Intrigue for sure. And actually, there is some real intrigue. And I should say the attempted murder thing. I guess it's not even attempted murder.
SPEAKER_00It's tongue-in-cheek. It's a little bit tongue-in-cheek.
SPEAKER_01I don't want to get you that excited, but I want to get you a little bit excited. It's it's James Comey and did he actually threaten President Trump. But before we get to that story, which has actually been fairly well covered because he is the former FBI director, there's something that's been brewing in more locally in Raleigh in North Carolina that I think is super, super interesting fraud involving the a business, at least allegations of fraud, involving the business of a state senator, Sophia Chitlich, from Durham. Ashley, do you know about this story?
SPEAKER_00Until you brought it to my attention earlier this week, I believe, I was not aware of this. And I was really surprised to learn about this story because I often I feel like often when there is fraud involving someone who's in office, it gets blown up. And I do think it especially happens for uh Republican members. So we're talking about a Democrat today.
SPEAKER_01We are. And to be clear, she has not been accused of any fraud. Sophia Chitlick, who's the state senator, who's kind of very much connected to this story. But there's layers to this that I want to get into and I think people will find interesting and also worth knowing about. And it involves an energy company called American Efficient. And I first came across this story in the Raleigh News and Observer. So if you want to read that story there, that's where it became news to me. So it's not that nobody is is covering this. Um, but Sophia Chitlick's husband. Estranged question mark. And we'll get to that in a moment. Like, what is the nature of her relationship with her husband? And that is not a personal question. It actually has legal significance that we will get to in a moment. But she is married uh to the to um Benjamin Abram, who is the founder of a company called American Efficient, and it is an energy company. And this past April, the Federal Energy Regulatory Commission found that the company had to run a decade-long fraud and hit it with $1.1 billion in penalties. Wow. Ouch. It's a big number, and that includes $722 million in civil penalties and $410 million in disgorgement. Now, for those who are not lawyers in our audience, which I'm going to assume is nearly everyone, disgorgement is essentially um profits that you never should have taken. So a fine is something that they the government will fine you that you have to find a way to pay from the money that you have. And when they say it's disgorgement, it's basically um you never should have had it, so it's not actually yours in the first place.
SPEAKER_00So they need to return this to the customers.
SPEAKER_01You basically have to pay it back. Well, this is a fine that they would pay to the federal edu the Federal Energy Regulatory Commission. And maybe in theory they would give it back to the customers. I don't know the answer to that.
SPEAKER_00Okay.
SPEAKER_01But yes, um, they're just distinguishing between fines, which are punitive because you've done something wrong, and disgorgement, which is you just have to give that back because it's not yours. It was never yours in the first place. Right? So those are the differences. Now, of course, the the company is denying wrongdoing, and and we'll get into some of this um as we tell the story. But this really gets into kind of how our energy system works and what this company was doing. Um, because they are accused of fraud and claiming money from the federal government that was not theirs. And here's how uh here's what the accusation is. There's something in the energy market called the capacity market. Have you ever heard of this, Ashley? Because I had not.
SPEAKER_00I'm vaguely familiar with the concept, but I'm not into the details of this.
SPEAKER_01Yeah, I I in just reading the story and kind of studying up on it, I've I've learned some things about energy that I didn't understand. And and one of the things that actually kind of became personal, I'm I'm a customer of Duke. I think everybody around here is. Do we have another option in power besides Duke?
SPEAKER_00I don't think in electric cooperative.
SPEAKER_01The North Carolina Electric Cooperative. Okay, the uh the North Carolina Electric Cooperative is apparently the alternative to Duke. And Dominion Power. And Dominion. Oh, right, okay, good. So so there are alternatives. I have Duke, I'm a customer, and they recently, within the last several weeks, uh, called me and and and basically said, we will pay you a modest amount of money in you know reducing your power bill if you will allow us to basically take over control of your heat system and and control it at peak times. So when it's very cold, we want to be able to set the temperature of your house. When it's very hot, we want to set the be able to set the temperature of your house in order to kind of regulate demand at peak times. So I understand why they're doing that. I actually decline the offer. But they were doing this, and and it has something to do with what we're talking about here with capacity markets, because the energy grid and energy companies are always trying to figure out how to like have enough power when they need it and try to make it not like ridiculously expensive. So this capacity market uh looks into the future, and it it's basically a prepayment on future energy. Now, there's two ways that they can they can do this. Um you can either promise to um provide power at a peak time, or you can promise to reduce consumption at a peak time, right? And the impact on the grid is the same, and I think that kind of makes sense. Are you with me so far? I'm pretending to know something about energy right now, but I've done a lot of you're doing great. Tell me if I'm if I'm losing you. So essentially, um, you you can promise to reduce power or you can promise to provide more. Now, here's the trick that American efficient is accused of being part of that they purchased basically receipts from things like Home Depot, Lowe's, and Walmarts of their energy efficient appliances, light bulbs, products. And and we all know that when we walk into these home goods, you know, they have those little, they have those stickers on there. They say, This is how you know how much energy you're gonna save from this product and how much money that's gonna save you, and yay, we're all saving the environment, right? So they would go purchase all of the receipts, the rights to those receipts for some fractional amount of money, and then they would turn those in to the federal government as under this program that incentivizes people to either reduce usage or improve supply, and they would be paid by the federal government. Well, I I'm gonna qualify that. I'm not sure it's by the federal government, but by somehow through this program, they would they would get paid by the energy world for having reduced future usage, which is something that you could be compensated for in the energy market. That makes sense? Yes. Okay. But here's the problem. FERC, in their investigation, which has ultimately led to a allegation of fraud, they said that the company collected half a billion dollars by purchasing receipts from Lowe's and Walmart and Home Depot, et cetera, by claim uh by claiming credit for energy efficiency resources that it neither owned, controlled, or caused to exist. So basically, people were gonna buy that refrigerator, they were gonna buy that light bulb anyway, and American Efficient had nothing to do with it. But they purchased the receipts, the purchased the rights to it, and that was actually a transaction that was legal. You can buy the rights to the sale, I guess. And I can't think of any other reason you would want to do this, but you can buy the rights to the to the sale, and I suppose for like warranty purposes or something like that, maybe people do that. But they did not cause the sale, according to FERC, and they did not control the sale, and they did not cause the sale to exist, and they ended up getting $500 million through this program basically by flipping receipts. And FERC says you can't do that, and that's fraud. That's the basis of the allegation. Now, how does this connect to the Raleigh legislature? Because this entire um this business model, and I and and I should say that according to FERC, this is all American Efficient does. They don't have any power plants, they don't have any solar farms, they don't have any wind farms.
SPEAKER_00Dude, I didn't understand that. This is this is this is the entirety of the business.
SPEAKER_01Yeah, the the the yeah, to be efficient was to flip energy savings in this market. They don't do anything else. They do like studies and and and I and I will say this. Um I I think I have um yes, it they they they basically do research to the supports this, but this is what the company does exclusively.
SPEAKER_00So they're providing no product, uh no benefit, uh they're just getting these.
SPEAKER_01They're providing energy savings in in theory. And the yeah, they develop verification methodologies, they own an energy analysis firm, which and they run an efficiency education campaign, but all of it feeds the same single engine uh engine, which is flipping receipts. And FERC's contention is precisely that there's no separate substantive uh business underneath this receipt flipping exercise.
SPEAKER_00Okay.
SPEAKER_01And it's huge money, right? Yeah. And this is, I mean, house flipping, receipt flipping. I mean, it's it's it's it's crazy money. So the initial allegation in this article from the Raleigh News and Observer is that Sophia Chitlick was actually lobbying for them in Congress. And they quote some aides who were part of these congressional meetings about this, where she was there advocating for uh American efficient. Now, where the plot thickens a little bit um is uh the qu the the qu because Sophia Chitlick is a state senator, she has disclosure requirements. And under North Carolina law, when you are a state legislator, you not only have to uh disclose your own personal financial situation, you have to disclose your spouses as well. And Sophia Chitlick claims $5,000 of total income on her disclosures.
SPEAKER_00Annual?
SPEAKER_01Yes.
SPEAKER_00Okay.
SPEAKER_01And that's a very low number, of course. And that didn't even include like her that that doesn't include her legislative salary, which everybody knows exists because they all get paid not a lot of money. Not much. That's not an accusation that she's getting rich being a a senator in North Carolina because she's not. But what's interesting is that she and her husband uh filed for legal separation in 2023. And as a result of that, he does not have to disclose, she does not have to disclose any of his financial information because a legal separation eliminates that obligation. But another thing that is true is he has exceeded campaign, he has exceeded campaign contribution limits under the law because he is her spouse. That law does not account for legal separation, does not care. It allows a spouse or you personally, if you're running for office, you can donate, you know, any of your many billions of dollars that you personally have to your own campaign if you want to. And your spouse can do the same.
SPEAKER_00And it doesn't matter if you're legally separated or not.
SPEAKER_01So this interesting thing that Sophia Chitlich, the situation that she's in, is they are legally separated. They filed for legal separation, and that means none of her husband's financial information is disclosed through her role as a state senator. But he is also taking advantage of the fact that they are married, still yet separated, to exceed campaign contribution limits. Um both of those, that's how the law is written.
SPEAKER_00Having their cake and eating it too with having your cake. Married but separated, benefiting them, evidently, in terms of contributions and financial secrecy. Correct. And is that what's is that what's happening? I mean, is it we're right.
SPEAKER_01We're gonna we're gonna speculate. Yeah, all of this FERC allegation, all of the FERC fraud stuff is not yet proven. They're gonna defend themselves and they have a right to defend themselves in court. And and I think their primary primary argument is that, you know, when we pay Home Depot for all those receipts and give them money for it, that incentivizes them to sell more of those things. So we're actually putting an incentive into the market for them to sell more energy efficient products. Therefore, we are actually generating energy savings. I think that is a part of their defense. And um, you know, FERC isn't buying it.
SPEAKER_00And and um notably Was this explicitly prohibited by FERC?
SPEAKER_01Well, they would I mean American Efficient would say no. It was not um pro it was not explicitly prohibited. Energy savings is actually incentivized, and and that that's the question. And then the the other the other things like this had been done by other companies. The problem is they had actually been disqualified in some places because of because people caught onto their scheme, but they did not notify the people who were still taking it that they had been disqualified in other places, so they were concealing information that FERC said was fraudulent so that they could continue perpetuating what FERC considers to be a fraud. Now, of course, American Efficient has the right to make a defense of themselves, and they are going to do so. I am not an expert in these things. What I do know is that it was a unanimous finding by the FERC board that includes people who were appointed by Biden, that includes people who are Biden by who were appointed by Trump. There is not on that board any objection. Um, if I'm, based on what I can see, if I'm American efficient, I don't feel good about myself right now. But they got lawyers, they're gonna they're gonna defend themselves, they're gonna make an argument, you know, we'll see what happens. That's not really the you know, I a primary interest of the um, you know, the voters of North Carolina. That's just everybody who's purchased something from Lowe's or Home Depot lately. If you bought a light bulb from there, uh maybe you paid more for it. Or it and and your energy bills are going to pay for um $500 million of um people's money that they've spent on energy has gone to American Efficient. Um because that's where they're getting they're getting it essentially through power bills. So that's a I mean, that's kind of a problem.
SPEAKER_00Well, there's I mean, there has been a lot of interest and attention into you know govern fraud with government programs recently. Well, something as there should be. Um, we don't want tax dollars going to these, you know, schemes.
SPEAKER_01We want to save energy. But yeah, this feels exploitative to me, just on its face. It does. It's it's like the whole, you know, the Somali daycare thing, right? It's it's like, is anybody checking what you're we want there to be daycares for children. But is anybody checking to see that the spirit of the entire exercise is being honored, that children are being cared for rather than like people are like registering their kids and their grandkids and their nephews, and they're never actually watching them, but they get them on a list and then they get paid for them, right? It's the same kind of concept that there's no accountability, it seems there wasn't for a long time, to ensure that the thing going to save energy is actually going to save energy and not going to somebody who very creatively realized, oh, I can take advantage of this program by doing something that looks like I'm saving energy, even though I'm not saving energy.
SPEAKER_00Well, and the thing that's different about this situation than the Somali daycare fraud is this involves or is very adjacent to someone who's serving in government. And it in that way reminds me of uh the um accusations against Yolanda Hill, Mark Robinson's wife. She was she had a nonprofit that was called Balanced Nutrition. It was administering a federally funded child nutrition reimbursement program and a north for daycare centers. And a North Carolina audit found that the organization improperly claimed government reimbursements by submitting submitting duplicate receipts and claiming more than the receipts supported. And so initially, uh state regulators wanted 132,000 back, but later they reduced it to 100,000. Um so no criminal charges were brought against her and she denied wrongdoing and all that. But it's sort of this situation with Sophia Chitlick sort of reminds me of that. As you know, when you get people who have nonprofits or companies who are getting these these reimbursements and these payments from the government, and they're also running for office. I'm starting to feel really uncomfortable about this situation because there's there's a whole lot of room uh for um just funny business and and bad intentions and potentially fraudulent situations. And we don't want that from our elected officials. We want them to be there because, you know, to um represent the people and you know, advocate for for issues and things like that. We don't we want we don't want them there for some kind of financial incentive that's separate from their service.
SPEAKER_01To be clear, when she was lobbying on behalf of American Efficient in Washington, D.C., she was not yet elected. Right. So this was not in her first.
SPEAKER_00The connection, though, is with the spouse, right? And that's why I'm comparing it to Yolanda Hill. Yeah. It's with the spouse.
SPEAKER_01Yeah, you know, and in in the way, I mean, the the way that their legal separation works to their advantage by allowing them to conceal his financial information while also allowing him to exceed campaign contribution limits, that that just can't feel that can't be, you know, coincidental. I feel like they've got to know these things. And and I will say, and a bit of confession for me, you know, I have children going into college, and I have said somewhat tongue-in-cheek to my wife, and she did not think it was very funny, as you work through the financial situation of paying for college for your children. I'm like, hey, you know what? If we just got separated and we claimed your income, you know how much more help we would get for college, right?
SPEAKER_00I am I am I see why she did not appreciate that.
SPEAKER_01No, I mean, but but I mean this in a very practical way. Like that, and and again, I'm a lawyer, but that's I kind of think that way, but really, there's incentives that you created, and those are those are those are not purposeful. And and for sure, the uh the the campaign except limit exception for spouses and the um disclosure exception for separated spouses was not designed for the purpose it's being used, right? They they had you can understand why a separated spouse, if you're separated, you're living a different life. That's what we assume about separation. Therefore, you're not connected to this legislator in the same way. And so we're not going to require the disclosure of your funds.
SPEAKER_00Absolutely.
SPEAKER_01Because we assume a separation is actually separation. But if it's a separation in on, you know, in name only, and you're actually living life together, and I don't know what their I don't know exactly what their situation is. But but it's also weird that if you're separated, hey, here's a whole bunch of money for your campaign, right? You that doesn't feel separate. But I understand the incentives, and that's like, hey, I could get more money for my kid for college if we were legally separated and only one income was considered, and we just say, you know, my kids live with my wife, and uh, you know, that's the only thing that's considered, right? These are just games that people play when they're trying to play games. And when you're smart and creative and you understand the law, you can figure this stuff out. It's just a matter of is it right or not? And certainly it's not right to defraud if if that ends up what being what it is, default defraud energy users of $500 million, right? I mean, this is not like running into the 7 Eleven. And stealing some candy bars because the city no longer prosecutes petty theft, right? This is orders of magnitude more significant than this. And I and I do believe I read and I believe that there has been some referral for potential criminal charges in this whole thing, given the scope of the fraud. Um it's all gonna work out, it work itself out over time, but you know, it's not a small deal.
SPEAKER_00Yeah, there's a lot going on with this story, and we'll keep an eye on it.
SPEAKER_01Uh we will. Um, let's move on to our next one. Our other North Carolina, did James Comey threaten to kill President Trump? Is the headline. And for those who may not know about this, we'll catch up real quickly. This is originally um back in May 25. James Comey, uh, who is the former FBI director, he posted on Instagram an image showing seashells forming the number 8647 on the beach. He deleted it now. 8647. The government's reading is the the term the number 86 is slang for getting rid of something. And 47 probably refers to the 47th president, right? So the number was 8647. And the reason this is even controversial is because it could be a number code for get rid of 47. And that could be interpreted as a veiled threat.
SPEAKER_00Nearly a yeah, and he had like a little cutesy um caption for it. Cool shell formation on my beach walk. That's what he said.
SPEAKER_01And this happened in North Carolina, yeah. For those of us who are local and care, and uh and and that's why these um these charges have been brought in North Carolina, which is why it's both a national and kind of a local story. Now, the two kind of the positions here. Acting attorney general Todd Blanch has argued that the case isn't just about one post, saying that prosecutors collected a body of evidence over roughly 11 months that was presented to the grand jury and that the full evidence would come out at the public trial. Comey's team, led by four more former federal prosecutor, Patrick Fitzgerald, has signaled it will seek dismissal on grounds of selective and vindictive prosecution alongside a First Amendment defense that the Post is protected political speech and that he lacked criminal intent. Now, some important context here, Ashley, is that this is the second time the Trump administration has charged Comey. This the C the Seashell charge, I have to be very careful with my pronunciation, came out seven months after a separate Department of Justice effort to prosecute him for allegedly lying to Congress. An indictment, a federal judge in Virginia threw out because the prosecutor who led it, Lindsay Halligan, had been improperly appointed. Now, Ashley, do you think there's any possibility? And and Comey and Trump do not like each other. That is uh that is uh is well known. Is this just petty using the power of the federal government to get revenge on somebody you have personal beef with? What are the chances of that in your mind?
SPEAKER_00I I mean probably yes.
SPEAKER_01On some level, right?
SPEAKER_00I mean, yeah.
SPEAKER_01There's always prosecutorial discretion.
SPEAKER_00Well, it's I mean, it it was a s it was a very stupid and childish post. I mean, very stupid and childish. You would you would expect more mature behavior from Was it a serious I I know like when I saw it, I was like, how is this person in charge of the FBI? We don't think that's the same. How was he? Yeah. I mean, how how I mean we do not live in a serious society.
SPEAKER_01Well, in fairness, I have seen the president also put some things on social media where I asked the same question, right?
SPEAKER_00Yeah, like well, that's we should expect better from our societal problem. It's a spread. Um, so this is obviously like beneath the dignity of someone who has such an office or used to hold such an office. It is ridiculous that our FBI, former FD FBI director, would put that kind of shell formation on the ground.
SPEAKER_01Do you think he did it? I mean, and this is we're just gonna speculate for a moment because I have no idea. Do you think he's on a walk and he just happened to see this? Or did he actually like take the time to gather all these shells, put them in an 86-47 formation, and then take a picture?
SPEAKER_00I was assuming he did it. I guess. I actually was assuming he not. He did not. Okay, but I don't think that's interesting.
SPEAKER_01But that's based on you know, nothing.
SPEAKER_00Either way, he liked it. Yeah, he and he posted it. And it's like, does is anyone taking this? I mean, I don't take that as a serious threat. I do take it as extremely like inappropriate, and you should never post this. It's not funny at all. And I do think it, I do think the body of evidence that they have gathered that's supporting this 8647. I mean, do can I say right now, oh, this is petty, like I'm gonna go after my enemies with the power of the federal government. I I guess I'll take that back because I don't I don't know what they found. Um, but it definitely seems like I don't like what you're doing, and I'm gonna show you that.
SPEAKER_01Yeah, in isolation, you don't think that's a threat. That legally that is basically everything, right? Because as as I mentioned earlier, they will raise a First Amendment defense um to this these criminal prosecutions. And the the question the jury will be asked is do you think this is a true threat? Do you think because nobody argues for the idea that threatening someone's life is first you say that with your mouth, right? But if it's a real threat, I'm gonna kill you, and you have a gun, you don't have a right to say that. The constitution does not protect that. True threats are not protected speech. That is that is generally understood. The question here that a jury would have to answer, will have to answer, assuming this does go to trial, is do you believe that this message, 8647 in the seashells, posted on Instagram, was a true threat from the former FBI director.
SPEAKER_00Do you think it was a true threat?
SPEAKER_01No. I do I think that James Comey really was intending to like attack the president? I think politically he'd love to destroy him, all sorts of things. Do I think he actually was calling for violence?
SPEAKER_00No.
SPEAKER_01Yeah. I mean, you know, it's was calling for violence. Yeah, that's yeah, that's interesting. Would he be sad about it? I mean, you know, the world that we live in where there has been so much violence, and you see when the violence happens, how many people are like, oh, yeah, how about that, right? I mean, tragically, there's a lot of people who think it is an appropriate response to things. I I mean, do I want to believe better of James Comey? Of course. Um, I don't know the man at all.
SPEAKER_00How do you parse out like what what is in someone's heart when they do something like this? You know? Like if someone's like, hey, I'm gonna kill you. Ha ha ha, just kidding. Well, like, how do you is that a threat? Like, I mean, how do you know what's in like someone's true intentions are?
SPEAKER_01Well, my kids have threatened each other with death so many times I can't count it, right? How many times have I heard one of my children say, I'm gonna kill you to one of my other children? Nobody actually believed it was a true threat. We understand it's it's an expression of frustration. And so that's that's you know, we're all kind of familiar with that. We probably all threatened to kill somebody at some point in our lives, and we didn't really mean I'm gonna end your life. Right. It's just uh a way we vent, and sometimes it's just playful. So um, we know that context matters in human communications and the way we say things. And did he think it was funny? Was he trying to be cheeky? My yeah, my guess is everybody knows that he has beef with the president, and and so he's kind of like I assumed that he actually actually did come across it, and so he's like, Oh wow, how about that? This is kind of funny, and maybe people will chuckle because of my beef with him.
SPEAKER_00Um but it's hard to convince me that the former FBI director was actually trying to plan an assassination, which is why I think if yeah, we we'll see what the body of evidence reveals that Todd Blanch and whoever's working with him has come up with. But just this one post alone seems like it's to me, it doesn't seem like it would be hard to prove that that's a serious threat and that he should go to jail for for 10 years. Although I'm very sad that the former FBI director thinks that's funny and wants to post it.
SPEAKER_01Yeah, that's that's it's its own kind of problem.
SPEAKER_00Yeah.
SPEAKER_01But the trial was originally scheduled for July 15th, that has been postponed. Trial date is now set for October. I'm gonna assume they're gonna go to trial. It's at this point. Uh, because the government seems um intent on carrying this out. It feels personal to me. We'll see. And uh we'll see what happens. But we will keep you abreast of all of it. Friends, thanks for joining us so much. Today, here on Politics for Happy People. Reminder that new episodes drop every Tuesday and every Friday. So, like and subscribe wherever you have found us so you don't miss the next one. We look forward to talking to you then.