WASHINGTON (Bloomberg) -- Fisker Automotive Inc., a maker of luxury plug-in cars, was allowed to keep using money from a U.S. Energy Department loan after violating its terms multiple times, according to a research report.
The Energy Department, which gave Fisker a $529 million line of credit in 2009, knew by December 2010 that the carmaker wasn't meeting milestones required to keep drawing taxpayer funds, according to a report by PrivCo, a New York-based researcher specializing in closely held companies.
PrivCo said it based its report on documents obtained through the Freedom of Information Act.
While the Energy Department cut off Fisker's funding in June 2011, after the company drew down about $193 million, the delay allowed additional taxpayer money to be lost, the report said.
"They made a mistake" in awarding the loan, PrivCo Chief Executive Officer Sam Hamadeh said. "Should they have fought this sooner? Obviously -- as soon as it became evident that they had begun to default."
Fisker, based in Anaheim, Calif., stopped manufacturing cars late last year and has retained Kirkland & Ellis LLP, a law firm with one of the largest U.S. bankruptcy practices.
The company laid off three quarters of its remaining workers April 5 after producing only 2,500 units of the $103,000 Karma. The plug-in car is assembled in Finland.
Fisker's first repayment of $20.2 million on the Energy Department loan is due April 22, the report said.
Technical defaults began in 2011 and included having lower-than-required earnings before interest, taxes, depreciation and amortization, and failing to meet a production milestone of at least 11,000 vehicles sold to dealers for an average of $87,500 by Sept. 30, 2011, Hamadeh said.
Tony Knight of Sitrick & Co., an outside public relations agency representing Fisker, declined to comment.
A U.S. House panel is scheduled to hold a April 24 hearing on Fisker and its government financing.
Invited witnesses include co-founder and namesake Henrik Fisker, who resigned last month; CEO Tony Posawatz and Chief Operating Officer Bernhard Koehler, who helped start the company whose customers include singer Justin Bieber and actor Leonardo DiCaprio.
"PrivCo's report raises more questions as to the circumstances surrounding government support for Fisker," Representative Jim Jordan, an Ohio Republican who is chairman of the House Oversight and Government Reform subcommittee holding next week's hearing, said Thursday.
The Energy Department, which has had to defend its loan guarantees to failed solar-panel maker Solyndra LLC, halted Fisker's access to its loan about 13 months after the lending agreement was signed.
The department acted responsibly by cutting off Fisker's access to its loan when it did, said Bill Gibbons, a spokesman.
"The Department of Energy stopped payment on the federal loan in 2011 after Fisker stopped meeting their milestones, and is committed to the best outcome for taxpayers," Gibbons said. "Despite Fisker's difficulties, our overall loan portfolio of more than 30 projects continues to perform very well, and more than 90 percent of the $10 billion loan loss reserve that Congress set aside for these programs remains intact."
Fisker received the money primarily to acquire and restart production at a closed plant of the predecessor of General Motors Co. plant in Delaware, the home state of Vice President Joe Biden, who attended the press conference announcing the loan.
The company forecast it would create 2,500 jobs, according to a project summary still posted on the Energy Department's website.
Activity at the Delaware plant stopped last year and no cars have been made there.
PrivCo, in its report, estimated Fisker has spent $660,000 in government and venture-capital investment for each car it's produced. Of those, about 1,600 were purchased by consumers. Another 338 cars, worth more than $33 million, were destroyed during November's Superstorm Sandy while parked at the Port of Newark, N.J.