Citibank has revealed in court filings that the FBI, the EPA, the EPA inspector general, and the Treasury Department have requested that the bank freeze accounts of several nonprofits and state government agencies, citing concerns of fraud related to the Greenhouse Gas Reduction Fund.

The accounts in question were frozen in February, but the new documents provide previously unknown details, including a full list of the nonprofits under FBI scrutiny. The funds were disbursed as part of the $27 billion Greenhouse Gas Reduction Fund, created by the Inflation Reduction Act passed by Congress in 2022.

The EPA received $14 billion for a National Clean Investment Fund, which provides grants to green banks. These green banks use the funds to provide financing for clean technology projects around the country. Startups with technologies ready to scale commercially were eligible to receive financing to make projects a reality. The funding was mostly used for loans, which were to be paid back and recycled for future lending.

Citibank was selected as the financial agent to administer the funds, holding them in accounts under the names of the awardees. The EPA's contract with Citibank was publicly announced in April 2024. However, EPA administrator Lee Zeldin has expressed concerns about fraud, although he has not provided evidence to support his claims.

The FBI has requested that Citibank place 30-day administrative freezes on accounts held by nonprofits that were recipients of the green bank funding. The affected organizations include Habitat for Humanity, United Way, the Colorado Clean Energy Fund, and New York State Department of Taxation and Finance. Three nonprofits that received green bank funds have sued Citibank, asking the bank to release the money in their accounts.

In a recent hearing, a judge in the U.S. District Court for the District of Columbia questioned a Justice Department attorney representing the EPA. The judge asked for evidence of fraud, abuse, or bribery, citing a lack of credible evidence to support the claims. The judge has ordered the Justice Department to provide the court with details about the alleged fraud.

The development raises concerns about the impact on clean technology startups and green banks, which rely on the funding to support their projects. The freeze on accounts may hinder the progress of these initiatives, potentially stalling innovation in the clean energy sector.

The incident also highlights the importance of transparency and accountability in government-funded programs. As the investigation unfolds, it will be crucial to determine the validity of the fraud claims and ensure that the funds are being used for their intended purpose.

As the situation continues to evolve, it remains to be seen how the account freezes will affect the clean energy sector and the startups that rely on these funds. One thing is certain, however: the need for transparency and accountability in government-funded initiatives has never been more pressing.