A Leap of Faith

Don’t you just love how the Holiday Season is filled with faith and self reflection?  It is a truly an inspirational time of the year.  Thus, I was upset to get a recent email that discussed a tactic used by David Feuerborn to raise money from people of faith.  Apparently he is telling them that Jesus came to him in the middle of the night and showed him how to make R6000 (or whatever he is calling his toxic solvent these days). 

This is a truly disgusting revelation.  I knew that Tom and David were deplorable individuals, but this takes the cake.  David must pray to a different god, because the God I pray to wouldn’t teach people how to scam their fellow man with toxic chemicals, lies, and misrepresentations. 

David also uses threats to avoid lawsuits from ESS investors.  He tells dissatisfied investors that if they sue him then his reputation will be damaged and he cannot raise more money for his fictional machines, and thus their investment would be lost forever.  Until now this lie has kept ESS investors at bay, but we aren’t drinking the Kool-Aid anymore.        

I wonder if David and Tom received some investor sponsored cars and interior decorating this Christmas?  

I am glad their trial begins in 21 days.  Let us all pray for swift justice and a long prison sentence.   

Hey David, how about a New Year’s Resolution not to scam any more people?  If you are truly a man of faith then that is the only way you can seek redemption for all the lives you have ruined with your lies and cons. 

-ESS Investor

See No Evil, Hear No Evil

I hadn’t planned on another entry until after the holiday season, but I received a very interesting email from an anonymous source last night.  There was certain information that I thought should be shared with the public.  The email contained excerpts from the transcript of the hearing that took place in Dallas, Texas on November 17, 2010.  (DISCLAIMER: I have not ordered a complete transcript of the hearing because it is expensive.  I have no way to validate the information contained in the email, but I will consider it factual until proven otherwise.  I will also redact this entry if I discover that the information I received is incorrect.)

The portion of the transcript that I received is a conversation between the Judge and Larry Shultz:

“The Judge:    Feuerborn and Jennings invented this technology?

Shultz:           Right. And I introduced them to Freestone.  I was not a partner in any way with Jennings and Feuerborn I was totally separate, independent entrepreneur trying to put a deal together between two different parties. 

The Judge:    [Y]ou said you’re not a partner with Feuerborn and Jennings, so are you retained as a – a – like  –

Shultz:              No.

The Judge:       -- as an agent?  I mean, what are you getting out of –

Shultz:           Like an introducer.  I introduced it to them, I introduced them to Freestone, and for that I got stock.  I got a share of the deal.  But I’m not a partner with them.” 

I haven’t seen someone try and create this much distance for himself since Democrat Rep. Joe Donnelly’s November campaign ads against Obama and Pelosi. 

This corroborates the information I was told by a previous tipster.  The blatant attempt of Shultz trying to separate himself from the fraud was mentioned in my blog post entitled Thank You Tipsters.  This information came from two different sources, and thus I believe it to be factual.  It looks like this is becoming an “every man for himself” situation.  We all know that David is the brains of the fraud.  Maybe they are turning on him to do some damage control?  Only time will tell.      

-ESS Investor

Civil Case Response Explained

Freestone’s Response and Brief in Opposition of Defendants' Motion to Dismiss for Failure to Join an Indispensable Party (“Response”) was very well put together.  The legal counsel I consulted with thinks that Freestone has a strong argument contained within their Response.  Let me begin with brief recap of events. 

Recap           

Feuerborn, Jennings, Shultz and ESSI (“Defendants”) filed a Motion to Dismiss for Failure to Join an Indispensable Party (“Motion to Dismiss”) approximately three weeks ago.  This was a second attempt to get the Civil Case dismissed.  Their first motion to dismiss was denied by the Court, so they attempted another stall tactic to avoid answering the lawsuit.  (Note: It’s difficult to answer a lawsuit when you know you lied and committed fraud.)  Freestone has presented numerous exhibits where Feuerborn and Shultz sent emails claiming that the Solvent Technology is non-toxic and environmentally safe.  Freestone has also presented a Material Safety Data Sheet given to them by the Defendants that makes the Solvent Technology appear as safe as water when we all know it’s very toxic.

The Defendants filed their Motion to Dismiss, because they felt that Earth Oil Services (“EOS”) (the company that was purchased by Freestone from the Defendants) was an indispensable party to the Civil Case.  EOS is a Nevada corporation and Freestone is a Nevada corporation.  In a Federal lawsuit you are required to have a complete diversity of jurisdiction; simply put, the Plaintiff and the Defendants must not be in the same state.  The Defendants are attempting to attach EOS to the lawsuit so that complete diversity jurisdiction does not exist, and thus the Civil Case would be dismissed on a technicality.  This is just another attempt to throw something against the wall to see if it sticks so that the Civil Case does not produce evidence that the U.S. Attorneys can use in the Criminal Case against Feuerborn and Jennings.    

Freestone’s Response

In Freestone’s Response they are essentially arguing that (i) EOS was never a party to the agreement signed by the Defendants and Freestone, (ii) no further relief could be granted by the court if EOS was a party to this lawsuit, and (iii) nothing ever occurred in the EOS entity.  There is case law cited within the Response that supports Freestone’s argument, and it looks like there are multiple precedence in favor of Freestone. 

            Here are some common sense factors as well:

If Freestone owns 100% of the shares in EOS, and if EOS was a party to the lawsuit, then wouldn’t Freestone be suing itself?  That doesn’t make any sense. 

If someone buys a defective product (in this case EOS), and they want their money back, then they sue the person that sold them the defective product.  Why would the Court require the defective product to be involved in the lawsuit?  This is how it was explained to me:

Let’s say that you (a Texas resident) purchase a car (located in Texas) from your friend (a California resident).  Your friend represents that the car is in perfect working condition.  After you purchase the car you find out that it won’t even turn on.  Your friend refuses to give you your money back so you sue him.  Then your friend tries to require the Court to attach the car to the lawsuit (because the car is located in Texas and you are a Texas resident) in a frivolous attempt to get the case dismissed.  What relief, monetarily or otherwise, can you get from the car?  You can’t, and thus it would not be an indispensable party. 

There is also a three part test (rule 19 (a)) to determine if a party is “indispensable” and Freestone argues that EOS is not a required party through this test.  The Judge will probably see this Motion to Dismiss for what it is (another stall tactic), and deny this second attempt to dismiss.  It’s too bad that these dirty tricks can be used to stall a lawsuit that has a lot of merit.  I guess it all comes down to ethics, and if the Defendants had any ethics then there wouldn’t be a need for the Criminal and Civil Cases in the first place.      

Merry Christmas, and may we all have a justice filled New Year!

-ESS Investor

Civil Case Update

Freestone filed its Response and Brief in Opposition of Defendants' Motion to Dismiss for Failure to Join an Indispensable Party.  This document has a lot of legal jargon but it looks very well put together.  I need to consult with an attorney before I attempt to summarize it on this blog.  

Freestone also filed an Amended Complaint against Jennings, Feuerborn and Shultz.  I gave it a quick scan and compared it to the original Complaint and I found a very interesting addition that popped right out!  Apparently Freestone discovered that Larry Shultz fraudulently transferred a bunch of stock to hide it from the SEC and Freestone.  I think the SEC is going to be very interested in this new information.  I will analyze the Amended Complaint further and see if there is anything else.  Here is an excerpt from the Amended Complaint: 

“4.20   Defendant Shultz has intentionally and purposefully concocted and implemented multiple fraudulent conveyances and transfers of Plaintiff’s common stock. Defendant Shultz, undertook these fraudulent transfers in order to (i) circumvent, thwart, and avoid the proper reporting requirements relating to shareholders of Plaintiff that are “affiliates” of Plaintiff, as that term is defined under SEC Rule 501(b), promulgated pursuant to the Securities Act of 1933, as amended (i.e.; owners of 5% or more of the issued and outstanding stock of a fully reporting publicly held and traded company), (ii) avoid proper reporting to the United States Securities and Exchange Commission, as required on SEC Forms 3, 4, and 5, and (iii) attempt to disguise said fraudulent transfers of Plaintiff’s common stock, and make said transfers appear to be sales to bona fide purchasers, when in fact, said transferees were not bona fide purchasers. In implementing such fraudulent transfers of Plaintiff’s common stock, Defendant Shultz made seventeen (17) such fraudulent transfers of Plaintiff’s common stock to the following individuals: 1.) Mislynne Charles, 2.) Jon Dehan, 3.) Family Tree Investment Properties, 4.) Don Gold, 5.) Camilo S. Jorge, 6.) Emil S. Jorge, 7.) Larson Tech Ventures, 8.) Liquid Coal Associates, 9.) Robert Nicholson, 10.) Amin Ramji, 11.) Sally Shultz, 12.) Brian L. Shultz, 13.) Eric L. Shultz, 14.) Alexander L. Shultz, 15.) Jordan Shultz, 16.) Shultz Family 1989 Inter Vivos Trust, and 17.) Walter Stevens (“The Transferees”), totaling 5,875,000 shares. As further evidence of the fraudulent transfer of such stock transfers by Defendant Shultz to The Transferees, the addresses of The Transferees are listed as the home address of Defendant Shultz.  The Transferees are not “Protected Purchasers” (sometimes also referred to in other jurisdictions as “Bona Fide Purchasers”) as defined under Section 104.8303 of the Nevada Revised Statutes. Additionally, some of the individuals who comprise The Transferees are controlled by, or are indisputably related to, Defendant Shultz.

4.21    The actions of Defendant Shultz, as described in Section 4.20 above, are intentional violations of:

Sections 16(a) and 23(a) of the Securities and Exchange Act of 1934;

Sections 30(h) and 38 of the Investment Company Act of 1940;

SEC Rule 10b-1; and

SEC Rule 10b-5.

Additionally, any of the individuals who comprise The Transferees who had actual knowledge of Defendant Shultz’s intent to fraudulently transfer Plaintiff’s stock, are engaged in a conspiracy with Defendant Shultz to violate the above listed securities laws of the United States” (Case 3:10-cv-01349-O ; Pages 210 and 211).

WOW!  It’s amazing how many people are involved in this!  Maybe we will see more people included in the civil lawsuit.  It sure looks like Freestone is setting the stage for more legal action.      

-ESS Investor

Criminal Case Update

A new motion was filed by the United States Attorney’s Office on December 17, 2010.  After reading the latest motion, I consulted with a criminal litigator.

Apparently the attorneys representing Feuerborn and Jennings are not complying with the Federal Rules for Criminal Procedure, and doing everything wrong.  The criminal attorney I consulted with said that this is Law School 101 stuff.  As an outsider, watching the pretrial motions via PACER, one might ask if the attorneys for Feuerborn and Jennings have ever been involved with criminal litigation.  Here are some excerpts from the Motion filed by the United States Attorney’s Office: 

“Defendants Thomas R. Jennings and David J. Feuerborn face trial on January 18, 2011, for tax fraud. Both defendants are charged with conspiracy to defraud the United States (18 U.S.C. § 371); defendant Jennings is charged with five counts of subscription to false tax returns (26 U.S.C. § 7206(1)); and defendant Feuerborn is charged with five counts of income tax evasion (26 U.S.C. § 7201).”

“To date, the government has produced approximately 43,300 pages of discovery to defendants, including witness statements under the Jencks Act, 18 U.S.C. § 3500. (Declaration of Eric D. Vandevelde ¶ 2.) The vast majority of these materials, approximately 93%, were produced on May 12, 2010, approximately three weeks after defendants’ arraignment and one day after this Court signed the protective order for discovery in this case. (Id.) The government will continue to comply with its discovery obligations as this case proceeds.”

“[T]he government repeatedly requested that defendants produce all reciprocal discovery materials mandated under Federal Rules of Criminal Procedure 16(b) and 26.2, and the Jencks Act. (Id. ¶ 3.) The government has emphasized, in particular, the need to receive expert disclosures from defendants. (Id.) To date, neither defendant has produced any discovery or made any expert disclosures to the government.”

“Accordingly, the government respectfully requests that this Court order defendants to comply with their obligations to produce reciprocal discovery materials by no later than January 10, 2011 (eight days before trial and the hearing date on this motion)” (Case 2:10-cr-00346-SJO ; Pages 575 and 576).

Below is another excerpt from the Government’s motion explaining the rules that Jennings and Feuerborn are ignoring:

“A defendant is required to produce reciprocal discovery under Federal Rules of Criminal Procedure 16(b) and 26.2, as well as under the Jencks Act. If a defendant requests discovery and the government complies and demands discovery itself, the defendant must provide the following reciprocal discovery: ‘books, papers, documents, data, photographs, tangible objects, . . . or copies or portions of any of these items if . . . the item is within the defendant’s possession, custody, or control; and the defendant intends to use the item in the defendant’s case-in-chief at trial.’ See Fed. R. Crim. P. 16(b)(1)(A).

A defendant must also produce a written summary of any expert testimony a defendant intends to offer at trial under Federal Rule of Evidence 702, 703, or 705. See Fed. R. Crim. P. 16(b)(1)(C)” (Case 2:10-cr-00346-SJO ; Page 576).

29 Days until their trial date!  It’s getting down to the wire.  Their trial would be a great place for ESS investors to meet and and exchange information.

-ESS Investor

SaltWaterloo

I received another email from a tipster that told me that David, Tom, and Lawrence claim that they can now remove salt from salt water with a new solvent.  This is one of the new extraction methods they are trying to sell in order to raise money from investors.  They claim the salt-removal solvent can be reused over and over again for a “non-hazardous” way to extract salt from ocean water.  In reality they are using simple chemistry to make something look like something it isn’t: AgNO3 + NaCl ---> AgCl + NaNO3. 

Here is that equation demonstrated on YouTube:  http://www.youtube.com/watch?v=yR0LdabBbIw.

I haven’t seen his salt water extraction demo, but I have to assume it looks a lot like the demonstration on the YouTube video linked above.

Legal Cases

I wonder if a settlement will be reached in the Civil Case before the Criminal Case begins in January?  I have been expecting that to happen in an attempt by David and Tom to fight a war on only one front, but like Hitler and Napoleon, David and Tom have enormous Ego issues so I doubt they will.  It’s probably better for ESS investors if they don’t settle so we can amass more evidence if/when a shareholder lawsuit occurs. 

From a David and Tom perspective, it’s probably not the smartest move to have a civil fraud case occurring simultaneously with a criminal fraud case (especially when it comes time for sentencing), but who knows what advice they are getting from attorneys trying to take depositions in a criminal case outside the scope of Rule 15. 

Rumors are that there might be a third front in the making.

I hear that winters can get pretty cold on the eastern front.  It might be best if the Defendants bring a heavy coat and scarf to the next hearing down Texas way.

- ESS Investor            

Statute of Limitations???

I assume by now you have all read my blog post entitled “Interior Decorating”.  In that blog post I stated that David Feuerborn and Thomas Jennings signed a stipulation admitting that they had paid an interior decorating company $20,660.67 out of an “EcoLogic” bank account.  Thus, admitting they created a bank account called EcoLogic to fool investors into thinking that money was going to a real manufacturing company called Eco-Logic.   

In most states the statue of limitations on fraud begins at the time of the discovery of that fraud.  Thus, this stipulation is direct evidence that (i) they created a bogus bank account to fool investors, and (ii) used investor money outside the scope of their use of proceeds.  This stipulation provides a date from which the statue of limitations can begin anew, because until that stipulation was filed we only had allegations of fraud and had no direct and irrefutable proof that fraud occurred.  This is great news for the potential ESS lawsuit against Feuerborn and Jennings!

Let’s think for a second why David and Tom might claim they needed a bank account with a name deceptively similar to the real manufacturing company.  They might argue that they were building part of the components for the real machine, or ordering chemicals under that company name.  But why does the name of the bank account matter?  It looks to me as if they were trying to get around the use of proceeds for the money they raised.  Even if they claim they created the bogus EcoLogic account because they were doing work on the machine or ordering chemicals, then why did they pay for interior decorating from the EcoLogic account rather than from their personal accounts?  They just don’t have a rational argument.  Get excited ESS investors.  This is a big deal!

-ESS Investor      

Not So Fast

I have a couple updates in the Criminal Case.  First and foremost, the Judge heard the various motions that have been previously discussed on this blog.  The Court published the minutes from that hearing.  In summary, the Judge denied all the motions filed by Dave and Tom and granted the motions filed by the U.S. Attorney.  Here are some excerpts:

• "The Court denies defendant Feuerborn’s oral motion to take deposition of custodian of records."
• "The Court Grants Government’s Motion for Order for Admitting Business Records under
  Declarations of Custodian of Record Pursuant to 902(11) and 803(6)."
• "The Court sets a Pretrial Conference on Monday, January 10, 2011 @ 10:00 a.m."

Another document was filed in response to Neil Evans' request for a continuance in the mater that was previously ruled upon.  It wasn't an answer from the Judge or the U.S. Attorney, but rather the clerk told Neil that he hadn't filed his continuance request correctly.  Shouldn't a seasoned lawyer know how to file documents with the court?  This seems like a baby lawyer mistake.  Here are some excerpts from the clerk:

• "Proposed [Request to Continue] was not submitted as separate attachment missing proposed order."
• "Proposed orders for Judge's approval are to be formally and separately prepared and submitted as a separate attachment to main document."  As an alternative, prepare and e-file formal Notice of Lodging, to which the formal proposed order is submitted as Separate Attachment thereto."
• "In response to this notice the court may order 1) an amended or correct document to be filed 2) the document stricken or 3) take other action as the court deems appropriate."

 Surely all these mistakes aren't a setup to claim deficient representation when they are convicted.

-ESS Investor

Interior Decorating

A stipulation was signed today by the U.S. Attorney's office, David Feuerborn, and Thomas Jennings where Tom and Dave admit to using funds in the bogus EcoLogic bank account to pay $20,660.67 to an interior decorator that did work at the house of Thomas Jennings.  This is definitive evidence that Dave and Tom used investor money in the bogus EcoLogic bank account for their personal extravagances.

Recap:  A company called Eco-Logic was purportedly building a machine that cleaned oil sands.  Eco-Logic (spelled with a dash) is a real company.  Tom and Dave created a Wells Fargo bank account called EcoLogic (no dash) to deceive investors into thinking that investor money was going to the real company that was purportedly building the machine.  Instead, they were using that money to buy cars, RVs, and interior decorating, etc.  ESS investors can use this Stipulation to prove that they defrauded ESS if we file a civil lawsuit against Feuerborn and Jennings.  Freestone can probably use this stipulation as well to show that these guys have a history of using deceptive tactics to deceive investors.    

-ESS Investor

The Rift

I have a small update to give you before I take off for the weekend.  In the Criminal Case Neil C. Evans filed a Request to Postpone Hearing of 12/6/10 to a Date Later in the Week.  (This hearing is to determine if David Feuerborn has the right to cross-examine “non-testimonial” witnesses (ie: Bank Officers, etc.).  As in the previous trial continuance request, Neil Evans cites the bad health of his parents as the reason for this hearing continuance request.  Obviously I wish no ill will towards his parents, and I think family always comes first, but I still question his ability to fly all over the United States to protect these guys while dealing with all his family problems.  Shouldn’t he divide his work load with another attorney so justice is expedited in both cases?  That seems like the ethical course of action, instead of throwing out nonsensical motions to delay the cases in order to buy more time.        

   

Don’t you find it interesting that the two Defendants, David and Tom, finally disagreed on their position to the Government’s latest motion?  Maybe there is a rift that is starting to occur.  That usually occurs in criminal cases, and one party will testify against the other for a lessor prison sentence.  As the likelihood of jail time quickly approaches things could be really heating up between the two.  We shall see.

Also, I have received a few emails from individuals stating their willingness to help testify against Tom, David, and Larry.  That is great and all, but you should really direct those offers towards the U.S. Attorney and Freestone.  If you have any new evidence that can help either case, or if you are willing to testify against them as a character witness I recommend you make contact with either the Government or Freestone ASAP.  I am sure they will both be grateful!

-ESS Investor

Totally Lost…

I’m trying to understand the latest Motion and Response that occurred in the Criminal Case.  First and foremost, Neil C. Evan’s filed Opposition to Motion to Admit Business Records (“Opposition Motion”) and he put the hearing date as “6/6/2010”, but I believe he means 12/6/2010 (Case 2:10-cr-00346-SJO; Page ID 547).

Apparently David Feuerborn opposes the U.S. Government’s Motion to Admit Business Records which was discussed previously on my “Payday” entry.  According to Neil’s Opposition Motion, David desires to “cross-examine each of the proposed Declarants to address issues of authentication of records in each and every respect, and as to any other issue raised by these proposed Declarations” (Case 2:10-cr-00346-SJO; Page ID 548).  According to the Opposition Motion David believes he has the right to confront or cross-examine witnesses under the Confrontation Clause.  That said, it states that David doesn’t mind streamlining the process by taking depositions “at the expense of the [U.S. Government]” (Case 2:10-cr-00346-SJO; Page ID 548).  (Yeah, I’m sure he wouldn’t mind putting it on Uncle Sam’s tab!)  Further, David proposes taking the depositions via telephone and/or SKYPE to expedite the process. 

Hmmm.  This seemed a bit odd to me, and apparently the Assistant U.S. Attorney felt the same way.    So what did the Assistant U.S. Attorney reply with?  Well let’s take a look.  On December 1, 2010 the U.S. Government filed the Government’s Reply in Support of Motion to Admit Business Records under Declarations of Custodian of Record Pursuant to 902(11) and 803 (6) (“Government’s Reply”).  In summary, the Government’s Reply indicates that they want to take testimony, that won’t be entered into the trial as evidence, in order to authenticate bank documents, etc.  Why would anyone need to cross-examine a banker that authenticates a bank document?  Any opposition to this request seems like a stall tactic to me, and apparently there are specific laws to ensure that this attempted delay tactic does not occur.  Also, it should be noted that Thomas Jennings does not oppose the Government’s Motion to Admit Business Records.  Thus, the Government stated the following in its response:

“Defendant Feuerborn fundamentally misunderstands the scope of the Confrontation Clause, specifically, the difference between ‘testimonial’ and ‘non-testimonial’ evidence as well as its applicability to pretrial Rule 104 hearings on the admissibility of proffered evidence” (Case 2:10-cr-00346-SJO; Page ID 554).  Further the Government’s Reply states, “Defendant Feuerborn’s proposal should be rejected.  Except for those permitted by rule 15, there are no depositions in criminal cases” (Case 2:10-cr-00346-SJO; Page ID 559).

You’re telling me that a seasoned criminal attorney doesn’t know that there are no depositions in criminal cases…

The Government’s Reply notes that the only testimony that could even be regarded as “testimonial” (which would allow the Defendants the right to cross-examine the witness) is testimony taken from a woman that performed the interior decorating on Mr. Jennings’ residence.  So that begs the question – what does David Feuerborn have against this woman’s testimony.  If anyone objects to it shouldn’t it be Jennings?

I think the court will see this for what it is – another stall tactic.  This seems to be their modus operandi in both the Criminal Case and Civil Case. 

Judge Otero will rule on this motion on December 6, 2010.  I will post his ruling when it comes across the wire.

-          ESS Investor 

Birds of a Feather

Yesterday I mentioned that I had a big tip that came in.  It is a huge game changer.  (When I get a tip I always ask the tipster if I have permission to publish the tip on this blog.)  During my email discussions with this certain tipster we decided to postpone the publication of this news to give Freestone and the U.S. Government the strongest cases possible.  I don’t want to jeopardize the integrity of either case.  That would be counterproductive from the original intent of this blog.  The last thing I want to do is give the Defendants a heads up on what’s to come.  But don’t worry.  I will post this revelation as soon possible. 

$20,000,000

The tipster that gave me the big news told me that I could publish the real number that David and Tom raised.  That’s right.  They raised more than $20,000,000 in this scam in both the United States and Canada.  According to the Grand Jury Indictment, David on Tom pocketed $2,000,000 (that they know about).  That begs the question, where did the rest go?  Is there hidden money that is unknown to the IRS?  Is there money hidden in offshore bank accounts?  Is there money hidden in Canada?  Where did the other $18,000,000 go that is partially ESS money? 

Larry Shultz   

The title of this post is in reference to a separate tip I received about Larry Shultz.  The tip was about two different scams he perpetrated on a different group of investors.  These scams involve forged documents and the theft of certain technologies.  The tipster gave me some of the corporate names he operated under, and I would like to do some research prior to posting more information on these previous scams. I guess it is true of what they say about birds of a feather…

I want to say a special thanks to all the tipsters (7 total thus far).  Your information is invaluable.  I have also had a spike in page hits over the last week (500 just yesterday).  Clearly a lot of people have been hurt by these guys.        

-ESS Investor

Cataclysm!!!!

Just got a HUGE tip!  Something BIG is brewing.  It involves new evidence, and both the Civil and Criminal Cases!!!!  Stay tuned!

-ESS Investor

Throw it Agsint the Wall and See if it Sticks

What do you do if you are sued for committing a massive fraud against someone, and you know you are guilty?  If you are like me then you don’t know because you aren’t a criminal!  If you are David, Tom and Larry then you have your attorney try to dismiss the case with every dismissal option allowed by the Federal Rules of Civil Procedure.  (Note: I consulted an attorney after I saw the latest Motion the Defendants filed in the Civil Case.)

Neil C. Evans, the legal counsel for David, Tom and Larry, filed another Motion to Dismiss entitled Notice of Motion and Motion to Dismiss for Failure to Join Indispensable Party (12) (b) (7) ) and to Dismiss for Lack of Subject Matter Jurisdiction (12) (b) (1) ) (Case 3:10-cv-01349-O ; Pages 195-201).  When an attorney for a Defendant knows that the Plaintiff has a very strong case then this is a tactic to try and (i) get a case dismissed on a hope and a prayer, or (ii) delay the process because the Defendant cannot answer the lawsuit without incriminating himself/herself.  The attorney I consulted also stated that there is a special reason for Neil to stall the Civil Case that is specific to this situation.  On January 11, 2011 David and Tom will face a grand jury trial in their Criminal Fraud Case.  Neil does not want any of their fraudulent activities in the Civil Case to affect their Criminal Case.  Thus, he does not want Freestone to take any depositions that could be used against David and Tom in the Criminal Case by the U.S. Attorney’s Office. 

Freestone also alleges some serious securities fraud violations.  These same violations could be argued in an ESS case against David and Tom.  More importantly I think everyone that purchased stock in ESS should contact the Securities and Exchange Commission and notify them that David and Tom sold securities through lies and misrepresentations.  Tell them about the Desist and Refrain Order issued by the California Department of Corporations (they are like California’s SEC).  Or contact OSHA and notify them that David and Tom have exposed investors to hazardous chlorinated substances which are also listed in the Desist and Refrain Order during their demonstrations in complete violation with the Toxic Substances Control Act (TSCA)15 U.S.C. §2622.  You will be protected as a whistle blower.   

It still amazes me that Neil Evans needs multiple continuances in the Criminal Case, but he has all the time in the world to file motions in the Civil Case and fly to Texas for hearings.  Something here doesn't add up.   

Once Freestone responds I will give a detailed account of the Defendants’ Motion and the Plaintiff’s Response similar to the blog entry that discussed their previous Motion to Dismiss for Lack of Personal Jurisdiction.  If you don’t remember, the Judge denied their previous attempt to dismiss this case.  So, there might be another hearing in this matter and Neil will fly back to Texas on ESS investor’s money.  This is the type of stuff you see on American Greed. 

-ESS Investor 

Thank you Tipsters!

Wow.  I wasn’t expecting any tips to come this quickly, but alas we already have some amazing information that have come from two different sources.  *Disclaimer*: The following information came to me from an anonymous source, and it has yet to be verified by the author of this blog.

Utah Lawsuit

On the ESS website it states, “[t]he Utah project with our Utah partners is currently raising funds to construct production systems in Utah to recover hydrocarbons from tar sands and oil shale.” 

Apparently we were not told the whole story about the Utah Venture.  In the early 2000s a lawsuit was filed by the Utah partner against David Feuerborn, Thomas Jennings, et al. for fraud relating to the chemical scam.  This lawsuit was filed in Utah state court.  The tipster gave me the county where the lawsuit was filed.  Once I get the information from the courthouse I can post the lawsuit number and pertinent information on this blog.  It is amazing how many lawsuits have been filed against Feuerborn and Jennings that relate to the chemical scam.  It seems that they keep trying to cover them up and explain them away with lies.  I am told the Utah Lawsuit ended in a settlement agreement between all the parties.    

Asa Kilander

The tipster confirmed that Asa Kilander is the girlfriend of David Feuerborn.  He also linked me to her Facebook page which indicated that she is friends with an “S. Feuerborn” (presumably kin to David).  As far as I am concerned this is definitive proof of this alleged relationship.  The tipster also informed me that she has in depth knowledge about the chemical and the scam.  The tipster indicated that this is why she was paid by ESS.  The tipster stated that he/she recently sent this information to the U.S. Attorney’s Office.  Maybe further criminal charges can be brought against the co-conspirators in this fraud to stop it once and for all. 

ESS Lawsuit 

Lastly, the tipster informed me that there is a group of ESS investors that have hired an attorney to determine if it will be feasible to file a lawsuit against Feuerborn, Jennings, and the other co-conspirators that received money from ESS (presumably the family members and friends that I have already mentioned).  I don’t know if this will be worth it because the IRS and Freestone are already going after them, and the IRS will probably get most of the assets of David and Tom.  Maybe they can get money from the other co-conspirators that were paid by ESS and that knew about the scam all along.  When the government published the W-2 forms it gave valuable insight into the money trail and who to go after.  The depositions in the Criminal and Civil cases will also give an indication of who knew what, and when they knew it. 

Second Tipster

As I began writing this blog entry I received another “You have mail” notification.  A second tipster informed me that two federal agents were in attendance at the Freestone hearing that took place a couple of weeks ago.  The tipster did not elaborate on why they wanted to attend the hearing.  Also, the second tipster stated that the judge questioned Larry Shultz about his association with David and Tom even though it was not brought up by the Plaintiff’s (Freestone’s) attorney.  Larry responded by saying he had no affiliation with David or Tom, but only introduced Freestone to David, Tom, and their company.  I find it very interesting that the judge probed into his affiliation with them.  The judge presiding over the Civil Case was previously a U.S. Attorney.  Maybe he finds it interesting that two of the defendants are being prosecuted by his former employer (the U.S. Government)? 

It looks as if the new partner of David and Tom, Shultz, is trying to totally distance himself from the scam and possible criminal charges.  I can’t say that I blame him, but I don’t know how believable it is to think that he was totally ignorant of their scam and the chemical's toxicity.  I will be able to confirm these statements once I receive the full transcript of the hearing.      

-ESS Investor 

Tips are Appreciated (Just Words - No Cash, Thanks!)

I hope everyone had a wonderful Thanksgiving.  I created a Yahoo email for people to send anonymous tips about David Feuerborn, Thomas Jennings, Lawrence Shultz, and anyone else that might be involved in this scam.  If you have any tips please send them to essinvestor62@yahoo.com. 

On November 22 the U.S. Attorney’s Office filed a proposed order to take the deposition of Kathleen Strode.  We are not sure who she is and what her affiliation is with ESS, but we will soon find out.  This proposed order is Page ID # 545 on PACER. 

It looks like the multiple continuances are coming in handy for the Government’s case against Feuerborn and Jennings.  They are using the extra time to amass more evidence against them.  Let’s be thankful to David’s attorney for stalling.  Also, if anyone else has additional information that might help the Government’s case against Feuerborn and Jennings please email it to Assistant U.S. Attorney Eric Vandevelde or Assistant U.S. Attorney Daniel Levin at eric.vandevelde@usdoj.gov and daniel.b.levin@usdoj.gov.   

- ESS Investor

Payday

The United States Attorney filed the “Government’s Motion to Admit Business Records Under Declarations of Custodian of Record Pursuant to 902 (11) and 803 (6)” in the Criminal Case against David Feuerborn and Thomas Jennings (Case 2:10-cr-00346-SJO: Document 53. Pages 234-239).  It was a busy weekend for me, because there were approximately 300 pages of exhibits attached to this Motion.  These exhibits give a clear picture of the fraud, and the extent of the fraud, that Feuerborn and Jennings perpetrated against ESS investors and others.  You won’t believe how much money went to friends, wives, decorators, cabinet manufacturers, etc.  It looks as if they used ESS money to buy items such as a Lexus and an RV as well.  I wanted to remain impartial, but I can’t help becoming extremely frustrated by the indisputable evidence that the U.S. Attorney’s office has compiled.

(Note: The personal information listed below was derived from the W-2 Forms published by the government as exhibits to the Motion.)

Let’s first look at Suzanne Jennings from Anaheim, CA.  She is the wife of Tom Jennings and for some reason she received $35,000 from ESS Environmental, Inc. in 2005 (Case 2:10-cr-00346-SJO: Document 53-4. Page 299).  I’d like some explanation of what she did for ESS to deserve that money.  I would also like an explanation as to why Suzanne and Tom purchased an RV that cost $62,143 with money diverted from ESS (Case 2:10-cr-00346-SJO: Document 53-4 and 53-5. Page 310 and Page 333 respectively).  There are also copies of checks written from “Ecologic” to Trinity Cabinetry by Tom Jennings for a new set of cabinets for their house.  If you don’t remember, Eco-Logic is the company that was purportedly building an oil sand machine.  They had ESS investors believe that they were paying the real Eco-Logic while they were actually diverting money into the fake “Ecologic” bank account they created so they could buy an RV and cabinets for their house (Case 2:10-cr-00346-SJO: Document 53-5. Pages 322-324).

Do you remember my blog entry that listed a company called Jewelry by Asa?  I didn’t know what the connection was.  (Note:  When I Googled the Lantana address David Feuerborn used for the "Cleansal" domain name "Jewelry by Asa" came up under the same address.)  Well, I found that connection buried within these exhibits.  Asa Kilander of Camarillo, CA was paid $28,000 dollars by ESS Environmental, Inc.  Somehow she is connected to Dave and Tom and the chemical scam (Case 2:10-cr-00346-SJO: Document 53-4. Page 300).  What if her “Swedish jewelry and clothing business” was a front company to hide ESS money?  What if there is hidden ESS money in Sweden?!?!  I find it odd that her website no longer exists. 

I am anxious to see the exhibits that will be filed in the Civil Case.  While the Criminal Case deals with tax evasion and tax fraud, the Civil Case deals directly with the chemical scam.  Once both cases make some more progress I think ESS investors will have a lot of information to sift through. 

-ESS Investor          

Courtroom Drama

I put a phone call in to Freestone’s office to ask if anyone from the company attended the hearing on Wednesday.  I spoke to an individual at the company that attended the hearing, and he gave me a play-by-play of what occurred.  I will keep his identity anonymous out of respect for his privacy.  I have no ill will towards their company, because they have been hurt by this scam just as all the ESS investors have been hurt.    

Usually federal court hearings are pretty bland, but I am told that this one had a little excitement.  To begin, David Feuerborn and Thomas Jennings did not show up.  Neil Evans (David Feuerborn’s criminal attorney) was present as well as the new third partner, Larry Shultz. 

It sounds as if this hearing was more exciting than an episode of Law & Order.  I would have loved to have been a fly on the wall at this hearing, because according to my source at the company Larry Shultz was thrown out of the courtroom by Judge O’Connor for speaking out of turn while in the gallery.  Now I am more inclined than ever to get a transcript of the proceedings so I can find out exactly what was said that angered the Judge.  Shultz wasn’t just warned.  He was thrown out!  Not the best first impression on a Judge that will be presiding over your case if you ask me.  I wonder if the Judge knows about the criminal charges that have been brought against Feuerborn and Jennings by the U.S. Attorney's Office.  It looks as if this guy Shultz is now completely intertwined in their chemical scam, and if he has been involved in raising money for them he might be involved in their criminal activities which include defrauding the federal government, and tax fraud.  I hope someone investigates and follows the recent money transactions.    

   

(Note: The Judge allowed Shultz to come back in to testify as a witness in the hearing.  While on the stand Shultz apologized for his outburst.  It will be interesting to see what he said on the stand, and if it conflicts with any information that is known about the chemical scam.)

After the discovery of this news I am going to order a complete transcript of the proceedings.  I will update everyone when I get it. 

-ESS Investor

Denied

“ELECTRONIC  Minute Entry for proceedings held before Judge Reed C O’Connor: Motion Hearing held on 11/17/2010 re [10] Motion to Dismiss/Lack of Jurisdiction, filed by David Feuerborn, Thomas Jennings, Lawrence Shultz, Environmental Services and Support, Inc; Court denies this motion.  Attorney Appearances: Plaintiff – S. George Alfonso; Defense – Neil Cary Evans. (Court Reporter: Denver Roden) (No exhibits) Time in Court – 1:00 (chmb)”

I found this on PACER this morning.  It looks as if the hearing took place in Dallas, TX yesterday as scheduled and Neil C. Evans (David Feuerborn’s criminal attorney) flew from California (presumably on ESS investor money if not all of it has already been spent on exotic cars and interior decorating) to represent all the Defendants.  Wouldn’t it be cheaper to get a Texas attorney?  This is just another example of how these guys spend other people’s money without giving a flying hoot.  Oh, btw, the Defendants lost so the trial will remain in Texas.  I still find it odd that Mr. Evans has time to fly to Texas to represent the Defendants even though he is telling the judge in the Criminal Case that he needs multiple continuances, because he doesn’t have enough time to prepare David’s defense.  It would seem as if there are some inconsistencies between his claims and his actions.    

The Civil Case will remain in Texas.  I will try and obtain a transcript of the proceedings.  If there is anything of relevance I will post it on this blog.

Let’s think about this logically.  If you had invented a miracle cleaner that is truly environmentally friendly and works as represented to chemically separate oil from solids then why would you want a long and public trial with a previous partner that makes the claim that your solvent is a complete fraud.  Wouldn’t that make it difficult to find a new partner?  It makes no logical sense to continue this nonsense if you have a real product.  Maybe they are getting some bad legal advice, or they know they scammed Freestone and they are trying to hold on to what they obtained in the scam.  Also, David and Thomas are facing jail time in the Criminal Case.  How does it look to have an ongoing Civil Case making the claim that you defrauded a public company while the United States Government is alleging that you defrauded them!  If it quacks like a duck...then its a duck.  In this case, if it chirps like a jail bird then it probably is one, or at least its about to be.

 

- ESS Investor

Patent Scam

Hello blogosphere!  I have touched on today's subject in a previous blog post, but I would like to focus on the results of my recent due diligence.  David and Tom claim that the “solvent” is patent pending.  They have been making this claim since 2003.  The California Department of Corporations’ Desist and Refrain Order states, in section 4 (c), that the patent pending claim was a lie that David and Tom told to investors.  Clearly the California Department of Corporations did a search and investigation into the issue and discovered that neither the “solvent” nor the process was not patent pending. Freestone also claims that David and Tom made this same misrepresentation. 

Thus, I decided to conduct a patent search under the name “David Feuerborn”.  Google has a great tool for searching the patent records.  The only thing that shows up is a patent for a needle safety shield.  Why haven’t David and Tom filed a patent application?  I think I articulated that point very well in my previous blog post:

“The patent pending claim was a complete lie.  If Feuerborn patented the solvent then the toxicity would be revealed.   Also, I was told it was patent pending in the early 2000s and there is still nothing posted on the USPTO website.  The California Department of Corporations Desist and Refrain Order also states that this was a lie told to investors.  According to the Civil Case Complaint this same lie was told to Freestone by David Feuerborn.  Personally, I am shocked at the audacity of Feuerborn, Jennings and Shultz by perpetuating this lie as recently as last year!” 

- ESS Investor

Bench Warrant Issued for David Feuerborn

This blog post will have nothing to do with the chemical scam perpetrated by David Feuerborn, Thomas Jennings, Larry Shultz and others, but instead I will focus on some past legal documentation I found during an internet search on David Feuerborn.  While this case has no direct connection with the chemical scam, it does give some insight into the behavior of David.  The subsequent events that occurred after the divorce might have a direct connection with his legal battles on the chemical scam.       

I discovered a very messy divorce proceeding and child custody battle.  It looks as if a bench warrant was issued due to his contempt of court:

5/28/2003

ORDER TO SHOW CAUSE RE CONTEMPT AGAINST DAVID JOHN FEUERBORN FILED BY COUNTY OF VENTURA

BENCH WARRANT ISSUED

 

According to this documentation he had some cash flow issues that related to his payment of child support.  I wonder if that is why he went on the road to Louisiana and other states in order to raise money with the chemical scam.  Maybe these seemingly unrelated events are very much related.

Maybe David didn’t want to file a tax return so that he looked destitute and would not have to pay child support. 

It looks as if David has always had money issues, and instead of making money through hard work and a normal job he decided to take the easy way out and use his parlor tricks to scam investors into investing into the chemical scam.  Very interesting how this is all finally coming together.  

- ESS Investor

Arthur Mark Feuerborn

Has anyone ever noticed that when you Google the name "David Feuerborn" a paid advertisement comes up for the Law Offices of Arthur Mark Feuerborn?  There is also a disclaimer on his website that states, "Arthur Feuerborn has been dismissed from all actions involving ESS Environmental and related entities as he has not been involved in those companies, except as a nominal shareholder in the two entities.  He has had no involvement in the management, direction, control, or operations of any ESS-related entity nor has he received compensation or benefit" (Disclaimer LInk).

We are assuming Mark is the brother of David.  They look strikingly similar.  According to the District Attorney's office of Ventura County Arthur is mentioned as one of the parties that was originally indicted in Louisiana for racketeering, securities fraud, and criminal conspiracy.  

It would seem as if he is totally distancing himself from the chemical scam at this point in time.  Why else would he need that disclaimer on his Website?  

Also, it doesn't look as if he is representing his brother in the Criminal Case.      

- ESS Investor

Death and Taxes

“In this world nothing is certain but death and taxes.” – Benjamin Franklin

How true this quote must ring to David Feuerborn and Thomas Jennings.  I have been asked why the United States would indict David and Tom for tax fraud rather than indict them for their chemical fraud scheme.  If you talk to David and Tom I am sure you will hear responses such as, “these are trumped up charges” and, “they are only going after us on tax fraud because they can’t prove our chemical business was a scam.”  One should ignore those biased responses.

Instead it is well known that tax fraud is very easy to prove.  Take for instance the criminal case that brought down the infamous mobster Alphonse Gabriel “Al” Capone.  Al Capone was a ruthless gangster, but the tax evasion charges are what finally put him away for good.  The tax fraud might be the best way for ESS investors to finally get justice.  So the government will need to prove the following in the Criminal Case against David Feuerborn and Thomas Jennings:

1.        Did David file a tax return in the past five years?  If he did it should be on file with the IRS.  If he didn’t then it won’t be on file.  That is very easy for the Government to prove.  I don’t think the excuse “it got lost in the mail” will work this time.

2.       Did Thomas Jennings file his tax returns incorrectly over the past five years?  All the Government needs to show is that he misstated his income based on the forensic accounting of their bank accounts. 

3.       Did Feuerborn and Jennings open a bank account with the name “Ecologic”?  (This is spelled deceivingly similar to a company that built a machine that is currently who-knows-where.  The real company is spelled “Eco-Logic” with a hyphen.)  The government is alleging that they created this “bogus” bank account in order to divert money into their personal accounts without investor knowledge. 

4.          Did Dave and Tom ask their CFO to classify the ESS money paid to them as “loans” so they wouldn’t have to record it as regular income?  I am sure they have sworn testimony of the CFO to validate this allegation.  The IRS doesn’t take kindly to loans that have no term or interest rate.

5.       Did Tom pay for interior decorating at Interiors by KC, Inc. with investor money?  That should be easy to prove.

6.       Did Dave by motorcycles and/or cars at Hahm Motorsports with investor money?  That should be easy to prove.  (Grand Jury Indictment, Page 1-25; Case: CR 10-00346)

Do you see how easy it is to prove tax fraud?

The U.S. Attorney had indicted them for tax fraud, but I am sure he will use a broad brush to paint a picture that includes the chemical fraud as well.  The U.S. Attorney has already used the Civil Case in his motions, and he can continue to use it.  He can also use the sworn testimony and additional discovery gathered in the Civil Case.  Additionally, one has to ask if they paid taxes on the money paid to them by Freestone.  I doubt it.  This shows a continued effort to defraud the U.S. Government.      

Thus, there is little gray area when it comes to tax fraud.  If convicted, one might assume that they will go back to their chemical scam after they get out of prison because that is all they know.  Here is my analysis of that scenario.  If Dave and Tom go to prison they are looking at terms of up to 20-30 years.  If they get the minimum sentence or a decreased sentence and they return to their chemical scam then the Civil Case might be the answer.  Freestone can ask certain questions in their interrogatories and discovery portion of the litigation that can prove that criminal acts took place and even bring the new guy, Larry Shultz, into the mix.  If they try to perpetrate the chemical scam again, then the U.S. Attorney can go after another indictment based on the sworn testimony gathered in the Civil Case.  This may happen anyway if enough evidence is amassed.  Only time will tell.   

- ESS Investor