Thursday, September 30, 2010

Criminal Case Update 09/30/2010

A Stipulation was filed on September 29, 2010 that grants David Feuerborn and Thomas Jennings a continuance of their Criminal Case (No. 10-346-SJO) until November 30, 2010.  The Court has previously continued their Criminal Case from June 8, 2010 to November 9, 2010, but it looks as if they were granted one more continuance.  Both the attorneys for the United States and for Feuerborn and Jennings agreed to the November 30, 2010 continuance date.

The stipulation goes on to state, "[d]ue to the nature of the prosecution, including the charges in the indictment and the voluminous discovery materials, this case is so unusual and so complex that it is unreasonable to expect adequate preparation for pretrial proceedings or for the trial itself within the Speedy Trial Act time limits" (Criminal Case Page 190, Lines 10-15).

The United States has "approximately 43,000 pages of discovery and numerous audio recordings of interviews" (Criminal Case Page 190, Lines 8-9).

The Honorable Judge Otero is holding another hearing tomorrow (October 1, 2010) in chambers to discuss the potential conflict of interest pertaining to Neil C. Evans (Feuerborn's legal counsel in the Criminal Case) and his dual representation of both defendants in the Civil Case.

-ESS Investor

Wednesday, September 29, 2010

New Promotion of ESS Solvent

We uncovered a blog post that was made on a site called The Eco Eye.  I believe David Feuerborn is the individual in the demonstration video and Larry 411 is Lawrence Shultz. Here is the text from the YouTube video:

"This close-up chemical demonstration shows the basic process steps that are inherent to any continuous flow Oil Extraction Machine using the EncapSol chemicals: (1) Insert the feedstock Tar Sands (2) Add EncapSol liquids in the reactor (3) Gravity-separate the water, the heavier EncapSol liquids encapsulating the oil and the even heavier sands and solids, (4) Dry out the sands with low-temperature process waste-heat, (5) Evaporate the EncapSol liquids to recover the hydrocarbon/oil for sale, and (6) Condense the evaporated gaseous EncapSol back into a liquid to start the whole closed-loop process all over again in a continuous flow reaction that can extract oil from oil-infused rocks and sands.

With the push for Arctic drilling, the fact that oil normally congeals in cold and freezing temperatures tis a big problem that is very costly because it consumes too much fuel energy in the process just to get the oil flowing.

However, as EncapSol demonstrates in this video -- unlike any other oil industry solvent being used, EncapSol can uniquely and cost-effectively break hydrocarbon molecular bonds so as to make heavy, immobile, 8-API gravity oil flow like water for easier extraction, even in freezing temperatures.

Whether it is TAR SANDS from Utah or OIL SHALE from Colorado or waste-oil sludge pits, oil spills or storage tank bottom sludge -- EncapSol literally can cleanly dissolve the liquid hydrocarbons from the solids that strand it.

Please note that in the process, the EncapSol solvent is fully recovered with greater than 99% efficiency -- which recovered solvent is re-used in the next cycle.

All separated water, sand, gravel, clay and rocks are delivered clean, free of any remaining oil or residual solvent.

This is a closed-loop zero-discharge system."

http://theecoeye.com/?p=6740

Misc. Information

I have been asked to provide links to all the online documents relevant to ESS Shareholders.  Thus, I am aggregating some of criminal and civil documents that are on the internet.

Louisiana Criminal Indictment:

Ventura County PR

Article 1

Article 2

Article 3


California Criminal Indictment (pending):

Article 1  (mug shot article)

Article 2

Article 3


Texas Civil Case (pending):

Justia Case Information

Freestone 8-K about Lawsuit

Freestone PR about Lawsuit

Freestone PR about Lawsuit 2


Texas Cease and Desist Order:

http://www.ssb.state.tx.us/Enforcement/files/1499.pdf 

California Desist and Refrain Order (still in effect):

http://www.corp.ca.gov/ENF/pdf/2006/ess.pdf 


Venture Research Institute Message Board on ESS:

http://www.vcresearch.info/open/forums.asp?TopicId=7176&ForumId=132

Tuesday, September 28, 2010

Back to the Basics: The Civil Case

Let's take a look at the Civil Case currently pending in the Northern District of Texas: 

On July 9, 2010 Freestone (the "Plaintiff") filed a lawsuit in the United States District Court for the Northern District of Texas, Dallas Division, Civil Action Number 3:10-cv-01349-O against Lawrence Shultz, Environmental Services and Support, Inc. (“ESSI”), David Feuerborn and Thomas Jennings (the "Defendants").  The Plaintiff is alleging that the Defendants committed "fraud by nondisclosure, the common law tort of conversion by pretext and swindling, deceptive trade practices, common law fraud and fraud by misrepresentation/statutory fraud."

On August 3, 2010 documents were filed with the Court to show that all of the Defendants had been served.  The documents indicate that the Defendants (and members of their families or live in companions) tried to avoid service by either denying their identities, or claiming a false identity.  (The service documents can be read on PACER under Pages 81-88.)

On August 19, 2010 a Stipulation was filed with the Court by Neil C. Evans, esq. who is representing all Defendants in the Civil Case.  (Note: He is also David Feuerborn's attorney in the Criminal Case.  Evans has also filed documents on behalf of Tom Jennings in the Criminal Case.)  The Stipulation states, "all Defendants will file their responsive pleadings to the Complaint in this action by Thursday, August 19, 2010" (Civil Case, Stipulation to Set Deadline for Filing Response to Complaint by all Defendants. Page #101, Paragraph 1).  Further it states that, "all Defendants waive any objection to process service" (Civil Case, Stipulation to Set Deadline for Filing Response to Complaint by all Defendants. Page #101, Paragraph 2).  (Note:  A response to the Complaint has never been filed by the Defendants.)

On August 19, 2010 the Defendants filed a "Notice of Motion and Motion to Dismiss  for Lack of Personal Jurisdiction" with the Court.  The Defendant's main argument is that "the Defendants lack the requisite contacts with the state of Texas" (Civil Case, Notice of Motion and Motion to Dismiss  for Lack of Personal Jurisdiction. Page #91, Paragraph 1).

On September 9, 2010 the Plaintiff filed a Response to the Defendant's Motion to Dismiss.  This Response states the Plaintiff's belief that jurisdiction is proper in the Northern District of Texas, because (i) Lawrence Shultz was working as a finder and consultant for Feuerborn and Jennings and made multiple unsolicited calls to a consultant working for the Plaintiff in order to pitch their solvent and structure a deal, (ii) Feuerborn and Shultz called and sent multiple emails to the Plaintiff before and after the Stock Purchase Agreement was signed, (iii) Jennings made multiple calls to the Plaintiff, (iv) Feuerborn and Shultz made multiple visits to both Houston and Dallas where the fraud occurred and the aforesaid misrepresentations were made to the Plaintiff and others, and (v) Feuerborn made business cards with the Plaintiff's address.  (Civil Case, Plaintiff's Response and Brief in Opposition to Defendant's Motion to Dismiss for Lack of Personal Jurisdiction (Docket #10). Pages #106-115)  The Response goes into further detail, but those are the main points I noticed.

The parties are now awaiting a ruling from the Judge hearing the Civil Case.


-ESS Investor

Monday, September 27, 2010

Petro-Sog, Ltd Lawsuit filed in 1994

I came across a lawsuit filed in 1994 in Texas.  The lawsuit is titled "Petro-Sog, Ltd v. Federation of Research Chemical Engineering, Inc., Bahman Abtahi, Bruce Akbari, and David Feuerborn" ("Petro-Sog Case").  This case was filed in Texas State Court in Harris County, Texas in the 280th Judicial District as Case # 96-50513.  The Petro-Sog Case is not listed on PACER because it was filed in Texas state court, but it can be found at the Harris County Courthouse or by using their online document retrieval website.  It took some digging, but I have summarized the relevant information below.

Case Summary:

Feuerborn, Akbari and Abtahi were operating under the company Federation of Research Chemical Engineering, Inc. ("FORCE") that had a solvent called Reneu.  Reneu is the product that ESS investors know as R6000.  David Feuerborn was the President of FORCE which was based out of Baldwin Park, California.  Reneu purportedly, "has an ability to separate hydrocarbons from liquids, separate hydrocarbons from solids, separate sulfur from hydrocarbons, and to act as a de-emulsifying agent" (Petro-Sog Case, Original Petition Page #4, Paragraph 10).  The Original Petition goes on to state that FORCE "sought to sell a large interest in its technology" (Petro-Sog Case, Original Petition Page #4, Paragraph 11).  The Original Petition goes on to state the following:

"On October 14, 1994, [FORCE] shared its technology and trade secrets regarding Reneu with a representitive of [Petro-Sog].  During this meeting, [Petro-Sog] learned that [FORCE], Abtahi, Akbari, and Feuerborn had made certain representations regarding Reneu that were false and untrue to induce [Petro-Sog] to enter the Agreement.  Among other things, [FORCE], Abtahi, Akbari, and Feuerborn falsely represented to [Petro-Sog] that Reneu had certain characteristics and abilities that it did not have or posses.  In particular, [FORCE], Abtahi, Akbari, and Feuerborn falsely represented that:

a.       Reneu and its reactants and products did not represent an environmental risk;
b.      Reneu and its reactants and products did not have any special disposal requirements;
c.       Reneu and its reactants and products did not have special handling and storage requirements;
d.      Reneu and its reactants and products did not require special EPA testing and/or approval;
e.      Reneu and its reactants and products did not possess chlorinated solvents; and 
f.    Reneu and its reactants and products are ready for commercial production” (Petro-Sog Case, Original Petition Page #5, Paragraph 15).

Judge Ruling:

"The Court found and now finds that each of the Defendants, [FORCE], Bahaman Abtahi, Bruce Akbari and David Feuerborn, committed actual fraud against the Plaintiff, [Petro-Sog]" (Petro-Sog Case, Final Judgment Page #1, Paragraph 2).

- ESS Investor

Criminal Case Update

Happy Monday everyone!  This blog entry will be a long one so bear with me.  First I will go through the motions that have been filed by the United States Attorney and by the attorneys representing David Feuerborn and Thomas Jennings.  If the judge has already ruled then I will also give his ruling.

"Conflict of Interest"

On August 23, 2010 the United States Attorney filed a "Notice to the Court of Potential Conflicts of Interest and Request for Hearing."  In summary, the Notice stated that there might be a potential conflict of interest on the part of the counsel representing David Feuerborn (Neil C. Evans, esq.) in the Criminal Case and his dual representation of both David Feuerborn and Thomas Jennings in the Civil Case.  The U.S. Attorney states that there is a potential overlap of the Criminal Case and the Civil Case because Feuerborn and Jennings used the same pitch to Freestone that they used to the ESS investors in order to induce an investment.  The U.S. is further alleging that the ESS money was then funneled to Feuerborn and Jennings, whereupon they didn't pay taxes on that money.  Thus, the potential conflict arises because both cases "arise out of similar conduct -- namely, misrepresentations to investors regarding defendant's companies...and the technology defendants and those companies claim to have developed" (Criminal Case Page #98, Lines 22-26).

On September 2, 2010 Neil C. Evans filed a response to the U.S. Attorney's Notice.  In summary, Evans argues that the two cases are completely unrelated.  He also states that his clients have signed waivers of conflict.  His main argument is that the allegations in the Civil Case occured after the allegations in the Criminal Case.

On September 20, 2010 the Honorable Judge Otero stated that he wanted supplemental briefs from the defendants and that this matter would be continued until October 1, 2010.

On September 24, 2010 Neil C. Evans filed his supplemental briefs where he states that, "[t]he alleged potential conflict of interest asserted by the Persecutor in this case, does not involve the joint representation of Defendants by an attorney in the instant case" (Criminal Case Page #179, Lines 7-10).  (Personal Note: Evans has filed motions on behalf of Jennings in the Criminal Case.)

Lastly, the main reason that the U.S. Attorney made this notice is to avoid any appellate argument that the Defendants Feuerborn and Jennings did not have "conflict free" counsel.  I will update everyone once the Judge's ruling has been posted on PACER.

"Application to Travel"

On September 3, 2010 Evans filed an "Ex Parte Application to Expand Travel Restrictions as Conditions of Release" on behalf of Feuerborn AND Jennings.  Currently, Feuerborn and Jennings are restricted to the Central District of California, Texas and Louisiana prior to the trial date in the Criminal Case.  Evans asked that the restriction be modified so that Feuerborn and Jennings can travel throughout the continental United States.

On September 3, 2010 the U.S. Attorney responded by stating that, "publicly available records indicate that defendant's 'business' activities are fraudulent in nature" (Criminal Case Page #146, Lines 18-19).  Thus he asked that the court deny this request to expand travel privileges.   The U.S. Attorney cites the following:

http://www.ssb.state.tx.us/Enforcement/files/1499.pdf | http://da.countyofventura.org/091505.htm | http://www.corp.ca.gov/ENF/pdf/2006/ess.pdf

On September 20, 2010 the Judge vacated their application and directed them to the Pretrial Service Office.  (Personal Note: We are unclear if the Pretrial Service Office has the ability to extend their travel privileges.)

"Continuance Request"

On September 20, 2010 Neil C. Evans filed an "Ex Parte Application to Continue Trial" citing that, [his] ability to devote time to [the Criminal Case], which includes about 50,000 pages of documents produced by the Prosecutor, was materially affected by personal events" (Criminal Case Page #154, Lines 25-28).

On September 24, 2010 the Judge vacated this application as well.  (Personal Note:  We are unsure if there has been any continuance granted, but as of now the trial date is still scheduled for November 9, 2010.  Also, despite his request for a continuance in the Criminal Case, Mr. Evans is still the only counsel representing them in the Civil Case.)

Personal Note:  I have observed that Neil C. Evans is the only attorney filing anything in the Criminal Case, and Steven M. Neimand, esq. (attorney representing Jennings) has yet to file anything.  Additionally, an attorney named Dennis Berry attempted to "specially appear" for Jennings on the hearing that occurred on September 20, 2010.  The Court stated that special appearances were not allowed and ordered Neimand appear.  I just think that this is very odd, and, as an outsider looking in,  it appears that one attorney is representing both Feuerborn and Jennings in the Criminal Case.
 

The Defendants (including Feuerborn and Jennings) in the Civil Case asked the court to dismiss the case because they claim that Freestone does not have jurisdiction over them.  Freestone filed a response giving their reasons why they do, in fact, have jurisdiction over them.  This has yet to be ruled on, and I will read both the motion and response to give a detailed account of the Civil Case as well.

-ESS Investor

Friday, September 24, 2010

Case Updates

    I have opened up a PACER (Public Access to Court Electronic Records) account.  It costs about $0.08 per page, and I would recommend it to anyone that wants up-to-date information on the two court cases pending against Feuerborn and Jennings.  PACER also has true and correct copies of the attorneys' filings.   The attorneys in each of the respective cases are required to post their motions and responses on PACER so the public can follow the trial.

    The two cases pending are United States of America vs. Thomas R. Jennings, David J. Feuerborn, et al. ("Criminal Case" | Case # 10-346-SJO) and "Freestone Resources, Inc. vs. Lawrence Shultz, Environmental Services and Support, Inc., David Feuerborn, Thomas Jennings, et al. ("Civil Case" | Case # CV 10-01349-O).

    In the Criminal Case the U.S. Government is alleging "Conspiracy to Defraud the United States, Subscription to a False Tax Return, and Income Tax Evasion".  In summary, the Grand Jury Indictment alleges that Feuerborn did not pay his taxes and Jennings intentionally filed his tax returns incorrectly on the money they raised from the ESS investors, used investor money to purchase cars and motorcycles, used investor money to pay for interior decorating, and created bogus bank accounts to funnel investor money to themselves as "loans" so it would remain hidden from the investors.

    In the Civil Case Freestone is alleging that Shultz, Feuerborn and Jennings used certain misrepresentations, false statements, false documents and fraud to induce Freestone to enter into a Stock Purchase agreement with them.

    The trial date in the Criminal Case is set for November 9, 2010.  There have been a few motions filed in each case that I need to read thoroughly so I can give a better summary of the events on this blog.  I hope to have some updates posted tomorrow.  Stay tuned.

-ESS Investor

ESS Investor Information

Hello and welcome!  I am an investor in ESS Environmental, a company started by David Feuerborn and Thomas Jennings.  I invested money in a process that purportedly extracts oil from contaminated waste sites.  Unfortunately, it was later discovered that the "solvent" used in the process I invested in was extremely toxic (more toxic than the oil).   I created this blog in order to give the 600+ ESS investors a place to discuss their trials and tribulations.  I have been following the criminal and civil cases of Mr. Feuerborn and Mr. Jennings and I will provide updates as they come in.  I don't know if we can get our money back, but at least we have a place where we can talk and discuss strategies.