Possible Sanctions!

The Judge in the Criminal Case signed the order continuing the Criminal Trial until February 22, 2011. 

The Hearing’s minutes were also posted.  The minutes do not contain any ruling as to the Defendant’s attempt to create a “mini-trial” on the solvent’s effectiveness to confuse the jury (I believe that hearing is scheduled for January 18, 2011).  Feuerborn and Jennings are trying to sell the jury that the chemical is non-toxic (despite all the evidence to the contrary from state agencies and private companies), as well as the claim that the product can generate “billions of dollars” (despite tens of millions of dollars raised, purportedly, for the technology and not one cent of profit earned).  Once again, this is a Criminal Case about how the defendants (David Feuerborn and Thomas Jennings) created bogus bank accounts in the name of their vendors to secretly and illegally funnel money to themselves in order to deceive investors and the United States Government, and how they did not pay taxes on the money they funneled to themselves.

Furthermore, “[t]he Court orders Mr. Evans and Mr. Neimand to comply with discovery under FRCP 16(b) and 26 by February 8, 2011.  If counsel fail to comply and the Court finds that such failure is without good cause, this Court may prohibit defendants Feuerborn and Jennings from introducing evidence at trial in their case in chief and or hold Mr. Evans and Mr. Neimand in contempt should the Court find willful failure to comply.  The Court may also impose other sanctions including monetary sanctions” (Case 2:10-cr-00346-SJO ; Page ID #789).

I still can’t believe they are claiming that Lawrence Shultz is an “expert” witness.  I would like for Feuerborn and Jennings to explain why Shultz is an expert.  Larry Shultz already testified that he is only an “introducer” and he admits that he is “not a partner with them.”  Personally, I believe he is their new partner in this scam.  He only testified that he is an “introducer” in order to avoid being criminally liable in their fraud (the plausible deniability argument).  Shultz’s recent Government Filing is contradictory to his claims in the Civil Case that he is merely an “introducer”.  He clearly indicates that his hands are as dirty as Feuerborn’s and Jennings’.  I also can’t imagine how any sane and honest individual would align themselves with Feuerborn and Jennings in light of their recent criminal indictment and civil lawsuit, as well as their past legal issues.  Jail birds of a feather tend to flock together.           

-ESS Investor

Continued Misrepresentations of Larry Shultz, David Feuerborn and Thomas Jennings

As many of you know I follow a lot of the internet chatter relating to the chemical scam being perpetrated by David Feuerborn, Thomas Jennings, Larry Shultz, ESS and their co-conspirators.  I have noticed that David, Tom and Larry have taken to the internet to promulgate their lies about the solvent, and defame those that have uncovered their fraud.  This is the standard modus operandi of their scam.  They claim that the California Department of Corporations is corrupt, they claim that the Ventura County District Attorney’s Office is corrupt, they claim that the IRS and United States Attorney’s Office is corrupt, they claim that the Louisiana Attorney General’s Office is corrupt, they claim that they Texas State Securities Board is corrupt, they claim that Petro-Sog is corrupt, they claim that the Utah Partners are corrupt, and now they claim that Freestone is corrupt.  Are we beginning to see a pattern develop?   

(Personal Note: I will not give David, Tom and Larry another forum (aka this Blog) to spew their misrepresentations and lies, but I want to acknowledge some of the recent information they have been posting on the internet, and on certain government documents.  That said, out of respect to those that have been damaged by this scam I will not publish links to their posts unless they are published by the parties they have defamed.) 

Mr. Larry Shultz filed a certain document with a government agency under penalty of federal criminal violations if misstatements or omissions of facts are contained within the government document (“Government Document”).  Mr. Shultz signed the Government Document and filed it of record so he can’t retract it.  In the Government Document he claims that Freestone is corrupt. (Remember that pattern I mentioned above?)  In the Government Document he claims that he (Shultz) is now a “whistleblower” because of the amended lawsuit that Freestone recently filed against him, David, and Tom.  (The amended complaint shows additional securities violations perpetrated by Shultz.)  Shultz also states that he wants his day in court to clear his name.  He claims that rights were given to Freestone by himself, David and Tom, and that they eventually took away those rights from Freestone.  He claims that the chemical is “non-toxic” and safe, and that it can be used for EOR (pumped into the ground to extract oil).  He also claims that Freestone let “billion dollar rights” slip away.      

1) To begin, I can’t imagine that their attorney (Neil Evans) advised Larry Shultz to file this Government Document that outlined their potential argument/strategy in the Civil Case.  More importantly I am sure that their attorney knows that judges do not appreciate defendants and plaintiffs trying to argue the merits of a lawsuit outside their courtrooms.  According to my attorney, the defamation that occurred in the Government Document is also very much frowned upon by the Courts (to say the least).  In the Government Document, Shultz claims that he is some kind of “whistleblower”, and that he is using that as a pretext to defame Freestone and its management.  This is the same tactic David and Tom have used against government agencies that have uncovered their massive fraud.  They claim that these government agencies are corrupt or have corrupt officials working for them.  They claim that the multiple government agencies and the companies that have indicted/sued them are involved with a vast conspiracy against them.

2) Mr. Shultz also stated that he wants his day in court to clear his name.  Thus, I ask you, Mr. Shultz, why do you keep trying to get the Civil Case dismissed on claims that jurisdiction does not exist?  Why haven’t you answered the lawsuit?  Your actions speak louder than your words.

3) Next, Larry Shultz claims that he gave Freestone certain “rights” and then took those “rights” away because Freestone didn’t fulfill some obligation.  Let’s see, you cannot pump toxic, chlorinated chemicals into the ground (EOR) so that is a “right” that didn’t exist in the first place.  More importantly, who wants to own rights to a toxic chemical?  If these “rights” are so precious and you have the ability to grant them or take them away, and you truly care about the company that is suing you, then why are you taking rights away from them?  In one breath you say that you are trying to help and protect this company, but in the next breath you say that you took rights away from the company and you won’t give them back unless new management renegotiates with you!  This makes no sense, unless you want to take away these fictitious “rights” as an excuse to sell them to another party in order to continue the con.  This seems to be what they did to ESS investors, because the ESS “rights” seem to overlap with Freestone “rights”.  Hmmmm.  I am beginning to see another pattern develop.

4) If you are going to continue the claim under penalty of federal criminal violation (which has been refuted by multiple scientists at various state agencies and private companies) that your chemical is non-toxic and that it works, then produce your “bona fide” chemists willing to vouch for it.  I didn’t see an expert witness with a chemistry background listed on the motion in the Criminal Case.  I only saw an introducer and an investor that have a vested interest in the toxic chemical.  If your chemical is so amazing then why don’t you take the chemical to Exxon, Chevron, Shell, BP, etc.?  In the Civil Case Freestone states they wish to rescind the Agreement you signed with them.  Forgive my ignorance, but doesn’t that mean you can get all your “rights” back?  As is the case with most ESS investors I don’t think Freestone or anyone wants your “rights”.  The current actions of David, Tom and Larry don’t make any sense unless it was a scam to begin with.

**Criminal Case Update** 

The Criminal Case has been postponed until February 22, 2011.  The Government agreed to give Feuerborn and Jennings one last continuance with their agreement that they would not request any more continuances in this case.   

-ESS Investor                    

Confusion

In light of the recent Motions filed by Neil Evans, I have to assume he is confusing the two fraud cases (the Civil Case and Criminal Case) filed against his clients. 

The Criminal Case deals with Tax Fraud in which David Feuerborn and Thomas Jennings paid themselves large management fees with investor money without filing, or incorrectly filing, tax returns on the money they received.  They also created bogus bank accounts where they funneled investor money to themselves to purchase condominiums, exotic cars, interior decorating, RVs, motorcycles, etc. in order to hide these expenditures from ESS employees.  The IRS and U.S. Attorney’s Office did not seek a grand jury indictment on the chemical fraud (most likely because the statute of limitations had expired).  Instead they are using the Al Capone theory, and they are going after these fraudsters for Tax Fraud, and Tax Evasion.  Combined David and Tom owe the IRS approximately $850,000 dollars.

Meanwhile a company based out of Dallas, Texas (Freestone) is suing David Feuerborn, Larry Shultz, Thomas Jennings, and ESS for their chemical fraud.  Namely Freestone is claiming that the chemical was misrepresented to them, and that it contains hazardous chemicals.  They are also claiming that David, Larry, Tom and ESS attempted to extort Freestone in order to get more stock, committed stock fraud, gave Freestone false and fake documents, that the defendants represented that the solvent was patented and patent pending, etc.  Many of the allegations made by Freestone are listed in the Desist and Refrain Order issued by the California Department of Corporations, because they were using the same misrepresentations to investors in California and Louisiana.  David Feuerborn has already been sued successfully in Harris County, Texas for the chemical fraud where the Judge in that case determined that David Feuerborn, “committed actual fraud against the Plaintiff, [Petro-Sog]". 

On January 10, 2011 Neil Evans filed a motion in the Criminal Case requesting to enter into evidence documentation about the chemical’s effectiveness.  If Feuerborn and Jennings are not indicted by the Grand Jury for chemical fraud then why would this matter in the Criminal Case?  Also, his witnesses that wish to testify on the chemical’s “effectiveness” are two individuals with a vested interest in the chemical.  These individuals include Paul Sicotte who invested a “substantial amount of money” in the chemical without achieving any profitable results, and Larry Shultz who is the front man for David and Tom, and whom Freestone is suing for fraud relating from the toxic chemical they are peddling. 

Where are the credentialed chemists willing to testify on behalf of Feuerborn and Jennings?  Even though it is inappropriate in the Criminal Case to call such a witness this is good news for Freestone, because they have indicated that they do not have any bone fide chemists willing to validate their claims that the chemical is non toxic.  Larry Shultz has already stated that he is just an “introducer” in his Civil Case Hearing testimony.  What qualifications does an “introducer” have? 

Neil Evans Motions:

In my last post I published information contained in the motions filed by Neil Evans.  I wanted to go into more detail on those motions in today’s post.  When Neil realized that he would not get a continuance for his parents illnesses (the same excuse he has used the last four times) he added another reason.  He states that he discovered a computer and hard drive tower with exculpatory evidence relating to why David and Tom had their accountant reclassify ordinary income as “loans”.  He claims the information on the computer gives “justifications for such conduct, actions, and beliefs on a contemporaneous basis” (case 2:10-cr-00346-SJO ; Page ID 761). 

I would like to pose this question:  David Feuerborn, Thomas Jennings, and Larry Shultz did a deal with Freestone where they received certain cash payments for their “Licensed Technology” correct?  There is indisputable documentation that Freestone made payments to these individuals.  Why didn’t they use that money to pay back the “loans” if they were, in fact, real “loans?”  Additionally I must assume that the Canadian Joint Venture paid David, Tom and Larry.  So, why didn’t they use the Elemax funds to repay their “loans” if they were in fact “loans?”  Also, if I was the IRS I would research if they paid income taxes on the money they received from Freestone and Elemax.  I doubt they did.

The answer is simple.  They were never interested in paying this money back, and the only reason they classified their ordinary income as loans was to avoid paying income taxes on the investor money they secretly funneled to themselves. 

Patents Mentioned in Neil Evans’ Motions:

The U.S. Attorney states that, “[i]t appears that [Defendant Feuerborn] intends to introduce evidence of four patents awarded to Defendant [Feuerborn], two of which relate to a self-ejecting compact disc case and two of which relate to a flexing safety shield for hypodermic needles, to establish that defendant Feuerborn is an inventor.”

First, I must assume, facetiously, that inventors do not have to pay income taxes.  What does his occupation as an inventor have to do with income tax evasion?  What do these patents have to do with his chemical?  At least this gives Freestone an idea of what’s to come. 

So now we have an “expert introducer”, and some flawed logic that “inventors” (if you can even call Feuerborn an inventor) don’t have to pay income taxes.

I am not sure if the scheduled hearing took place yesterday on all these absurd motions, but as soon as I get any new information I will make it available. 

-ESS Investor     

NUTS

This morning I woke up to find SIX new motions in the Criminal Case.  These documents include (i) Neil Evans’ claims that the prosecutor misrepresented facts (essentially calling the Assistant U.S. Attorney a liar), (ii) a request to call Larry Shultz as an “expert witness” (remember this was the person that got kicked out of the Civil Case Hearing in November, and the same individual Freestone is suing for fraud relating to the solvent), and (iii) an attempt to enter evidence on the “effectiveness” of their bogus chemical.  (Are they forgetting that this is a case about tax fraud and fake bank accounts?) 

I have a feeling that they received some earnest money for a deal that they are trying to close with the company mentioned by my anonymous source.  They are now using that money to bring their attorneys back to life. 

Neil’s Motions:

Neil finally made a visit to the IRS offices in Camarillo on January 6, 2011.  He had the ability to make this visit at the time of the indictment, but he decided to wait until the 11^th hour in order to stall the criminal proceedings.  This is the same tactic he is using with his frivolous motions to dismiss in the Civil Case. 

Additionally Neil claims that he discovered some computers that have “exculpatory emails” as to why Feuerborn and Jennings issued loans to themselves.  (Note:  Where are the loan documents?  How do you explain the condominiums, cars, interior decorating, motorcycles, RVs?  You want us to believe that you were really going to pay back the investors one day?!?!  Ha!  You had that opportunity after Louisiana and you did nothing!)

Neil goes on to say, “[p]rior to January 6, 2011, we had been led to believe, by the Plaintiff, through Eric Vandevelde, that the only evidence which existed from the seizure of Defendant’s car by the County of Ventura in 2005, were certain documents which had been scanned and produced to us previously.  We learned on January 6, 2011, that this representation was not accurate, and that, in fact, the computers existing in Defendant’s car when it was seized by the County of Ventura existed and were available to the Plaintiff just by asking the County of Ventura evidence hold employees to look for these computers, which occurred for the first time on January 6, 2011!” (Case 2:10-cr-00346-SJO Page IDs 756 and 757).  (He seriously used an exclamation point?!?!)

Neil also claims that Larry Shultz is an expert witness.  (Does Shultz plan on selling shares of ESS to jurors?)  Shultz is clearly an unstable individual when you read the Civil Lawsuit, and read portions of the transcript of the Civil Case hearings made available to me.  Neil also wants to call an individual named Paul Secote (spelled Sicotte by the U.S. Attorney) “who works for a Canadian Company which had initiated a joint venture of this technology with ESSI (the parent company developing this technology) by creating large equipment which would utilize the technology on a large scale, a witness which the Plaintiff has contacted and interviewed previously while I was on the telephone.  Mr. Sicotte will testify that his Company spent a substantial amount of money testing and evaluating the technology in question, and has determined that it’s a bona fide technology of the substantial value which Defendants believe exists” (Case 2:10-cr-00346-SJO Page IDs 764). 

Analysis:

So, apparently Paul Sicotte is a part of Elemax (the Canadian Joint Venture), and Neil admits that he has “spent a substantial amount of money” on this fraud.  Don’t you think he might be a little biased because he wants to sell his stake in this “solvent” to get his money back?  If this is a “billion dollar” idea then why hasn’t he finished this project yet to prove the merits of the technology?  Obviously Larry Shultz is neck deep in this fraud with the Defendants.  The Civil Lawsuit produces a mountain of evidence that he is now their front man for this con.  Shultz is now the one Feuerborn and Jennings use to make misrepresentations to investors.    

Neil also claims that he wants to enter evidence of patents that show that Feuerborn is an “inventor”.  It is amazing to me that none of the patents he proposes to enter in as evidence has anything to do with the solvent technology!  In fact Freestone has presented evidence where Dave and Larry both claim that part of the technology is patented and part of it is patent pending.  Wouldn’t these be interesting patents to see, or did Feuerborn, Jennings and Shultz lie to Freestone about their existence?

The Criminal Case is not about the technology’s validity.  We all know it’s a scam because third-parties/state agencies have tested it extensively.  Are you going to continue the lie that these third-parties/state agencies didn’t have the real formula?!?!  If so, then present your chemist that has tested the “real technology” (hmmm, I don’t see any “bone fide” chemists willing to testify on your behalf).  The Ventura County District Attorney, the California Department of Corporations, the Louisiana authorities, and Freestone have plenty of evidence that the chemical is toxic and carcinogenic. 

Assistant U.S. Attorney’s Response:

“On Wednesday, November 3, 2010, counsel for defendant Feuerborn asked to inspect records the next day (Thursday) or the day after (Friday). Government counsel responded 13 minutes later, making the records available for inspection both days, starting at 7:30 a.m. Counsel for defendant Feuerborn never followed up” (Case 2:10-cr-00346-SJO ; Page ID 767). 

Evans had the opportunity to inspect all the documents in November.  He decided to wait until January of 2011 in order to induce further delays in the Criminal Case.  This is a tactic that is constantly being used by the Defendants in both the Criminal and Civil Cases. 

“At no point prior to January 6, 2011, did counsel for defendant Feuerborn reference any computers seized from his client or ask the government to obtain such computers from any state authorities” (Case 2:10-cr-00346-SJO ; Page ID 769). 

“In his response to the government’s motion to compel reciprocal discovery, defendant Feuerborn indicates that he intends to introduce evidence about the effectiveness of the technology he has developed to separate petroleum from tar sands. (CR 76.) This issue would be relevant if defendant Feuerborn were charged with misleading investors about the effectiveness of his invention. But this is a tax case. Defendants are charged with conspiring to defraud the Internal Revenue Service, filing false tax returns (defendant Jennings), and tax evasion (defendant Feuerborn)” (Case 2:10-cr-00346-SJO ; Page ID 772). 

The Defendants also want to introduce videos of the technology.  I think we have all seen the jar demonstrations that Evans would like to present.  How does that prove that it’s a non-toxic product?  I have already shown how a toxic substance can pass the aquatic fish test.  It might be true that the "solvent" can remove oil from solids (I'm not saying that can or can't).  Either way, that doesn’t mean that it is non-toxic, and that doesn’t mean it can be used in a mechanized process.  Imagine what will happen when chlorinated gas escapes from the machine.  People could be injured and die if they work around this chemical!     

Let’s hope and pray the judge sees through these tactics!

-ESS Investor

Continuing the Con

I received an anonymous tip that David, Tom and Larry are currently working to sell the bogus, toxic chemical to yet another company by using the same misrepresentations given to Freestone, investors in the state of Louisiana, and stated in the California Department of Corporations Desist and Refrain Order.  I am told this is a desperate attempt to raise some quick cash to pay for legal expenses in both the Criminal and Civil Cases, and that David and Tom are hoping that the trial will be continued to give them enough time to finalize this sale. 

-ESS Investor

Criminal Case Hearing Postponed by One Day

Neil Evans, the legal counsel for David Feuerborn, filed an Urgent Request to Postpone Hearing set for 1/10/11 to 1/12, 1/13 or 1/14/11 due to Medical Urgency as Counsel for Feuerborn’s Father – Heart Procedure on 1/10/11 (“Medical Motion”).  Evans requested to continue the hearing that will discuss the U.S. Attorney’s previous request for reciprocal discovery, as well as Evans’ latest motion to continue the trial date.

In the Medical Motion Evans stated, “I was informed this morning, at around 9:00 a.m., that my father will be having a serious heart procedure at Cedars Sinai on Monday, January 10, 2011, commencing at 8:00 a.m., a procedure which has been advanced from a date which otherwise would have conflicted with the current Trial Date of 1/18/11” (Case 2:10-cr-00346-SJO ; Page ID 745).

I hope the best for Mr. Evans’ father during this procedure.  Barring any unforeseen complications with his medical procedure, it looks as if the medical problems with Evans’ parents won’t be a problem during the trial, and I don’t see a need to continue the trial date.

“I have notified Mr. Vandevelde prior to this Application of the issue, requesting that he cooperate in this continuance.  I have not heard back from him” (Case 2:10-cr-00346-SJO ; Page ID 746).

You probably haven’t heard back from him because he is an Assistant U.S. Attorney busy bringing criminals to justice (aka his job).  You should really give him more than a few hours to respond to your request.  According to the last filing by the Assistant U.S. Attorneys, Evans’ has been unresponsive to their communications for the last two weeks!  Remember the golden rule?  Treat others how you would want to be treated.   

Judge Otero ruled that the hearing would be postponed by one day.  The hearing is now scheduled for January 11, 2011 @ 9:00 a.m.  I will let everyone know the outcome of the hearing which is now delayed by only a day. 

- ESS Investor

Opposition to Continuance

The Assistant U.S. Attorney just filed the Government’s Opposition to Defendant Feuerborn’s Motion to Continue Trial (“Opposition Motion”).  First and foremost, this is Neil Evans’ fourth attempt to continue the Criminal Case.  In the Opposition Motion the Government states, “Mr. Evans informed government counsel of his intent to request a continuance the morning of January 5, 2011, and filed his request shortly thereafter. Although government counsel has contacted defense counsel over the past two months regarding a number of issues, including proposed jury instructions, the proposed joint statement of the case, proposed stipulations, and reciprocal discovery, Mr. Evans never indicated he would seek to move the January 18 trial date. Indeed, Mr. Evans has not responded to any of the government’s communications” (Case 2:10-cr-00346-SJO; Page ID 738).

“An eleventh-hour continuance will force these witnesses to once again rearrange their schedules to accommodate a new trial date” (Case 2:10-cr-00346-SJO; Page ID 739).

I couldn’t agree more.  I know numerous ESS investors that have made arrangements to fly from Texas, Louisiana, and Northern California to attend the hearing.  Additionally the Government agrees with my logic on Neil’s hypocritical statements in his Continuance Motions:

“It does not appear that Mr. Evans has been unable to practice law during the last two months, including representing defendant Feuerborn in a matter arising out of similar facts presented in this case. On November 17, 2010, Mr. Evans appeared at a motions hearing in a civil case in the Northern District of Texas, in which he represents defendant Feuerborn, defendant Jennings, another individual, and defendants’ company. Freestone Resources Inc. v. Shultz, et al., No. 10-cv-01349-O (docket entry #17). About two weeks later, on November 29, 2010, Mr. Evans filed a motion to dismiss the civil complaint for failure to join an indispensable party and for lack of subject matter jurisdiction. Id. (docket entry #18). On December 6, 2010, Mr. Evans appeared at a motions hearing in this criminal case, but did not request a continuance of the trial date. (CR 61.)” (Case 2:10-cr-00346-SJO; Page ID 739).

It’s clear to me that David Feuerborn’s attorney is more active, and devoting more time to the Civil Case rather than the Criminal Case (probably because there is money involved in the Civil Case).  I have to assume it’s because he knows nothing about Criminal Law.  He is only Dave’s attorney in the Criminal Case because he knows all about Dave’s con, because he has been representing Dave since 1998 according to documentation I have seen on PACER.     

“Defense counsel have now had approximately eight months to review the bulk of the discovery, over two months to review the draft summary charts, and a month and a half to review a significant portion of the government’s trial exhibits” (Case 2:10-cr-00346-SJO; Page ID 740).

Does anyone know if Neil Evans’ statements are, in fact, true?  I think Evans should produce some evidence that his father and father-in-law are as sick as he claims they are.  I only ask because birds of a feather…  

I wonder if Evans will fly back to Texas if the Texas Judge orders another hearing for his second frivolous Motion to Dismiss in the Civil Case?  That will truly be a tell tale sign of Evans truthfulness.  

The Judge will hear Evans Motion to Continue on January 10, 2011.  I will keep everyone posted.

-ESS Investor

Unbelievable…

So, Neil C. Evans (the counsel representing David Feuerborn) requested ANOTHER Motion to Continue their Criminal Case citing, once again, the illness of his father and father-in-law.  He wants to push the trial back to April!!!  This is an attorney who has been flying all over the country representing various clients on other cases, and is even representing David, Tom and Larry in the Texas Civil Case.  I know that I sound like a broken record, but how can he use the excuse that he doesn’t have enough time to devote to their Criminal Case if he is flying halfway across the United States to attending hearings in their Civil Case?!?!

Here are the real reasons he wants a continuance:

He wants to give Dave enough time to raise more money to pay for his legal defense by selling this scam to other investors (most likely overseas from the tips I have received).  Now they have a front-man, Larry Shultz, that is not facing criminal charges at the moment pitching their toxic chemical to third-parties to try and raise money. 

Common Sense:

If Neil Evans has so many personal issues going on then why doesn’t Dave hire different legal counsel to represent him in this matter?  For instance, if I hire an employee, and that employee is always making excuses why they can’t work, then I fire him/her.  This isn’t rocket science, and it seems like the justice system would not allow this huge miscarriage of justice to occur by allowing this inexcusable behavior.

I will keep everyone updated on the U.S. Attorney's response to this unbelievable new Motion.   

-ESS Investor

Criminal Case – Detailed Outline

Yesterday I posted my blog entry entitled Huge Filing in the Criminal Case - Synopsis of their Scam.  In that entry I focused on some of their past scams that involve their toxic chemical, but most of that information has already been reported on this blog.  Thus I wanted to share a portion of the Memorandum that deals directly with the tax fraud, and investor fraud:

Tax Fraud Case:

“The criminal tax fraud charges in this case arise out of defendants’ secret funneling of investor money to themselves through a bank account set up in the name of one of ESS’s outside vendors, as well as their receipt of other compensation from ESS that was not reported, or falsely reported, to the IRS.

Specifically, defendants opened a bank account in the name of “Ecologic,” a name misleadingly similar to one of ESS’s legitimate outside vendors, Eco-Logic Environmental Engineering, Inc. (the “real Eco-Logic”). That account is referred to herein (as well as in the indictment) as the “Bogus Ecologic Account.” Defendants then wrote checks drawn on ESS’s bank account (in which investors’ monies had been deposited) to “Ecologic”; but instead of giving the checks to the real Eco-Logic to pay for engineering equipment and services, defendants deposited the checks into the Bogus Ecologic Account and funneled the money to themselves -- by withdrawing cash, buying cashier’s checks, transferring money to their personal bank accounts, and writing checks drawn on the Bogus Ecologic Account. Defendants used this money for various personal expenses, including, for example, to purchase cars, motorcycles, and recreational vehicles, to pay for interior design and cabinetry work at their personal residences, and to purchase condominiums in Palm Desert, California. Defendants did not tell ESS’s accountant or other ESS employees about the existence of the Bogus Ecologic Account.

In addition to funneling money to themselves through the Bogus Ecologic Account, defendants also paid themselves large “management fees” for running ESS. These fees were typically $15,000 per month. After receiving tax forms (Form 1099s) from ESS characterizing such payments as compensation for their services, defendants instructed ESS’s accountant to falsely recharacterize such monies as “loans” from the company and issue new Form 1099s showing zero dollars of compensation, despite there being no loan documentation to support such a recharacterization, and despite the fact that other managers’ fees were not similarly recharacterized.

All told, defendants Jennings and Feuerborn received unreported income of at least approximately $1 million and $2 million, respectively. Defendant Jennings’ total tax due an[d] owing is approximately $236,000; defendant Feuerborn’s is approximately $604,000” (Case 2:10-cr-00346-SJO ; Page IDs 596-597).

Discussion:

Clearly David and Tom have as much contempt for the United States Government and its laws as they do for the investors of ESS.  We were told that they were building machines and using money for R&D while they were actually taking $15,000.00 a month in “management fees” and buying all kinds of toys and condominiums.  These management fees totaled THREE MILLION DOLLARS that went to pay for their extravagant lifestyles while investors were given false promises, and false hope of actually seeing their investment return to them one day.  This truly gets my blood boiling.  There are more than 600 ESS investors that were scammed by these criminals.  In my opinion, David and Tom deserve to spend the rest of their lives behind bars.   

12 more days until their trial begins.

-ESS Investor    

Huge Filing in the Criminal Case - Synopsis of their Scam

Hello Blog World!  We had a lot of documentation filed today in the Criminal Case, and I have been sifting through it since early this morning.  The U.S. Attorney filed its Government’s Trial Memorandum (“Memorandum”) and it was approximately seventy-four pages long.  It goes into detail on the eleven counts of Fraud, Tax Evasion and Subscription to a False Tax Return.

Below are some of the pertinent excerpts from the Memorandum:   

Status of the Case:

“Trial is set for January 18, 2011, at 9:00 a.m.”

“The estimated time for the government’s case-in-chief is approximately four court days, excluding cross-examination.”

“The government expects to call approximately twelve witnesses in its case-in-chief.”

Background:

“Since at least the early 2000s, defendants Jennings and Feuerborn have owned and operated a series of companies that purportedly developed technology that could separate oil from dirt and other materials without producing any hazardous waste. The names of defendants’ companies were usually some variant or expansion of the abbreviation ‘ESS’ -- for example, Environmental Soil Sciences, Inc.; ESS Environmental, Inc.; and Environmental Services and Support, Inc. Specifically, defendants claimed that they developed and were in the process of patenting a chemical solution that, when used in conjunction with specialized machinery, could quickly and efficiently remove oil from huge volumes of contaminated soil. Defendants have used various names for their chemical solution -- for example, ‘Renue,’ ‘R6000,’ ‘RTS-11,’ and, more recently, ‘Cleansal.’

Defendants have pitched the technology to potential investors as the panacea to oil spills and soil decontamination and remediation projects. Defendants’ marketing materials projected that annual revenues would exceed a billion dollars by ESS’s second year of operation. (E.g., Bates No. IRS-028405.)  Despite numerous warning signs that defendants’ claims about the technology were false, defendants managed to convince hundreds of people to invest tens of millions of dollars in ESS. These warning signs include the following:

In 1996, defendant Feuerborn and a company called Federation of Research Chemical Engineering, Inc., or ‘FORCE’ (a predecessor to ESS) were sued in Harris County, Texas, for fraud in connection with the marketing of a chemical solution that, like those later pitched by ESS, purportedly could separate oil from other materials without producing hazardous waste. In October 1998, a final judgment for approximately $40,000 (including $5,000 in punitive damages) was entered against defendant Feuerborn, with the court finding that defendant Feuerborn had “committed actual fraud.” (Bates No. IRS-042944.)

In March 2003, the Texas State Securities Board fined and issued a Cease and Desist Order against ESS and defendant Feuerborn for illegally selling securities.(See http://www.ssb.state.tx.us/Enforcement/files/1499.pdf (last visited December 20, 2010).)

In August 2005, defendants Jennings and Feuerborn were indicted by state authorities in Louisiana for, among other things, fraud, conspiracy, and racketeering in connection with the sale of securities in ESS. (See http://da.countyofventura.org/091505.htm (last visited December 20, 2010).) Defendants pled guilty, and ESS was fined $150,000 and required to buy back ESS shares defendants had sold to investors. (See http://www.deq.state.la.us/portal/Portals/0/Legal/cis/ENV%20CRIMES%20PROSECUTED%2004_02_08%20upd.xls (last visited December 20, 2010).)

In November 2006, the California Department of Corporations issued a Desist and Refrain Order against defendants Jennings and Feuerborn, as well as ESS, for ‘offer[ing] and s[elling] securities . . . by using untrue statements and/or misrepresentations or omissions of material facts.’ (See http://www.corp.ca.gov/ENF/pdf/2006/ess.pdf (last visited December 20, 2010).)

On July 9, 2010, defendants Jennings and Feuerborn, as well as ESS, were sued in the Northern District of Texas for making material misrepresentations and concealing materials facts regarding the sale of securities in ESS. See Freestone Resources, Inc. v. Shultz, et al., No. CV 10-01349-O.

[T]he Louisiana indictment caused defendants to change how they executed their tax fraud scheme. Whereas from at least 2003 through 2005, defendants primarily funneled unreported investor monies to themselves through the Bogus Ecologic Account, following the Louisiana indictment, defendants instead paid themselves 'management fees' but mischaracterized them as 'loans.'” (Case 2:10-cr-00346-SJO; Page IDs 592-596)

Discussion Points:

Basically the U.S. Government gave a synopsis of just a few of the scams that David Feuerborn and Thomas Jennings have been perpetrating over the last few years.  It makes me sick to my stomach.  Hopefully these men will be put behind bars so they cannot scam anymore innocent victims.    

I will post more from the Memorandum ASAP.

-ESS Investor

Are David and Tom in Arkansas?

Does anyone know if Dave and Tom are in Arkansas running their toxic machines?  According to news sources 3,000 dead birds mysteriously fell out of the sky, and 100,000 dead fish washed up on the shores of the Arkansas River.  It makes you wonder if Jesus is talking to Dave again...

http://www.aolnews.com/2011/01/03/first-birds-fall-now-100-000-fish-dead-in-arkansas/

-ESS Investor

“If you drink much from a bottle marked `poison,' it is almost certain to disagree with you, sooner or later.”

Happy New Year Blog World!  Let’s pray that David and Tom will be spending 2011 behind bars so they cannot scam any more innocent victims, and hopefully this new guy, Lawrence Shultz, will be following in their footsteps.  

Over the holidays I read a comment posted on the VRI Board.  I thought it was a great idea.  According to the claims of David, Tom and now Lawrence, the chemical solvent is completely “non-toxic”.  ESS investors were all sold on this idea, and Freestone has shown emails, a fake MSDS and other documentation from David, Tom and Lawrence where they continue to make this claim.  If that is the case then they should be willing to let their family and friends that have assisted in the marketing and sale of this product drink a litre of it.  Then David, Tom and Lawrence should all drink a litre of it.  What better way to prove that it is not toxic!?!?

I hope the people at Freestone read this post and pass it on to their legal counsel.  If David, Tom and Lawrence say that they will not drink the product, nor will they let their friends and family drink the product, then that is definitive proof that it’s toxic stuff - case won!  Obviously you will have to watch them closely to make sure they don’t engage in anymore Parlor Tricks, and try to swap out the toxic chemical after the experiment with water or something of the like.

Only 15 days until their trial!

- ESS Investor