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                    

“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

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

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 

Arrogance is Bliss

I've decided to use this blog post to analyze the mindset of David Feuerborn and Thomas Jennings as it relates to the chemical scam and the problems they have encountered in the 20+ years they have been at it. 

Arrogance:

I can attest that David Feuerborn and Thomas Jennings are extremely arrogant individuals.  Take for instance Dave’s arrogance towards the Internal Revenue Agency.  He hasn’t filed a tax return in the last 5 years and he thinks he can get away with it!  That’s arrogance. 

Dave and Tom know there are hazardous chlorinated chemicals in their “solvent” yet they think they can forge Material Data Safety Sheets and other government regulated documentation so that everyone thinks it’s as safe as water.  This is a federal offense!  That’s arrogance. 

Dave and Tom also get people to front for them so that due diligence research doesn’t reveal their identities and past scams.  In Louisiana they used paid actors to pitch the solvent to would-be investors, and they used an individual named Larry Shultz to sell the “solvent” to Freestone.  That’s arrogance.

They set up bogus bank accounts at Wells Fargo with names almost identical to the vendors building their “machines” so they could funnel money to their personal bank accounts and investors would think the money was going to the machine manufacturers.  That’s arrogance. 

They are still trying to sell their “solvent” under different names and different corporations even though they have been criminally indicted by the state of Louisiana, criminally indicted by the U.S. Federal Government, successfully sued by Petro-Sog, civilly sued by Freestone Resources (ongoing), and issued a Desist and Refrain order from selling securities by both Texas and California.  That’s arrogance. 

How do they get away with it?:

If you talk to Dave and Tom then you hear the excuse that they have been through all this trouble because “people are trying to steal their ‘solvent’”, or that “people are just jealous of their miracle cleaner.”  Let’s take a look at that argument:

Petro-Sog only wanted to recover money that they paid to Feuerborn when they found out that Feuerborn had made multiple misrepresentations about the chemical and its toxicity.  They wanted nothing to do with the “solvent” when they discovered it had carcinogenic, chlorinated chemicals contained in it. 

Freestone just wants to recover their stock and money that they paid to Feuerborn, Jennings, Shultz and Environmental Services and Support, Inc.  They are asking for a rescission of their Agreement because they made the same discoveries made by Petro-Sog, which indicates that they want nothing to do with this hazardous “solvent” either. 

Then one must ask if the Internal Revenue Service, the state of Louisiana, the California Department of Corporations or the Texas Securities Commission wanted to steal their “solvent”.  This is the most laughable of them all.  I know Dave and Tom blame their Louisiana prosecution on corrupt local officials, but the fact still remains that many investors lost hundreds of thousands of dollars on this scam.  It sounds to me as if they people they scammed were just well connected.  None of the documentation or disclosures they made to Louisiana investors discussed the carcinogenic chemicals that are contained within the “solvent”.  

These guys think they are above the law.  They don’t care if people get hurt because they don’t make the proper disclosures about their “solvent's" toxicity.  The only thing on the minds of Feuerborn and Jennings is how they can make some quick cash without working for it.  It looks as if the chickens are finally coming home to roost.      

- ESS Investor

The Eyes of Texas are Upon You

It looks as if we have some life in the Civil Case.  Judge Reed O’connor has ordered both parties (Plaintiff and Defendants) to appear for a hearing on November 17, 2010 to hear verbal arguments on the jurisdiction challenge submitted by Neil Evans, the attorney for David Feuerborn, Thomas Jennings, Larry Shultz, and Environmental Services and Support, Inc. (“Defendants”). 

On November 17^th Freestone will argue that the Defendants had the minimal contact needed in the state of Texas to keep the jurisdiction in the Northern District Court in Texas.  According to my research, minimal contact is usually all one needs to prove in order to keep the original jurisdiction in which the complaint was originally filed.  According to Freestone’s response to the Motion to Dismiss, the Defendants had minimal contact with Texas in that they originally solicited a Freestone consultant and resident of Texas while he was in Texas, made multiple phone calls to Freestone’s Texas office, sent multiple emails to Freestone’s Texas office, visited Freestone’s office in Texas on multiple occasions where they gave misrepresentations during demonstrations of the solvent, a demonstration trip in Houston, and the Petro-Sog case indicating that at least one of the Defendants (David Feuerborn) has previously directed this scam at the state of Texas.

Neil Evans, the attorney for Feuerborn in the Criminal Case, argued that he didn’t have enough time to prepare a proper defense for his client, and requested a continuance multiple times in the Criminal Case.  Now, how are we supposed to believe that he has time to travel to Texas to represent all of the Defendants in the Civil Case?  What are the odds that he will come up with some obtuse reason to postpone the jurisdiction hearing in the Civil Case?  But then again the Judge must to approve his reason before he will allow the hearing to be postponed.  I have a feeling that Judge O’connor will not have a lot of patience for these guys if they attempt delay tactics when he hears about their criminal indictment. 

So now the Defendants’ attorney is going to fly back and forth between California and Texas on ESS investors’ funds.  This is the biggest travesty of them all.  On a phone conference with ESS investors David Feuerborn claimed he was looking for a joint venture partner, and that construction was underway on another machine.  Instead, it looks like any new money that might come into this venture will be spent on defending David Feuerborn and Thomas Jennings.    

Personally, I would like both cases to move forward as quickly as possible.  My goal is to collect any and all evidence in the Criminal Case and Civil Case that proves that Feuerborn and Jennings used fraud in their chemical scam in the hopes that an ESS class action can be put together.  If there is evidence that criminal actions have occurred then the authorities might even get involved and stop them once and for all!  No one else needs to get hurt by these guys and their scam. 

-          ESS Investor    

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

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