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

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

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