The purpose of the this document is to outline and discuss my concerns with the Four Million Eight Hundred Thousand Dollar ($4,800,000) loan to Earthcare Energy, LLC (hereinafter referred to as “ECE”) that was recently approved by the Evansville City Council (hereinafter referred to as “Council” and “Councilpersons”). Since the Council meeting wherein Stephen P. Geldmacher (hereinafter referred to as “Geldmacher”) presented ECE’s proposal and the Council meeting wherein the loan was approved five (5) to four (4), a significant amount of information has become available regarding the ECE proposal. The information now available demonstrates that the loan to ECE carries significantly more risk than what was originally contemplated. This additional information should be made available to the public, as they should be part of the conversation as to whether this loan is appropriate. The increased risk related to this loan is more than the public should bear, and the loan to ECE should be rescinded.

My information now available regarding the loan to ECE can be divided into four (4) categories:

1. The track record or lack thereof for the Principals of ECE;
2. The track record for Elite Energy Systems, LLC;
3. The issues related with the product, the Total Flow Generator; and
4. The inability to see the Licensing Agreement between Richard Langson and ECE.

A review of the following information reveals that the Principals of ECE have no proven track record for successfully developing and executing a business plan or launching a new product on the commercial market. If any record exists, it is a record of failure. The track record for the Principals at Elite Energy Systems, LLC (hereinafter referred to as “EES”) is one of lawsuits for faulty products and contract violations, false claims to potential investors and bankruptcy. Regarding the Total Flow Generator (hereinafter referred to as “TFG”), the Principals for ECE claimed that the TFG was patented technology with zero competition. The information provided herein demonstrates that this is far from true. Finally, all of these issues make it unacceptable that the licensing agreement, the very basis for the loan to ECE, has never been seen. All of this information shows that this loan to ECE comes with substantial risk that should not be tolerated.

Information

1. The track record or lack thereof for the Principals of ECE

a. Kenneth D. Haney

Unless there is a different Kenneth D. Haney (hereinafter referred to as “Haney”) that worked for United Airlines and has ties to Evansville, Haney filed a Chapter 7 Bankruptcy in the Northern District of Illinois in October of 1999 and was discharged in April of 2000 (99-33301). Additionally, in the last eight (8) years, Haney has been associated with a large number of businesses: Earthcare Energy, LLC; Earth Care Energy; Greenearth Solar LLC; The Kd Haney Group; OfficeSupplies2000.com; Rightway Computers, LLC; Guaranty Lending; Khanh Nguyen Ageny; Santa Cruz Distributors; Petroleum & Environmental Services International, LLC; Power Tube Systems, LLC; Dollar Save LLC; and The Kenbro Corp. None of the businesses appear to have survived beyond his involvement. None of the businesses appear to have store-fronts, phone numbers, employees, reference in newspapers, past advertisements, websites, or to otherwise exist. If an address is listed for the business, it is a residence or a post office box. There are numerous exhibits that outline how Haney claims to be CEO and President of a variety of businesses at essentially the same time and claiming a variety of accomplishments that don’t appear to be verifiable. Haney also appears to own a home in Spring, Texas, where he has yet to pay his property taxes for 2011. His current late penalty is over Two Thousand Seven Hundred ($2,700) and his total property tax liability is over Twelve Thousand Eight Hundred ($12,800).

In addition to it appearing that Haney’s finances are not in order, Haney sent an email to Council with material misrepresentations. He claimed that there were patents related to the TFG and that there was “no competition period.” Both claims are untrue. There are no patents related to the TFG, and therefore the technology is not protected from copying or reverse engineering, and there is significant competition in this market. The TFG is competing with a much more established product, the gas let-down turbine generator (hereinafter referred to as the “Turbo Expander”). This product is being marketed throughout the world by companies such as GE and Ingersoll Rand. The Turbo Expander performs the same function as the TFG and appears to work at higher pressures than the TFG, which has never been tested in real world conditions or pressures. By working at higher pressures, the Turbo Expander is able to generate more electricity than a TFG. Richard Langson (hereinafter referred to as “Langson”) co-authored an article acknowledging that the TFG worked best at lower pressures. The Turbo Expander works at pressures up to One Thousand Eight hundred (1,800) psi, or triple the pressure claimed by other Langson distributors as maximum working pressures.

b. Stephen P. Geldmacher

Stephen P. Geldmacher (hereinafter referred to as “Geldmacher”) has the most serious track record of failure with a start-up company. In November of 2006, Geldmacher became President and CEO of Comvergics Systems. The Company literature claimed that it had developed a communication hub the size of two (2) reams of paper that ran off of a wireless carrier and would create internet, telephone and fax capabilities at a remote or mobile location. Claiming a working prototype, a cellular carrier interested in supporting the product, and multiple customers lining up to purchase these devices, the company collected Six Million Five Hundred Thousand Dollars ($6,500,000) from investors between 2006 and 2008. The company touted plans to launch their product to a select number of customers at the beginning of 2008 and then broadly launch commercially in the second quarter of 2009. Comvergics Systems never manufactured any communication hubs and had stopped even updating its website by 2009. In 2009, the founder of Job Sight Solutions, Inc. doing business as Comvergics Systems formed a new company, Comvergics Wireless, LLC. Comvergics Wireless, LLC applied for a new commercial business license in Rancho Cordova, California for telecommunications sales and services in the second quarter of 2011.

In addition to a recently failed business venture, Geldmacher, like Haney, has materially misrepresented his work history and accomplishments. His LinkedIn account outlines he was at Motorolla for no more than two (2) years and at SBC for no more than one (1) year (as well as has an eleven (11) year gap in his resume), yet he claims a variety of accomplishments for both companies that don’t seem possible in the time allotted or given the actually histories of the companies. For example, Geldmacher claims a variety of accomplishments for SBC, including the successful turnaround of two (2) regions, yet was there a year or less. His claims regarding his tenure with Sprint-Nextel are also untrue. He claims to have been on the original executive team for Sprint PCS (personal communications service), however, he did not start working for Sprint until 1996, at least two years after the Sprint PCS idea was born. He also never led the startup from zero to Ten Billion Dollars ($10,000,000,000) in sales. Sprint was not approved to sell cellular service until 1996, and then Sprint responded by acquiring millions of customers by purchasing licenses. They almost instantly had the potential for Two Hundred Sixty Million (260,000,000) customers. Geldmacher was an area manager at the time the licenses were purchased. He essentially had very little to do with the organization or growth of Sprint.

During the eleven (11) year gap in his resume, Geldmacher acquired a California franchise tax lien in Alameda County, California in 1991 that wasn’t released until 1996. The trend of acquiring state and federal tax liens continues today. Geldmacher has at least three existing federal and state tax liens: one in El Dorado County, California filed in 2006 (amount unknown), and two in Will County, Illinois filed in 2006 for over Nine Thousand Dollars ($9,000) and nearly Two Million Two Hundred Thousand Dollars ($2,200,000). Geldmacher’s response to the tax liens was to convey his home to a trust. His response when asked about the liens was that they were somehow related to his divorce settlement, and it was confidential.

c. Fred J. Young, Jr., Andrew L. Salter and Erwin Washington

Fred J. Young, Jr. (hereinafter referred to as “Young”) and Andrew L. Salter (hereinafter referred to as “Salter”) have LinkedIn resumes that are attached. The best argument against the claimed accomplishments in the biographies provided by Debbie Dewey for both men are their own LinkedIn accounts. Young worked from July of 1992 to April of 2008 for Seasons 4, where he sold commercial HVAC units to grocery stores. After leaving Seasons 4 and going to American Capital Energy, Young appears to have remained in sales. Young does not appear to have any experience in the last twenty years with manufacturing. Salter also appears to have had a career in sales. In the resume provide by Debbie Dewey and on ECE’s website, Salter allegedly founded AA Global Systems, however that company does not appear to exist. What does exist is AA Global Solutions, Inc., which sells office supplies and furniture. Salter has sold office supplies for the bulk of his career. He has a degree in History and is a secondary teacher. I am skeptical of his ability to develop business for the TFG without a technical background. As to Erwin Washington (hereinafter referred to as “Washington”), he was convicted in 2010 for attempting to fly a commercial airplane while intoxicated. He received a 10 month suspended sentence. It does not appear that he is still working for United Airlines. Even without his criminal history, Washington does not appear to have the background to be President of ECE.

2. The track record for Elite Energy Systems, LLC.

Although Evansville is allegedly going to be the Original Equipment Manufacturer for the TFG, for some reason we have to buy the first several machines from another manufacturing company. This manufacturing company, Elite, has a track record of law suits and bankruptcy. Elite was formed in November of 2008 in Delaware and in January of 2009 in Nevada after its predecessor, Chapeau Inc. (hereinafter referred to as “Chapeau”) doing business as BluePoint Energy, Inc. (hereinafter referred to as “BluePoint”) filed bankruptcy in October of 2008. BluePoint filed a Chapter 11 bankruptcy with Twenty-Two Million Dollars ($22,000.000) in debts. The Bankruptcy Court converted it to a Chapter 7 in December of 2008. BluePoint filed bankruptcy just ten (10) months after receiving an investment of Ten Million Dollars ($10,000,000) from TEFCO, LLC (hereinafter referred to as “TEFCO”). TEFCO was formed in Virginia on December 12, 2007, by Gordon V. Smith, for the sole purpose of investing in BluePoint Energy. It was also formed in California in February of 2008 and cancelled in Virginia. The investment was announced December 19th of that same year. Gordon V. Smith had been on the Board of Directors of Chapeau since August of 2006. When the announcement was made, it sounded oddly familiar. Essentially, BluePoint had a great product, customers lining up, and the infusion of cash was going to push the company to the next level of “sustainable profitability.” However, ten (10) months later the company was gone. BluePoint’s assets were sold for One Million Six Hundred Thousand Dollars ($1,600,000) to TEFCO, who is the managing member of Elite. Steven P. Brandon (hereinafter referred to as “Brandon”), the Vice President of Operations for Elite and Michael A. de’Marsi (hereinafter referred to as de’Marsi”), the Director of Software Systems Engineering joined BluePoint Energy in February of 2006. Brandon became an Officer of Chapeau in September of 2008.

Prior to coming to BluePoint Energy, Brandon and de’Marsi worked for Hess Microgen LLC (hereinafter referred to as “Microgen”) in management positions. Projects from the time period that Brandon and de’Marsi were at Microgen led to lawsuits that started in 2005 and ran through 2008. Plaintiffs included Xnergy and the City of San Diego. The claims ranged from breach of contract, breach of implied warranty of fitness for a particular purpose, breach of implied warranty of merchantability, breach of express warranty, to tortious interference with a contract, fraudulent inducement and unconscionability. Most of the cases settled, but the case with Xnergy resulted in an Eight Million Two Hundred Thousand Dollar ($8,200,000) jury verdict against Microgen. Six Million Three Hundred Thousand Dollars ($6,300,000) was for punitive damages. Brandon was fired from Microgen in January of 2005. Of the seven (7) officers at Elite, four (4) were originally at Microgen.

Given Elite’s history, I think concern is warranted as to whether we will actually receive a working product if ordered from this manufacturer.

3. The issues related with the product, the Total Flow Generator.

During the course of various presentations to the Council by ECE, we were told and led to believe that ECE had no competition and they alone were in the business of using the pressure in gas pipelines to produce electricity. This statement is simply untrue.

Several multinational companies such as GE, Ingersoll Rand and Atlas-Copco have been utilizing an alternative technology –the Turbo Expander for years. There are thousands of these devices are in operation throughout the world and are producing electricity on a daily basis. There are no TFGs of the type marketed by ECE in place anywhere in the world. In fact, none have been sold even though they have been on the market since 2009.

Numerous other companies in addition to ECE have been licensed by Langson Energy to sell his device. Helix Power, Rattler Energy and Trans Pacific EnviroEnergy are but a few. A September press release from Langson Energy also stated that Trans-Pacific was granted the exclusive license to manufacture and sell the device in Canada. A more recent press release touts the establishment of a partnership with an Argentinian firm to market the device in South America.

We are asked to trust the word of total strangers who are asking to borrow millions of dollars, the same strangers who told us that they have no competition. The only thing that we do know is that this statement is false.

As stated previously, the technology of the TFG can be copied and has competition. Additionally ECE has made claims before the Council that a true third party test of Langson’s device would be completed by Concurrent Technologies Corporation before March 31, 2012. It is now May 3rd and not test results have been made available to the Council at all. ECE has posted an article on their website touting a test run by Elite with no raw data to support any claims at all.

4. The inability to see the Licensing Agreement between Richard Langson and ECE.

No member of the Council, GAGE or the Mayor’s staff has seen the agreement between ECE and Langson. We do not know its terms. We do not know if other agreements, identical in terms, exist between Langson and others. We do not know how many other companies are trying to sell this identical technology.

The inability to see any contracts that ECE has claimed to exist, including the License Agreement between Langson and ECE, any contract or memorandum of understanding (MOU) from the Department of Defense (which ECE claims is pushing for installations in the summer of 2012), or any reference to the Billions of dollars of business from the State of New York that Haney claimed was in hand during a presentation before the Council, is unacceptable.

Conclusion

In closing the City of Evansville is on the verge of issuing bonds to fund a loan that has been approved by the Council under duress due to the threat of going elsewhere by Haney. Furthermore, the product for which the Council has approved by a five (5) – four (4) majority has never been tested in real world conditions, has never been sold or installed anywhere according to the capacity advertised, is not protected by any patent, and contracts represented to the Council have not been made available for examination. Additionally the track record of the founders has been embellished beyond the point of be able to be verifiable.

The Council typically relies on outside vetting to enter into such agreements. In this case the vetting was not sufficient and the vote was not only rushed but was held under duress. In any other real world situation including commercial banking this set of conditions would be cause for re-examination of the previously passed agreement due to finding new material information. It is time to take a breath and come to grips with what we are about to do. I as the Council representative from the 3rd Ward and as a passionate advocate for prosperity in the 3rd Ward and the City of Evansville call for a time out before moving ahead with a project that is at best premature and at worst a misinformed decision.

Source:Stephanie Brinkerhoff Riley

This report is published by the City County Observer without edit, opinion, or bias

In an interview with 14 WFIE Gage president Debbie Dewey stated that “personal information isn’t something their team takes into account when bringing a business to town. I’ve been involved with new ventures and growth ventures for a lot of my career, those are not the things we use for evaluating success-probability of a project.”

When contacted by 14 Ken Haney the Chairman of Earthcare is quoted as saying “Everyone has personal things, we can bring up dirt on anybody and pull up inaccurate and stupid information, but until you know the true facts and the outcome of any of that information you shouldn’t smear people’s names.”

Dewey also claims that Friday was the first time that she had seen anything in writing regarding bankruptcies, arrests, shell companies, and failed business ventures. Two credible sources have told the CCO that there was a meeting last week in the office of Mayor Winnecke attended by Dewey where all of this same information was made available to Dewey and Mayor Winnecke in writing and the people including Councilwoman Riley who presented it were summarily dismissed.

Link to 14 story.

http://www.14news.com/story/18152195/concerns-rise-over-new-evansville-energy-company

Click on this link to sign the petition:

http://www.ipetitions.com/petition/stop-the-earthcare-energy-loan/