New Jersey Attorney General's Offce

Idaho Man Sentenced for Stealing Funds Invested in Bogus Fuel Technology Venture

TRENTON – Attorney General Stuart Rabner and Division of Criminal Justice Director Gregory A. Paw announced that an Idaho man has been sentenced to prison for stealing funds from victims who invested in United Fuel Cell Technologies Inc., a phony corporation that the defendant claimed had developed a revolutionary technology to convert water to hydrogen fuel.

According to Director Paw, Superior Court Judge Thomas P. Kelly of Mercer County sentenced Patrick Kelly, 51, of Kuna, Idaho to five years in state prison on a charge of second-degree theft by failure to make required disposition of property received. The defendant also was ordered to pay $400,000 in restitution. Kelly pleaded guilty to the charge on July 31, admitting that he used more than $200,000 in funds invested in United Fuel Cell Technologies to purchase eight cars in his own name.

An investigation by the Division of Criminal Justice determined that between November 2000 and June 2004, Kelly collected about $2.5 million in investments in United Fuel Cell Technologies from about 500 people, mostly New Jersey residents.

It is alleged that Kelly spent investor funds on a variety of expenses, many of which were clearly not related to the business or the development of their purported technology. Kelly allegedly spent $80,000 for a fountain for his home and financed a credit card for his 12-year-old daughter.

“This defendant is going to prison because he stole from investors,” said Attorney General Rabner. “We are committed to vigorously prosecuting these cases to protect New Jersey residents who are trying to invest and save for their retirement or their children’s education.”

“Mr. Kelly claimed to offer investments in a breakthrough technology. In reality, he offered only lies,” said Director Paw. “We have ensured that he will be appropriately punished for his greed and deception.”

The Division of Criminal Justice obtained a state grand jury indictment on Sept. 23, 2005 charging Kelly with second-degree securities fraud in connection with his sale of “common stock” in United Fuel Cell Technologies. The indictment alleges that he falsely claimed that United Fuel Cell Techologies was a Delaware corporation, and that Hewlett Packard and IBM had agreed to assist the corporation in developing and marketing its technology and related products. In fact, United Fuel Cell Technologies was never incorporated, and Hewlett Packard and IBM did not make any agreement with the company. Kelly also was indicted on second-degree charges of conspiracy and theft.

The judge today dismissed charges in the case against a second man, John Yoka, 35, of Livermore, Calif.

Hydrogen fuel cells, which are a legitimate technology, generate energy using hydrogen or hydrogen-rich fuel, with water as a byproduct. However, Kelly, who also used the name Genesis World Energy, fraudulently claimed to have invented a process to separate the hydrogen and oxygen molecules in water to produce hydrogen and oxygen gases to be burned as fuel or used in fuel cells. He claimed the technology would free the U.S. from dependence on oil from the Middle East.

State Investigator Noelle Holl and Deputy Attorney General Patrick J. Flor were assigned to the investigation for the Division of Criminal Justice. They were assisted by Investigators Dean Kuehnen and Julian Leone of the New Jersey Bureau of Securities. Flor prosecuted the case and represented the state at the sentencing.

Source: ZPEnergy.com

GWE knew about the criminal complaint in February 2003 (Score: 1)
by chipotle_pickle on Sunday, April 18, 2004 @ 02:30:02 PDT
(User Info | Send a Message) http://freehydrogen.blogspot.com

And they heard from the NJ investigator long before December 2003, when the public learned about the NJ inquiry. So for most of the time they updated their website, they knew they were the subject of a fraud investigation. This means that it's unlikely that the fraud investigation is what's made them stop updating their website. But I don't have any idea what's made them stop.

The scam had already pretty much played itself out by the time that anyone had heard about it. UFCT was a privately held Delaware corp run by Patrick Kelly from Meridian Id. The investors were drawn from existing social networks in NJ (mineral hobbyists, sun entthusiasts, etc). The pitch included a demo, but it was not a Newman/Lee class demo. More of a Tilley class demo. Investors bought in from 2001 through 2003. But in late 2002, investors were impatient. This is when GWE was invented. It has been a year and a half long distraction, but while opening up the website and throwing the press conference did make it look like there was a business, and it attracted boosters like Vlad, it also brought detractors like Bob Park, Erik Kieg, and me.

I understand from Vlad that they still make updates to the portion of their site for licensees. These are the people who signed up in January 2003 and were NDAed in 2003-May, that they still haven't shown any technology. There was a time I was curious what GWE was telling those people, but it just doesn't matter. GWE never intended to do business with the licensees, not even to rip them off. The whole licensee show has been, like the rest of GWE, just to distract the investors who already knew in late 2002 that something seemed wrong.