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.
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