yes, there is a connection
Borneo Energy alleges that it learned that SSTP had technology that it claimed could produce "Vertroleum," a biofuel, from various materials, including palm waste. Borneo Energy was interested in developing the potential of such waste. On February 18, 2008, its representatives visited SSTP's Baytown headquarters to investigate "a potential investment in SSTP and/or technical collaboration with SSTP." During the visit, SSTP demonstrated its process for producing Vertroleum using the "Rivera Process." The demonstration used soybeans as feedstock. Borneo Energy alleges that "Mr. Rivera represented that a similar result could be obtained from palm waste." During that visit, according to Borneo Energy, SSTP and Rivera made the following misrepresentations:
* Rivera represented that Vertroleum was of "high quality" and could be "used as biocrude, biodiesel, or as a biodiesel blending component for petroleum diesel," and that the production process created a residue that was a "high-quality fertilizer."
* Rivera represented that laboratory test results (which he presented) analyzed Vertroleum's chemical composition. Rivera did not mention that the testing company was closely related to SSTP; the company's president was a member of SSTP's Board. The test results showed that Vertroleum met the ATSM standards for biofuel. Borneo Energy alleges that Rivera and SSTP knew that Vertroleum did not meet these standards or recklessly represented Vertroleum's qualities despite the lack of proper testing.
* Rivera presented a "whitepaper" that purported to analyze SSTP's technology for generating biogas for use in electricity generation. The whitepaper projected an internal rate of return of 142.1% for SSTP, making a two-reactor Vertroleum production plant in the United States economically viable. Borneo Energy alleges, on information and belief, that Rivera and SSTP knew that this internal rate of return was not achievable.
* Rivera represented that SSTP had plans to construct a four-reactor biogas generation plant in Baytown and to expand to add more reactors.
* Based on the whitepaper and the plans to construct the plant in Baytown, Rivera represented that SSTP was a high-quality investment venture.
* Rivera represented that SSTP was financially sound and that it had engaged an auditing firm that would shortly produce audited financial statements, which would be provided, along with other financial and technical information, "within weeks." Borneo Energy alleges, on information and belief, that Rivera and SSTP knew that they could not provide audited financials within that time frame.
* Rivera did not disclose the investigation by the SEC or his involvement in the "pump and dump" scheme.
Borneo Energy alleges that in reliance on these representations and omissions, it entered the February 28, 2008 Stock Subscription Agreement, agreeing to pay a total of $2 million for 50 million shares of SSTP stock. Borneo Energy also signed the Term Sheet, agreeing to pay a $100,000 fee for technical training and assistance from SSTP to produce Vertroleum from palm waste in Malaysia. Borneo Energy alleges that SSTP and Rivera never intended to provide the promised technical collaboration.
Borneo Energy alleges that it paid the initial $100,000 installment under the Stock Subscription Agreement and the $100,000 fee under the Term Sheet. In March 2008, Borneo Energy had testing performed on the Vertroleum product samples it received. Those test results showed that the product did not meet relevant standards. Borneo Energy wired a second installment of $900,000, withholding the remainder pending receipt of the SSTP audited financials and additional test results. Borneo Energy received neither. Nor did it receive the promised technical collaboration and assistance or any SSTP stock. On July 18, 2008, the SEC sued Rivera over his involvement in the USSE stock. This lawsuit followed.
Borneo Energy Sendirian Berhad v. Sustainable Power Corp.
IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION
