International Automated Systems (fka IAUS)

[scion]

Millard project

By Amy Joi O'Donoghue , Deseret News
Published: Saturday, Dec. 21 2013 4:50 p.m. MST
http://www.deseretnews.com/article/865592845/Are-Utahns-solar-projects-just-pie-in-the-sky-Claims-raise-questions-in-Millard-County-elsewhere.html?pg=all

In the Millard County project, officials said Johnson has three building permits but lacks the conditional use permit or business license associated with the smattering of solar towers his company erected on a patch of ground just less than five acres west of Hinckley, Smith said.

Johnson denied being out of compliance with the county's permit requirements.

"I don't know what they are saying. As far as I know, we have complied with everything they have asked us to do," he told the Deseret News. "It makes no sense for us not to comply."

But in a June 8, 2011, violation issued by the Millard County Planning and Zoning Department, officials wrote that Johnson was using the company website of RaPower3 and "continuing to recruit investors and selling your product with your principal offices in Deseret, Utah, as well as holding a convention in Salt Lake City June 27-29. We require that you have a conditional use permit and a business license to continue to do business in Millard County."

Smith said inquiries about an unrelated solar generation project have started questions anew, so the county is reiterating its demands that Johnson come into compliance by submitting the proper paperwork.

A second notice of violation was sent to Johnson Oct. 22, demanding paperwork be submitted to county officials or he could face civil and criminal penalties. An official with the county planning office said Johnson had not responded to the latest demand so the office was preparing to have him served.

Projects in 4 states

Smith said he and county officials have fielded questions from the public about Johnson's Millard County project.

"I had an investor from Las Vegas who wanted to know where the $100 million solar plant was in Millard County," Smith said. "I told him it doesn't exist."

Smith said he believes the project is being described and promoted as something it is not.

"We've been asked if it is in our county and if it is being built," Smith said. "We do not have an active solar project functioning in Millard County."

The RaPower3 website also describes a manufacturing plant that Smith said does not exist, although county documents show Johnson obtained an electrical permit for what's known as the old Oasis seed building.

Publicity question

As Johnson's company, which also goes by IAS, has been linked to various projects over the years, there is an initial burst of publicity in renewable energy forums or online business news, followed by little else.

Johnson told the Deseret News that he's never sent out any press releases, and neither has his company — even though the press releases promote his company, his technology, accurately describe his former career working for AT&T and include quotes from him or his son, Randy Johnson, who is vice president and secretary of the company, according to its stock business statements.

"IAS has never put out any kind of press releases on the project itself," Neldon Johnson said. "Other people may say whatever they choose to say about them, I don’t have any control over that."

An Internet search shows announcements dating back more than a decade, such as:

• In 2002, the IAUS bladeless turbine solar technology was extolled in a Hawaiian venture that could also generate hydrogen power and green methanol in a project that was celebrated at the time but never came to pass. The press release lists Randy Johnson, and a telephone number for IAUS as a source for more information. The Hawaii Office of Energy Development said no such project came to fruition using the IAUS bladeless "propulsion" turbine.

• In 2006, a press release said a new solar thermal project in Nevada would use IAUS technology. The deal was described as a 100-megawatt, $150 million purchase and installation contract signed by IAUS. Nevada Power officials said no such plant exists. Neldon Johnson recently said, "I am not aware of the press release, I am not aware of the project."

As of this week, the press release remained on the IAUS website.

• In 2008, describing his Millard County solar project to news reporters, Neldon Johnson said a California consortium had already bought into it, and it soon would be producing power.

"These panels are built out of rogue plastic, and that is about as cheap as you can get," he said, also noting "no pollution, no CO2 to worry about, and everybody is happy, and we're coming in for a better price than coal."

Yet no power is being generated, according to Smith and state energy officials.

• In 2009, Neldon Johnson's IAUS solar technology was part of a deal inked between another company and the city of Needles, Calif., to propel that community to be the nation's first solar-only city. City officials said the solar project never got off the ground in part because of questions over the technology and a proposed price increase that the city rejected.

Johnson said the failure of the Needles project rested with the other company because it could not generate the capital, but news accounts at the time also say that it was IAUS's intent to "construct, own and operate," a 5-megawatt solar electric power plant outside the city.

"We went down there and we told Needles what we had to offer and Needles was excited about what we had to offer, but the company that was doing it did not have any capital. They were trying to raise money, and they never did," Johnson said.

The company declared bankruptcy in December of 2011. Details about the Needles project remained on the IAUS website this week.

In 2012, a PRWeb release about a solar company, SOLCO Energy, and the IAUS technology said the sound of bladeless turbines spinning "green power" in the western desert of Utah is "fiscal music to the ears" of companies' CEOs. The press release also links to a KSL story that aired in 2008 describing the towers in Delta and the promise of power.

The Utah Governor's Office of Energy Development said it knows of no such project.

Neldon Johnson said he was not aware of the press release sent out in 2012 yet says he is the manager of the company that markets his product. The state Division of Corporations identifies SOLCO Energy's registered agent as LaGrand Johnson, who is also chief financial officer of IAUS and its general manager of research and development.

Project questions

In Millard County, Smith said the towers were never granted the building permits with an eye to being a major power source producer, but as an experimental prototype.

Both representatives of the Governor's Office of Energy Development and Utah Clean Energy, a nonprofit advocacy organization that helps facilitate the development of renewable energy in Utah, said they have heard of IAUS and its latest corporate partner, RaPower3, but have never worked with them on any project.

"We are not working with that company," said Samantha Mary Julian, director of the state energy office. "Normally we get asked to work with companies, help them with ordinances, permits, advice, all kinds of things."

Julian said her office gives state-funded incentives to established technology. She said the IAUS technology being promoted in partnership with RaPower3 is something she's not familiar with.

Utah, she stressed, has no producing, "utility-scale," large solar projects.

"There are a couple utility-scale projects larger than 2 megawatts that are looking to come online," she said. "They could come online next year or the following year."

Neldon Johnson, for his part, insists his technology is viable and has other applications beyond the generation of electricity, such as the creation of heat to warm buildings or to purify brackish water for irrigation purposes.

SEC complaint

The solar technology developed by Johnson through his company is not his first foray into business in which he claims an invention will achieve revolutionary technological accomplishments.

Before the solar thermal lenses the RaPower3 website said he developed with assistance of Hubble Space Telescope scientists, there was a new communications system called Digital Wave Modulation, which Johnson was promoting heavily from 1995-96.

A complaint by the SEC detailed that Johnson was behind the publication of eight separate news releases about Digital Wave Modulation disseminated 55 times and that he conducted a national news conference in Orem as well.

The news releases claimed, among other things, that the machine could transmit 1.8 billion bytes of information per second and network with up to 1,000 computers at a time, according to the SEC filing in federal court in Salt Lake City.

During the 12-month period the news releases were going out, the SEC noted that stock of International Automated Systems rose from $3.50 a share to $40 a share.

The claims of Digital Wave Modulation's abilities were simulated on a computer, and Johnson never "physically" built a machine or an operational prototype, the SEC said.

The federal agency brought a civil action of securities fraud in 1998 against Neldon Johnson and IAUS, a case that was ultimately settled in 2005 with an order issued by Judge Dee Benson.

Johnson was allowed to settle the case with the SEC absent an admission of guilt. A payment of $1.3 million in profits gained from the alleged activity and $1.2 million in interest, which Johnson was ordered to pay to the court, was waived because of Johnson's sworn statement of his financial assets, according to the judgment. The court documents don't specify his "financial condition."

Karen Martinez, an attorney on the case and now the regional director of the SEC for Utah, said an injunction was issued against Johnson warning him not to engage in any activity that would violate the anti-fraud section of federal law dealing with securities or engage in an act or practice that would "operate as fraud or deceit upon a person."

Martinez said she could neither confirm nor deny if the SEC had taken up any probe of IAUS in connection with the solar pronouncements, which have come steadily throughout the years even as the SEC digital case was unfolding in federal court.

A Millard County official, however, told the Deseret News that an IRS criminal investigator has recently been to the county offices inquiring about the Hinckley project.

IAUS trading

IAUS shares continue to be publicly traded as a "pinksheet" penny stock at 25 cents a share — an amount that has only deviated slightly in the past year of trading. Penny stocks are not regulated by the state securities division but do fall under the purview of the SEC.

RaPower3 stresses on its website that people who become members of the company and purchase its solar technology are not buying a security, but instead make their money through lease agreements and tax credits generated from the solar equipment.

Members are said to receive a "placed in service" letter by February if they purchase by the end of this year and earn money based on new members they bring in. On its Facebook page in 2011, RaPower3 referenced the Millard County towers, saying people can "buy one of these," by Jan. 31 and qualify for a $6,000 "bonus." The company has a B+ rating by the Better Business Bureau, which has received no complaints against the company and describes it as a "multi-level selling company."

It remains to be seen what Johnson's Millard County project will do, but Smith and other county officials would like to know how to answer inquiries, and when Johnson will submit the proper paperwork.

Smith said it has become frustrating.

"When I asked him personally what was going on a couple of years ago, he was told he needed to come in and get a permit to be compliant. He said he would and he never has," Smith said.

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