Hi Marlin, I think it would be a tough haul for the FBI to get a conviction. In a criminal court they would have to meet the standard of guilty beyond a reasonable doubt. That's a high bar to reach.
An over-unity device violates the laws of physics, but a steam engine doesn't. Cyclone has various videos of engines turning under their own power, and on the Army project, the Army eventually accepted the genset to close out the contract, so the U.S. Army technical experts have already signed off that a Cyclone engine worked to some degree.
If I was their defense lawyer, I'd just put Harry and Frankie on the stand and let them talk for a while. It would be clear they are both morons. Then the prosecution would have to prove they had criminal intent and didn't do what they did because of stupidity. Unless the FBI comes up with internal memos from Frankie to Harry explaining how they intended to cheat investors, the pair's actions could be explained by simple incompetence. And given that the two "co-habitate", there probably wasn't a lot of memo writing.
A civil suit just has to meet the balance of probabilities level, so in that example of the over-unity outfit, it is much easier to get a decision that they defrauded investors and get a judgement for damages. I would think a civil case against Cyclone could be won, but somebody would have to fund a long and expensive civil suit with little chance of collecting.
The SEC could go after them for violating securities laws, but their resources are too thin and the result would probably just be a delisting of CYPW and maybe a lifetime ban from the markets for Schoell and Fruge. The SEC has required a number of corrections by Cyclone in the past, but on really minor things like requiring proof of their claim in the annual report that Harry Schoell is a "genius". The fact that Cyclone has been selling stock with the claim that they have developed, i.e., past tense, this wonderful engine without any evidence the engine is "developed" has escaped the SEC's notice.
So, in practice it looks like these two have gotten away with it, and continue to do so. The good news is that we're getting the facts of Cyclone's performance known, and the only people buying the stock are gamblers looking to make a quick buck and who don't care whether it's a scam or not.
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