Cherokee Investment Partners

Cherokee Investment Partners (CIP) has very little to do with LENR other than this: in 2012, the CEO of CIP, Thomas Darden, wanted to investigate investment possibilities in LENR, and the CIP reputation probably helped Darden to gain access to Andrea Rossi. Cherokee also assisted Darden and others in starting up Industrial Heat (IH).

In his opening statement in Rossi v. Darden, Chaiken, Rossi’s attorney, claimed that Cherokee had provided half of the initial $1.5 million payment (for the Plant) that secured the License Agreement, and Rossi included Cherokee in his lawsuit (in spite of serious legal problems with that).

(Apparently the $750,000 was a personal loan to Darden, not an investment, for CIP ended up with no IH stock, as far as we know, and no IH Holdings International, Ltd. (IHHI) stock in the stock swap that bought out IH shareholders entirely.)

Back then, Darden et al were considered heroes by Planet Rossi. However, when Rossi sued them, everything flipped, and suddenly everything Cherokee was presented as fraud and ripping off the taxpayers and the like. Documents have been dredged up purporting to show great misbehavior, and even though it is now totally irrelevant to Rossi affairs, some of Rossi’s followers keep beating the drum.

A recent comment on Sifferkoll’s blog theorizes that Darden et al settled because of embarrassing “revelations” about CIP on Sifferkoll’s blog. It disappeared?

This Sifferkoll post is dated 7/3/2017, two days before the parties unexpectedly settled in court:

Are Tom Darden and the Cherokee Lawyer “Sharks” Deliberately Leaving out Important Information in their SEC Filings?

Notice the headline doesn’t actually make a statement, it asks a question. That’s a common Sifferkoll tactic: Ask a question and then present misleading evidence that could seem to point to the answer he believes or wants to wag in front of his audience.

Planet Rossi reads Sifferkoll as Holy Writ. So, sure enough, we have this on LENR Forum:

SSC wrote:

guest111 wrote:

Someone should make a call to the Florida Dept. of Revenue, and IRS, [about a possibility that Rossi did not pay all his taxes.]

This was completely dumb, it would be a total waste of time unless one has personal knowledge or a very good and very specific case to show from public documents (and I don’t think it exists on this point. A stronger case might be made for perjury, and even there I’m told by an attorney that a complaint to state or federal prosecutors would probably be a waste of time. But I would not claim it is “impossible.”) Then SSC goes into nutty brilliance:

The same person should also contact the SEC and warn it that Cherokee has lied in its March statement, because at the question : “You are actively engaged in business as a real estate broker, dealer, or agent.” they answer : “ none “, despite all the related companies engaged in real estate activity (brownfields are by definition a real estate activity in so far they are not just remediation but also revitalization by building and selling housing and commercial centers).

SSC doesn’t cite the actual document nor does he give a source. All too common on Planet Rossi. Sifferkoll, however, dumps a mass of mostly irrelevant detail on us. In this case, though, he is referencing a prior post by SSC. I’ll get back to that.

The actual form being discussed is here.

That’s a complex form, 33 pages. Sifferkoll and SSC imagine that Cherokee should have answered certain questions differently, but that’s apparently an error.

Planet Rossi, in general, has no comprehension of what CIP actually does. They are “investment advisors,” which is why SEC statements are required.

I have seen nothing that indicates that CIP is engaged in real estate activity, per se. Rather, it advises other organizations that do this. CIP doesn’t build and sell housing, but advised LLCs might (and, I think, do). “Real estate broker, dealer, or agent” is quite specific in meaning, legally. CIP is not one of these. They are investment advisors. An investment advisor might give advice on investing in real estate, but does not thereby become a broker, dealer, or agent, and, in fact, it could create a conflict of interest, which is probably why the SEC asks the question.

The individual advised LLCs may do this. As well, CIP may have some investment in them, which does not make them brokers, dealers or agents.

This is typical of Planet Rossi FUD on CIP.

SSC continued:

Moreover at the question “Are you actively engaged in any other business not listed in Item 6.A ( that is other than giving investment advice)?” they answer: “no”, which is an omission, because Cherokee had to declare that it is actively engaged in another business with IH and others. Finally at the question “Has any domestic or foreign court in the past ten years, enjoined you or any advisory affiliate in connection with any investment-related activity?” they answer : “ no”, making an omission because they did not declare the story of Ashley II of Charleston LLC , an affiliate which had some trouble with the Law.

No, CIP did not declare that. Rossi claimed that. Further, CIP was not enjoined, and “trouble with the law” is vague. If I’m correct, Ashley II is in bankruptcy, which means Cherokee, if CIP invested in Ashley, lost money (as did other investors). It also means that whatever happened there is likely to be closely scrutinized. Nothing is alleged here that shows any violation of regulations, just fevered imaginations.

Cherokee was not engaged in business with IH. They provided a minimal level of support to their CEO, Darden (office space and a little staff support, IH claims to have reimbursed for that), and no investment, and had no ownership interest in IH. This is all clear from documents in Rossi v. Darden, where Rossi was desperate to find evidence of Cherokee ownership and essentially came up empty.

For an investment advisor (as CIP is) to leave out “important information” in an SEC filing would be asking for major expenses and possible fines. These filings are prepared by experts, generally, but are here being analyzed by a fanatic who already has his mind made up and is clueless about what is actually happening.

In the claims about CIP, Planet Rossi often completely confuses the situation of an individual project LLC with the situation of CIP. Each LLC is legally independent, and has its own responsible board and its own officers, and, as well, its own set of investors with voting rights, etc. SSC imagines that the existence of some people who are common to the various organizations would create legal identity. It doesn’t. There are narrow situations where it might, under some circumstances. Those circumstances are not alleged. This is all ignorant nonsense.

So Ashley II might be subject to some court order. That does not subject CIP to the order, unless the Court included CIP (and apparently did not). CIP, or more likely one of the managed funds, may be an investor in Ashley II. That does not create any liability beyond the possible loss of their investment. This is all standard corporate law.

The Cherokee family of LLCs operates as they do, because they take on very risky projects. If they did them as Cherokee, the entire structure could come down from one mistake. So, like any corporation, the individual LLCs are responsible to their own investors (shareholders) and for following the law and regulations in the areas where they operate. CIP itself advises those who want to follow the advice. It may help collect the investors. It will disclose risks, etc. It is subject to law and regulations governing investment advisors.

The prior post by SSC goes into great detail founded on the interpretive errors described here. The same lack of analytical skill and caution that led Planet Rossi into hosts of errors, and that continues to do so, are shown here: (SSC’s comment)

Item 11 H (1) (a) Question : “Has any domestic or foreign court in the past ten years, enjoined you or any advisory affiliate in connection with any investment-related activity?”

Cherokee’s answer : “ No”.

SSC knows that the precise meanings of terms is crucial, and quotes SEC definitions:

– Advisory Affiliate : Your advisory affiliates are (1) all of your officers, partners, or directors (or any person performing similar functions);(2) all persons directly or indirectly controlling or controlled by you; and (3) all of your current employees( other than employees performing only clerical, administrative, support or similar functions).
– Enjoined: This term includes being subject to a mandatory injunction, prohibitory injunction, preliminary injunction, or temporary restraining order.
– Investment-Related: Activities that pertain to securities, commodities, banking, insurance, or real estate ( including, but not limited to, acting as or being associated with an investment adviser, broker-dealer, municipal securities dealer, government securities broker or dealer, issuer, investment company, futures sponsor, bank, or savings association).

The application of each one of these by SSC is problematic. His strongest point would be a claim that the Ashley II injunction was “investment-related,” because the key issue was the liability of Ashley II as an owner of property (“investor in property”) requiring environmental remediation. My opinion is no, it would not be that, the intention of the regulations wouldn’t include ownership of real estate and injunctions relating to that as covered, but this is a place where a company like CIP would obtain professional advice, and if they follow professional advice, and absent clear and specific intention to violate regulations, this wouldn’t be a criminal offense, even if the disclosure were required. So set this one aside as possibly establishing that Ashley II was “so enjoined,” and we will see about the others.

An order or injunction will specify who is ordered or enjoined. Who is that? Is it CIP? Is it an officer of CIP? Apparently not. SSC’s interpretation would be impossible to implement. How would a corporation know about all their employees, even key employees? That language is there to avoid a corporation hiding behind an employee, when the issue being asked about is actually corporate business.

An extension of this to CIP is very unlikely, and it would not be criminal to overlook such a fact, if it existed. It would be an error, and it would only be criminal if deliberate. I.e., if they knew something was to be reported and hid it.

The order applying to Ashley II does not apply to CIP, even if there is an officer or investor in Ashley II who is connected with CIP. The court order applies to Ashley II, not to officers or investors in that LLC. If I own shares in a corporation, and that corporation is ordered to pay for remediation work, that order does not require me to do anything. Likewise, an officer would not personally be subject to the order to pay: if the corporation is bankrupt — which happens! –, the ordered costs just get tossed in the hopper to take their place with other debts. The investors only get what is left over after all debts are paid, if anything. Their entire investment is at risk, but only that, not more.

Only if an officer has improperly absconded with corporate funds would there be some possible personal liability. Sifferkoll and SSC are totally confused.

ele

On LENR Forum, ele wrote:

Wyttenbach wrote:

Spoiling 50 Billions of public money is honest,

This was actually off-topic. The reference is to ITER, and the point is obtuse, like much from Wyttenbach. There are certainly problems with ITER, and we might wish that some fraction of the ITER budget would go to a possible alternative, basic LENR research that might establish the possibility of an alternative to hot fusion, but Wyttenbach’s objection, the difficulty of shielding against neutrons, is a known problem with known solutions. They actually use the neutrons to generate more tritium fuel. That is quite well-known physics. Hot fusion is a very difficult engineering problem, to be sure. But so is LENR, and hot fusion is understood, whereas LENR is not.

With no excuse other than he wants to, ele uses this to praise Rossi and toss mud at Darden, but it’s all insane.

Just to note. Rossi never asked or used public money for the Ecat. This is a quite important fact,

Rossi did attempt to get governmental funding, before 2011. His demonstrations flopped, and while he was told he was welcome to come back and try again, he never went back. Further, note that ele says “for the Ecat,” but then comparing to Darden, he doesn’t specify what the funding is for, nor whether or not Darden was personally involved. He is confusing Darden not only with IH — which did not solicit public money — with Cherokee, which also does not solicit public money, but facilitates the formation of individual projects, which sometimes do, and then a generic project to obtain “tax credits” for use by investors in those individual projects was confused by Planet Rossi as “public money,” when it isn’t.

It is a governmental activity designed to encourage investment in remediation projects. Some remediation projects fail. That’s life. That does not necessarily mean that funds were “wasted,” one would need to look at details, which Planet Rossi never does, being content with findings some words they can use abstracted from reality to make the points they want to make.

In contrast seems that Darden has obtained and wasted a huge quantity of public money,

No, Darden has not obtained any public money, as far as I’ve seen. Nor has Cherokee. Some specific projects have obtained grants for environmental remediation. I think there may have been a hundred projects (I don’t know the number). A few, very few, have failed. When one of these projects fails, there could be hundreds of millions of dollars of investment involved (of which maybe $25 million was Cherokee seed-money, that they lose, along with other investors). Each project has its own investors and its own management, being legally independent, and this is essential for operation in a very risky business area. Buying pieces of contaminated real estate, one can become legally responsible for clean-up, which can be astonishingly expensive. Cherokee has managed to do this well enough to prosper and grow, apparently.

However, Rossi did clearly ask for public money with his thermoelectric generators. How did that work out? I don’t know about public money with Petrol Dragon, but public money was or is certainly involved in the necessary clean-up in Italy.

And there is no point, in context, to ele’s defense and attack. Rossi was not being accused of wasting public money, and Darden was an erroneous target, and all this could be is a continuation of the Rossi Good Darden Bad inertia of ele. This has absolutely nothing to do with the topic in this thread, the Gullstrom-Rossi paper. It distracts from it. Is that the purpose?

ele and certain others are repeating these fraudulent allegations over and over, knowing, perhaps, that if they say it often enough, others will then take these “facts” up, and repeat them, believing them.

If Rossi has any influence on these people, he should tell them to STFU. They are not helping him, they will stimulate response, some of which will point out more sustainable allegations against Rossi. None of this will help Rossi move forward with his development project.

If Rossi is encouraging this activity behind the scenes, he is continuing to harm himself. He dodged a bullet once, maybe he thinks he can do it again.

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