More meshu and flabber on LF and then something completely different

Gaseous emissions continue on LF, as usual, but then comes something completely different, an informative description, generally neutral. I’ll add some links and then blog comments, reserving the right to be crazy-as-hell (meshu) myself. After all, posts here are a blog (translate: fun!) and may be quite opinionated. Overall, CFC is intended to be neutral, but neutral-by-inclusion (like Wikiversity) not neutral-by-exclusion (like Wikipedia).

sigmoidal wrote: (an excellent post covering recent documents filed)

Eric Walker wrote:

Docs. 282 and 283 and attachments now on the docket:

282 – Correction by IH (not informative) [see #282 below]
283 – Appeal of Magistrate’s ruling that Zalli Jaffe’s emails are privileged [see #283 below]
283.01 – Full transcript of discovery hearing on 2017-02-23 (Magistrate Sullivan)
283.02 – Full transcript of discovery hearing on 2017-05-09 (Magistrate Sullivan)
283.03 – Full transcript of discovery hearing on 2017-04-20 (Magistrate Sullivan)
283.04 – Darden email to Zalli Jaffe and Uzi Sha giving contact info of JMP/Rossi/Fabiani
283.05 – Levi’s unsworn declaration that he felt pressured by Uzi Sha
283.06 – Darden deposition stating that he told Rossi prior to January 2014 that GPT performance could not occur. This appeal by Rossi has been addressed by the Magistrate three times in deposition hearings, and once by Judge Altonaga, where she referred the issue back to the Magistrate on procedural basis (without prejudice). The Magistrate ruled (multiple times) that the Zalli Jaffe emails are privileged. So now Rossi is appealing to Judge Altonaga, hoping that she will over-rule Magistrate Sullivan’s decision.

Rossi (meaning his lawyers) are trying to establish that Darden committed perjury by saying that he told Rossi, some time prior to January 2014, that there was no possibility of accomplishing GPT performance, implying that there is some information in the Zalli emails stating that IH had not told Rossi that this is not the GPT. Rossi further alleges that Uzi Sha tried to bribe Levi, thus causing ‘witness tampering’ which should prevent attorney-client privilege of the Jaffe emails.

IH (successfully) argued to Magistrate Sullivan several points regarding why Rossi’s arguments were without merit. They argued that there is no explicit bribery of Levi, that he is not a witness in the case, and that the timing makes it irrelevant as well. And specifically, in response to the perjury claim, that the time frames mentioned in the Zalli email (which we do not have access to because of attorney client privilege) were quite different resulting in them being taken out of context, as they were claimed by IH’s lawyer to be regarding the Doral test, where there had already been clear communication that this could not be the GPT.

Also, from the transcript in 283-03, we have the full text of the Magistrate’s deliberation regarding spoliation, where the Magistrate denies IH’s motions for sanctions (where IH essentially asked the Magistrate to toss Rossi’s case against IH). [See #283-03 below]


This is a correction of ¶ 34 of 04/04/2017 0236.0_IH_Opp_to_SOMF_214_Rossi MSJ the original being

34. Admitted.

and it is corrected to:

34. Admitted, except denied as to “Defendants” in subsection (b) and denied as to the second sentence of subsection (c). Both contradict the language in the License Agreement. Defendants also note that (a), (b), and (c) are not the only payment contingencies in the License Agreement.

I’m writing studies of the MSJs (see a work-in-progress here) because something like the above is unintelligible without merging documents. I have not done that for 214, the avalanche of documents leaves me with much to do and little time by comparison. The reference is to ¶ 34 of the Rossi MSJ:

34. Section 5 of the License Agreement originally made payment under the License Agreement contingent upon the following factors:

a. the 1MW E-Cat unit operating at the same level (or better) at which Validation was achieved for a period of 350 days (even if not consecutive) within a 400 day period (defined as “the Guaranteed Performance” or “GPT”);
b. the test was to commence immediately following the delivery of the 1MW Plant to Defendants;
c. the ERV (as previously defined in Section 4 of the License Agreement)1 will confirm in writing the Guaranteed Performance. The ERV was, pursuant to the agreement, the final and binding arbiter as to whether Guaranteed Performance was achieved.

Annesser has done this many times, restate sources in ways that might be overlooked as fairly representing the source, when, in fact, the language has shifted in ways that make Rossi’s claims appear stronger. There is another example in the Joint Pretrial Stipulation,

89. In May 2015, IH closed on a $50 million investment by non-party Woodford Investment Funds (“Woodford”). Woodford claimed that “Rossi’s technology was a core element of this investment.”

As I have pointed out, the alleged Woodford claim was (1) not a claim by Woodford, but a comment by Paul Lamacraft in reaction to the upcoming IH press release, and (2) is misquoted in a way that makes it appear to be confirming Rossi’s position (that IH raised money based on Rossi technology, as such), rather than a more nuanced possible meaning. The misquotation, and attribution of a personal comment to a corporation, as if official, makes this a clear error. If accurately quoted and attributed, it could stand.

I have seen before, it is common, that even very good lawyers don’t notice everything, and a deceptive lawyer may set a misunderstanding up, just as Rossi set up certain “misunderstandings.” It is possible that, to meet the deadline for that Joint Stipulation, IH lawyers decided not to bother correcting this, because it is largely moot. IH did invest in Rossi technology, and the fact of that investment, then, was at least a factor, I suspect, in the Woodford investment, and both IH and Woodford, in May, 2015, were likely hopeful that it would pan out. The first sign of a truly serious problem was in July, 2015, when Rossi excluded Murray, the IH engineer. Rossi has implied a contradiction, i.e., IH is claiming that by this time, they had failed to replicate the technology, but, in contradiction, they then presented it in glowing terms to Lamacraft (and he wrote on JONP about IH and the investors, at the visit, which must have been in February, 2015, dancing and hugging in joy — which doesn’t necessarily match the visit and investment timeline).


Annesser is beating a dead horse, and he knows it. He explains the purpose, perhaps because he knows Altonaga will be irritated:  “Given that Magistrate Judge O’Sullivan’s determinations are non-final, Plaintiffs direct this appeal to the District Court in an abundance of caution to preserve Plaintiffs’ appellate rights.”

He is correct that if he did not appeal to Altonaga, he might lose the right to appeal the ruling. However, this is much ado over practically nothing. Annesser obviously did read the email, and he discloses his memory of the content:

One of the issues in this case is the timing of the performance of a contractual “Guaranteed Performance Test”, the successful completion of which would entitle Plaintiffs to a payment of $89 million. Defendants argue that the Guaranteed Performance Test was never performed, and, if it was, it was not performed timely. In support of their position, Defendants claim that they had oral conversations with Plaintiff Andrea Rossi notifying him of their contention that the time for performance of the Guaranteed Performance Test had passed.[2] Plaintiffs deny that such oral conversations ever took place. This is where the present document comes into play. Upon recollection of undersigned counsel, in his email to Zalli, Defendant Darden admits that Defendants never informed Plaintiffs that Defendants believed the time for performance of the Guaranteed Performance Test had passed, instead leaving the matter purposefully open and ambiguous.
[2] Defendants must contend such notice was oral, as there is no written communication in support of their contention.

As to the footnote, sure, oral, but that does not imply that there is no written communication in support. There is such communication, supporting that Rossi knew the Second Amendment had failed, was merely a proposed Agreement, as was actually obvious from simply looking at it (but I assumed that there might be a fully-executed and dated copy somewhere, I thought it ridiculous that Annesser would file that, as it was, unless such a copy existed. Well, I was wrong. He did file it and treat it as a Done Deal, thus misleading the Court. If this had been honestly addressed, my guess is that Rossi v. Darden would have died with the Motion for Dismissal, because of the absolutely obvious defect with no allegation of any clear occasion for estoppel. Saving perhaps $15 million in legal expenses.

The Zalli email was written in November, 2015, and it was clear by then that legal conflict was arising. It was at about this time that IH wrote to Rossi that the Doral power sale was not a GPT, and Penon not the ERV for it. Consulting with Zalli on the possibility of international fraud, it is quite plausible that Darden would lay out the situation. At no point before or early in the time of the Doral operation, had Rossi asserted the Doral installation was the GPT, and so the IH avoidance of conflict with Rossi would suggest not raising delicate issues unless necessary, and they would have believed it was not necessary, since the claim hadn’t been made and there were only vague hints (such as Penon referring to himself as ERV — which he had been for the Validation Test). Consulting with Zalli, as they claim to have done, Darden may well have stated that they had not informed Rossi of their understanding. It is unlikely that he intended more than that, and this would not necessarily mean that they had never informed him (i.e., that the deadline was approaching in 2013, or had passed in 2014).

Annesser is trying to make this into perjury on the part of Darden (links added):

The document in question demonstrates that Defendant Darden knowingly and intentionally committed the crime of perjury in the course of his sworn deposition when he testified under oath that he informed Dr. Rossi as early as January 2014 that the Guaranteed Performance Test pursuant to the License Agreement could not be performed. See Ex. 6. at 123-125. Darden further testified that he had conversations with Dr. Rossi explaining that they were “out of the contract or, you know, the deal is over or the – you know, the time has passed.” Id. at 125:6-8. Notably, not only did Defendant Darden’s testimony directly contradict the information set forth in the document at issue, Defendants’ counsel subsequently relied upon and cited to Darden’s perjured testimony in support of their Response to Plaintiffs’ Motion for Partial Summary Judgment. ECF No. 237. Specifically, in support of their Response, Defendants argued that “Thomas Darden told Rossi back in late 2013 or in 2014 that the time for commencing the Guaranteed Performance test had passed.” Id. at 9. Defendants’ furtherance of Darden’s fraud warrants an exception to any attorney-client privilege that may have attached to the document.

Annesser claims “direct contradiction,” but the testimony is about October 2013. The Second Amendment was drafted and partially signed, apparently in October, 2013, and the necessity for the Second Amendment is obviously that, without it, the time had expired. The Second Amendment was an attempt to formalize it, and it was expressed safely for IH: the test was to begin at a time set by agreement of all parties in writing. This would be explicit, not vague.

The alleged comment to Zalli was made in November, 2015, and would likely have been referring to telling Rossi during the Doral operation that it was not the GPT. It looks like he did not do that until maybe November.

An obligation to inform him would not arise until Rossi made a claim that it was — or was to be — the GPT. As this is so obviously crucial for a claim of estoppel, it is telling that there is no evidence adduced that Rossi so informed IH, and no mention in the negotiations for the move of the reactor to Florida of a “test,” but only of possible demonstrations to investors, as well as measurements of the power delivered by the customer, and thus some need to measure the power from the IH side, hence an obvious suggestion, presumably by Rossi, that Penon be engaged for that purpose. Should IH have confronted the use of “ERV” by Penon? Perhaps. But it would have involved confronting Rossi at a time when they were still attempting to keep him “sweet” as it has been called. I.e., not upset. They did attempt to negotiation a simpler voluntary test, to pay him anyway, without the formal requirement.

It is extremely unlikely that the Zalli email would make a difference. Unless Darden said something he would be extremely unlikely to say, all that is established is that Darden didn’t tell Rossi it wasn’t a GPT until something like November, 2015, and that is more or less established, if we exclude the pre-Doral period, and allow this to have been done in 2013 and maybe 2014, before there was even a possible GPT in Doral. This all only makes any sense with reference to Doral being the GPT.

Now, the Second Amendment itself shows shared awareness of the deadline having passed. It replaces the original Agreement GPT with one that starts upon written agreement of all the parties. Not only did the Second Amendment fail ratification, it was not followed in any case, it would have required, again, agreement of all the parties to changes (such as from “Six Cylinder Unit.”). Trivial to do, if there was an actual agreement, so … why didn’t Rossi ask for that? He obviously didn’t! Where did he request a signature from the parties on the start of a Test?

We already know that Ampenergo would probably have refused to agree. Rossi attempted to bypass that requirement of the Agreement, as to amendments. He could have negotiated a separate Agreement with IH that would not require Ampenergo agreement. He did not do this. Instead, he created a faux “independent customer and a faux test, and it doesn’t take a jury to see this as established, so IH might actually win MSJ on this.

Altonaga, with the MTD, much simpler, originally wanted to wait for Discovery until she decided. My opinion is that this was not the best decision she could have made. She could have asked the parties to clarify the issues in the MTD instead of simply sitting on what was unclear (and Discovery has the reputation of being the most expensive part of lawsuits). Whether the “Six Cylinder Unit” is the same as the “1 MW E-cat unit,” was a simple question, and the parties agree that it isn’t. They could have agreed back then, and perhaps saved many millions of dollars in legal costs. That the Second Amendment was not properly executed was obvious, and the requirement for written agreement of all the parties to amendments was clear and explicit. That Cherokee Investment Partners was not an owner, much less sole owner, of Industrial Heat was simple fact, but she depended on that assumption. Etc.

Now, other evidence that Rossi knew about the GPT expiration.

  1. (1) The Second Amendment itself. It would not have been necessary except for that expiration. As written, it was safe for IH and Ampenergo (AEG) (because of the requirement for a separate start date agreement in writing, approved by all parties).

(2) The deposition of Greg Cassarino makes it explicit that Cassarino had a conversation with Rossi about the AEG refusal to sign the Second Amendment. I notice how Annesser presents this (Ex. 55) (links added):

27. Disputed. AEG’s corporate representative testified that he could not remember whether AEG executed the Second Amendment. See Supp. Ex. 55 at 78:22-79:18. AEG also testified that that they understood that by not signing the Second Amendment, the amendment would not be binding upon them. See Defs.’ Ex. 12 at 79:2-18, 87:2-11; Defs.’ Ex. 16 (IH-00089736-43). AEG testified that it did not favor the Second Amendment because AEG believed that the terms thereof would have a negative impact on their fee arrangement with Defendants. See Defs.’ Ex. 12 at 79:6-18.

Cassarino was momentarily confused, that’s apparent. Annesser has quoted the same Cassarino deposition records three times (79:18), once from his Exhibit 55 and twice from the Def. Ex. 12. This seems common with Annesser claims: a claim is made, with a summary of the point, but then the evidence cited is similar enough that someone who is not careful will consider it supported; this is mentioned above. Here, my emphasis, “the amendment would not be binding on them,” while not completely false, was actually:

2 Q. Did — after this time frame, November of 2013, did Industrial Heat or Doctor Rossi ever come back  to you and say, We don’t think that that second
5 amendment was valid, because AmpEnergo didn’t execute it?
7 A. Yeah.
8 Q. And do you recall having conversations about it?
9 A. I — I’m sure we did. I don’t recall exactly when/how, but we knew — by not signing it — that that second amendment was not going to be valid

This was so legally obvious that it would not need to be said. The Second Amendment was an Amendment to an Agreement that was explicit, that all amendments would need to be agreed upon by all parties. If a draft was created, allowing execution in parts (as this was), it would become binding on any party only when all parties signed it.

If two parties desired a separate agreement, they would create one. They could simply create an addendum to the Second Amendment agreeing that it was binding on only IH and Rossi and Leonardo — and that could explicitly protect AEG’s rights. (If IH ended up paying Leonardo $89 million based on a separate agreement, but without a GPT — which is what IH was proposing, actually, AEG would then have a strong claim against IH, and my sense is that IH would have simply paid it. The AEG-IH agreement (Def. Ex 16) provides for cash and equity payments. IH could easily have done this, if they were in a position to pay Rossi for actually transferred IP, (worth billions of dollars at least) and AEG clearly wanted that, they wanted Rossi to succeed in showing IH how to make reactors that would pass independent testing.

From the IH MSJ SOMF document, ¶ 31:

31. On April 30, 2014, Rossi admitted that the Proposed Second Amendment was not effective because AEG did not sign it. See Leonardo Corp. Dep. (excerpts of which are attached hereto as Composite Ex. 17) 195:19-196:24; Composite Ex. 18 (AEG Dep. Ex. 15; Leonardo Corp. Dep. Ex. 15).

(3) So, in his deposition (LC Dep, Def. Ex. 207-17, p. 195), Rossi acknowledged writing about the Second Amendment

13 Q. You wrote that because Ampenergo did not sign the amendment the amendment had been cancelled, correct?
16 A. Yes.
17 Q. That’s what you wrote?
18 A. Yes

 (4) Ex. 18 utterly demolishes the argument that Rossi was not informed that the Second Amendment was invalid. The April 30, 2014 email from Rossi to Cassarino was quite explicit, and Cassarino forwarded this mail to Vaughn, so IH, if they had not already known, now knew as fact that Rossi knew the Amendment was not valid.

(5) And then, of course, there is the Darden deposition already referenced by Annesser as “perjury,” here and here.

In the most recent hearing we have on this, April 20, page 75:

19 MR. PACE: Then Mr. Annesser keeps kind of loosely
20 throwing around this accusation of perjury, which is completely
21 unfounded. And let me give you some context here which is —
22 and he knows this because we talked about this before, the
23 testimony of Thomas Darden was that they had told Dr. Rossi in
24 2013 and 2014 that the time period had lapsed for the guaranteed
25 performance test. The e-mail that he’s referring to is a more
1 contemporaneous one where the question is after Dr. Rossi had
2 started doing what he was doing in Doral, had he told Dr. Rossi
3 during that time period, we had been telling him on this thing
4 he’s now doing hey, by the way, this is not the guaranteed
5 performance test. And in fact, he has never testified to that.
6 He didn’t testify in his deposition oh, in May of 2015 or in
7 October of 2015, I told, you know, Dr. Rossi hey, stop doing
8 what you’re doing here because it can’t be the guaranteed
9 performance test. So there’s no perjury in any event. I mean,
10 to be honest with you, even if there was an inconsistency, at
11 best all they would have is an inconsistency. But there’s not
12 even an inconsistency here. But they keep trying to find a way
13 to back door in this document that still doesn’t get them
14 anywhere.

So this is what is behind Annesser’s claim above that “Defendants must contend such notice was oral, as there is no written communication in support of their contention.” There is written communication, from Rossi himself, that he knew that there was no Second Amendment in effect. There is no communication in the record that establishes the Doral installation as a GPT, there is no communication where Rossi attempts to negotiate some substitute for the failed and acknowledged as failed Second Amendment. Annesser attempts to place the onus on IH to inform Rossi of what was obviously already shared knowledge.

At this point, I’ll mention once again that I’m not a lawyer, but I’d be thinking about sanctions for frivolous litigation.

283-03 (about the spoliation motion, hearing April 20)

First of all, I notice the appearance in this hearing of Bernstein, who was an associate at Silver Law Group, Annesser’s former firm (Ms. Silver died last year) and who has joined Annesser and Chaiken in the new firm, Annesser and Chaiken. I have seen no formal withdrawal of PBY&A as counsel.

A motion for spoliation that would, in one fell swoop, award victory to the moving party, must obviously be flawless. A problem I see here is that Pace combined two different acts of spoliation, and the first act is one that was known to them when they visited the Plant after shutdown, that’s the removal of the pipes connecting the IH Plant and the Customer Area and whatever was there. They did not object to this at the time, apparently; if so, I haven’t seen evidence of it, and that’s important to this hearing. So this part of the spoliation motion was rejected, and it looks like it carried the second part with it.

The issues in Rossi v. Darden are incredibly complex, and a judge is not likely to understand them comprehensively with a few minute’s explanation. To punch through the natural ignorance and noise, would take intense focus on what is most important. The second act of spoliation is far more important than the issue of the pipes, it is the dismantling of the alleged heat exchanger, and removal of all traces of it, and there was no indication of a heat exchanger until the most recent depositions and documents. The alleged heat exchanger is Rossi’s answer to the claims that 1 MW dissipation in the warehouse would have made it uninhabitable, deadly.

The judge did not deeply address the second and more serious spoliation. Given the arguments he was facing, I think his decision was reasonable. IH has appealed, and perhaps the tide will reverse before Altonaga. What has to be on the mind of the judges is the possibility that a case is decided inequitably due to a technicality. The missing piping and missing heat exchanger can be brought up at trial, if there is a trial.

Because of the missing piping, it is possible that such and so condition existed that would lead to massive mismeasurement of power. Because of the missing heat exchanger, it is possible that it never existed. There is plenty of evidence that Rossi has lied about this or that, and on the matter of the heat exchanger, if it existed, he did lie to the public about the issue of megawatt dissipation. (He originally claimed that it was used for an endothermic chemical reaction.)

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Author: Abd ulRahman Lomax


3 thoughts on “More meshu and flabber on LF and then something completely different”

  1. Maybe a sideways point here:
    “34. Section 5 of the License Agreement originally made payment under the License Agreement contingent upon the following factors:

    a. the 1MW E-Cat unit operating at the same level (or better) at which Validation was achieved for a period of 350 days (even if not consecutive) within a 400 day period (defined as “the Guaranteed Performance” or “GPT”);”

    Rossi can easily claim that the “GPT” worked just as well as the Validation Test did, since both had a COP of 1.0. A small thing to have a grin about this Saturday….

    1. Yeah, there is much silliness in how the Agreement was written. From what I’ve seen, it was mostly a matter of whatever Rossi wrote, with IH putting in enough to protect themselves adequately — or even inadequately, but this is normal business with a speculative LLC like IH: the most they can lose is the investment. It is very abnormal for someone to sue the founders unless they truly ran with the money, and to go after the (much larger) company they work for.

      They knew that if the device worked, if Rossi actually transferred the IP and they could make devices with significant excess power, $100 million was peanuts. So they were not sweating the details.

      Basing payment on COP was completely nuts. I’ve pointed out that a device with chemical fuel in it can have infinite COP. A megawatt of excess heat, that would be astonishing. And it could be much less, providing only that it is sustained for adequate time. There was an issue of reliability: what if the Rossi device manages major XE, but fails after a few days? So the idea of an extended test, great. However, “megawatt” was grandstanding, making everything difficult. Much better: reliability testing for individual reactors, say 10 kW. Say ten of them, not tested simultaneously, but sequentially, and under transparent conditions, and true independent assessment.

      But Rossi didn’t want that. He wanted to do what he wanted to do. It’s all quite clear, and the only mystery, to me, is what makes him tick underneath what he did. It doesn’t “make sense.” The easy story of a scammer and fraud doesn’t really work, as many have pointed out — often concluding that what he had must have been real because “he’d have to be crazy” to sue for a fraud.

      Why do we rule out insanity?

  2. Abd,

    This is a great analysis of the legal issues: one that I hope JD would agree with. I have a small proviso – which is that US legal arguments are what they are, and something that seems clear to us may not in fact seem clear in a Court of Law.

    Annesser’s involvement here is fascinating. It seems as though this certainly lucrative for lawyers case is what allowed Annesser et al to set up on their own, or at least helped this. That perhaps lends a straw of support to your suggestion that Annesser might have been instrumental in this whole case ballooning the way it has. That must remain unclear, I expect, Rossi himself is surely capable of taking risky action, against advice, and presumably rich enough to pay for it. I also wonder if perhaps Annesser himself might be one of the many people taken in by Rossi’s brand of charlatanry – believing him more honest than was the case until too late to back out. The legal impediments here would not be an issue for a Jury if the test were real and positive. How could Annesser, taking this action on, have an accurate view of that?

    From a non-legal standpoint, it makes sense that when the test started Rossi was well aware it was not the GPT, and did not try to claim it was (since he knew that in that case it would not fly). I still think that this is grey. The Term Sheet looks a bit like the written start date mandated by the second Amendment, the lack of signature by one party looks remediable. That Penon as ERV is paid by IH adds some credence (or, the other way, some confusion).

    These things could have been snuck in by Rossi. Or they could have been added by IH to keep Rossi sweet in the full knowledge that a semblance of a GPT was what he desperately, as he says, wanted. From where comes this desperation? Most would say $89,000,000.

    This ambiguity, as a real fact noticed by external observers, is what gives legs to Rossi’s action. Many other things knock it on the head – and your dissection here of where Annesser’s claims incorrectly twist facts support those things.

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