Rossi and IH Conflict Over Production? (Hhiram)

The following post was submitted by Hhiram.

An interesting exchange on JONP was posted yesterday between user Gene and Rossi:

April 24, 2016 at 1:10 AM
Dr Andrea Rossi,
In past you already had written in this blog that you were working to make a massive production factory. It was more than three years ago.

Andrea Rossi
April 24, 2016 at 7:52 AM
True. Then talks with Cherokee began in spring 2012, they were very serious and I changed strategy, because at those times I was convinced that Cherokee was really intentioned to make a big production concern, not a financial speculation. I was wrong.
Warm Regards,

Could the origin of the conflict between IH and Rossi be IH’s decision to partner with Chinese manufacturers? Rossi has repeatedly stated that his goal is to establish a large manufacturing lead over the reverse-engineered imitation products that will inevitably follow from China.

The timeline of IH’s engagement with interests in China and the start of their conflict with Rossi (roughly halfway into the 1-year test) seems to line up.

As Rossi suggests, one possibility is that IH (and their parent company Cherokee) didn’t want to partner with him in actual production of E-Cat systems in the US. Rossi seems to believe he was misled here, and that instead of intending to partner with him on actual production IH was interested (perhaps from the start) in investing in production elsewhere (presumably based the E-Cat IP they acquired from Rossi).

If true, it seems understandable that Rossi would see this as a betrayal and be furious about it.


  • Observer

    I think IH adopted a strategy that would bring money in regardless of the success of the E-Cat as a commercial product (think “The Producers”).

    Venture capitalists would much rather sell the possibility of success than invest and wait for the success to happen.

    Rossi’s desire to quickly prove (or disprove) the commercial viability of the E-Cat would reduce the window available to IH to sell “unlimited possibilities”.

    • Ophelia Rump

      That is very insightful.

    • US_Citizen71

      That would follow somewhat closely Cherokee’s typical business model as well. Most of their venture’s are funded by way of bonds paid by special tax districts. They have bonds made that are paid back by way of a percentage of the tax collected in the district the idea being that the tax value will go up after the “brownfield” is rehabilitated and pay for itself and make the government approving the bond money at the same time. This doesn’t always happen, from searching news stories on Cherokee about half of their projects go bankrupt and are not finished, at least by them. They don’t seem to care as they charge consulting and maintenance fees for the bonds and make the back the pittance they pay for the brownfield property rather quickly. The fees they charge are what the SEC violation and fines were about.

    • LilyLover

      True to your name, you observe.
      I love your cogent analysis. Perfect.
      Maximizing the time window of opportunity to sell the dream was the IH game. Busted!

    • “I think IH adopted a strategy that would bring money in regardless of the success ”

      What has the MO of Darden and Woodford been to date with other investments?

    • Pweet

      I hardly think IH would have believed ‘selling the possibility of success’ as you say, would be anywhere near as profitable as what they would make if the technology was as good as had been claimed. They stood to make billions of the thing flew, and I believe they hoped it would until about ten months ago now. maybe even a bit longer. They probably had doubts quite early on, but with any new technology there are always doubts. It’s when the doubts become solidified to demonstrated facts the attitude of investors change, and I don’t think that happened anywhere near the beginning.
      From the tone of the Rossi commentary, or lack of it to be more precise, it sounded like the wheels were falling off some time around June 2014. In fact someone posted here words to that effect around 30th July 2015 when he posted;-
      “I can’t help thinking there has been a cooling in the relationship between IH and Mr. Rossi./ Leonardo Corp.” and he then went on to say why. Of course it was hotly disputed then but in hindsight it looks to have been quite accurate.

      However, for your statement above to be realistic it would have to mean IH bought into the arrangement already knowing the ecat did not work, but realising they could make a quick profit by buying into it, talking it up and on-selling it to others, and then bailing out before it became apparent to all and sundry that it wasn’t all it appeared to be.
      I don’t believe for a second that was the case. It is completely contrary to what Darden said when it was finally made public that IH was the secret partner. IH never touted it around publicly and I think they would have done that from the start if they were after a quick profit. It is also contrary to what Rossi said his impressions were of IH when they bought into the partnership, and if nothing else, I think Rossi is quite an astute judge of character.
      I think IH bought into it exactly for the reasons they said. Their business is in buying up degraded sites, restoring them to a usable asset, and then selling or leasing the finished product. The ecat, if it was real, would fit in with that stated aim of leaving the world a better place and making them a lot of money along the way. I believe their intention was to buy into it, prove it, and hold it for as long as possible to assist in cleaning uop the planet, and also making a truckload of money along the way of course. For them to bail out early, something made them aware that particular avenue was not paved with gold.
      Now, whether that realisation was the right one or not might still be up for dispute by some at this point, but there can be no reasonable doubt they came to a strong enough conviction that whatever was there, was not worth paying out the remainder of the agreement. I think it is highly unlikely the present happenings are in accordance with an original plan of a quick turnover and profit..

      • Pweet

        Oops. Typo in the above and can’t edit.
        Should have been “sounded like the wheels were falling off some time around June 2015” not June 2014.
        Sorry. ๐Ÿ™‚

        • Montague Withnail

          There is no way that HPC is being delayed on purpose for LENR. UK gov is desperate for it to proceed, they are actually serious about decarbonisation.

          Various actors within EDF have realised the magnitude of the risk they would be taking in committing to the construction, and that it is actually large enough to sink the entire company, and they are fighting against it, hence there has been not FID.

      • Observer

        IH was going to make money whether the technology worked or not. There is a reason why they are called Hedge Funds.

        • Pweet

          Not necessarily. And as I said, nowhere near what they would make if it was anywhere near as good as claimed.
          What needs to be answered is, what made them realise they would be better off out of it rather than to stay in the game?
          Something changed their mind from when they bought into it thinking they would make a fortune. What was it?
          I don’t believe it was that they made 50 million and thought that was enough. That is definitely not what venture capitalists do, unless of course, they think that’s all there is to be made out of it.

          • Observer

            Venture capitalists sell their stake to other investors. These investors are interested in what the investment will be worth 6 months from now compared to what it is worth now. For this reason venture capitalists want to sell at the point of maximum expectations, not at the point of successful completion of expectations. This is why venture capitalists are more concerned with the sexiness of the technology than the odds that the technology will find its market.

            This is not new. This is not evil. This is about money making money.

  • Ophelia Rump

    If IH still wishes to produce the Rossi IP, that puts the lie to their statements that it does not work.
    Does it work or does it not?

    • cashmemorz

      Since there is no solid theory of how the E-Cats work then it is not “substantiated”. This one factor is preventing due diligence to be satisfied before massive investments can be achieved.

    • LilyLover

      IH says –
      For all legal purposes it does not work.
      For all “come invest in us” purposes, it works better than guaranteed.
      For all patenting purposes, ‘it’s different and it works’, and it’s ours to give to our favourite company, as we deem fit.
      For all investor duping purposes, ‘we did due diligence, it works or we did due diligence but shrewd Rossi cheated us and sorry, you cannot have your “fees” back – we love to play with your money and for that love of labour, we love to take it away from you.’
      Hope this clarifies the ConFusion of ColdFusion.

      • Very cute way of summing things up!

  • Observer

    Bank robber Willie Sutton reputedly replied to a reporter’s inquiry as to why he robbed banks by saying “because that’s where the money is.”

    IH seeks investment capitol in China because that’s where the money is.

    Remember, IH is not selling LENR devices; they are selling the idea of LENR devices.

  • Occams Razor: It works, IH wants to slow it down. Rossi does not. IH is trying not to attract too many enemies. Rossi doesn’t care. Rossi is being targeted. Other LENR companies keep quiet. Pressure is building to stop Rossi. Pray for Rossi.

    • Stephen Taylor

      William of Ockham might suggest Rossi has not mastered the art and science of cold fusion. Rossi might agree with his assessment!

      • Pekka Janhunen

        His reactors seem to work and his theory seems wrong. Art yes, science no.

        • Stephen Taylor

          My current guess is that he can only get them to work sometimes. Same old problem still haunts the art of cold fusion. Maybe science will come to the rescue someday.

        • Michel Vandenberghe

          Yes ๐Ÿ™‚

    • clovis ray

      Yep, it’s amazing how anybody, could go against, such a marvelous, and splendid a thing this discovery really is ,. for the human race to advance just one little bit more,and if we will use it for our betterment. it should liberate, not inslave.

      • Andrew

        I honestly don’t think that IH are out to destroy LENR or Rossi. They just want LENR to proliferate the world (and make some money along the way, lower risk).

        Most likely Darden has planted many LENR seeds and wants many of them to grow and bear fruit, giving one seed (Rossi) a $90M fertilizer job could create a monster that overshadows the rest of the crop.

        This could all end up being a difference in business models, neither being evil or part of a conspiracy.

        • US_Citizen71

          He probably shouldn’t have signed the contract then, huh?

          • Andrew

            Im sure IH will put forward some very legitimate concerns with their reply, even if they lose the lawsuit they are not out that much more as long as their other crops are strong enough to survive the storm. Do I agree with it? No. Darden is no fool and must have some very good reasoning behind his actions. I would surmise that if Rossi wins the lawsuit Darden would have to pay but would still retain the licence agreement…

          • US_Citizen71

            I’m sure he does. Might it be making sure his investment in clean fracking technology has a chance to make money before fracking is massively slowed due to 50 COP LENR reactor?


            He is listed as the director of the company at the time of publishing. I would think by now the technology should be getting close to being a saleable product, if it is not already. With all of the concern over contamination from fracking and the increase in number of countries and wells being drilled, he is likely inline to make a killing shortly. Cage the goose, slaughter the pig?

          • who should not ? Darden or Rossi?

            my feeling is that Rossi did not read the contract, or refused to understand what was his obligation : share IP sincerely.
            This was predictable, if you remind his past behaviors.

      • Mike Rion

        Again, not about advancement or humanity, just money and power, which are basically synonymous.

  • Roland

    How touchingly naive.

    US corporations that aren’t specifically bound by contractual obligations, such as military contractors to the Pentagon, haven’t demonstrated any particular patriotism for several decades in their fixation on short term profits as the only meaningful metric for assessing business success.

    US corporations operating in China are generally either required to share relevant technologies with a state approved Chinese ‘partner’ or will have those technologies stolen from them anyway by industrial espionage in fairly short order by Chinese state interests.

    This process is very well documented by both the US, and other, corporations operating in China and by the US government but this recognition has had little impact on the number of companies moving operation to China or measurably slowing the very successful Chinese industrial espionage program.

    That Leonardo assigned China, as a territory, to IH was a considerable gesture of trust that, in retrospect, seems misplaced on several levels.

    • “That Leonardo assigned China, as a territory, to IH ”

      Assumption of fact not in evidence?

  • Mike Henderson

    As I read Sifferkol’s summary of NCKHawk / Weaver’s postings over the last three years, I can see this has all of the hallmarks of a pump and dump scam.
    1) Buy into a poorly capitalized tech stock early.
    2) Shout its praises. Convince other investors to climb on the bandwagon.
    3) Sell shares high, take a short position.
    4) Bad-mouth the stock. Convince investors to bail out.
    5) Close the short position and cash in.

    In this case, this is not an exchange-traded security. But that doesn’t close the door, you just have to be more clever.

    And what if this is a remake of “The Sting” in which con men pull a heist on a bad guy, and they are secretly in cahoots with another con man?

    Pass the popcorn.

    • doug marker

      Mike, *no* one is selling shares – your premise really relates to something quite different and unrelated to Rossi & IH – which is an inventor / VC relationship. There are no shares to ‘pump and dump’ !.

      Sorry, but I think we can bin this line of reasoning.

      Doug M

      • Mike Henderson

        If I were to write a movie script, it might go like this. Disclaimer: Any similarity to persons living or not is purely coincidental.

        1) “Fund manager” (FM) with a history of setting up brownfield cleanups that buy dirty land cheap, set up bonds (borrow public money) to fund the cleanup to be repaid by future tax proceeds from the cleaned property, walk away with fees, significant percentage of projects go belly up.

        2) “Mad scientist” (MS) type with a history of energy related opportunities that show great potential and suck up investor funds but … don’t quite pan out in the long run. MS befriends fringe physicist to learn his stuff. MS’s process shows interesting results.

        3) FM and MS sign a contract paying a small fortune for rights to his perpetual motion machine. “Other guys” join the team — Umpire, Boiler Room, COO, etc.

        4) .MS demonstrates perpetual motion in short trial signed off by Umpire. FM and COO go to work hooking big fish (BF) for bajillions. Meanwhile COO and team set up R&D center and buy up a portfolio.

        5) MS sets up a pilot scale long demonstration in customer’s plant. BF signs on the dotted line, funding starts to flow in. But customer is hidden behind a storefront for obvious reasons, after all this is fringe physics.

        6) Someone alerts the environmental cops who do a drive by of the R&D center and find absolutely nothing. Too little?. FM gives nice speech at perpetual motion conference.

        7) MS and FM suddenly stop talking nicely midway through the demonstration. Dark clouds gather. MS’s demo ends and is dismantled leaving an empty warehouse. Within days, MS files lawsuit claiming “FM and COO are naughty guys out to steal perpetual motion.”

        8) Investors are getting nervous … they have put in a small fortune and don’t want to pony up a big fortune with so much chaos. Deals collapse, they feel great that they dodged a big hit. FM, COO, MS, and Other Guys walk away.

        9) And in the background, the perpetual motion machine is still spinning away.

        • doug marker

          Lol – certainly imaginative ๐Ÿ™‚


  • cashmemorz

    If all that IH is selling to the Chinese is “unsubstantiated” technology and the Chinese bit without having a solid theory how it works and on top of that all that the Chinese have is the E-Cat, a product that is soon to be eclipsed by the E-Cat X, and the Chinese are happy so far (not knowing such details), then IH is getting away with a trick the same trick that Rossi is trying to pull on IH.

    • US_Citizen71

      He was, until you typed that. ; )

      • cashmemorz

        If the Chines are following this blog and I am right then I should apply to Darden for a job($$$, if this speculation of mine turns out to be the true scenario…..$$$

        • US_Citizen71

          If it concerns the state or making money you can pretty much bet they have someone watching the internet for information. With almost 1.4 billion people to employ an army can be thrown at the internet for research and monitoring of news. Large numbers of people can do amazing things. They’ve been known to build giant pyramids with nothing but hand tools before. : )

  • Omega Z

    Hopefully that’s sarcasm.
    Apple smart phone manufactured in China, etc etc,,

    • clovis ray

      If i had been in control, i would have sent jobs packing, to me he is a dirty crony capitalist, that needed to have his crap ban from america,I do not and will not buy anything from apple,

  • A surprisingly open response, which has moved on considerably from the last time I contacted them (2013) when they were simply ‘maintaining a watching brief on developments in the field’.

    They are obviously open to the idea – what a terrible shame that after all this time there is still no product available that could head off Osborne’s folly at Hinkley Point.

    BTW I think the latter is falling apart under the weight of the misinformation, underhand dealing, waste of taxpayer money, and crassly stupid decision making that has propped it up so far, rather than any rational decision to hold off for a while and see what else is on the table – but just possibly someone in the DECC has been quietly at work helping the process along!

  • Mike Henderson

    No, but I learned firsthand in a discussion board on Yahoo for NASDAQ:HAUP many years ago (2005?). HAUP was a “popper” that every year or so shot up about 3x, but only briefly. It was fascinating to watch the operators working the crowd up up up, while pounding on anybody who cast any doubts on HAUP’s prospects. Then suddenly those usernames disappeared and others materialized who were sadistically cruel about the company’s products, officers, and customers. And yet didn’t these new userids use similar phrasing and make the same grammatical mistakes as those who had been so upbeat? Lightbulb! I was able to follow them to another company’s board. Same stuff, different board.

  • Stephen Taylor

    We, in the peanut gallery, certainly do not know if he has complete control of his device. We wait, and we hope.

  • Montague Withnail

    Not how DECC works, but you can be sure they would get involved pretty quickly once they had something they could work with.

    The $10tn question: why won’t Rossi do a proper credible evaluation? That is the only question people should be asking now and they should be asking it over and over again until either Rossi agrees or goes away. Anything else is just a red herring.