Not Just Another Conspiracy Theory (Michael Rion)

The following post has been submitted by Michael Rion

Not Just Another Conspiracy Theory

This is a story about something that took place back in 1980. I’ve even seen it mentioned briefly in passing here on ECW, quite a while back, but I don’t believe you’ve heard about it from my particular perspective. First a little about me; I’m 71 years old and a retired Real Estate Broker/Developer in Southern California. I’m not now, nor have I ever been a scientist or researcher.

However for the first 20 years of my professional life I was a shoe designer and in early 1980 my wife and I had just returned to Southern California from Melbourne Australia, where I had been on assignment for a large shoe manufacturer there for about two years. Upon our return I had a job waiting for me, but my wife, who was not the domestic type, was not so lucky and needed to seek new employment. We rented a Condo in Redondo Beach, a southern coastal suburb of Los Angeles.

At about that same time a new television show, aptly named “That’s Incredible” aired on ABC and was an immediate hit. On one of the earlier episodes a man named Dr. Gerald Schaflander was featured. He claimed to have invented a new fuel for automobiles, which was half the price of gasoline and totally non-polluting. We were fascinated, by both the man and his invention. What’s more he was located nearby in Los Angeles just to the north of where we lived. On a whim we called up and arranged an appointment with the idea in mind of perhaps investing some money.

Schaflander’s company was called Consumer’s Solar Electric Power Corporation, or CSEP, and was located in Culver City California. Schaflander, who met with us personally, had a Ph.D. in social psychology. He was very charismatic and somewhat eccentric. He was a person who in many ways was like Andrea Rossi and the similarities of this story to his do not end there. Like Rossi, he had been involved over the years in several failed ventures, some of which were controversial in nature.

He had started CSEP in Menlo Park California, up near San Francisco, six years earlier. I don’t know how many here are old enough to remember, but in 1974 we were fresh out of the first gasoline shortages brought about by OPEC embargos in an effort to raise the price of crude oil, and we were due shortly to enter the second wave in 1976. Both instances resulted in many gas station closures and long waiting lines, sometimes blocks long, at the few that remained open. At the time the official story line was that we were running out of oil and more of the same was to be expected. Although this eventually proved untrue most folks believed it at the time, and it was life altering for many. The embargo was successful in that it nearly tripled the price of gasoline, from 35 cents gal. in 1972 to around $1.10 gal. by 1980. At the same time we were being bombarded with new and expensive EPA requirements, which made autos both more costly and much less fuel efficient. It was even worse in California, which was even stricter on emissions.

It was Schaflander’s aim to come up with a new kind of fuel that was both cheaper and less polluting. While not a scientist, he was very good at two things, organization and raising capital, so over the next 6 years he did just that and assembled a team of scientist to work on the problem. Early on they settled on a form of Hydrogen as the most likely solution.

By 1980 they had been successful in coming up with a formulation of hydrogen fuel which would stay liquid at normal temperatures, was less volatile than gasoline and, with suitable carburetion modifications, was compatible with the gasoline engines then available commercially. It was also basically non-polluting as the only emissions were water vapor and unmeasurably small quantities of itrous Oxide, which were specific to the additives necessary to maintain the liquid state of the fuel. Even better it could be produced at less than half the price of gasoline. Just like with LENR, most main stream scientists at the time declared that what he claimed was scientifically impossible (This has since been determined to not be the case).

During our visit we were given a tour of the facility and invited to drive one of a fleet of six 1979 Chevrolet Caprices, which had been converted for that purpose. One of the cars had been earlier driven to the east coast and back for testing purposes. We were then shown official test results from the SCAQMD (the Southern California equivalent of the EPA, but much stricter at the time) which showed the emission totals. Based on that we made the decision to make a modest investment, but most remarkably, during our interview Dr. Schaflander became impressed with my wife’s personality and professional qualifications. As a result he offered her a job as his personal assistant at a very attractive salary.

During her tenure there we both became very involved with efforts to raise money and at seminars he gave for that purpose we met movie stars and celebrities, many who invested heavily in the venture. Jack Nicholson was just one such personalities and here is a link to a promotional video he did for them in 1978 We still have a company brochure that he autographed for us at the time. It was fascinating at the time to sit in a large room with perhaps a hundred potential investors, many of them the who’s who of Hollywood, seated in folding chairs listening to updates regarding the development process.

Not surprisingly there was much resistance over the years by numerous entities, mostly unidentified, but strongly suspected, at the time, to have direct ties to several of the large oil companies. I don’t want to go into a lot of detail here about it, but I’m providing a link here to an article published in “The Nation” , which gets into it further. At one point even, one major oil company offered to buy out the company offering several million dollars via a letter of intent. Although this was later dismissed as having been fabricated by Schaflander, my wife professes to have seen the official letter of intent and then personally typed up a letter of rejection from Shaflander, who refused on altruistic principals (during the time my wife was there he drove a beat-up 66 VW, lived in a rented one bedroom apartment and drew an embarrassingly small salary, that is when the money was there to pay it, so he clearly wasn’t in it for the money). Sadly most of the hard proof for this later went missing after being confiscated by federal authorities.

During this later period things began to escalate. It was in 1978 I believe, when CSEP signed a huge contract to supply Simplot agricultural Corporation with thousands of gallons of the new fuel for use in irrigation pumps and farming implements. Near that same time they entered into a deal with the Postal Administration to convert P.O. Jeeps to the new fuel on an experimental basis, for testing purposes. Not long after the rejection of the oil company purchase offer the first shipment of HY-fuel (250 gallons) was ready for delivery to Simplot. To everyone’s surprise the fuel tanker was turned away by Simplot upon arrival at their depot in Idaho, and the contract was abruptly canceled on the grounds that the chemical makeup of the fuel hadn’t been disclosed as agreed. It had been though, and there was written proof, but there was no money to allocate for pursuit of a legal remedy at that stage.

About a week or so after that the agreement with the Postal Administration was also withdrawn and four partially converted Jeeps were reclaimed. Schaflander responded by purchasing a retired PO Jeep to continue development, and a short time later perfected it, but all to no avail. It was also during this period that the SEC became involved. First, they sent questionnaires to a few of the largest investors asking if they felt they’d been enticed to invest through misrepresentation. You can imagine the effect on investment this had. Schaflander responded by copying the questionnaire and sending it to all of the investors, several hundred in all, just to demonstrate transparency.

It was also about this time that accounts from two different banks, which were used for operating expenses, were frozen by the U.S. government without explanation. Schaflander responded by filing suit to have the funds released, but without money to pay employees most were given layoff notices, including my wife. Some of the essential personnel were presented the alternative of receiving stock, at a 3 for one discount, in lieu of salary, which also included my wife. As her income was not essential for us at that time she accepted and we eventually ended up with over 10,000 shares of common stock in the company. Because of her insider status we were both committed, and believed 100% in Schaflander and the operation. What’s more, we still do to this day.

Regrettably our faith had little effect, when a couple of months later the FBI, with perhaps a dozen federal officers in tow, arrived one day and gathered all remaining personnel in the front lobby. They then proceeded to confiscate all files and paperwork, much of which contained proprietary information. They literally loaded file cabinets on hand trucks, wheeled them out to a waiting truck and loaded them inside. Later they returned and impounded the fuel tanker with over 250 gallons of Hy-fuel on board. As the files were essential to day to day operation Schaflander responded by filing another suit in federal court to have them returned. My wife stayed on to assist with the paper work. The end finally came a few weeks later when, probably at least partly in response to the federal suit, federal deputies arrived and arrested Schaflander and his CFO Steven Wright. They were arraigned on charges of mail fraud with the intent to defraud investors, after which they were allowed to post bail. It may be a stretch, but we’ve both come to believe that the U.S. Government colluded with one or more large oil companies to shut down a potentially viable alternative energy source.

The rest of the story is recorded in legal history, which can still be sourced on the internet today. They were both convicted on 10 counts of mail fraud and sentenced to 4 years each in federal prison. I’m not sure about Wright, but Schaflander never admitted to any wrong doing and as a result served the entire 4 year sentence, even though he was eligible for parole in just 24 months. As for myself and my wife I do believe we investors were defrauded, not by CSEP or Dr. Schaflander, but by the US government who, by effectively sabotaging and then shutting down the operation, deprived every investor of any potential return on investment.

By the way, Hy-fuel has apparently since been found to be exactly what it was claimed to be. But Schaflander’s biggest innovation was making it affordable. He did this by using, otherwise useless, salt contaminated ground water under the Arizona desert to manufacture hydrogen via electrolysis by using then newly invented gallium aluminum arsenide solar cells to provide electricity via solar collectors (old technology now, but it was ground breaking then). But the real secret was that he had perfected a way of mass producing the cells, which reduced the cost by a factor of 10, thus overcoming the negative cost ineffectiveness of producing hydrogen by electrolysis.

Right after the 1980 incident I was very outspoken about my opinion; all the way up to and including the convictions. Once that came about though almost all of the public (including the movie stars who lost all of their money) seemed to accept that it had all been a scam right from the very beginning and it became nearly impossible to counter that without starting an argument (sound familiar?). So I stopped trying. We kept thinking that my wife would be called as a witness for the defense, but it never happened. I’ve read legal post mortems on the internet regarding the case and the conclusion seems to be that both Schaflander and Wright were victims of ineffective council, and could probably have won an appeal on that basis. To their credit they were both virtually penniless after the seizure and probably weren’t able to afford good representation; might have been part of the plan right along. Based on this experience I have a hard time completely discounting suggestions that LENR may have hidden resistance, from unknown entities working behind the scenes. Dr. Gerald Schaflander (like Fleischman and Pons) is now out of the controversy, but the CFO Stephen Wright could still be out there somewhere. It would be interesting if he saw this and responded.

  • Mike Rion

    Very rarely is there a happy ending when bucking up against the U. S. government. Preston Tucker, back in the 1940’s may have won his court battle, but it was so expensive that he failed in the end just the same.

  • Mike Rion

    There are reviews on line that detail the court case and what happened there, but there was never any money found. Both Schaflander and Wright ended up prevailing on friends to pay there legal costs. In fact its suggested in the legal reviews that is why they were convicted, because of the low quality of the attorneys involved.

  • AdrianAshfield

    What is stated at the end of the linked video
    is that the hydrogen is stored in a white metallic powder.
    That sounds rather different from the description of the liquid Hy-Fuel.
    I rather doubt that it is possible to make H2 by solar power economically or that would be done now.
    If he did come up with a way to store H as a high percentage of a stable , cheap liquid, that would be quite a trick and I would have thought could have been patented.
    I wonder if the composition of the fuel ever came out in the court case and if not, why not?

  • AdrianAshfield

    I suspect the reason was much more prosaic. Consider the power required to transmit directly to a satellite.
    It would be difficult to do now with a small phone, with all the advances in electronics since that time.

  • Omega Z

    These conspiracies arise from people who are looking for away to use technology for free.

    Someone created a food replicator, but it was suppressed by the farmers unions. Highly unlikely. Such a technology even if possible would not be cheap or practical in general and does not need suppressed.

    We have SAT phones. They are not cheap. Satellites are also currently used for our cell and land phones and all other Data transmission. Spoiler Alert: Land lines are still the cheapest, most dependable and reliable of all such communications systems. They can also easily be built to handle far more communications while Satellites are limited.

    As to Hydrogen powered vehicles at half the cost. First, as soon as a competitive product comes to market, the price of fossil energy declines. The hydrogen no longer has that price advantage. Second, Do you think the Oilco’s care what they pump into you vehicle to power them. Oil, Hydrogen, Doesn’t matter to them. It’s product either way.

    LENR: I have no doubt there is an effort to suppress it, But, It’s not the people you might think. Most of the suppression comes from the scientific realm. Mostly, Big Physics. With the advent of LENR, massively expensive projects like ITER are probably finished.

    • “Satellites are also currently used for our cell and land phones”

      Um, no. Speaking as a former cellular RF eng in the DFW area …

  • Alan DeAngelis
    • Alan DeAngelis

      Perhaps Hall’s replication of Myer’s cell failed because he used distilled water (at 9:22 min.) Some room humidifiers won’t work with distilled water. They need a trace of electrolyte (i.e. what tap water would have).

  • Mike Rion

    Except that unions, at least in US, are not as strong as they used to be. But yes, you’re correct, this is a world changing technology and there are bound to be special interests with great power who will be opposed and bring everything they’ve got to bear in that opposition. Will the US government join in the opposition? Only time will tell, but its a distinct possibility.

    • doug marker

      Mike, The one hope re Govt interference is that if they haven’t already been doing so, then there comes a point where some foreign govt will support the innovation if it believes it can do so to the detriment of those other Govts that oppress a game-changing innovation.

      What makes energy unique is that many govt foreign policies are based on oil economies & oil trade.Best example I can think of in this regard was chip technology & computer industry & US manufacturing in general. By the late 1980s & up to the 1990s US had fallen way behind Japan. Japanese chip and computer companies were beating the US at its own game.

      In Japan MITI was working with Japanese industry to target the US. Some Japanese computer manufactures were convicted in the 1990s of espionage against US computer companies (mostly hushed up). US industry with Govt support rebuilt itself & the computer industry went through an era of internal fierce competition. The US surged ahead in chip innovation and software. By early 2000s US businesses were using PCs and computing to flatten out their organisations – esp using new work-flow software such as spreadsheets & word processors, work-flow etc:, Japan was caught napping and due to its tradition of hierarchical organisations and structures suddenly found it harder to compete. But that wasn’t all. Japan had used its hierarchical traditions in distribution and was able to severely limit US companies ability to distribute product in Japan.

      At the same time the US encouraged US corporations to assist Korea (I had a direct role doing this – spent many visits to Korea to assist in boosting their technological capabilities via the corporation I worked for) it allowed Korea to catch up and get ahead of Japan. The Koreans wanted to do this as a matter of national pride. In the latter 1990s, Korean chip manufactures finally caught up and passed the Japanese.

      Just think about how dominant Japanese companies were in the 1980s/1990s and how much more dominant Korean companies are today. The Koreans are still in front almost 15-20 years later. Japan learned a harsh lesson about how a Govt & its industry corporations can win a hidden war and punish the loser.

      So point is that innovations that are disruptive can be supported or squashed if Govt and industry work together. In the US, big corporations are an extension of the Govt. Worst case being the Military manufacturers.

      So many stories that can be told re who squashed who and got away with it either by might or with Govt assistance.


      • Mike Rion

        Very true, and with something as potentially disruptive as LENR technology I find it hard believe that not only the US government but many others are putting pressure to bear behind the scenes. The real question to me is whether this happening within the main framework of Rossi vs. Darden.

        • doug marker

          Mike – in a business sense I identify most with the VCs – but I also know what they can get up to.

          Either IH & the people are unbelievably incompetent, or they have an agenda.

          The energy states are so sky high (many trillions of $s, global political stability), that anything is possible…

          – Are IH making an early grab for energy IP
          – Is Rossi too hard to control ? (personality, nationality etc: etc: )
          – Did IH realise the IP was not protected enough to proceed
          – Are IH a front ?, if yes then who ?
          – Did IH simply screw up ?

          So many questions.
          But, Occams Razor says follow the money


        • Kevmo

          Someone else in the article below claimed to work at CSEP, left in February ’81 and cofounded CAE, Canadian Alternative Energy. Sound like anyone you know?

          He accused Dr. Shaflander in this thread of lying about the gas mileage and violating laws of physics.

          • doug marker

            When it comes to ‘new energy’ the accusations of lies & defies (laws of physics) always flow no matter what the reality is.

            The problem for laypeople is always deciding whose ‘lies’ to follow 🙂
            We simply don’t know so tend to go with the flow. Most of us don’t
            want to be seen to be backing any idiots lest we appear so ourselves.


          • Kevmo

            In this case the accusation of violating the laws of physics came from someone on his own team. That’s significant.

          • Mike Rion

            Nigel Appleton over on LENR Forum was nice enough to post this link to current use of Hydrogen/ammonia fuel usage. Due to its higher octane rating it would seem especially appropriate for use in Diesel engines.


          • Mike Rion

            would be interesting if we knew who blubbergork really is. Since he did not use
            his real name and that particular forum is apparently offline today I guess
            that would be too much to hope for. Apparently he did know Schaflander and I
            have no specific reason to think he is not being truthful. My wife and I have
            been batting it back and forth. She became acquainted with one of the scientists
            who worked on the fuel, but can so far only recall his first name, Peter, and
            said he was a recent immigrant from Russia. Jerry was indeed a b-ll sh-tter so
            some of what he says rings true. I have no doubt that Jerry may have
            exaggerated things from time to time. He himself openly compared the fuel
            economy to that of CNG and for me that rung true. Since he was always robbing
            Peter to pay Paul in the day to day expense of operations I have no doubt that
            some of his accounting may have fallen suspect, but I am still convinced that he
            gained nothing financially for himself.

            Some of what
            blubbergork says demonstrates to me that he knew little about automotive technology
            of the day. I on the other hand have been a car guy for over 50 years now. I
            knew the right questions to ask even then. In the late 70’s cars had been
            artificially de-tuned as a bandaide method of reducing emissions, especially in
            California. Only ten years earlier, in the late 60’s some performance cars had
            run 11.5 to 1 compression ratios and pumped out 400 hp or more. By 1978 the
            peak compression ratio was about 7 to one, and the same displacement that had
            netted 400hp in 1970 was only producing a little over half that much. The ones
            that remained from the 60’s had to be detuned as around 1980 leaded gas became
            unavailable except as Avgas only available from airports. On top of that fuel efficiency
            had dropped by at least 20% over that same period. In talking to one of the
            auto technicians in the shop area of CSEP I learned that Hy-fuel only netted
            less than 80% of the BTU output of gasoline, but was much higher octane than
            currently available gasoline. This enabled them to advance the timing on the
            test cars to the point they were only losing about 10% power efficiency. In
            this regard the comment about camshaft duration has some relevance, in that valve
            timing could have been very much more advanced, supported by a higher available
            compression ratio due to the higher octane of the fuel, sort of like having a
            racing cam in your car. They had estimated at least as high as 14 to 1. This
            would have effectively doubled the horsepower output, or conversely have
            doubled the fuel efficiency.

            I myself suspected
            that some of the conspiracy stuff from prior to my involvement was hyperbole,
            but the timing between the letter of intent offer, mysterious withdrawal of the
            Simplot contract and then directly after that the US governments participation using
            the post office, SEC and then the FBI, was simply too coincidental to dismiss
            out of hand. Also, although Jack
            Nicholson testified on behalf of the prosecution, he was later reported to have
            told an acquaintance that he was coerced by the Federal Attorneys who
            threatened to prosecute him for his involvement in promotion. Probably and empty threat, but who would want to test it. He apparently still believed in the product
            at that point. Perhaps we will never
            know the truth, but my wife and I remain convinced of skullduggery by the US

            As an added though, suppose the fuel efficiencey had been worse and the price the same as current gas prices, how much would the total absence of emissions been worth?

          • Kevmo

            I see Toyota is selling a hydrogen car now. It is likely they “borrowed” some of the Hy -fuel approach but we’re never going to know for sure.

        • Pekka Janhunen

          Ammonia (NH3) could be used as a hydrogen carrier, it can be made from air and water (using energy) and it returns to air and water when it burns in an internal combustion engine. The energy density is roughly 50% of gasoline. Ammonia is poisonous but much easier to store than hydrogen, and it is routinely transported by railroads and trucks in massive amounts.

        • doug marker

          Nicholas, Rossi *did* take money from mom n pop investors – it is on record. Why do you say he didn’t ?


  • Appleby

    Great. Tell me how to invest also please.

  • Anon2012_2014


    I’m interested in Joi’s Scientific H2 production method. (Everything else on their website is already well known.) I am assuming they are producing the H2 from electricity but not using electrolysis. Electrolysis is about 40 to 75% efficient thus far (one way, electricity to H2). If we can get a 90% efficient round trip (electricity to H2 to electricity), we can replace conventional batteries for electricity storage on a household or utility scale. If we can improve the handling at room temperatures and pressures and keep the energy to mass and energy to volume ratio to within say 2X of gasoline or kerosene, we can replace transportation hydrocarbons.

    I’d like to see one published (i.e. public) “hint” (without an NDA) at what Joi does to decide if I should pursue them further. Their website says nothing. Why not patent and publicize?

  • Why would Werner von Braun, a rocket scientist, be asked to design a communications system? The rockets to get satellites into orbit are one thing, the design of comm birds is quite another …

    • Mike Rion

      He wasn’t asked to design communications systems, only to evaluate the feasibility of geostationary orbiting satellites

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