ClearSign Combustion Corporation (NASDAQ:CLIR)
The story behind ClearSign Combustion Corporation (CLIR) and its ECC Technology has suffered a critical failure. There is a point in time, before which I find no credible scientists capable of inventing ECC Technology, and after which all latecomers are irrelevant to the founding of the technology.
It's a logical problem: one cannot knowingly say that what comes after an event comes before it and stay honest. Imagine that you are standing on a riverbank. Upstream, you see a lumberjack by the river cutting down a tree. It splashes into the water and floats down past you. You follow the log with your eyes and can see further downstream yet another lumberjack, ax in hand.
Which one cut the tree down? The lumberjack upstream or the lumberjack downstream? At the least, common sense would confidently eliminate the lumberjack downstream.
Who put together ECC Technology and When?
Here is the simplest expression of the critical failure. MDB Capital has been with ClearSign from the beginning of its public life and wrote a 26 page research report, published last month on September 7, 2012.
"In addition, the team retains the original inventor of ECC, Chief Scientist David Goodson …" ~ MDB Capital Group, Sept. 7, 2012, research initiation.
Mr. Goodson as the original inventor of ECC is a very big problem, as we discovered in my last article and which we shall summarize shortly.
But April 2009 is also a very big problem for ClearSign. This is the point at which ClearSign investors stand upon the riverbank. April 2009 is when ECC Technology was first articulated ... when ClearSign applied for its first patent, touting the technology currently pending and used in the prospectus to sell shares to investors. Now, just as the log floating down the river tells us that the lumberjacks downstream did not cut down the tree, we also know that the later engineers and professors who joined ClearSign after ECC was declared could not account for that formulation. Any experimentation and articulation of the technology on that patent application occurs before April 3, 2009. So let's go over who was upstream and who is downstream from April 2009?
Upstream: The currently pending application lists 5 "inventors." Who are they? (I've dealt with their resumes in greater detail in a previous article: Here, I present a brief summary.)
First, from false patent claims to highly questionable scientific and undisclosed businesses, David Goodson's credentials in the prospectus were sometimes inflated, sometimes inadequate, and sometimes downright false. The most humorous: ClearSign claims that he had once collaborated with Nobel Prize winners ‒ in such a highly unlikely situation that it is safe to say that somebody lied. This is ClearSign's "Chief Science Officer," who was said to be the "original inventor of ECC."
Second, where was ClearSign's disclosure of Thomas Hartwick's affiliation with Sustainable Power Corp (OTC:SSTP)? Sustainable Power Corp was used by John Rivera, convicted last year for fraud in a classic pump and dump.
Third and Fourth: CEO Richard Rutkowski and CMO Geoffrey Osler are businessmen, not combustion scientists or engineers. Why are they listed as "Inventors"? Are they sincerely patenting inventions or inventing patents to sell shares to investors? Why are they here?
Fifth, Christopher Wiklof is the patent agent.
This is upstream of April 2009 and these are the five "inventors" who first articulated ECC technology. I cannot find a credible scientist on the patent application. I believe that ClearSign's pursuit of ECC Technology is a science scam.
(In this particular Seeking Alpha article, I'll set aside the fact that the four effects touted in the Whitepaper had already been discovered by other scientists and engineers ‒ 15 to 60 years earlier. Any attempt by ClearSign to claim these discoveries for their own, failing to give credit to the scientists who made the actual discoveries, is tantamount to scientific plagiarism. For now however, let's return to the critical failure in the ECC story.)
The Lumberjack downstream couldn't have cut down the tree:
The engineers and University of Washington professors that began participation with ClearSign after April 2009 cannot therefore be those who participated before. This is just common sense. It's the same as saying that "after" is not "before." But then again, the mind is full of traps and illusions. When a mental association with prestigious credentials goes up against the inexorable chronology of events how can "after" come before? We can do it in language, either mistakenly or dishonestly. We can do it with sloppy thinking. We cannot however find it in reality. And yet here we are! Since April 2009 ClearSign has paid for advisors in cash and stock, many from the University of Washington. Clearsign in my opinion borrows credibility by this association with the professors. They sign non-disclosure agreements and are said to have no decision-making power, leaving them with more financial benefits and less legal accountability. These advisors are put front and center, next to ClearSign's employees in documents, on websites, and even on a recent research paper, and by this mere proximity many unsophisticated investors take their own mental association as proof of the legitimacy of ECC Technology.
It appears to work. The point appears to have been lost on many investors, and so we say it again: It is physically impossible for the professors who arrived after April 2009, to have made the contribution to ECC Technology before April 2009. As scientists, you have Mr. Goodson and Dr. Hartwick in April 2009; they fall short. It makes no difference whether you put even an Einstein or a Newton next to them later.
A Fake-it-till-you-make-it strategy?
Could the later engineers and University of Washington Professors discover a genuinely new technology? But wait a minute … could we say this without suggesting that ClearSign's business model was just another Fake-it-till-you-make-it scam? There would be serious problems with such a ... "business model."
First and most obvious, this would not have been what everyone signed up for.
- From a business perspective, most Fake-it-till-you-make-it strategies are due to management's illusion that they can control the uncontrollable. They get further and further behind, the lie gets bigger and bigger … until they implode.
- From a scientific perspective, I'm betting there is no scientist so competent he can resurrect a living result from a dead scam.
A scam sets up an inverse relationship between integrity and ability.
Damage done: Under normal circumstances one wants the most talented and intelligent on one's science team. When however one has determined the existence of a scam, then everything is reversed. The greater the credentials, skills, and intelligence the more investors they will bring in and the greater the damage done. In principle, this is similar to something Warren Buffett once said about hiring employees. He said that you want employees who have three qualities: integrity, intelligence, and energy. However, if they don't have integrity, their intelligence and energy will kill you. When you think about it, he tells us, you really want dishonest people to be dumb and lazy.
Lost Integrity: And when you think about it, once you see that a fraud has taken place, the more intelligence and experience a scientist has the less integrity one can afford him. This is my objection to those who tout Dr. Thomas Hartwick's credentials. Once he used those credentials for Sustainable Power Corp, while the SEC was suing John Rivera for fraud, those credentials work against him. If one wants to say that he is highly intelligent and scientifically experienced, then one will have a difficult time arguing that he did not know what was happening ….
- From a business perspective, Rivera was currently being sued by the SEC. How could Dr. Hartwick not know what he was supporting?
- From a scientific perspective, Dr. Hartwick was supposed to be an expert on this ready-to-commercialize, albeit now discredited, "SSTP Process." If anyone was in a position to know, it was supposed to be Dr. Hartwick.
There is no room to maneuver here. Either a scientist is competent enough to know that he is involved in a scam and is therefore untrustworthy, or he does not know the science well enough and is therefore incompetent. Since one is always free to invest elsewhere, "Bad or Bad?" is not a choice; it's a mental trap.
For the record, I have until now deliberately avoided mention of Dr. Breidenthal (and the other University of Washington professors). Being downstream they were irrelevant. However, recently ...
- He allowed Mr. David Goodson to be listed as co-author on research he is to present to the American Physical Society next month
- He allowed his research, his name, his credentials, and his university to be used in a ClearSign press release.
So here we are. Dr. Breidenthal is now relevant, whether by passively or actively letting his name be used … I don't know which. It appears that ClearSign is working hard to associate itself with the University of Washington, and currently with the American Physical Society, through Dr. Breidenthal.
How much has Dr. Breidenthal been paid for his role in ClearSign? What are his credentials? As far as ECC technology is concerned, it doesn't matter. He signed on after April 2009 and is downstream from the invention of "ECC Technology," the original inventor of which was said to be David Goodson.
This fact matters. David Goodson's problems are serious and transparent. After thorough research, I believe that ClearSign's April 2009 set up of ECC Technology and the way it has been touted to investors constitutes a science scam. I also believe that the professors who signed on later are intelligent and educated. Therefore, my chief objection to the University of Washington professors is due to the mere fact that they are here.
The university advisors are paid in cash and stock. Mr. Goodson and ClearSign can stand next to the ClearSign advisor, Dr. Breidenthal, and borrow credibility by their association with the University of Washington and the American Physical Society. So here's Mr. Goodson, listed as co-author on Dr. Breidenthal's research. Did Mr. Goodson make a genuine contribution or did Dr. Breidenthal's financial interests and/or contractual obligations with Clearsign find a merely plausible way to put him there? After in depth research into the false and inflated claims regarding the Chief Science Officer, Mr. Goodson, I am confident it is the latter.
Analogy: A straight-A student is arrested in a bank robbery. The excellent grades, past education, and current level of intelligence do not sponge away the crime. In fact they demonstrate that he has a clearer thought process than most, less room to claim ignorance, demonstrating in turn his greater guilt. In any event, his grades do not make him innocent; his being here makes him guilty.
Given his education and intelligence, my case against Dr. Breidenthal is the fact that he is here.
Disclosure: I am short CLIR.