Perhaps a jury will not award much or anything. But you know that IH is aiming to shut down Rossi one way or another because they brought up his "Unfair Trade Practices' and non-payment of taxes. So regardless of what happens between IH and Rossi, even if they settle, Rossi might serve time in jail for either UTP or non-payment (again), only this time in the US instead of Italy. I agree with Ladajo - IH doesn't seem to be too interested in settling. Rather, they seem intent on alerting the State of Florida about Rossi's fraud and the Feds about his tax evasion. Scorched earth comes to mind.
State of Florida (will the FL Attorney General's office pay attention?)
COUNT IV: FLORIDA DECEPTIVE AND UNFAIR TRADE PRACTICES ACT
(Industrial Heat and IPH against Rossi, Leonardo, Johnson, JMP, Penon, Fabiani, USQL)
136. Counter-Plaintiffs reallege the allegations in Paragraphs 1 through 135 as if fully
set forth herein.
137. As described in greater detail above, Rossi, Leonardo, Johnson, JMP, Penon,
Fabiani, and USQL (the “FDUTPA Defendants”) were all engaged in a common scheme against
Counter-Plaintiffs.
138. The first part of the scheme was to manipulate Counter-Plaintiffs into allowing
the Plant to be sent from the Industrial Heat facility in North Carolina – where any work on,
operation of, or testing of the Plant could be supervised and overseen by Counter-Plaintiffs – to
Florida, where Leonardo, Rossi, USQL, Fabiani, and Penon could operate the Plant and
purportedly conduct measurements of the Plant’s operations away from the oversight and control
of Counter-Plaintiffs.
139. The second part of the scheme was to manipulate the operation of the Plant and
the measurements of the Plant’s operations to create the false and deceptive appearance and
Case 1:16-cv-21199-CMA Document 29 Entered on FLSD Docket 08/06/2016 Page 59 of 66
impression that the Plant was performing at astronomical levels, with COP measurements not
only well in excess of anything achieved by any third party testing of the E-Cat technology, but
in fact many multiples higher than anything achieved by any third party testing. For example,
notwithstanding flaws in their testing methodology that would have caused them to overstate
their conclusions of the COP they were measuring from an E-Cat reactor, the Lugano scientists
concluded that the E-Cat reactors they measured were producing a COP of 2.6, 2.9, 3.2, 3.6 or
5.6. According to the manipulated and fabricated testing and measurements of the FDUTPA
Defendants, they – through Leonardo, Rossi, and Penon – claimed that they were achieving
COPs more than 10 times greater than the Lugano scientists, and in fact as high as 40+ times
greater than the Lugano scientists.
140. The final part of the scheme, of course, was for Leonardo and Rossi, based on the
false and deceptive operations of the Plant in Florida, to claim to Counter-Plaintiffs that they
were required to pay Leonardo and Rossi $89 million and, when Counter-Plaintiffs rightfully
refused, to institute litigation against Counter-Plaintiffs.
141. Another goal of the scheme was to obtain various payments from CounterPlaintiffs
for work that one or more of the FDUTPA Defendants was performing not to benefit
Counter-Plaintiffs, but in fact with the goal of harming Counter-Plaintiffs. Among these
payments were service payments to USQL, Fabiani, and Penon; expense reimbursements to
Leonardo, Rossi, USQL, Fabiani, and Penon (including for travel, apartment rentals, visa-related
costs, repair work to the Plant, patent attorneys, and patent application fees); and payments for
equipment (or the transportation of equipment) to be used – or purportedly to be used – by the
FDUTPA Defendants.
142. In furtherance of this scheme, the FDUTPA Defendants engaged in the
unconscionable, unfair, and deceptive acts and practices described above, including:
a. Deceiving Counter-Plaintiffs about JMP, the operations of JMP, and the
reasons for JMP wanting to use the steam power that could be generated by
the Plant.
b. Deceiving Counter-Plaintiffs as to the reasons for wanting to move the Plant
from North Carolina to Florida.
c. Manipulating the operation of the Plant and the measurements of the Plant’s
operations to create the false impression and appearance that it was producing
a COP far in excess of the COP it was in fact achieving.
d. Providing false information to Counter-Plaintiffs as to the operation of the
Plant and the measurements of the Plant’s operations.
e. Refusing to provide other information properly requested by CounterPlaintiffs,
and to which Counter-Plaintiffs were entitled pursuant to the
License Agreement, the Term Sheet, the USQL Agreement, and/or the nature
of the purportedly (but in fact, not) independent work being done by Penon.
f. Preventing or blocking Counter-Plaintiffs from obtaining truthful information
about the Plant’s operations, the measurements of those operations, the role of
JMP, the use by JMP of steam provided by the Plant, the role of Penon, or the
bases for expenses or costs charged to Counter-Plaintiffs.
g. Charging Counter-Plaintiffs for services, expenses, and equipment that were
purportedly being used either for the benefit of, and to further the goals of,
Counter-Plaintiffs when in fact no such services, expenses, or equipment were
being used for Counter-Plaintiffs’ benefit.
143. The acts and practices alleged above, including in the prior paragraph, were
unconscionable, unfair, and deceptive. As such, they have been declared unlawful pursuant to
Section 501.204 of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”).
And the Feds:
Failure to Pay Taxes.
122. Prior to Leonardo and Rossi entering the License Agreement, it was well known
that Rossi had taxation issues with the Italian government, which even led to him facing criminal
tax charges in Italy.
123. As a result, the License Agreement has several carefully crafted provisions to
ensure that Leonardo and Rossi would comply with their tax obligations as they relate to any
payments from Counter-Plaintiffs.
124. First, the License Agreement (Section 12(j)) required a representation from both
Leonardo and Rossi that each has filed all necessary “tax returns or reports” and “has paid all
taxes required by any jurisdiction or subdivision or agency thereof” prior to entering the License
Agreement. License Agreement § 12(j).
125. Second, the License Agreement (Section 13.5) required each party to file all
necessary documentation and returns as to any tax applicable to its or his “respective revenues
derived . . . in respect of the E-Cat IP.”
. . .
128. Notwithstanding the foregoing, on information and belief, Leonardo and Rossi
have not paid their federal taxes on payments made to them from Counter-Plaintiffs, and have
not filed all tax returns or reports relating to payments made to them from Counter-Plaintiffs.
