Jan 102014
 

 

Sterling D. Allan – Another Business Partner, Neldon Johnson, in Trouble – Sterling Hiding Information

Is Sterling marching off to his Waterloo? – Part 1

In these articles you will learn some details about these various subjects, among other things.

  • Sterling D. Allan holding back critical negative information about one of his business partners.
  • Neldon Johnson and International Automated Systems, Inc., their first legal trouble with stock registration. It was NOT with the SEC!
  • A very short list of many of the frauds and scams in Utah during the last few years, one reaching the Utah Attorney General Office and the resignation of Utah Attorney General, John Swallow.
  • Neldon Johnson and International Automated Systems, Inc., and their many court cases.
  • Neldon Johnson and International Automated Systems, Inc., and questions about why the operators of the company never spent one day in jail, never had to pay over $3 million in disgorgements and fines. And are hiding behind “Personnel financial statements” to the SEC.
  • Neldon Johnson and International Automated Systems, Inc., and questions about why the company is not obeying the 2004 settlement with the SEC, and nobody is doing anything about it.
  • Neldon Johnson and International Automated Systems, Inc., and questions about why their stock is being traded daily OTC, and they have not filed any of the required SEC documents since September, 2011, over 2 years ago.
  • Neldon Johnson and International Automated Systems, Inc., and questions about their latest project, a possible solar energy and IRS scam.
  • Neldon Johnson and International Automated Systems, Inc., and questions about their connections to RaPower3, SOLCO Energy, and the Johnson Family Trust.

Just when we thought Sterling could not go any lower in promoting frauds and scams, we find out that Sterling has been holding back critical, negative and contrary information for over four years about one of his business partners. Information that Sterling should have posted as soon as the information was discovered.

Why is it that Sterling, only after the news of the current troubles of his business partner – Neldon Johnson – was published in the local newspaper, decided to post the damaging information he has been holding since 2009?

The whole state of Utah is basically run by the church you might think that criminal activity of all kinds, including frauds and scams, would be much lower than any other state in the union. Especially since there is no mob or organized crime of any note operating in that state. But that is not the case. Utah is high on the list of states with the greatest percentage of frauds and scams. Before we talk about Sterling and his business partner let’s look at some of the other recent frauds and scams in Utah. To top the list Utah Gov. Gary Herbert just appointed Sean Reyes as the new Utah attorney general because John Swallow just resigned over fraud allegations. Does anyone know why there is so much fraud going on in Utah? We think we do.

Here are some recent and current Utah fraud cases.

“Prison for a con man: Southwick bilked 800 victims in 30 states
By Tom Harvey The Salt Lake Tribune Published June 13, 2008

To scattered applause from a courtroom nearly filled with his victims, Ogden businessman Val E. Southwick was handcuffed and led away Thursday after a judge imposed the maximum sentence for a fraud that touched some 800 victims in 30 states and three foreign countries.
The sentence came after some 25 years of lawsuits, accusations of fraudulent business practices and gross mismanagement, Southwick’s high living on investors’ money and finally criminal charges that culminated in the hearing in 3rd District Court in Salt Lake City.
Southwick had pleaded guilty to nine counts of violating Utah’s securities laws in which some 180 investors may have lost $180 million in what appears to be the largest financial fraud in Utah history.”

Some said this was the largest financial fraud of this type since the Bernard Madoff case.

Next we have this case.

“Utah man gets 151 months in wind farm fraud
Judge sentences Utah man to 151 months in wind farm fraud that took in more than $4 million
By Ben Neary, Associated Press August 27, 2013 9:55 PM

CASPER, Wyo. (AP) — A Utah man who defrauded investors nationwide of more than $4.4 million by promoting investment in nonexistent wind farms in Wyoming and South Dakota must serve more than 12 years in prison, a federal judge ordered Tuesday.
U.S. District Judge Scott Skavdahl heard hours of testimony in Casper from state and federal investigators before rejecting a claim from defendant Robert Arthur Reed, 53, of Salt Lake City, that he didn’t deserve extra prison time for organizing the scam that claimed money from 83 victims.”

And again.

“Investment fraud rampant in Utah County
February 28, 2010 12:50 am  •  Janice Peterson – Daily Herald

Investment fraud is a constant problem around the state, but officials say much of the problem may be centered in Utah County.
Keith Woodwell, director of the Utah Division of Securities, said Utah has a lingering reputation as the fraud capital of the country. While he said that reputation is no longer accurate, Utah County’s reputation as fraud capital of the state may be.”

 And again.

“Receiver In Jeremy Johnson/IWorks Fraud Case Issues Devastating Report; Incredible Number Of Firms Referenced In 79-Page Court Update; ‘Dozens Of Companies Used As Conduits To Re-Route Revenue And To Commingle And Hide Funds,’ Document Claims
By PatrickPretty.com 10:41 am Feb 8, 2012

EDITOR’S NOTE: Jeremy Johnson and associated companies were accused civilly by the FTC in December 2010 of orchestrating a massive fraud scheme involving hundreds of millions of dollars. At the moment, Johnson, 35, faces a single criminal charge of mail fraud. He denies wrongdoing on both the criminal and civil fronts and has painted himself a victim of an evil government and a court-appointed receiver run amok.

About three weeks prior to the release of the court-appointed receiver’s report that is the subject of the story below, the government signaled that new criminal charges will be forthcoming and that those charges will apply to Johnson and unnamed “others” within his business web.
“The United States’ criminal investigation is expected to continue for some months,” prosecutors said in a Jan. 12 court filing.
A devastating 79-page report filed Friday by the court-appointed receiver in the Jeremy Johnson/IWorks case paints a picture of an incredibly elaborate domestic and international fraud scheme — one that only grew as the government moved in.”

And again.

“March 6, 2013 Updated – July 1st, 2013
By Jennifer Stagg and Associated Press

Jeremy Johnson faces 86 charges of Internet fraud
Federal indictment: US vs. Jeremy Johnson et al.
Johnson continues to claim innocence in federal case, defends AG
Utah businessman’s mail fraud case going to trial
St. George millionaire arrested for allegedly writing bad $100K check in Vegas

SALT LAKE CITY — A federal grand jury on Wednesday stacked dozens of new Internet fraud charges on a Utah businessman who just months ago rejected a plea bargain and complained he had paid a bribe to make the case go away.
Jeremy Johnson was hit with 85 fraud and money laundering counts in a new indictment that adds four business associates who weren’t previously defendants in the case.
Prosecutors say Johnson’s businesses used the Internet to fraudulently enroll millions of people in get-rich schemes by charging their credit cards without authorization. He was originally indicted nearly a year ago on three counts of fraud and money laundering.”

From the FTC.

“FTC Seeks $22 Million from Wife and Parents of Ringleader Behind Alleged Utah-based Internet Billing Scheme I Works
Mansion and Silver Bars Among Alleged Ill-Gotten Gains
For Release January 23, 2013

The Federal Trade Commission has asked a federal court for permission to charge three persons and five companies they control with improperly receiving at least $22 million from a scheme that allegedly bilked consumers out of more than $275 million with deceptive “trial” memberships for bogus government-grant and money-making schemes.
In December 2010, the FTC charged the I Works operation, controlled by Jeremy Johnson and nine other individuals, with violating federal law.  The court subsequently froze the assets of Johnson and 61 corporations and appointed a court-supervised receiver to help ensure that money can be returned to consumers if the case is resolved in the FTC’s favor.
In the proposed amended complaint announced today, the FTC asked the court’s permission to name eight relief defendants who are not charged with participating in the I Works scheme but allegedly received ill-gotten gains from it that the FTC seeks to recover:  Johnson’s wife, Sharla Johnson; his parents, Kerry and Barbara Johnson; Orange Cat Investments LLC; Zibby LLC; Zibby Flight Service LLC; KV Electric Inc.; and the KB Family Limited Partnership.
Sharla Johnson allegedly received at least $5 million in funds and property, including a multi-million-dollar, 20,000-square-foot mansion in St. George, Utah, subsequently used to secure a $3.1 million home equity line of credit.
Kerry Johnson allegedly received at least $1.6 million in funds and property, including about $1 million worth of silver coins and bars.
Barbara Johnson allegedly received at least $77,500.
Orange Cat Investments allegedly received at least $5.1 million in funds and assets.
Zibby allegedly received more than $13 million.
Zibby Flight Service allegedly received at least $2.5 million.
KV Electric allegedly received more than $800,000.
KB Family Limited Partnership allegedly received at least $1.75 million in funds and property, including some of the proceeds of the $3.1 million line of credit secured by the Johnson residence.”

And again.

“SALT LAKE CITY — The Federal Trade Commission is asking a federal judge in Nevada to rule against St. George businessman Jeremy Johnson in a 3-year-old fraud case.

The FTC, in a motion filed Wednesday in U.S. District Court in Las Vegas, seeks summary judgment and a final order against Johnson and his iWorks enterprise, the Deseret News reported.
Johnson is accused of tricking online customers into spending $281 million on bogus Internet services.
The FTC claims iWorks lured customers into “trial” memberships for bogus moneymaking opportunities and government grants for personal expenses. Those who signed up for the “risk-free” offers were repeatedly charged monthly fees and enrolled in other programs without their knowledge.
“At the height of the iWorks scam, defendants were making 150,000 sales per week. Defendant Jeremy Johnson received no less than $52 million from this well-oiled fraud machine,” the FTC complaint adds.”

And again.

“SALT LAKE CITY – A southern Utah businessman at the center of a scandal involving the new Utah attorney general was in court Wednesday on federal fraud charges.

Prosecutors say Jeremy Johnson, through his web company I Works, fooled customers into giving him credit card information to pay shipping for a free compact disc, then I Works took those cards and started charging customers monthly.
Banks got so many demands for money back, they blacklisted I Works and Jeremy Johnson with a process called MATCH, or Member Alert to Control High Risk Merchants.
Prosecutors say that instead of fixing their business practices, the defendants used friends and family names to create dummy corporations, and continued fraudulent practices.
Johnson, I Works, and his associates Ryan Riddle, Scott Leavitt, Bryce Payne and Loyd Johnston now face dozens of charges, including conspiracy, bank fraud, wire fraud and money laundering.
Many of those charges are felonies and, if convicted, the men could be behind bars for years and face millions of dollars in fines.
Johnson gained attention in Utah after alleging that Utah Attorney General John Swallow helped broker a deal that attempted to bribe top lawmakers to make those fraud charges go away. Swallow denies any illegal activities.”

And again.

“Swallow Involved in Attempt to Bring Ward to Utah
Utah AG had served on same anti-porn board as the U.S. attorney
By Stephen Dark Posted // October 23,2013 –

At a Jan. 11, 2013, federal court hearing before Judge David Nuffer, embattled St. George businessman Jeremy Johnson told the court that he would plead guilty to bank fraud and money laundering, as long as U.S Attorney Brent Ward agreed to not prosecute individuals on several lists of family, friends and associates that he had presented to the court.
Among those people on a list Johnson had e-mailed in October 2012 to his then-attorney was recently elected Utah Attorney General John Swallow.”

And again.

“Man accused in nationwide scam lost millions at Las Vegas casinos, officials say
By Steve Green
Published Thursday, Feb. 10, 2011 | 12:51 p.m.
Updated Friday, Feb. 11, 2011 | 9:30 a.m.
Sun Archives

A Utah man implicated in a $275 million scam victimizing consumers nationwide gambled away and lost millions of dollars at Las Vegas casinos and by playing Internet poker, investigators say.
Documents newly filed in Las Vegas federal court by the Federal Trade Commission allege Jeremy Johnson of St. George, Utah, gambled away some of his money even after he was ordered by the FTC to preserve his assets because he had been targeted in an FTC investigation.
The FTC says Johnson and his companies scammed consumers out of $275 million by luring them into obtaining trial memberships for bogus services and then repeatedly charging their credit and debit cards monthly fees for the worthless services. Johnson’s attorneys deny these allegations.
The documents about Johnson’s gambling were filed in advance of a hearing in which government attorneys are trying to extend a temporary order freezing the assets of Johnson and scores of associated companies.
By freezing the assets, the government can try to seize and liquidate them in order to make restitution to the alleged victims.
A court-appointed receiver company that has been sorting through the assets of Johnson and his companies reported to the court this week that Johnson’s I Works company and related companies generated $332 million since 2000 in revenue related to their Internet businesses.
Of that amount, “$59 million was dissipated by supporting lavish lifestyles and investments in real properties, aircraft, vehicles, businesses, brokerage trading accounts, precious metals and was distributed or loaned to family, friends and related entities,” the receiver reported.
While sustaining millions of dollars in gambling losses, Johnson, known in Utah as a philanthropist, through I Works over the years gave $1.5 million to the Church of Jesus Christ of Latter-day Saints and its Little Valley 5th Ward in St. George, the receiver reported.
Samuel Jacobson, an FTC investigator, said in a court declaration Wednesday that Johnson has been a frequent gambler at Wynn Las Vegas, the MGM Grand, other MGM Resorts International properties and also gambled extensively at the online site fulltiltpoker.com.
Tiltware LLC, owner of the website, last month provided information to the FTC showing Johnson played there using the name ginette22.
Between April and October 2010, Johnson lost $1.536 million on the poker site, Jacobson said. Wynn Las Vegas, in the meantime, reported to the FTC that between June 17, 2006, and Jan. 21, 2011, Johnson lost $1.35 million gambling there, Jacobson said. That includes some $836,000 lost after Johnson received an asset preservation letter from the FTC on Feb. 22, 2010, Jacobson reported.”

And about John Swallow.

“Meet The Utah Attorney General Who Just Resigned Over Fraud Allegations
By Nicole Flatow on November 22, 2013
CREDIT: Associated Press

On Thursday afternoon, Utah Attorney General John Swallow (R) announced he would step down, amidst allegations that he violated campaign finance laws, breached attorney-client privilege, and bribed federal officials.
Swallow has been under investigation by the state elections office, two county attorneys, the Utah House, the FBI, the Department of Justice and the Utah State Bar. He has denied all allegations, but said he was stepping down because he could no longer tolerate the toll of the investigations. But sources told the Deseret News that he agreed to step down in exchange for dropping criminal charges.”

And again.

“Gov. names Sean Reyes as Utah attorney general
December 23, 2013 12:31 pm  •  Associated Press
SALT LAKE CITY — Salt Lake City-area attorney Sean Reyes will be Utah’s new attorney general, Gov. Gary Herbert announced Monday morning.

Reyes replaces John Swallow, who announced in November that was resigning after nearly 11 months in office, citing the toll of multiple investigations.
Swallow has been accused of setting up a bribe and offering several businessmen protection in return for favors, among other accusations. He has denied all allegations and said he will work as a private citizen to clear his name.”

 

The Fraud College.

“LDS Church joins effort to stop fraud, scams in Utah
Decision to have official at prevention event boosts hope affinity fraud will be addressed.
By Tom Harvey
The Salt Lake Tribune
First Published Jan 21 2012 01:01 am • Last Updated Apr 05 2012 11:37 pm

Concerned about the tidal wave of fraud sweeping over Utah that has reached an estimated $2 billion in purported scams, The Church of Jesus Christ of Latter-day Saints is stepping up to participate this year in an event that aims to erect a protective wall.
After skipping the first Fraud College conference in 2010, the church, whose members have been battered as victims of fraud, is sending Managing Director of Public Affairs Michael Otterson to speak at the Feb. 15 conference.”

More fraud.

“Arrested » Close associate of Shurtleff and Swallow is slapped with six felony counts.
By Robert Gehrke
The Salt Lake Tribune
First Published Dec 12 2013 03:54 pm • Last Updated Dec 13 2013 04:31 pm

In 2010, John Swallow, then a chief deputy attorney general, got a warning from a colleague to steer clear of Tim Lawson, a friend and “fixer” for then-Attorney General Mark Shurtleff.
“Lawson is the guy that is going to bring down the house of cards,” Swallow’s co-deputy, Kirk Torgensen, warned in an email.
That prognosis may prove prophetic.
On Thursday, prosecutors slapped Lawson with six felony counts, the first charges stemming from a months-long investigation into alleged misconduct by Swallow, Shurtleff and others.
The charges, filed in 3rd District Court by Salt Lake County District Attorney Sim Gill and Davis County Attorney Troy Rawlings, accuse Lawson of evading taxes, retaliating against witnesses, obstructing justice and a pattern of unlawful activity.
The FBI and the Utah Department of Public Safety arrested Lawson on Thursday afternoon and booked him into the Utah County Jail. Investigators also executed a search warrant at Lawson’s Provo home.
Two charges — the pattern of unlawful activity and one tax violation count — carry potential prison terms of 15 years. The other four have sentences of up to five years each. Lawson’s initial bail was set at $250,000.
Court documents allege Lawson attempted to intimidate victims of Marc Sessions Jenson, a businessman who is charged with defrauding investors as part of the $3.5 billion Mount Holly ski and golf resort planned near Beaver.
Lawson is also charged with threatening Utah businessman Darl McBride, who has said that Lawson threatened to have him beaten up if he didn’t take down a website critical of Mark Robbins. McBride said Robbins, a Jenson business associate, owed him money.
Shurtleff later met with McBride and offered to get him $2 million — money he said he would get from Jenson — if McBride would take down the site.”

 

There were hundreds of cases in Utah in the last few years, but we are going to detail only the case involving Sterling D. Allan and Neldon Johnson. So let’s turn our attention to Neldon Johnson and International Automated Systems, Inc. What kind of company are they, and have they been involved in any trouble in the past? We will start with some brief comments about the company itself.

International Automated Systems, Inc was incorporated in the State of Utah on September 26, 1986.
International Automated Systems, Inc. (IAS or IAUS) went public in 1988.

First a clarifying comment. All states have security laws that apply only to that state. These laws are separate from the one governing the United States Securities and Exchange Commission (SEC). In Utah this department is the Utah Division of Securities, a part of the Utah Department of Commerce. To be free from having to file a prospectus, quarter and yearly reports, and other required documents with Utah and the SEC there must be an exemption for the company. It is a company’s responsibility to know the laws relating to securities at both the state and federal level if they are going to sell stock and securities. Some exemptions are self executing others require documents to be filed at both the state and/or federal levels. If an exemption or other document needs to be filed it is up to the company to file the proper documents. Failing to do so can result in civil and criminal charges with heavy fines and/or jail time.

The first record we have of International Automated Systems, Inc., and their trouble with securities was when they failed to file the required Utah documents with the Utah Division of Securities after they started selling stock. In these three documents from the Utah Division of Securities we learn about the earliest troubles of International Automated Systems, Inc.

The first sign of trouble was on January 31, 1989 when two documents were sent from the Utah Division of Securities to Neldon Johnson. Document one was a “Stipulation and Consent to Order,” in which Neldon Johnson admitted to all of the facts and charges in Document No. 2.

Here is the full text of document No. 1.

8810001_Page_1 8810001_Page_2 8810001_Page_3

Document No. 2, “Findings of Fact, Conclusions of Law and Order” was a notice sent to Neldon Johnson and International Automated Systems, Inc., after a person wanting to buy the company’s stock contacted the Utah Division of Securities to see if the stocks had been registered or were exempt.

Here is the full text of Document No. 2.

8810002_Page_18810002_Page_2 8810002_Page_3 8810002_Page_4 8810002_Page_5
As you can see Neldon Johnson was found guilty of violating the Utah securities laws and had to offer rescission to all purchasers of the units sold. He also had to pay a fine of $1,500.

The next record we have of Neldon Johnson being in hot water with the Utah Division of Securities was in a report issued from the Utah Securities Advisory Board, dated November 20, 1991. This was in response to a request for exemption from Neldon Johnson and Automated Systems, Inc. In this report they were told that they were NOT exempt from all of the filing requirements.

Here is the full text of Document No. 3.

011202101_Page_1 011202101_Page_2 011202101_Page_3 011202101_Page_4 011202101_Page_5 011202101_Page_6 011202101_Page_7

Highlights of the above document include –

“The Division notified Applicant in the Notice that the application for or notice of exemption from registration was incomplete, that failure to complete the application for or notice of exemption from registration, notwithstanding the Notice, constituted willful violation of S61-1-14(2) em) of the Act and Rule 177-14-2m of the Division, and that the Division would deny the use of the exemption under S61-1-14(2) (m) of the Act, unless Applicant within thirty (30) days from the date the Notice was mailed, either (1) provided the requested documents and information to complete its application for or notice of exemption from registration, (2) withdrew its application for or notice of exemption from registration, or (3) requested a hearing…

Conclusions of Law

10. Applicant’s failure to complete the application for or notice of exemption from registration filed with the Division renders such application or notice materially incomplete or causes such application or notice to contain statements that are, in the light of the circumstances under which they were made, false or misleading with respect to any material fact.

11. Applicant’s failure to complete the application for or notice of exemption from registration filed with the Division constitutes a willful violation of S61-1-14(2) (m) of the Act and Rule 177-14-2m of the Division.

“IT IS HEREBY ORDERED the application for or notice of exemption from registration pursuant to 561-1-14(2) (m) of the Utah uniform securities Act, Utah Code Annotated, (1953, as amended), and Rule 177-14-2 of the Division of Securities, filed by Applicant, International Automated Systems, Inc., be and hereby is, denied, and

IT IS FURTHER ORDERED that such denial is to be effective immediately upon execution of the Order by the Director of the Division of Securities of the Department of Commerce, and

IT IS FURTHER ORDERED that Applicant be required to pay one hundred fifty dollars ($150) to partially offset the costs to conclude the administrative action.”

Notwithstanding the order of the Utah Securities Advisory Board, on November 20, 1991 we don’t find any record of documents filed with the Utah Division of Securities, by Neldon Johnson until we read an order involving U-Check, Inc., another of Neldon Johnson’s companies, dated April 26, 1999, for the same offenses, failure to register securities, and file required documents.

Then on June 23, 1999, about one month later, Neldon Johnson and U-Check, Inc. withdrew their registration request with Utah.

Between the problems Neldon Johnson was having with the Utah Division of Securities from January 31, 1989 to June 23, 1999, and even though Neldon Johnson was notified that he was NOT exempt from Utah registration on January 31, 1989, Neldon Johnson continued to sell stock in his company without registering them with Utah. Neldon Johnson and International Automated Systems, Inc. did though, start filing documents with the US SEC (SEC). This became clear in the class action lawsuit filed on July 3, 1996, by Sefarty. After the filing of the class action lawsuit the SEC started a formal investigation into Neldon Johnson and International Automated Systems, Inc. one month later in August of that same year, 1996.

 SEC1

One reporting company lists these documents filed with the SEC in 1987-1989.

 SEC2

Above are the first electronically filed documents with the SEC for International Automated Systems, Inc. But remember Edgar only has records going back to 1994.

On June 24, 1996 International Automated Systems, Inc. filed five documents, three of them were 10Qs and one 10K all for the years 1995/6, with one 8K for 1996. This was just a few days before the class action court case filed by Serfaty on July 3, 1996. It is very possible, and more likely than not, that Neldon Johnson and International Automated Systems, Inc. knew about the pending court case and that is why these 10Qs and 10K documents were filed.

You can download an original copy of all IAUS EDGAR SEC Documents here.

Here are some highlights of the SEC 8-K Document –

Item 2. Acquisition or Disposition of Assets
See item 5 below.
Item 5. Other Events.
Recently the Company determined that it had the responsibility to file periodic reports under Section 15(d) of the Securities Exchange Act of 1934. The Company initially filed a registration statement on Form S-18 with registration number 33-16531-D registering its securities. The registration statement was declared effective on April 13, 1988. The Company sold approximately 200,000 units at the public offering price of $.50 per unit. In the offering the Company realized approximately $100,000 in proceeds. The Form SR was filed and on November 18, 1988, a report on Form 10-K was filed by the Registrant which report was for the period ended June 30, 1988. Since that time no periodic reports were filed. Management was informed that it had no requirement to file the reports and proceeded under that erroneous assumption. Registrant believes it is a small business issuer.

[We find the truth of the above statement highly unlikely. Stocks registrations and No. 424 & S-18 reports had been filed with the SEC over the years, and all of this time we are to believe they did not know they had to file periodic reports?]

Here are some highlights of the SEC 10QSB document –

As of December 31, 1995, registrant had 9,006,600 shares of common stock, no par value per share, issued and outstanding.

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As of December 31, 1995, the ratio of current assets to current liabilities was approximately one to two. As of June 30, 1995, the Company was technically insolvent because liabilities exceeded assets.

[No one buying stock knew this because the company did not file any of the required reports.]

Of the 5 documents filed with the SEC on June 24, 1996 this is one of the two most important.

Here are some highlights –

Recent Developments.
Registrant intends to acquire technology from its president relating to a different and more efficient method of transmitting information and data using transmission waves, technology based on data compression on compact disks, and other technology. To acquire the technology Registrant will issue 6,000,0000 shares of common stock, and 1,000,000 shares of preferred stock. Each share of the common stock has one vote and, it is anticipated, each share of the Series A preferred stock to be issued will have ten votes per share and the preferred will vote with the common stock on all matters. The technology is called digital wave modulation, which if proven and implemented, would increase significantly the amount of information which can be transmitted using different mediums. The digital wave modulation technology is under development and the commercial feasibility has not been demonstrated. Registrant believes that it has many competitors in the communications, information and data transfer industries which have greater capital resources, more experienced personnel, and technology which is more established and accepted in the market place.

The Company’s business if its technological development is successful will require the Company to enter new fields of endeavor and even new industries. If the products are successfully developed so that commercialization is achieved the Company will enter new industries and new geographic markets. The Company has not adopted a definitive plan establishing the order of product development or the priority it will follow in attempting to enter additional geographic locations. Entry into new markets will have risks and require significant capital resources which, if available, may not be available to the Company on acceptable terms. Success will be dependent on the judgment and skill of management and the success of the development of any new products.

The Company’s success depends, and is expected to continue to depend, to a large extent, upon the efforts and abilities of managerial employees, particularly Neldon Johnson, President of the Company. The loss of Mr. Johnson would have a material adverse effect on the Company. Presently the Company has no employment contract with Mr. Johnson. The Company’s products have inherent risks. The Company has no insurance to cover these risks. In particular the Company has no current plans to purchase product liability insurance. Thus, for these risks the Company alone must bear risks. It is anticipated that the Company will not be insured against all risks or potential losses which may arise from the Company’s activities because insurance for such risk is unavailable or because insurance premiums, in the judgment of management, would be too high in relation to the risk. If the Company experiences an uninsured loss or suffers liabilities, the Company’s operating funds would be reduced and may even be depleted causing financial difficulties for the Company.

Patents and Technology
The Company has one patent and in the transaction with its President will acquire rights to one additional patent as well as the acquisition of other technological rights. One patent granted in November 1988 deals with the self-service check out system. The patent pertains to an apparatus attached to a computer which has in its data base the weights and prices of all items sold. As the items are scanned checked the computer keeps a tally of the total weight. This total is compared to the weight as recorded from the scale under the receiving cart. The total weight of items scanned and placed in the cart as determined by the scale is compared to the computerized cumulative weight of the items by the computer. An error message is signalled if there is a discrepancy.

Mr. Johnson has in process four patents pending which he has agreed to transfer and assign to the Company in the transaction previously described, when and if the patents are granted. One patent pending is for the AFIM and the others pertain to the digital wave modulation technology. The Company has not sought or received an opinion from a qualified patent attorney regarding the strength of the patent or the patents pending and the ability of the Company to withstand any challenge to the patent or any future efforts by the Company to enforce the patent against others. Competitors may violate the Company’s patent rights. If the Company had to defend its patent or patents, it may lack the funds to sustain and support the patent litigation which may be costly and time consuming.

The Company believes that it has developed trade secrets and it has made efforts to safeguard and to secure the trade secrets. But there can be no assurance that these safeguards will enable the Company to prevent competitors from gaining knowledge of these trade secrets and using them to their advantage and to the detriment of the Company. The Company relies heavily on its proprietary technology in the development of its products. There can be no assurance that others may not develop technology which competes with the Company’s products and technology. The Company intends to take certain steps to protect its unpatented know-how. No assurance can be given that parties not associated with the Company will not gain access to such information. In addition, the Company has no trade marks for its products.

Neldon Johnson and International Automated Systems, Inc. have been involved in many lawsuits during the years. Let’s look at a few of them.

*******

2:96-cv-00583-TC Serfaty, et al v. Intl Auto Sys, et al filed 07/03/96 closed 07/19/99

Brief History showing the two different civil actions against Neldon Johnson and International Automated Systems, Inc. at the same time.

07/03/96 – Serfaty, Class Action Lawsuit filed.
08/14/96 – SEC started an investigation of Neldon Johnson and International Automated Systems, Inc.
09/24/98 – SEC filed their own separate civil action against Neldon Johnson and International Automated Systems, Inc.
07/19/99 – Serfaty, Lawsuit settled out of court.
07/19/99-01/13/05 – The SEC civil action against Neldon Johnson and International Automated Systems, Inc. continued, until 2005.

The Serfaty, et al lawsuit was a direct result of International Automated Systems, Inc. pumping up their stock price by issuing many reports and news briefs of their new technology called Digital Wave Modulation. The most damaging news reports stated that the company promised to provide and demonstrate a working prototype at the news conference and demonstration held on June 27, 1996. The company failed to demonstrate a device at this news conference, as a matter of fact to the best of our knowledge the company to this day has never demonstrated any device based on Digital Wave Modulation with the capabilities they were claiming in 1995-1996.

There were many unhappy people because the stock price dropped over 75% as a direct result of that failure. The lawsuit was originally filed as a class action, but class action status was denied by the court, so more people were added as plaintiffs.

This lawsuit concluded with Neldon Johnson and International Automated Systems, Inc. agreeing to pay the defendants, $170,631 for shareholder losses and associated legal fees. The $170,631 liability was accrued in the accompanying financial statements as of June 30, 1999.

According to the Order of Dismissal with Prejudice entered on July 19, 1999, all claims, defenses, and causes of action asserted in the action by Plaintiffs as against Defendants, and all related affirmative defenses, were dismissed with prejudice.

*******

The next major lawsuit was SEC v. Intl Auto Sys, et al.

2:98-cv-00687-DB SEC v. Intl Auto Sys, et al filed 09/23/98 closed 01/13/05

The world first became aware of this lawsuit when the SEC filed the following notice in their documents and on their website.

SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15898 / September 24, 1998
S.E.C. v. International Automated Systems, Inc. et al., Docket No. 2:98CV-0687B (U.S.D.C., D.Ut.)

The Securities and Exchange Commission announced the filing of a Complaint in the United States District Court for the District of Utah, on September 23, 1998, seeking a permanent injunction, disgorgement, civil penalties and other relief against International Automated Systems, Inc. and Neldon P. Johnson. The complaint also names three of Neldon Johnson’s adult children, Donnel Robert Johnson, Randale Paul Johnson and Brenda Marie Smith, as relief defendants and seeks disgorgement from those individuals.

The Commission alleges that for approximately one year, from June 1995 through June 1996, IAS, a microcap issuer based in American Fork, Utah, whose stock is quoted on the OTC Bulletin Board, and Neldon Johnson, the company’s president, chairman and majority owner, issued a series of false press releases and published them in over 50 advertisements in Investors Business Daily and Barrons. It is further alleged that during this period, the price of the company’s stock rose from $3.50 to over $40 a share. The complaint alleges that the press releases claimed IAS had developed a new data transmission technology called Digital Wave Modulation (“DWM”) and related products which would revolutionize electronic communications. It is alleged the rise in the price of IAS stock correlates closely with publication of the advertisements themselves and activity on Internet bulletin boards generated by the advertisements. The complaint also alleges the price of IAS stock began to collapse the day after IAS failed to produce, at a heavily promoted June 27, 1996, press conference, a promised prototype of a 6,000,000 baud modem based on the DWM technology. On May 29, 1996, when IAS’ stock price peaked at $53.50 a share, the company’s market capitalization was nearly $1 billion.

The complaint further alleges that from July 1995 through June 1996, approximately 150,000 shares of IAS stock were sold from brokerage accounts maintained by Neldon Johnson, Donnel Johnson, Randale Johnson and Brenda Smith, for gross proceeds approximately $3 million. The proceeds from these stock sales were distributed, directly or indirectly, to Neldon Johnson, IAS, Donnel Johnson, Randale Johnson and Smith, and possibly others.

The Complaint alleges that, by this conduct, IAS and Neldon Johnson violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
http://www.sec.gov/litigation/litreleases/lr15898.htm

This lawsuit concluded with these actions:

09-27-2004 – Consent of Randale Paul Johnson to Final Judgment (kvs) (Entered: 09/28/2004)
09-27-2004 – Consent of Intl Auto Sys to Final Judgment (kvs) (Entered: 09/28/2004)
09-27-2004 – Consent of Neldon P. Johnson to Final Judgment (kvs) (Entered: 09/28/2004)
10-15-2004 – Stipulation by SEC, Brenda Marie Smith to dismiss cmp against dft Brenda Marie Smith w/ prejudice, w/ each pty to bear its own costs and atty’s fees (asp) (Entered: 10/18/2004)
10-18-2004 – Judgment for SEC against Intl Auto Sys signed by DB, 10/18/04 cc: atty [EOD Date 10/19/04] (asp) (Entered: 10/19/2004)
10-20-2004 – Order granting stipulation motion to dismiss cmp against dft Brenda Marie Smith w/ prejudice, w/ each pty to bear its own costs and atty’s fees signed by Chief Judge Dee Benson , 10/20/04 cc:atty (asp) (Entered: 10/21/2004)
10-25-2004 – Motion by SEC for payment of funds to the SEC (kvs) (Entered: 10/26/2004)
10-25-2004 – Memorandum by SEC in support of motion for payment of funds to the SEC (kvs) (Entered: 10/27/2004)
10-27-2004 – Consent to entry of final judgment by Donnel Robert Johnson (kvs) (Entered: 10/28/2004)
10-28-2004 – Final Judgment for SEC against Donnel Robert Johnson (See judgment for details) signed by Dee Benson, 10/28/04 cc: atty [EOD Date 10/29/04] (kvs) (Entered: 10/29/2004)
11-08-2004 – Order granting motion for payment of funds to the SEC (See order for details) signed by Chief Judge Dee Benson , 10/30/04 cc:atty (kvs) (Entered: 11/09/2004)
01-13-2005 – Case closed per order no. 66 (kvs) (Entered: 01/14/2005)
01-13-2005 – Judgment for SEC against Neldon P. Johnson (See roder for details) signed by Dee Benson, 1/12/05 cc: atty [EOD Date 1/14/05] (kvs) Modified on 01/18/2005 (Entered: 01/14/2005)
01-13-2005 – Judgment for SEC against Randale Paul Johnson (See judgment for details)signed by Dee Benson, 1/12/05 cc: atty [EOD Date 1/14/05] (kvs) (Entered: 01/14/2005)

FINAL JUDGMENT AS TO NELDON P. JOHNSON
The Securities and Exchange Commission (the “Commission”) having filed a Complaint and Defendant Neldon P. Johnson (“Defendant”) having entered a general appearance; consented to the Court’s jurisdiction over Defendant and the subject matter of this action; consented to entry of this Final Judgment without admitting or denying the allegations of the Complaint (except as to jurisdiction); waived findings of fact and conclusions of law; and waived any right to appeal from this Final Judgment:

I.

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant and Defendant’s officers, directors, agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice of this Final Judgment by personal service or otherwise are permanently restrained and enjoined from violating, directly or indirectly, Section lOeb) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule IOb-5 promulgated thereunder 1 [17 C.F .R. § 240.1 Ob-5], by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security:
(a) to employ any device, scheme, or artifice to defraud;
(b) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
(c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

II.

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant and Defendant’s officers, directors, agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice of this Final Judgment by personal service or otherwise are permanently restrained and enjoined from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)] in the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly:
(a) to employ any device, scheme, or artifice to defraud;
(b) to obtain money or property by means of any untrue statement of a material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or
(c) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.

III.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that based on Defendant’s sworn representations in his Statement of Financial Condition dated January 7, 2004, and other documents and testimony submitted to the Commission, the Court orders Defendant to disgorge $1,326,445.75 representing profits gained as a result of the conduct alleged in the Complaint together with $1,210,734.76 in prejudgment interest thereon, but waives payment of that amount based on the Defendant’s sworn representations in his Statement of Financial Condition. The Court is not ordering Defendant to pay a civil penalty based on his sworn representations in his Statement of Financial Condition.

Defendant further acknowledges that the Court’s determination to waive payment of the ordered disgorgement and not to impose a civil penalty is contingent upon the accuracy and completeness of Defendant’s Statement of Financial Condition. If at any time following the entry of this Final Judgment the Commission obtains information indicating that Defendant’s representations to the Commission concerning his assets, income, liabilities, or net worth were fraudulent, misleading, inaccurate, or incomplete in any material respect as of the time such representations were made, the Commission may, at its sole discretion and without prior notice to Defendant, petition the Court for an order requiring Defendant to pay the unpaid portion of the disgorgement, pre-judgment and post-judgment interest thereon, and the maximum civil penalty allowable under the law. In connection with any such petition, the only issue shall be whether the financial information provided by Defendant was fraudulent, misleading, inaccurate, or incomplete in any material respect as of the time such representations were made. In its petition, the Commission may move this Court to consider all available remedies, including, but not limited to, ordering Defendant to pay funds or assets, directing the forfeiture of any assets, or sanctions for contempt of this Final Judgment. The Commission may also request additional discovery. Defendant may not, by way of defense to such petition: (1) challenge the validity of this Consent or the Final Judgment; (2) contest the allegations in the Complaint filed by the Commission; (3) assert that payment of a civil penalty should not be ordered; (4) contest the imposition of the maximum civil penalty allowable under the law; or (5) assert any defense to liability or remedy, including, but not limited to, any statute of limitations defense.

IV.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is incorporated herein with the same force and effect as if fully set forth herein, and that Defendant shall comply with all of the undertakings and agreements set forth therein.

V.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.

The mind cannot wrap its head around the fact that the court said,

“the Court orders Defendant to disgorge $1,326,445.75 representing profits gained as a result of the conduct alleged in the Complaint together with $1,210,734.76 in prejudgment interest thereon, but waives payment of that amount based on the Defendant’s sworn representations in his Statement of Financial Condition. The Court is not ordering Defendant to pay a civil penalty based on his sworn representations in his Statement of Financial Condition.”

When you look at all of the money waived for the three defendants —
NELDON P. JOHNSON,
DONNEL JOHNSON
RANDALE JOHNSON

disgorgement – $ 1, 657, 456
prejudgement interest – $ 1,357,330
fines 00.00 usually thousands or tens of thousands each
About Total $3,014,786 plus fines

All based on secret financial statements filed with the court.

Why didn’t the court provide for a payment schedule, based on the future income and assets of the Johnson family and International Automated Systems, Inc.? How many thousands of people are paying for fines on a monthly basis in the State of Utah now, based on their ability to pay, we wonder? We believe no person and company should ever be allowed off the hook like this. Especially when Neldon P. Johnson and the company continued to operate as before without interruption. Where is the deterrent to prevent more criminal activity? And as you can see later in this article, no lessons were learned.

IAUS stock is still being traded daily even though no required SEC documents including quarterly reports have been filed for over two years. The last document in the EDGAR database is NT10-K – Notification of inability to timely file Form 10-K, dated 2011-09-28. The parties, Neldon P. Johnson, family, and friends, just started new additional companies, with a new project, solar energy, this time.

*******

Another court case was this one.

2:99-cv-00517-PGC Intl Auto Sys v. Optimal Robotics, et al filed 07/02/99 closed 01/29/04

“Optimal Robotics Responds to Allegations by International Automated Systems
MONTREAL, Jan. 10 /PRNewswire/ — Optimal Robotics Corp. (Nasdaq: OPMR) today issued the following statement in regard to the civil action complaint  filed by International Automated Systems, Inc. (“IAS”) on July 2, 1999 and in  response to IAS’ press release of January 7, 2000.

In each of 1995 and 1996, Optimal Robotics received lawyers’  correspondence from IAS alleging patent infringement.  IAS’ claims were  reviewed by Optimal Robotics with patent counsel and, as disclosed in  subsequent public filings by Optimal Robotics, Optimal Robotics maintains that the allegations are without merit.  Optimal Robotics is vigorously defending  against the claim.

Optimal Robotics is puzzled by IAS’ press release of January 7, 2000, as  it comes more than six months after the filing of its complaint against  Optimal Robotics and nearly three months after Optimal Robotics’ answer to  such complaint on October 22, 1999.”

“Optimal Robotics Announces Settlement Agreement with International Automated Systems, Inc.
January 28, 2004 07:23 AM Eastern Standard Time
MONTREAL–(BUSINESS WIRE)–Jan. 28, 2004–Optimal Robotics Corp. (NASDAQ: OPMR), today announced that it has entered into a settlement agreement with International Automated Systems, Inc. (IAS), which brings to a close the patent lawsuit between the parties. In accordance with the agreement, IAS will receive a sum that is not considered to be material to Optimal.

Other key provisions of the settlement are as follows:
— IAS will dismiss all of its claims as to all defendants and Optimal will dismiss its counterclaim against IAS.
— IAS will assign to Optimal all of its rights in the patent, which the defendants were alleged to have infringed and Optimal will grant back to IAS a royalty-free, non-exclusive, non-transferable license under the patent, without the right to sub-license.
The settlement announced today is subject to the approval by the United States District Court for the District of Utah.”

*******

2:06-cv-00115-DB International Automated Systems v. IBM et al filed 02/07/06 closed 01/10/08
2:06-cv-00114-DB International Automated Systems v. Microsoft filed 02/07/06 closed 08/31/06
2:06-cv-00613-DB UPEK v. International Automated Systems filed 07/26/06 closed 03/28/07

These three lawsuits were connected to Neldon P. Johnson’s claims that his fingerprint reader patent was unusual, but when he started to play with the big boys he found out real quick that just because you can obtain a patent does not mean it is valid in all cases.

Neldon P. Johnson lost all three lawsuits and even had to pay some of the lawyer fees of UPEK, Inc.

*******

There were other lawsuits, but you get the picture. Obtain a patent or a patent pending, than file lawsuits with other companies using the same type of technology.  Sometimes a large company will pay a few thousand dollars to save the costs of a jury trial. This can be profitable especially when Neldon P. Johnson was only using money gained in selling company stock, and pumping the OTC stock.

In a later SEC filing Neldon P. Johnson claimed that International Automated Systems, Inc. had not earned a profit in over 15 years, and actually was in the hole over $10,000.000.

All of which now, after a little history, brings us to the current troubles of Neldon P. Johnson with the Sterling Allan connection.

On 29 July 2005 Sterling created this webpage for International Automated Systems, Inc. (IAS).

IAS-01

By 11 August 2005 Sterling had changed the page to this.

IAS-02

Sterling composed a page on August 2, 2005, “IAUS Pushing Solar to Within Competitive Range of Grid Power.” This is what the top and bottom of that page looked like.

IAS-03 IAS-04

 What is of interest to us is the comments at the bottom of the page. Remember these comments are about the two civil lawsuits, the class action and the SEC —

  • The class action lawsuit had been resolved in 1996. All of the documents relating to this lawsuit were available to the public. This was resolved with Neldon Johnson paying the people over $100,000 and their lawyer fees.
  • The other item was the SEC lawsuit that was settled in 2004/2005. These documents were publicly available during 2004 and after 01/14/2005 when the last document was posted. Sterling’s article was posted 08/02/2005, seven months after the last SEC documents were posted.

Not only were the court documents available but there were many publications about the settlements, as for instance these —

FIRM’S SHARES DIP 75% AFTER VOW FALLS THROUGH

From the FORM 10KSB (Annual Report (Small Business Issuers))
Filed 10/13/05 for the Period Ending 06/30/05

ITEM 3. LEGAL PROCEEDINGS
On September 23, 1998, the Company was notified by the U.S. Securities and Exchange Commission (SEC) of formal action against the Company, its president, and members of his family for possible securities violations. The action stems from alleged material misrepresentations by the Company and the Company’s employees regarding new technology developed by the Company. The Company reached a settlement agreement with the SEC in the amount of $100,000 which has been finalized, paid, and signed by the Court as of January 2005.

Clearly Sterling did not read the SEC filing. but what was more damming was the text of the settlements with the SEC.

On Jan. 18, 2006 we first learn of Sterling forming a partnership with IAUS in the article “    “IAUS offering turbo charged solar tax credit benefit program.” In this article Sterling states:

“Full Disclosure: Sterling D. Allan, the author of this PESN story, has an agreement with IAUS to receive a referral fee for individuals who sign up for this program.”

Now this is very important as you will see because Neldon Johnson is currently being investigated by the IRS. Many people think selling tax benefits is one of the only reasons for the company’s existence, at this time. That and buying and selling stock of course.

The statement about the IRS investigation can be found in the latest Deseret News article:

Are Utahn’s solar projects just pie in the sky?

This also the article where we first learn of Sterling’s partnership.

Now let’s look at a couple of things. When Sterling posted his two latest articles about International Automated Systems, Inc. it was on December 22, 2013 and December 23, 2013. Included in one article was a link to a video Sterling put up on YouTube called “IAUS Solar Boondogle.” If you watch this short video you will listen to Sterling’s scathing comments about the company.  If Sterling takes it down let us know and we will host it ourselves.

Here are some interesting comments from that video taken on April 13, 2009.

1:45 – People who are investing in this stuff are wasting their money.
3:00 – I have been trying to get in here for 3 years.
[This means that Sterling says he has been trying to get a look at the operation from the time he signed on as a partner in 2006.]
8:15 – These guys do not belong in our top 100. They are going to be off of our top 100 list.
[Now look at where this company was and still is on Sterling’s top 100 list. Did Sterling say this just for the benefit of those with him? One of whom was his dad? The company is No. 10 and 11 on Sterling’s top 20 and top 100 list, still to this day.]

 Sterling shows  International Automated Systems, Inc. as No. 11 on his top 20 of the top 100. Current as of this posting.

After Sterling had been promoting his partner’s company for two years without doing any investigating, someone really wanted to get the people’s attention about the facts relating to this company. This person started putting up notices on the main page “Directory:IAS.”

Even after this, “in your face,” heads up, all Sterling did was remove all of the statements he did not like and that he thought would hurt his chances of making more money working with these people.  This person would put the notices up, then Sterling would take them down, then the person would put them back up, until it seems Sterling banned the person from posting on the website. This is telling because Sterling tells everyone they should post relevant material on any story there on this wiki site. We guess it is OK to post something unless it is going to hurt Sterling’s chances of making some money with his partners. Here is one screen shot. Notice the date – March 11, 2007

IAS-05

Sterling says this on his homepage.

“Welcome to PESWiki, The community-built resource that focuses on alternative, clean, practical, renewable energy solutions. As of Thursday, December 26, 2013, there are 4,583 articles on free and renewable energy that anyone can edit!”

Another of Sterling’s many false statements and deceptions on his websites.

Sterling finally made his visit to the operation site on April 13, 2009. After the onsite evaluation, Sterling continued to promote his partner’s company, International Automated Systems, Inc., so how did the website look after Sterling’s scathing comments in his video? On 2 June 2009, six weeks after his visit and on the same day Sterling made some other changes to the webpage. Did Sterling make any comments about his trip and what he saw? Or print any conclusions like what he said on the video? Not one word.

Sterling is and has been a partner with Neldon Johnson and International Automated Systems, Inc. since at least 2006 and Sterling, until his latest articles on December 22/23, 2013, refused to say or print anything negative about them. It is possible Sterling would not have said anything at all except that the newspaper article mentioned his website. Sterling seems to be worried over this latest turn of events, we will show you why that might be so, later.

How much trouble is Neldon Johnson and International Automated Systems, Inc. in today? Let the newspaper article speak for us.

http://www.deseretnews.com/article/865592845/Are-Utahns-solar-projects-just-pie-in-the-sky-Claims-raise-questions-in-Millard-County-elsewhere.html?pg=all

Here are some of the highlights of that article –

“Are Utahn’s solar projects just pie in the sky? Claims raise questions in Millard County, elsewhere
By Amy Joi O’Donoghue, Deseret News
Published: Saturday, Dec. 21 2013 4:50 p.m. MST
Updated: Saturday, Dec. 21 2013 10:06 p.m. MST
DELTA — For more than a decade, a Utah company has been touting its “revolutionary” low-cost solar technology, with projects announced in four states. But those four projects have yet to generate any significant power, despite detailed announcements and news stories about planned multimillion-dollar solar plants.

The failure to produce any significant solar energy has several people asking questions about the company’s proposals and the technology itself, and it has some officials wondering if the man behind the effort is trying to generate interest — and money — at the expense of a community’s trust.

In Millard County, officials there say they are frustrated over their dealings with Neldon Johnson and his company International Automated Systems because of his failure to obtain necessary permits and licenses associated with his solar project, despite demanding them since 2011.

“(Johnson) has really been quite hostile with us,” said Millard County Commissioner Daron Smith. The claims of a power-producing solar installation generate buzz about its investment potential, he said, but the claims leave county officials confused about what is happening in their own community…

In the past, IAUS and Johnson have caught the attention of federal regulatory officials because of claims he made about other kinds of technology that never came to fruition. A complaint by the Securities and Exchange Commission was filed against him and IAUS in 1998, and a federal court order bars him from violating any section of the law that deals with securities fraud or any type of fraud or deceit.

Even Johnson agrees that none of the projects have generated any major power over the years — beyond a demonstration project in 2006 in Mesquite, Nev., that he said was successful.

Greg Shepard, RaPower3’s chief director of operations, is pictured with Johnson in 2006 as a participant in the IAUS solar lease program in an “exclusive” story released by Pure Energy Systems, a news and networking service promoting clean energy technologies…

In the Millard County project, officials said Johnson has three building permits but lacks the conditional use permit or business license associated with the smattering of solar towers his company erected on a patch of ground just less than five acres west of Hinckley, Smith said.

But in a June 8, 2011, violation issued by the Millard County Planning and Zoning Department, officials wrote that Johnson was using the company website of RaPower3 and “continuing to recruit investors and selling your product with your principal offices in Deseret, Utah, as well as holding a convention in Salt Lake City June 27-29. We require that you have a conditional use permit and a business license to continue to do business in Millard County…”

A second notice of violation was sent to Johnson Oct. 22, demanding paperwork be submitted to county officials or he could face civil and criminal penalties. An official with the county planning office said Johnson had not responded to the latest demand so the office was preparing to have him served…

The news releases claimed, among other things, that the machine could transmit 1.8 billion bytes of information per second and network with up to 1,000 computers at a time, according to the SEC filing in federal court in Salt Lake City.

During the 12-month period the news releases were going out, the SEC noted that stock of International Automated Systems rose from $3.50 a share to $40 a share.

The claims of Digital Wave Modulation’s abilities were simulated on a computer, and Johnson never “physically” built a machine or an operational prototype, the SEC said.

Johnson was allowed to settle the case with the SEC absent an admission of guilt. A payment of $1.3 million in profits gained from the alleged activity and $1.2 million in interest, which Johnson was ordered to pay to the court, was waived because of Johnson’s sworn statement of his financial assets, according to the judgment. The court documents don’t specify his “financial condition.”

Karen Martinez, an attorney on the case and now the regional director of the SEC for Utah, said an injunction was issued against Johnson warning him not to engage in any activity that would violate the anti-fraud section of federal law dealing with securities or engage in an act or practice that would “operate as fraud or deceit upon a person.”

Martinez said she could neither confirm nor deny if the SEC had taken up any probe of IAUS in connection with the solar pronouncements, which have come steadily throughout the years even as the SEC digital case was unfolding in federal court.

A Millard County official, however, told the Deseret News that an IRS criminal investigator has recently been to the county offices inquiring about the Hinckley project…”

It was because of this statement in the above article that Sterling published his own articles on December 22/23, 2013.

“Greg Shepard, RaPower3’s chief director of operations, is pictured with Johnson in 2006 as a participant in the IAUS solar lease program in an “exclusive” story released by Pure Energy Systems, a news and networking service promoting clean energy technologies…”

Is it possible that Sterling could get in trouble by posting articles like this?

There are a lot of people who believe like we do that “secondary actors” should be held accountable in cases of fraud and other similar types of activity.

In Part 2 we will look into this in more detail, and also look into whether Neldon Johnson and International Automated Systems, Inc. are abiding by the terms of their prior settlements with the SEC.

Your Friends,
January 10, 2014

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