College Finds Itself Snared in Heat-Pump Saga

A month after police charged a Ventura businessman with 47 felony counts in connection with marketing what he touted as an energy-saving heat pump, Ventura College installed one of his devices in its swimming pool.

A company run by Dennis M. Lee donated the electrical pump to the school in July and claimed it would heat the pool more cheaply than gas, college officials say. But last week, concerned about the controversy over Lee’s business and skeptical about the heat pump’s effectiveness, the college disconnected it.

“We had a feeling that there was not a savings derived,” said George Lanning, vice president of administrative services at Ventura College. He added that the school is still assessing the pump’s performance as a supplement to its gas heater.

Preliminary Hearing

The college’s involvement is the latest twist in the convoluted saga of Lee, who claims he will soon show followers how to produce household and industrial electricity at no operating cost. A preliminary hearing scheduled to begin next Monday in Ventura County Municipal Court is expected to shed more light on Lee’s claims.

The pump first came to the school’s attention via Wayne Phelps, a business teacher for 23 years at Ventura College and an investor in Lee’s company. Phelps declined to elaborate on his business relationship with Lee.

Phelps blamed the pump’s less-than-successful trial on Lee’s business problems. The disintegration of the company left it without technicians to adjust the equipment, Phelps said.

Free Installation

Lanning said he agreed to the free installation at Phelps’ urging and despite his knowledge of Lee’s arrest.

“My reaction was, if it’s something they’re willing to donate and it’s saving money, why shouldn’t we try it?” Lanning said this week.

Then, several weeks ago, Lanning said he received a call from an Oregon man who wanted a full report on the “huge savings” that Ventura College supposedly had reaped after installing the heat pump. The man, a potential investor in Lee’s business, also wanted to fly to Ventura with colleagues to inspect the pump, Lanning said.

Lanning said he told the man that the college was merely testing the equipment and had not yet noticed any savings. He also called Lee’s organization, then known as Conserve Financial Services, and complained about what he called false representations. He said a heat-pump installer at the firm insisted that no such representations had been made.

The Ventura County district attorney’s office alleged in a criminal complaint last June that Lee misrepresented the machine’s energy-saving potential to investors and misappropriated more than $800,000 from 200 victims throughout the United States. The complaint charges Lee with nine counts of grand theft by fraudulent misrepresentation and 38 violations of California’s seller-assisted marketing plan law.

Lee, who sits in Ventura County Jail on $750,000 bail awaiting next week’s hearing, is a charismatic, 6-foot, 250-pound man who sports an evangelist’s drawl and the fervor to accompany it. He plans to represent himself in court and compares his plight to that of Preston Tucker, the flamboyant businessman who stood up to Detroit with his newfangled car and survived repeated scrapes with the law.

“I am not a guilty man; I’m an innocent person,” the 42-year-old Lee said in a recent interview. He also stands by his claims that “free electricity” is just a few months away if he can get out of jail and back to business.

Lee blames his troubles on a conspiracy between law enforcement and the big utility companies, which he says have joined forces to keep energy prices artificially high. In the videotapes he uses to recruit investors, Lee invokes God and patriotism and rails against the conglomerates that soak the public and defile the environment.

Lee has many devoted followers throughout the country. After his arrest in June, hundreds of supporters besieged the district attorney’s office, the Sheriff’s Department and local newspapers with telephone calls demanding an investigation and Lee’s release.

But not everyone wants Dennis Lee back on the street.

News of Lee’s arrest pleased Paula Selis, an assistant attorney general in Washington state.

“I’m really glad to hear they brought criminal charges against him. This guy has gotten around, and he’s affected a lot of people and made a lot of money,” said Selis, whose office in 1985 brought a civil action against Lee for violating Washington’s consumer protection act.

“He was doing business dishonestly. He told people it would save 70% to 80% on their energy bills,” Selis said.

Agreed to Judgment

Lee eventually agreed to a stipulated judgment of $31,000 but left the state without paying those fines, Selis added.

Bruce McDowell, the Ventura County Sheriff’s fraud investigator who researched the case, said in a court deposition that Lee had been arrested eight times between 1974 and 1979 in New Jersey for fraud, forgery and drug-related offenses. He was also arrested in New York in 1982 for passing bad checks, McDowell said.

In an interview, Lee acknowledged being arrested just once -- for writing a bad check in his youth. But he said he never has been convicted of any crime.

As to the current charges in Ventura County, he said: “We were supposed to fill out a stupid form and give people reports or something. I had absolutely no knowledge of the seller-assisted marketing program.”

Robert Meyers, the senior deputy district attorney who is prosecuting the case, said Lee failed to provide written information to buyers and potential clients as required by law.

In addition, the pumps simply “don’t operate at the level he claims they do,” Meyers said.

Claim Questioned

The district attorney’s office also questions Lee’s claim that he can produce free electricity by using the heat pump and another, as-yet-unbuilt unit.

“It’s against the law of physics,” Meyers said.

But not all experts question the scientific principles behind the heat pump.

Bob Chatenever, an instructor of heating, air conditioning and refrigeration at Oxnard College, said he has seen Lee’s videos and believes that the technology does work.

“From a physics and thermodynamics standpoint, everything he is saying is good,” Chatenever said.

Meyers said Lee did not sell the devices themselves, but sold for $20,000 to $100,000 the rights to manufacture and market the heat pumps.

The pump uses a compressor, condensing coils, a heat exchanger and a hot water storage tank. Freon circulates throughout the unit, and heat is generated as the Freon changes from a vapor to a liquid and back to a vapor again, according to those familiar with the pump.

Energy Revolution

Potential investors were told they could get in on the ground floor of an energy revolution and that the technology to provide “free electricity” would be available within months, according to court records.

For down payments of $2,000 to $5,000, they were promised kits teaching them how to construct and market the pump. They also were to receive a list of as many as 2,000 other manufacturers and distributors, allowing them to obtain extra parts and develop a market for their finished products, according to investigators.

No dealer network ever existed, Meyers claimed. Lee, however, said he has hidden the list to keep it out of the government’s hands.

After his arrest, Lee sold Conserve Financial to a company called United Community Services of America, which is headed by Lee’s wife, Allison David.

Lee said his wife is one of 13 shareholders of the company and that the transfer was necessary to protect the firm and its investors and allow them to operate while he is in jail.

But the office that housed Conserve on Portola Road in Ventura is now locked and empty. Telephone calls are fielded by an operator who answers for an organization called “We the People.”

Lee started the organization to protect inventors from the corporations supposedly out to steal their ideas, Meyers said. Calls from the Times to “We the People” were not returned.