Promised Power Plant Fuels Cries of Fraud

TIMES STAFF WRITER

It would be difficult to write a better spoof of the energy frenzy than the tale that has been unfolding here on a small Indian reservation.

There is the pony-tailed convicted felon who came to this remote Eastern Sierra town with bodyguards, secrecy agreements and plans for a power plant that would reap millions in annual profits for the local tribe, require no fuel and produce no pollution.

There was the prototype: two boxes connected to a car chassis suspended off the ground. When a switch was flipped, the tires turned.

There were the company code names for employees: Falcon, Caesar, Cleopatra.

But it's not a spoof. It's the story of QSFG Research and Development Inc. of North Las Vegas and founder Michael J. Marshall, who has left a trail of angry investors, laid-off employees and allegations of fraud from Nevada to Hawaii.

Marshall is a silver-haired 47-year-old who boasts, in language grandiose to the point of parody, that he has invented a new technology that will power everything from cars to electricity plants and transform the energy industry.

Centuries from now, he declared at a groundbreaking here, "They will be looking back at us, this day right here. We are initiating the start. We are lighting the match."

He sold company shares at $25,000 a pop, signed a contract to build a 250-megawatt power station on the Bishop Paiute reservation and promised investors an energy empire.

In a brief telephone interview Friday, Marshall dismissed all the doubts and allegations.

"I don't care what you write because the truth is the truth. I'm only two weeks away from having a prototype showing I can run power stations. It does work. It does run," insisted Marshall.

"Where the Past Ends and the World's Future Begins," proclaims the brightly lettered sign on his now-closed office-warehouse in a North Las Vegas industrial park.

It is a phrase he used before, in New York state, where Marshall spent 2 1/2 years in prison for fraud and larceny. According to Cortland County files, the case involved $25,000 he took from an elderly man to patent an invention--apparently a "fuel-less generator" for cars.

After his release from prison in 1998, Marshall wound up in Las Vegas, where he incorporated QSFG last year. He started off with plans to outfit cars and trucks with his technology. When California's energy crisis hit, he switched to power plants, becoming one of many offering unusual solutions to the state's electricity problem.

"We're certainly hearing a lot more schemes. Not all of them are unreasonable," said Rich Ferguson, research director at the nonprofit Center for Energy Efficiency and Renewable Technologies in Sacramento. "This particular thing sounds like a violation of fundamental physical law, so it's a little hard to take seriously."

Site at Reservation Has Legal Advantages

Last spring, QSFG sent letters to Las Vegas casinos and Native American tribes in California and Nevada, pitching "a groundbreaking advanced electromagnetic technology" with which the firm could build new energy plants and retrofit existing ones.

Marshall, who wears a long braid or ponytail, said he was part Cherokee. But his interest in tribal land extended beyond any Native American ties. The reservations are self-governing, QSFG representatives noted, potentially eliminating local and state red tape and speeding up the approval process.

A few tribes responded, including Bishop and nearby Benton. Marshall and his entourage paid them a visit in May.

"He reminded me of a used-car salesman," recalled Joseph Saulque, vice chairman of the Benton Paiute tribe. "He talked real fast. He sounded quite intelligent and up on what he was talking about. But he refused to let anybody see what he was talking about. He refused to let us see his alleged engine."

The Benton tribe didn't pursue the matter. But the larger Bishop reservation found Marshall's story too tempting to resist: the tribe could make as much as $15 million a year in exchange for letting QSFG build a nonpolluting power plant on three acres of their land.

QSFG signed a contract with the Bishop tribe May 31; the groundbreaking was in early June. Shaded from the high desert sun by a large blue-and-white tent, Marshall and a parade of his employees took the microphone like evangelists.

This was the technology of the new millennium, they told a small gathering. It was an historic moment akin to the Wright brothers and their first flight.

"There's what you call closet inventors--I'm one of them," Marshall said.

None of the speakers detailed exactly how the energy plant would work. There was mention of rotary power, north polarity and an electromagnetic engine.

All along, Marshall insisted his invention was a carefully guarded secret--so valuable that he required bodyguards.

Pressed, he would show people his prototype: a car chassis with a steering column and four wheels. In place of the engine were two boxes that he refused to open. He would jack the chassis off the ground, flip a switch and the wheels would turn.

It wasn't much. But apparently it was enough to convince those who wanted to believe Marshall's engine could be the next big thing, as well as their ticket to millions.

"This man is a very good and fast talker . . . you believe him," said Juanita Ikeda, a former accountant for QSFG. "He was able to get everyone's greed to work against them."

Ikeda, who quit the company in June, says she is the one who discovered Marshall's New York conviction and made sure the Bishop tribe heard about it after the groundbreaking.

Calling the episode "a very embarrassing learning experience," Bishop tribal council chairman Monty Bengochia said the tribal development corporation "doesn't anticipate following through with the QSFG agreement."

Marshall laid off his staff early this month. According to the Nevada labor commissioner's office, 16 claims for back wages totaling more than $100,000 have been filed against QSFG by former workers.

In Hawaii, the state Department of Commerce and Consumer Affairs is investigating a fraud complaint against Marshall and QSFG by investor Michael H. Wong Sr.

A government engineer who lives in Hawaii, Wong bought a $25,000 share in QSFG after hearing about the company from a friend in Las Vegas.

Marshall's invention sounded plausible to Wong. "If this guy has it and wants to bring it out to the world I was all for it," he said.

But after Marshall canceled several public debuts of his technology, failed to pay any dividends and showed Wong nothing more than a car chassis, he doesn't believe he has an invention. "He does not have anything at all," Wong said.

His Las Vegas friend, Michael Kauffman, is similarly disenchanted. "This was my first investment. It was very stupid," lamented Kauffman. "It's a wash. I'm not getting my money back."

Kauffman says he has complained to the Las Vegas office of the FBI, which declined to comment on whether it is investigating.

Former Employees Tell of Ploys

Marshall insists that Wong is furious at him because he won't reveal his technology secrets. "The money went into the corporation, not into my pocket," he said. "As far as me scamming--that is not true."

Many of QSFG's employees and some of the investors knew each other before their involvement with the company. They fell into line with Marshall like dominoes.

Kauffman heard about Marshall from his roommate, Alesa Beck, who worked in a video store Marshall patronized. Marshall gave her an office job in the company. When he was looking for "spokesmodels" to promote QSFG, she referred him to friends who worked in Vegas as strippers. He hired them.

Kauffman told his sister, Teresa Romero of San Diego, about Marshall's invention and she bought $25,000 in stock. Wong told his son about the company and his son went to work for Marshall. A network of acquaintances followed, including a Southern Nevada community college professor of criminal justice who was hired as head of security and later made CEO.

Sitting in the restaurant of a downtown Las Vegas casino recently, Kauffman and five ex-employees described an operation sustained by alluring promises.

Marshall hired them at handsome salaries, paid them in the beginning and then erratically. He once insisted a solar flare had interrupted the computer transfer of payroll funds. He told them if they would hang on, they'd make a fortune.

He assigned code names to the staff--he was Caesar and a young woman he identified as his wife was Cleopatra. He made them sign nondisclosure agreements and claimed he had been nominated for the Nobel Prize.

Ikeda and others say Marshall wanted to create the impression of a healthy business when members of the Bishop tribe visited the QSFG offices. But the phones had been cut off and there was very little office equipment. So, the ex-staffers say, they were instructed to bring in their own personal computers. They spoke in mock conversations on phones that didn't work.

Marshall gave investors binders of material outlining ambitious corporate plans to employ thousands and build a string of plants to manufacture auto converter kits for his fuel-less engine.

The binders included a November 2000 letter from the Texas governor's office, signed by George W. Bush.

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