The Record-Review – The official newspaper of Bedford and Pound Ridge, New York

 

Cleaner-burning coal or a scam to bilk investors?


By R.J. MARX

A Bedford man and his wife, Stephen H. Baer and Vivian K. Baer, are headed to court over claims that they misrepresented their company, Novacon, to investors. Using misleading practices, Mr. Baer, with the assistance of William “M.J.” Rifkin, is alleged to have obtained over $3 million in investments from 128 investors in Novacon.

According to the complaint filed by the office of New York State Attorney General Eric Schneiderman, the Baers’ company, Novacon Energy Systems, purported to have a patented solution for burning coal in an “environmentally safe manner” that he marketed and sold using allegedly misleading practices. They are also being charged with failure to register with the New York State Department of Law to issue or sell securities.

But an attorney for the Baers, John Markham of Markham & Read in Boston, said this week that his clients had been duped by Mr. Rifkin, who, Mr. Markham said, is missing and believed to be dead. Mr. Rifkin is not named in the complaint.

“Steve Baer and his wife have developed what many eminent scientists say is a brilliant method of coal conversion that is very efficient and very, very much better for the environment in terms of elimination of a lot of the toxins that usually come from burning coal,” Mr. Markham said. “We are very hopeful that despite any problems that we’ve had along the trail, the sheer efficiency of the product will carry the day in the end.”

According to the complaint, from 2003 to 2007 Mr. Baer and the company’s “managing member” Mr. Rifkin made various sales pitches in which they stated they had the ultimate solution to environmentally safe coal burning.”

The attorney general’s office states that during these sales pitches, which were made over the phone, via email, in printed material and on recordings, Mr. Baer and Mr. Rifkin made numerous misrepresentations, including misleading statements about the enterprise and Mr. Baer himself, and false projections for the company. Among these were allegedly false assertions that Novacon could generate $20 million to $70 million per year within five years from the time of the 2004 business plan, and that Novacon’s profit margins would be 70 to 75 percent. The Baers and Mr. Rifkin also allegedly made promises to potential investors regarding the potential profitability of their common stock.

Of the approximately $3.5 million that the Baers raised, Mr. Rifkin was paid approximately $400,000 in commissions. A substantial part of what remained, according to the complaint, was used by Mr. Baer and his wife for personal expenses According to the complaint, the defendants were said to have used the remainder of the proceeds as follows: $224,000 for debit card purchases in restaurants, grocery stores, pet shops, video stores and jewelry stores. Approximately $357,000 was used for unidentified ATM withdrawals, wire transfers and other cash withdrawals. Additionally, the Baers used and commingled approximately $1 million for business payments for their personal expenses.

In 2007, responding to an investor complaint, the attorney general opened an investigation and ordered Mr. Baer to produce certain documents. Mr. Baer was also ordered to stop selling securities in New York State. In addition, the order froze bank accounts valued at approximately $1.2 million.

According to the complaint, Mr. Baer appeared before a referee eight times to give testimony but “while he stated to the court that it was his intent to cooperate, his answers were substantially unresponsive,” according to the complaint. In some cases he refused to answer. The judgment seeks restitution and damages for their fraudulent acts.

But according to the Baers’ attorney, Mr. Baer has developed an invention that is a “terrific process” for burning coal and much less toxic for the environment. “People have seen it work. There are a lot of people in the coal industry who run coal-processing plants who are very interested in his product,” Mr. Markham said.

Mr. Markham said that the attorney general’s office said that Mr. Baer made a “whole bunch of misrepresentations about his business.”

“In the discovery we asked them what he didn’t say that was accurate,” Mr. Markham said. “None of it has to do with the technology. It had to do with the patents or who were the investors who were interested.”

Mr. Markham said that Mr. Rifkin approached Stephen Baer and said, “I’m a fundraiser, I have people who can invest in your invention, and I like your technology.’”

According to Mr. Markham, Mr. Baer said he didn’t want many investors, only one or two. Nevertheless, Mr. Rifkin marketed the product to many different investors, Mr. Markham said. “Rifkin began telling people about Steve and his products.”

Mr. Markham said that the seizure of Mr. Baer’s assets and the ongoing legal battle has left the Baers without an opportunity to bring the technology to the marketplace. Those funds, about $3.5 million, he said, could be used to market the product nationally and internationally.

According to Mr. Markham, a successful prosecution of the Baers could lead them to be enjoined or fined or both.

He said he believed that the majority of Novacon’s investors would like to see marketing of Mr. Baer’s invention move forward. Mr. Markham suggested that Mr. Baer may have "Einstein" syndrome, in which very bright individuals are expert in their fields but may be unsuited for making basic business decisions and may be susceptible to bad advice from those around them.”

The New York Attorney General’s office said that the incident remains under investigation during trial discovery period. A spokesman said that the attorney general could not comment further.

A status conference at the judge’s office is scheduled to take place on Tuesday, Feb. 26.


‘All a series of lies,’ says son of investors


Stephen Huntoon is a former Chappaqua resident now living in Newburyport, Mass. He said that while they were alive, his parents were longtime family friends of the Baers and had loaned the Baers thousands of dollars for development of a process to burn coal more cleanly.

Mr. Huntoon said his mother Ann died about 10 years ago and his father Max died about a year and a half ago.

“They and the Baers were close friends over a period of 15 or 20 years,” Mr. Huntoon said on Monday, after contacting The Record-Review. “My father was taken by Stephen Baer’s patents for his process to burn coal cleanly. He believed in it. He spent a countless amount of time helping Steve get this off the ground, for coal-burning tests. All during this they were great friends.”

According to Mr. Huntoon, many of the items in the New York State Attorney General’s recent complaint resonated with own experience, including charges that Mr. Baer misrepresented himself and his business. “He told my father he had all these credentials — he was in MENSA, that he used to race cars — unfortunately we all believed it,” Mr. Huntoon said. “My mother died 10 years ago and my father a year-and-a-half ago. It wasn’t until last week that I discovered the document that the attorney general said the money is gone and they pissed it away on themselves and the house.”

He said that his aunt and his sister had also invested with Mr. Baer. “My sister’s been trying to reach them since 2007,” Mr. Huntoon said.

Mr. Huntoon says no one from the state attorney general’s office has contacted him or his aunt about the current court proceedings. “That’s the reason we all got suckered,” Mr. Huntoon said. “If my parents were alive, I don’t know what this would do to them. They were so close to them, they would send us monogrammed silver spoons when we were children. It was all built on his series of lies.”

Other investors are apparently waiting for a response from Novacon. Bret Christensen posted on the Novacon website: “I am an investor with Novacon from years ago. I have not got (sic) updates for quite some time. I have been trying to find out something, anything about Novacon with no response. Can you shed some light on the company.”

In a presentation, Novacon’s sorbent injection system is said to have the potential for use in coal- and oil-burning power plants as the “transformation technology to a cleaner, greener environment.



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February 22, 2013

‘Pops, Patriots and Fireworks’

Pound Ridge/Scotts Corners

  1. Scotts Corner Market – Trinity Corners Shopping Center;  55 Westchester Avenue

  2. Pound Ridge Sunoco — 66 Westchester Avenue    

  3. Sam Parker Country Market — 257 Westchester Avenue    


Bedford Village

  1. Bedford Rexall Pharmacy — Hunting Ridge Mall; 424 Old Post Road  

  2. Village Green Deli — Village Green; Routes 22 and 172    

  3. Bedford Shell — Routes 22 and 172 (at blinking light); 848 So. Bedford Road

  4. Village Service Center —193 Pound Ridge Road (at Long Ridge Road intersection)    


Bedford Hills

  1. Bedford Hills Deli – 7 Babbitt Road    

  2. Bueti’s Deli – 526 Bedford Road (Route 117)


Katonah

  1. NoKA Joe’s – 25 Katonah Avenue    

  2. Steger’s Paper Mill – 89 Katonah Avenue    

  3. Katonah Pharmacy – Katonah Shopping Center; 294 Katonah Avenue   

  4. Bagel Shoppe – Katonah Shopping Center; 280 Katonah Avenue    

  5. Katonah Sunoco – 105 Bedford Road


Mount Kisco

  1. Teamo/Mt. Kisco News – 239 Main Street    


Cross River

  1. Bagel Boys Café – Cross River Shopping Center; Routes 121 and 35    

  2. Cross River Shell Station – Route 35    

  3. Cameron’s Deli –  890 Route 35    

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