Jays comments are in regular text

Eric Krieg wrote the following to Jay Smith:

>

> Jay, ;

I ran into an article on Dennis Lee from way back. But I didn't want to post it to the email list without first giving you plenty of chance to maybe put together a response on Dennis's behalf - I know Wade had some stuff to say on this from long conversations with Dennis. Thanks for putting u p with my fixation, it must tick you off sometimes.

> eric

>

Thanks Eric,

I certainly appreciate your drive and determination. The newspaper article appeared to be fairly fact-based with lots of references researched and all. Not much was left to "appearances" or "speculation". The only thing it was lacking was Dennis' side. Ten years later Dennis wrote an autobigraphy that did go into great detail about many things like the article you found. It's a big book, with lots of Dennis' personal history. I'll try to be brief yet include relevant stuff.

> ======================================

> Right now Dennis is becoming increasingly well known nation wide for his

> claims of free energy. What most people don't know is that Dennis got his

> inspiration for how to promote free energy from Joe Newman

I am sure that Dennis picks up bits of information, and tactical ways and

means from everyone he meets. But Dennis had already done a fine job of

promoting prior businesses. By the time he met with Mr. Newman, Dennis had

already set up his heat pump business in Washington and had built it up to

a net worth of about $50 Million dollars. Mr Newman had already been doing

his work for some time and no doubt had developed some style and flair that

Dennis may have borrowed.

> (Joe has claimed to have a free energy machine and had tent-rival-style

> mass demonstrations for 20 years and is also generally unwilling

> to offer an open look to educated people).

Yes, Joe had a problem at the Tesla convention some time back. Someone that

knew what they were doing borrowed a test meter and actually measured his

device's performance without Joe's permission!

> What most people don't really know about Dennis is that he has

> been accused of fraud several times (that I've found out about

> so far) way before he got involved with heat pumps or free energy:

>

> The following came from an article "Praying and Preying" by Henry Goldman

of

> the NJ Bergen county record: It's basically selected outtakes from the

> article. I understand that some parts of the article may be mistaken in

> some way.

>

> " To those who invested their life savings, Dennis Lee's United Community

> Services seemed like a great idea" "as its founder, Dennis Lee, explained

,

> UCS would issue plastic cards entitling the holder to cash rebates on any

> purchases they made from merchants who also signed up with the plan. The

> merchants would get added business from hoards of discount-seeking

shoppers.

> UCS would make money by keeping part of the discount rebate before sending

> the rest by mail to the consumer. And investors in UCS would get rich by

> sharing in the millions of dollars in profit.

In Dennis' book he details the UCS Cupon Card plan and the projected numbers

seem to work out fine. The problem came in the form of how to promote the

business. That was the reasoning behind finding investors. Unfortunately

what Dennis didn't know was that taking investors into the business the way

he did brought him into a position of selling securities and he should have

been registered with the state to do that. Aparantly no one ever claimed

that there was anything else seriously wrong with the sale. Some thought it

looked too much like a pyramid scheme, but it wasn't.

The big downfall happened when a 50% partner in the business started to skim

a little extra money for himself without regard for the future of the

business. He attempted to cover himself one day when Dennis had sold his

truck to pay some bills. He loaned Dennis his car to go pay the phone bill

and then called the police to report his "stolen" car. Meanwhile a friend of

Dennis' had gone to Puerto Rico and set up the same concept there. He sent

back the results and it was a glowing success!

Due to the recent embezelment from the former partner Dennis needed to find

more money to promote the concept. He found a venture capitalist who said

that if Dennis could prove that at least 10% of the people with the coupon

card would spend $10 per month average that he would fund the concept to go

national. But he wouldn't provide even one dime until then.

Dennis pressed on with smaller investors and sold five franchises of the

business

for the next two years and had built the business up to being nearly

ready to go

back to the venture capitalist when a young accountant working for the

company

sent out too many checks to pay some creditors back. That started some

fairly

serious problems for Dennis again. But with a lot of luck just enough

money kept

coming in to keep everything going.

You see where this is all going, don't you? They were growing too fast

on borrowed

money and even though the concept was sound and profitable, they were

getting

into too much debt to handle.

When they did go back to the venture capitalist with proof that the

customers were actually spending an average of $25 per week. The

requirement was only $10 per month

to get the money to go national. Instead the venture capitalist offered

to buy the

business for 10 cents on the dollar for all the stockholders and 10% of

the company

for Dennis. That would have been a rip-off of the investors' money and

good faith

so Dennis turned him down and left.

> Moreover, a portion of those

> profits would be set aside to help the cause of world evangelism , part of

> an effort by Lee, who had become a "born-again" Christian, to atone for

his

> criminal past.

Actually his past was fairly average, he had been to war as a medic in

the army

and was deeply touched by all the suffering he saw there. After he got

out he

held various jobs and attended college where he maintained a straight A

record

for four years. In time he married and started the home remodeling

business.

That went along like many startups do, a few jobs, a few minor errors to

set it

back a little. Eventually he had lined up quite a few jobs that would

have put

him into a good cash flow position when the oil crunch of the

mid-seventies hit.

It was death to many in the construction business with lumber prices

soaring tall

as trees (if you could get any) and gas lines that stretched for hours.

He had lumber at several sites and had used "upfront" monies to catch

his backside

up. The credit line from the lumber supplier made it possible to do the

jobs he had,

and when they were completed, he would have been in good shape. -But-

The lumber companies saw that the oil shortage had a terrible effect on

the entire

country with deliveries almost halted everywhere waiting to get gas and

many

businesses failing for just as many reasons. They pulled back credit

lines for

all the small contractors and went out to jobsites to reposses

materials.

The suppliers didn't care about his customers, it was "Cash and Carry" now.

Then someone stopped payment on a large check that he had already deposited

and needed to cover other checks he had written out. This was the beginning

of the legal troubles and fraud charges. Everything had been conducted in

good faith. Jobs were bid fairly and contracted. Deposits were accepted so

he could perform his work. Charges of fraud require intent and there was

never any intent to not perform the work. He was not aware that the matter

should have been a civil case and not a criminal one. The court convinced

him that he should plea guilty even though they knew they couldn't prove

that he intended to do anything other than what he promised to do.

I see where the newspaper article reports him as telling the judge that he

had never intended to do the repair work and plead guilty in a second case,

but notice also that the judge gave him a suspended one year sentence for

that while he had the 5 counts of passing bad checks already on record! To

me that doesn't seem likley that someone with five counts of passing bad

checks would then get a suspended sentence on another charge of taking money

under blatent false pretenses.

> But United Community Services was, in fact , a million

> dollar fraud that never made any money." . . " Lee's only success,

> apparently, was in eluding the grasp of the state attorney-generals office

.

Actually Dennis proved that the concept was sound and could be ran

profitably in three out of three cases. Counting the operation in Puerto

Rico, his original operation that performed ten times better than the

venture capitalist had hoped for, and the franchise. Then he went to see Mr.

Evangelist. Dennis was moved by a message he recieved in prayer that told

him to give the entire business to Mr. Robertson. That was what Dennis went

to do, to give it away.

> .""Lee took advantage of his employee's and investors' religious

convictions

> by appearing to be a consumer-oriented, Christian-centered businessman,

when

> he could more accurately be characterized as a huckster for a pyramid

> investment scheme. His persuasive salesmanship enabled him to talk the

> nationally known broadcast evangelist Pat Robertson into forming a

business

> partnership with him. Today, Dennis Lee, the company's , slick talking,

34

> -year-old found, has gone into hiding, taking with him a small group of

> followers who apparently believe his claims of divine enlightenment."

By now, several years in operation and many lessons learned, Mr. Lee had

fixed most everything that needed attention in the business. He made another

good faith effort to fund the nationwide expansion. He went to see Mr.

Robertson whose advisors drew up an awfully difficult to understand contract

that they wanted Dennis to agree to. Dennis was puzzled and offended by the

materialism he had intended to just give it to them and they were

negotiating. Ultimately he just went ahead and signed the contract they put

in front of him and they funded the project with $150,000. Dennis went out

and performed his work for the company exactly like he said he would.

The next thing he knew the law firm that Mr. Robertson had hired was

concerned that maybe what he was doing could be considered to be a pyramid.

He went to meet them and explained the plan carefully to them and they

agreed that while it wasn't a pyramid, some people might think it was. Two

weeks later Dennis was ordered to attend another meeting where the lawyers

presented him with a stack of legal papers a foot high, titled the

"Withdrawal Agreement" for him

to sign.

It had many demands and requirements, but it could not take the place of the

first contract that Dennis had signed earlier. In that contract was a

clause that allowed either party to simply withdraw from the contract with

the other party's permission. Dennis had spent a great deal of the

investment money in an honest effort to make the business grow well, and

now Mr. Robertson wanted out because of rumors and not performance.

> "Jim Scanapico of Teaneck, age 26, who assumed a position of leadership in

> the company . . . by investing $36,000 of his family's, his friends', and

> his own money." "Alvin Wikle of Paterson, 56, a lifelong restaurant cook,

> who invested his life savings, some $65,000, in United Community Services

-

> and lost it all."

>

Ya gotta realize that few things are guaranteed in this life, returns on

speculative investments are certainly not.
 

> ---------- end of article quotes ----

>

> the things that I found interesting were: 2000 dealers, many classes of

> investors, the origin of UCS, targeting Christians, claiming to speak for

> God, totally cleaning out some investors, promising to make amends with

some

> new scheme, long complicated explanations of how to get rich, getting

> followers to sell others, incredible sales ability. I'm suprised that Pat

> Robertson was able to hold on to power after being hurt by Dennis - so far

,

> I've been unable to get any comment from Pat. I must say I almost admire

> Lee's chutzpah for returning to the same state where all this happened.

>

> eric@voicenet.com

> http://www.phact.org/e
 

It's also interesting that after all these years and all the million of

dollars he has spent, that he still wears socks with holes in them. In other

words, he sure hasn't been spending it on himself.

--

Jay Smith

Electronic Marketing Technology Consultant

JaySmith@tstonramp.com
 
 

-------- REPLY, End of original message --------
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http://www.phact.org/e