First of two parts. Read part two here.
Monday, May 16, 2011 | Former Anaheim Mayor Curt Pringle thought so much of Chaz Haba and his green energy startup, iCeL Systems, Inc., that he highlighted the partnership the city had forged with the company in his 2010 State of the City address.
The Van Nuys-based company, Pringle said, had developed a new type of lithium ion battery pack that could revolutionize how communities store and use energy. Anaheim paid iCeL nearly $100,000 for a pilot project, the centerpiece being a station that housed dozens of the company's lithium ion battery packs at Energy Field, a park in the city's urban core.
"New power technologies such as iCeL are helping to define the course of the entire power industry," Pringle said in his address. "And here in Anaheim, we are using our assets to provide our Anaheim customers with the greatest benefits from this new technology."
Pringle is not the only member of Orange County's political elite who has touted Haba and iCeL. Congresswoman Loretta Sanchez (D-Santa Ana) requested millions in federal money for iCeL. And Santa Ana Mayor Miguel Pulido worked as a paid consultant for the company.
But in the year and a half since Pringle boasted of Anaheim's deal with iCeL, it has become a cautionary tale about the perils of public-private partnerships. Interviews and city records suggest that the former mayor and other city officials possibly were conned by a man who has been described in courtrooms and other arenas as a green energy scam artist.
The pilot project at Energy Field ground to a halt by late 2010. iCeL, meanwhile, has been forced into bankruptcy by former employees and other creditors. The battery station, which sits near a children's playground, is dormant. But while active it might have posed a significant safety threat, according to city documents and a former high-level iCeL official.
These days, Pringle won't return a reporter's repeated phone calls when the subject is Haba and his company.
Neither will Sanchez, who attached a $2.5 million earmark for iCeL for a larger lithium ion battery project in Anaheim in the 2010-11 House appropriations legislation. The congresswoman's website boasts that the project would have generated enough energy to power 166 homes. The earmark ultimately was not granted.
Had Anaheim officials or Sanchez's office done a basic Internet search on Haba, they would have found references to many lawsuits by former business partners, creditors and employees in which he was accused of fraud, breach of contract and other misdeeds .
At least a dozen lawsuits filed against Haba since 1985 allege, among other things, that he misrepresented the abilities of his technology, licensed a patent he didn't own, illegally sold stock, was prone to concealing assets and presented to investors lines of products that didn't exist. One case claims that Haba used radio personality Rick Dees to pitch a nonexistant technology on the "Donny and Marie" television show.
A lawsuit accusing Haba of patent fraud describes him as someone "with little or no regard for other people's property rights or law." It's one of at least three cases against him or one of his companies that are still active, including a lawsuit filed by his former bankruptcy attorney.
Haba, when contacted by a Voice of OC reporter, was evasive about the specifics of the deal with Anaheim, but he said iCeL remains a viable enterprise. He dismissed the lawsuits as filed by employees who are bitter about being fired and former business partners who are angry because they lost money.
"It's crazy to short-term discount what we're [iCeL Systems, Inc.] doing on the basis of people who were dissatisfied, or even on people that thought they could steal the business," Haba said. "Now they make a lot of accusations, and a lot of them are half truths."
'A Ticking Time Bomb'
On a June day in 2009, Pringle, council members Lorri Galloway and Harry Sidhu and other Anaheim city officials were all smiles as they participated in a ribbon cutting ceremony for Energy Field, the city's showpiece for its green energy efforts.
Haba was on hand as well, posing for pictures with City Council members, and with his chief technology officer, Dr. Ryan Wartena, he led them through a tour of the iCeL battery station.
One major obstacle to solar, wind and other renewable energy power sources is the problem of storage -- how to stockpile energy from solar panels or wind turbines for use when the sun goes down or the wind dies?
Lithium ion batteries are considered to have a lot of potential in this area because, among other reasons, they hold up to 10 times the amount of energy as a typical lead-acid battery. Small versions of the battery are found in cell phones and laptop computers.
Haba has touted his technology as the holy grail of power storage. Haba claimed that consumers with iCeL battery packs in their homes could automate their home to jump on and off the electrical grid throughout the day and therefore save substantially during expensive, peak-energy use times.
But not only was iCeL never able to demonstrate those claims at Energy Field park, the company potentially had turned the park into a danger zone, according to David Nyberg, the company's former director of engineering and one of the employees who is suing the company in bankruptcy court.
When Wartena left the company last year, he took his laptop, which was the only way the company was monitoring the battery station, Nyberg said. Without any ability to monitor the site, the battery packs could have become unstable and exploded, Nyberg said.
"The truth of the matter is if you put a whole bunch of energy there and hook it up, you could end up with an explosion there," Nyberg said. "You could have hot, molten lithium ion all over the place."
Lithium ion batteries are potentially volatile because they are made with highly combustible organic compounds. If not designed, made and handled with extreme care, they can explode or start a fire, said K.M. Abraham, a lithium ion battery consultant who was vice president of battery research and development at EIC laboratories in Massachusetts.
Also, Abraham emphasized, it wouldn't be wise to purchase lithium ion batteries from small, unknown companies.
"They [lithium ion batteries] can't be made in someone's garage," Abraham said.
Beyond the combustible nature of the batteries, there were safety issues with the iCeL equipment from the outset, specifically the design of the internal circuitry. Nyberg said he raised the issue with Haba and Wartena but claims they refused to listen. "Every time I asked a tough question, somebody got mad at me."
Nyberg said he left the company in April 2010 after not being paid for months. A month or so later, he said, he received a phone call from Ed Murdoch, a staffer in the city's public utilities department.
According to Nyberg, "It became apparent that there was this potentially dangerous time bomb ticking in Anaheim. And I said, 'You need to get down there and turn that thing off.' "
Wartena, Haba and Marcie Edwards, the general manager of the city's public utilities department, deny that there were ever any safety issues at the site. Edwards confirmed, however, that the battery packs at the site have been shut off, even though the city's contract with iCeL runs into July.
Edwards also acknowledged that it was she who recommended that the city work with iCeL.
"I did like the idea. I have long believed that it would be battery storage technology that made intermittent sources of green power such as the sun and wind infinitely more viable. So I did want to pilot-beta test it in Anaheim," Edwards wrote in an email to a Voice of OC reporter.
Haba describes Nyberg as an unstable person who is prone to exaggeration and harbors resentments against him. "He [Nyberg] certainly is bitter at me, and he's trying to do anything he can to hurt me. I don't think there's any way I can stop it," Haba said. Nyberg, he said, is "loose in the head."
Wartena denies ever having taken any equipment from the site, much less his personal laptop from the battery station.
And, he said, there were other control mechanisms that would have ensured the safety of the site. He said there was a PC at the site that maintained control. "It wasn't like my laptop was running it," Wartena said.
The site also went through an electrical field test and "passed with perfect marks," Wartena said. City records show that the site passed such a field test in June 2009.
Other city records obtained by Voice of OC show that iCeL was having issues with remotely controlling the site between March and July 2010. Murdoch's safety concerns are noted in the city's iCeL file.
A "corrective action" report that iCeL filed with the city stated: "The system is unable to be monitored remotely -- therefore we are unable to determine if the system is pulling energy from the local grid and putting energy back onto the local grid."
Additionally, a typed note in the city's iCeL file dated Jan. 25 of this year states: "Ed [Murdoch] discovered there was a design flaw (safety issue)."
The note also recommends that "iCeL remove our [the city's] information from their website" and states the need for the city to have a "pat answer to those who ask about the system."
Finally, additional handwriting on the note asks: "Can we terminate this contract?"
In an email to Voice of OC, Edwards said the note is a "draft agenda for an internal meeting to discuss status of the project and next steps" and shouldn't be interpreted as a conclusion. Edwards wrote that batteries at the site have been turned off "for the last several months. ... this appears to be related to the 01/25/11 document."
Anaheim Councilwoman Lorri Galloway, the only council member serving at the time of the iCeL approval to return a reporter's calls, said she hadn't heard of any issues at the site. "I don't know anything, to tell you the truth," Galloway said. "There's an issue?"
Charles Peltzer, a member of the Anaheim Public Utilities Board, had his own puzzling experience with the project. He said his house had been chosen as a test site where an iCeL battery pack would be installed.
But the installation never happened. The Linc Group, the company that was supposed to install the battery packs at the houses, pulled out of the project, citing issues with iCeL, city records show.
"It seems like the whole project just disappeared," Peltzer said.
The public utilities board received a project report dated March 15 of this year. While the report acknowledges that the project had its shortcomings and that the iCeL site is inactive, it did not mention the potential safety issue that Murdoch had uncovered.
"While not a total success, there were certainly a lot of lessons learned for moving forward with battery storage as part of our overall resource portfolio," the report concluded.
Edwards acknowledged that she did not do an Internet search on Haba until after a Voice of OC reporter started asking questions, but she said she didn't need to.
"With respect to the companies, Internet research can be spotty and sometimes not that accurate," Edwards said. "We spent a lot more time scrutinizing the technology than we do the individuals, because that's where we're going to be spending the money."
The Linc Group questions the technology. "We discovered that, at the time of the proposed pilot, this technology was not yet fully ready for implementation," said the group in a statement sent to a Voice of OC reporter.
A History of Allegations and Lawsuits
In recent years, those in electric-power vehicle circles have described Haba as a huckster who perpetually claims to be the next Thomas Edison.
One stock-trading message board post reads: "Chaz is more than just a scam artist! He is a compulsive liar and senile."
Haba has been targeted by at least a half dozen lawsuits in Los Angeles County courthouses since 2000. He is accused in most of the suits of at best gross mismanagement and at worst outright fraud.
According to one former employee's lawsuit, Haba portrays himself as a devout Christian who runs his companies with the highest moral standards. But underneath his pious veneer, Haba is a racist and a homophobe, the suit said.
"Chaz Haba, who did his evildoing behind pious words of Christian charity, retaliated against Plaintiff's whistle-blowing and other abuse, eventually terminating plaintiff from his employment at Planet Electric," alleged a workplace discrimination lawsuit filed by Brett Montana, a former employee of a Haba company called Planet Electric.
Haba only wanted "'round-eyed' whites hired," and he expressed racist remarks about Asians and African-Americans, according to the lawsuit.
Montana's lawsuit goes on to allege that Haba made "fraudulent misrepresentations with potential investors/partners," that included falsifying PowerPoint presentations and presentations of "current" products that "did not exist commercially."
Montana's suit alleges that on the "Donny and Marie" television show, a man in an Easter bunny costume drove a Planet Electric-made Austin Healey car onto the set, and Dees said the car was powered by a "credit-card-sized battery."
According to the lawsuit, the battery didn't exist.
Other lawsuits have a similar narrative.
In 2003 a Las Vegas company called Whistler Investments made purchasing agreement with R V Systems, Inc., another Haba firm.
But by late 2004, Whistler Investments hadn't generated any revenue, a columnist for the Vancouver Sun wrote. The column also reported that the company had come under an informal investigation by the Securities and Exchange Commission.
Whistler Investments changed its name to Hybrid Technologies and in 2005 sued Haba and his companies, alleging, among other things, fraud, negligent misrepresentation and breach of contract. Hybrid Technologies states in court documents that it paid more than $3.1 million for a range of lithium ion battery powered products, and none were ever delivered.
Although it has not filed a lawsuit, the International Brotherhood of Electrical Workers' Washington, D.C., office acknowledged that it has yet to be repaid a $1.5-million loan it made to a Minnesota company that was to run an energy lab using iCeL products. That project never panned out, and the organization that was to run the lab -- Energy Harvest Group -- was one of the creditors to go after Haba when his company was forced into bankruptcy court.
"I hope nobody ever has to go through what we went through again," said Pete Treacy, an official with Energy Harvest Group.
Although Haba dodged specific questions about the lawsuits and other allegations, he insisted that his company is thriving.
"The first little thing I would say to you is this: If everyone says they got shafted, why do we still have good products, a good company, and doing business and we're still around?" Haba said. "It doesn't make any sense."
And he said that the people who work with him now respect and love him.
"Sometimes when they don't get paid, they get nervous," he said. "But they know that I'll be there at the end of the day and eventually get 'em paid. They know I'll be there to take care of them."
Tomorrow: Santa Ana Mayor Miguel Pulido's relationship with Chaz Haba and iCeL Systems.