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I've received many comments about my discussion of the "Free Electricity" hoax and am posting some of the most interesting information below. I hope you find it useful and appreciate those who sent me these tidbits. -- Lou Bloomfield
One reader sent in the following note:
"Thanks for your appropriate, well deserved response of September 25 to the question regarding the "Free Electricity" fraud. At a neighbor's request, and for the entertainment value (I expected, and got, a real "hoot") I accompanied him to this dog-and-pony show in Portland last week. This Dennis Lee is truly a snake oil salesman in every traditional sense of the word. He builds support in his audience (applause, always started from the same spot in the rear of the auditorium) with frequent digressions in his victimization by the government, big power companies, and the scientific world (David vs. Goliath). He makes several impassioned professions of his Christianity, actually stating that God told him to bring this invention to the people. He invokes patriotism by espousing his deep belief in the freedom of the individual in this country. There is no stone unturned. Unfortunately, in his hour, rather unpolished presentation, he fails to actually explain how his device works. He wildly mixes, interchanges, and misuses incompatible dimensional measurements (power, torque, energy, momentum, volts, to name a few). It was alternately hilarious, embarrassing, exasperating, and most of all, alarming. Alarming, because it appeared many in the audience were ready to line up as his disciples, regarding him not only as a "scientist", but a savior. Mr. Lee even turned the fact that he has served a jail sentence for (what else?) fraud into a plus, using his sentence as proof that the "big powers" are out to silence him. I am personally astounded that this man is not now in jail for what I witnessed. His promotion is, as you said, a total fraud; worse by far than even bad science. Unfortunately, a lot of people, based on my assessment of this one audience, are being fleeced by Mr. Lee and his operation. I will never understand why the attorneys general of the 47 states he appears in, or other local and federal law enforcement agencies do not stop this scam. It is patently fraudulent from top to bottom.
My background includes 2 years as a physics major at (a highly respected university), taking a degree from that school in EE, followed by (36 years at nationally prominent science/engineering firms). I guess I am just a bit stunned by the level of success I witnessed in selling this bunk to lay people.
Thanks for your exposure of this scheme for what it clearly is."
In response to my request for more details, he added the following:
"I am very certain that shills were in the audience. I mentioned the applause initiated from the rear of the auditorium at appropriate places. I'll relate another little event that was just too, too coincidental. At one point in the show, to illustrate that you CAN get free electricity from the air, Mr. Lee attached performed a little trick that the old GE traveling science shows used to do when I was in grade school. It's the one where you take a fluorescent lighting tube (in this case, a circular one) and made it light up only as far from one terminal as you placed your hand around it. By moving your hand along the tube, the lit area expanded or contracted with the movement of your hand. During this demonstration, he casually mentioned that these tubes were hard to find, and he would give anyone in the audience $100 for an old one, working or not. WOULD YOU BELIEVE that, about a half-hour later, a little old lady came trotting down the aisle, waving on old circular tube in the air. You can imagine the big production made of giving her the $100 reward, thus convincing the audience they were seeing an honest man before them. Pardon my cynicism!
As to where the money comes from, I have wondered the same thing. An attorney would have a field day analyzing his documents for his clients. He does not refer to them as investors, and they are not buying anything. Also, when you read the fine print, what you are buying is "a chance to get your own free energy system". To get in on his energy cooperatives, you pay $275, of which $75 is a nonrefundable fee, and $200 is called a donation, and goes into escrow (unspecified as to who the escrow agent is, or if it is connected to Lee's company). The $200 is refunded if the energy machines are not delivered, I think within a year. The contract also states that the energy machines delivered must produce "up to" 15,000 watts to the home. I believe a lemon and 2 strips of dissimilar metal would qualify under that language. There are also dealerships offered, although no terms were mentioned for them. I would assume a dealership would require a lot more front money. He also promotes his "Public Awareness Kits", consisting of video and audio tapes and books, for a security deposit of $50. The deposit is to be returned if the kit is returned in 2 weeks, but if not, or if you sign up ("believe"), then they keep the $50. I frankly believe that, once you are in for the $275, additional "contributions" will be required, but no mention was made of this, The whole relationship between the fleecer and the fleecies was kept pretty murky, and I did not get a clear impression of just what it was. This, I am certain, was not accidental.
Examining the fine print of his contract, you find that what your $200 "contribution" buys is a "Certificate of Beneficial Interest" (COBI). It "is not a guarantee or even a promise that the holder will get a free energy machine installed on his or her property". It "is a promise that 'if' and 'when' these devices are ready and able to be supplied to homes, the lead certificate holder ........" gets one for his home. It then states, in ominously bold print, "Any fee charged, over the $200 contribution, to recruit and process contributors in this cooperative effort will never be returned and are in no way secured against loss". This tells me that more fees will be requested from contributors. The "cooperative" referred to is a group of "50 like-minded individuals" in a block, each of whom has kicked in the $275. Thus, you see, no one has any expectation of getting a machine until he joins 49 other in his neighborhood to form a cooperative. If you envision hierarchical selling schemes and the word "pyramid" comes to mind here, we're on the same track. Once you're into this, you need to sign up your neighbors! In addition, having said all the above about the refundability of the $200 contributions, there is a rambling paragraph that says COBI holders realize that the contributions were used as seed money to develop the initial machines, it will no longer be in escrow. Any further refunds will come from the "general income of the International Tesla Electric Company".
I believe there are more demands for money to be made on Mr. Lee's clients than were divulged at the demonstration. I personally believe that one reason for the saturation blanketing of the entire country with these shows in a very short period of time is to maximize the exposure and income before any authorities can bring charges against him and publicize the scam he is promoting. I believe the company will, within a year, declare bankruptcy, go out of business, keep the money collected, and leave all his believers standing knee-deep in disbelief and utility bills. In short, Dennis Lee is not Mr. Wizard.
Thanks for helping counter this sort of fraud."
Another reader sent in the following newspaper advertisement:
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