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State of TX vs. BioPerformance Fuel, Inc.

Judge sets court date for Sept. 18, and allows the unfreezing of some funds to cover expense of preparing defense, including running necessary tests.

May 30 - June 1 Hearing for a Request for a Temporary Injunction
Claim 2006C1107589; San Antonio, Texas, USA

Compiled by Sterling D. Allan
Pure Energy Systems News

Follow up from . . .

• TX AG Temporarily Shuts Down BioPerformance - Texas Attorney General's office filed a lawsuit and obtained a temporary restraining order and asset freeze against Texas-based BioPerformance, Inc. for allegedly running a pyramid scheme promoting a fuel economy product that the authorities allege to be bogus. (PESN; May 17, 2006)

Status

Hearing concluded June 1.

Venue and Judge

There is a question as to why this is being held in San Antonio, and not Austin, the state capital. The judge in San Antonio has been on the bench for 30 years, and is approaching retirement, and thus is less likely to buck the system. So much at stake was riding on one person in this hearing: the judge.

At the outset, the defense attorney noted to the judge that there were several "fatal flaws" in the prosecution's case, but the judge declined to hear the grounds, and said he would wait until the end of the hearing to consider those.

May 30 Hearing Notes

Notes taken by BioPerformance distributor, L.W.  The notes were reviewed, and corrections noted by a second source, who was also in attendance, and who is also a BioPerformance distributor.


State of TX vs. BioPerformance Fuel, Inc.

May 30, 2006
8:30 AM – 9:45 AM (at which time court took a 25 minute recess)

The courtroom was a small one (40 seats) and was filled to capacity. There were 4 cameras plus various news reporters. The judge began the session by apologizing for the ‘temporary old quarters' because his office is under construction.

The judge opened with questions about 2 previous motions, as of May 24…the motion to quash a notice of deposition and a motion for protective order. It was decided both were moot, except that social security numbers and birth dates needed to be removed from all information submitted. The opposition says they would correct that error. Our side said the documents also needed to be removed from the Attorney General's website.

Our lawyers said there was a "fatal defect in the plea which rendered all else void". The Judge's response was, "I'm going to hear it anyway." He said to save the ‘fatal defect' until the end. Hmmmmm.

Our side countered that the rules of the state clearly said if it wasn't dealt with first that in effect, it meant that our side was waiving their objection, which we weren't.

The judge said the affidavits overcame the objections as they were sworn and in support of all facets of their position. Furthermore, since our side did not give the judge 3 days notice of the fatal plea (which we claimed was discovered over the weekend), he would ‘re-urge' at the end of the case.

>>>>>>>>>>>>>>>>>>>>>>>>>

OPPOSITION BEGAN BY STATING BP'S CLAIMS WERE COMPLETELY BOGUS:

• (Dropped charge about BP being a "pyramid")
• Emissions reductions
• Heating value – none
• Calorific value – none
• Combined effect – none
• In short, the product "simply doesn't work"
• The website has false advertising and is full of "nonsensical statements"
• The company has made $25 million in 6 months
• The defendants have personally deposited money into their own accounts and have spent some of it
• Gus and Lowell personally made claims, personally sent emails
• Innocent consumers have bought the product


OUR OPENING STATEMENTS INCLUDED:

• The product fulfills the American Dream
• The product was used for over 25 years
• There are procedural errors: affidavits are not in compliance with local rules
• There were a number of remedies the Attorney General could have used but didn't
• By freezing the defendants assets along with those of the company, they "tied their hands to promote a vigorous defense"
• There is nothing in the Attorney General's petition showing the company's founders have spent over $50,000 to show the product works
• Seeking additional time and the unfreezing of assets so they can defend themselves


FIRST WITNESS TO TAKE THE STAND

Gary Adkins, investigator with Consumer Protection
Job is to review, analyze and ‘capture websites' (using TelePort Ultra Software, does background checks and analyzes content. Does more than 100 of these on a daily basis.

Attempt was to prove Gus and Lowell ‘owned the website' because it was registered by them.


SECOND WITNESS TO TAKE THE STAND

Larry Scott, Lab Anchor for Core (?) or Ford (?) Lab of Houston
Job is to test fuel. Is the manager of the lab and an analyst. Says the lab is an ISO 9000 certified lab -- which means " this is the general certification for operating a business according to good business practices".

Our attorneys tried to show that his qualifications did not make him an "expert witness", just a "witness".

He says the product was brought to his lab by another lab -- the competition: Calo-Braeler (sp?), in Houston) -- labeled GASOLINE. He was not told what the ingredients were, had no knowledge if anything was in the gasoline but was told there was additive in one and not in the other. He also said there was not a Material Data Safety sheet accompanying the product, which is the normal protocol. He was delivered separate samples, about 4 oz. each, and only one specific test was requested.
He was not given the choice of which test to perform.

The samples were not tested to find out what was in them.

A Bomb Calorimeter was used for the test. This test only measured the heat produced when the sample was burned. The conclusions were that it didn't raise the heat value of the fuel.

He said that a Bomb Calorimeter could burn off enzymes if they were in the product. The enzymes would be burned or destroyed.

The man who ran the actual lab tests, Dan Worcester, was not present in the courtroom. (Another person present today thinks Dan was the person who ordered the test run, so there is discrepancy on this point.)

When asked if determining the heat value could also determine fuel efficiency, toxicity or emissions reductions, the answer was NO.

When asked the difference between naphthalene and naphthenate, I only got his description of naphthenate: "a reaction product of a napthenic compound."

I missed from 10:10 to 11:45

Court resumed from 2:00-3:30


WITNESS: JAMES CUSTER, ASSISTANT ATTORNEY GENERAL

ON or about May 1, he received from Gary Adkins, a bottle of BP powder and one of BP tablets. One was delivered to a lab on Bandera Rd. in San Antonio, TX; the other was left with Joe Franklin. Both bottles had a white top with a black seal around the outside of the top. The next day one bottle was taken to Professor Ronald Matthews at UTAustin. It was received back from the professor this morning. (May 30).


WITNESS: LEONARD WORSACK

Removed outside seal of sample container; No seal on the inside. Did not reseal bottle.


WITNESS: PROFESSOR RONALD MATTHEWS: PROF. OF MECHANICAL ENGINEERING and combustion emissions formations at UT Austin; does work for the Department of Engineering; SAE Fellow (Science Automotive Engineer)

He says there are 2 properties in the fuel that affect the fuel economy: the density and the heating value (which is the energy content of the fuel)

Dan Wooster, one of his students at Intertech in San Antonio, was chosen to do the tests.

There is some confusion by those of us in attendance as to what tests the professor actually performed or oversaw, as he did admit that tests involved an Engine Dynamometer (something that simulates the conditions of an engine but takes away the potential variations of driving habits), but that these test had not been completed yet.

A specific-gravity test was mentioned, and it was said that there was an increase and more of an increase after the booster shot. His words: " If it works, you'd see an increase but not a significant one…not 25%."

A heat combustion test was mentioned and it was said it had no effect…it was below the repeatability limits.

Something was mentioned about octane ratings but measurements had no measurable increase. His comments: "it shouldn't give a 25% increase, or a 10% increase, or even a 1% increase".

Our counsel brought up that if the tests haven't been completed, then when he said it "should not work" that was because he hasn't completed tests on whether it works as per claims made.

[Editor's note: An examiner who expects a negative result bespeaks bias.  This would compromise the tests since there's no "double blind" as is usual to eliminate the aspect of expectation influencing outcome? By announcing a negative opinion not backed up by recorded results, isn't he also trying to influence the trial outcome? Objectivity lacking…]

EPA documents were submitted and our counsel raised the objection that no EPA witness was present to prove that the information truly did come from the EPA.

The objection was overruled.

The rest of this session went over wording from the website, sentence by sentence, with the Professor saying that many of the words had little meaning to him.

My notes include the following:
• He says flashpoint "is just a fire safety term and has nothing to do with engine combustion."
• He says "the combustion process is more efficient if the car produces more CO2 than CO.
• When asked what ‘calorific power' meant, he replied, "I assume you mean the older term ‘calorific value'.
• He also said "all gasolines are equal" except for the additive packages that each gas company puts into their gas. He discussed what those additives could be and why they are used.

Our counsel asked if he had heard of the Transportation Research Center in Ohio. "no"


WITNESS: SUE HIGGS: T-BANK CASHIER

At this point, the opposition tried (AGAIN) to unsuccessfully enter exhibits ‘out of numerical order'. The judge prohibited it in the beginning and reinforced it again, saying he didn't mind waiting for however long it took. OF COURSE NOT…THE LONGER THIS HEARING CAN TAKE, THE LONGER WE ARE NOT IN BUSINESS.

So, a very LONG time passed as he renumbered things to match his notes and asked the cashier page by page (30 of them) what each page showed.

The judge interrupted and said he had a meeting at 4:00 and we were dismissed, to resume 8:30 am May 31.

May 31 Hearing

The following was conveyed by the second source by phone.

The morning's proceedings entailed a detailed account of budgetary expenditures by BioPerformance and by Lowell Mims (president) and Gus Romero in particular.  It was estimated that their income was in the region of $2 million since the company began in Dec. 2005.

Several times the defense attorney said, "Objection, Relevance," and the judge upheld the objection.  After a morning of this, finally the judge said, "I fail to see the relevance of this."  Technically, it was all irrelevant, inasmuch as the plaintiff had dropped the charge of BP being a pyramid.  The same holds for the proceedings in the afternoon, which continued along the same vein.

In the afternoon, there were questions in depth about the multi-level structure, and how the company could afford to give a 65% payout.  It was disclosed that the raw cost of a bottle of 40 pills comes to around $4.00 per bottle.  The prosecution tried to make the mark-up ($37.50 retail) sound criminal, but provided no legal grounds to support that assertion. 

Lowell Mims was asked why he established the company as a multi-level rather than just using a direct marketing approach.  The prosecution attorney tried to make multi-level marketing sound unethical and illegal, but provided no legal basis for the sentiment he was trying to convey by the tone of his voice.

Gus Romero was questioned about the members of his family who are involved in various facets of the company, from his mother loaning $100,000 in start-up funds, which were repaid, to his wife being a co-signer on a bank account, and his brother serving as the broker between the manufacturer and BioPerformance.  The prosecution tried to make it sound like this was somehow criminal, but provided no legal basis to support that.

Through questioning, the prosecution pointed out that Romero had paid for the legal defense in this hearing from one of four accounts, which held funds obtained from BioPerformance income.  He pointed to language in the legal freeze of the BP accounts prohibiting the spending of any monies earned from BP.  Romero said that his attorney did not think paying for legal defense would be a violation of that stipulation.

At one point, the extent of questioning about the manufacturer and the contractual agreements and the product formula seemed to get to the point as though the prosecution was trying to get at proprietary information, which is irrelevant to the case.

Finally, at around 4:15 pm, Lowell Mims requested of the judge that two or three of the witnesses who had taken time off work to attend today's proceedings be allowed to testify, because they would not be able to come tomorrow.

The judge declined, and said it was time to adjourn for the day.

May 31 Hearing Notes

Notes taken by BioPerformance distributor, L.W.

STATE OF TEXAS VS. BIOPERFORMANCE FUEL, INC
2nd day of Hearing
May 31, 2006
8:30 AM- 12:30ish

The session opened with the opposition requesting an extension on the temporary restraining order (TRO) which expired at midnight last night. Opposition wants to fax an extension to the banks so they will not release any money.

The judge asks: "Do you intend to be finished today?"
Both sides answered in the affirmative, but the judge said he didn't think so. In fact, he said, he didn't feel he would be able to issue a decision without spending some time thinking about it and reviewing issues, so even if they finished today, he wouldn't render a decision today, so he wanted to extend the TRO for longer than just today.

Our counsel objected and requested to tailor the TRO to release the defendants. The judge decided the TRO would last until June 2, and IF he issued a decision in favor of BioP, then the TRO would be dissolved. He wants all evidence to be presented.

Discussion turned next to expert witnesses. Ours were in the courtroom talking to the lawyer. The counsel for the Attorney General said he recognized some faces of people in the courtroom from yesterday, and so they could not be considered expert witnesses NOR COULD THEIR TESTIMONY BE HEARD!!!! None of these people were advised of this yesterday. Also, some were present who did not realize that they could have volunteered as witnesses.


WITNESS CONTINUES: SUE HIGGS FROM YESTERDAY

A large portion of the morning is spent going over bank deposits, cashiers checks and other banking business…dates, signatures, transfers, account numbers, trusts, etc.

Yesterday exhibits 18-47 were introduced, having had to be renumbered sequentially, AGAIN, as per the judge's request. This morning, the witness is asked to read exhibit 49, which was NOT admitted yesterday and the judge mentioned this TWICE, but the opposing sides attorney just kept going, apologizing to our lawyers that there weren't enough copies and handing one over to them. Who even knows what happened to number 48, as it was not mentioned.

Opposition tried to establish concern about the large amounts of money dealt with and tried to imply that the charge backs could have been for insufficient funds or dissatisfied customers.

Last question opposition asked was if she had any other knowledge, however obtained, that Mims has a $200,000 wire "out there somewhere"? She answered Yes. Compass Bank. Two were mailed from Compass bank to _____. However, she said she had no knowledge of it herself.


OUR ATTORNEYS TAKE OVER: Began by establishing this witness's job as a CFO cashier. Her duties include daily banking charges, financial statements, posting entries, payroll, personnel. Not the personal banker for Gus or Lowell, but in the branch that handles their accounts. She is local and was just called to the stand. Did not know what kind of business Mims ran and said she had never spoken to the AG's counsel before today.

She was asked what kinds of reasons might generate a charge back to the bank. (Stop payment, NSF, unauthorized, refer to maker…a variety of reasons)


Have you analyzed BioPerformance's account on charge backs? NO

Do you know what % are for insufficient funds? NO

Do you know what % are for refer to maker? NO

What would be the effects of a charge back on the customer? Closing the account

What % of charge backs would constitute a large enough amount to warrant a closing? 5% or more

Looking at the BP account, how many "remotely ___" per month? Thousands a day.

How many came back as NSF? Don't know

Was the number of charge backs not enough to trigger the closing of the account? Well, they have increased.

Have they increased since the subpoena May 16? NO

When was the account opened? Feb.

Were there a significant number of charge backs in Feb? no

In March, was there any concern? No

In April? They started increasing.

Was it greater than 5%? I think greater.

Did you talk to BP officials about that? No

Did you know they were an MLM business? No

Do you have other MLM businesses? Not aware if it

Is there a difference between an owner and one who can sign on an account? There is a signature card which has a place for a signer or for someone to sign as owner.

Is it customary to have someone who is NOT the owner sign on an account? Yes

Look at exhibit 41 charge backs. Does the bank keep records about WHY there are charges against an account? No

If the account is not overdrawn, you debit the customer's account for that and send the money to ___ Never ... been enough $ to debit the account.

Looking at the records, could you tell the difference between insufficient funds and refer to maker? No

Were there any bounced checks prior to the TRO? No

[Twice our counsel tried to establish a reference to other MLM's but was not allowed.]

Do you know the # of shareholders in this business? No

Does T_Bank handle other multi-million dollar companies? Yes

Do you know who the owner of the Murk Art account is? No

Does it show that deposits into Murk Art were specifically from BioPerformance? No

Do you know how many deposits were made into the Murk Art account? No


Opposing counsel requested permission for witness to be allowed to be released and go home as she had flown into Dallas yesterday and had been required to spend the night for today's hearing. You will note that at the end of the day, when our counsel requested similar consideration for our witnesses, it was denied.


2ND WITNESS OF THE DAY: TERESA MEDRANO
ASST. MGR FOR JP MORGAN CHASE BANK

Oppositions questioning centered around exhibit 52, an 18 page monthly bank statement, with statements from inception to April 06. Questioning covered transfers to Mexico, miscellaneous withdrawals and a Pro Tech Lab transfer.

Our questioning established there was nothing unusual about the bank transfers. It is typical for business accounts to have larger amounts. Verified that you can add additional signers to an account but the statement wouldn't show it. It is not unusual to have a web transfer of money, in fact it is a convenience service offered by banks for their customers and many use that service.


BREAK

Resumed at 11:10, where opposition attempted to introduce sealed records from the Secretary of State. Opposition tried to begin with number 70, but judge insisted to continue in numerical order, with #67. After each attempt, the judge said he didn't see the relevance.
He asked if we objected.  We did; and he sustained the objection each time.

Finally, he said, "I fail to see relevancy in any of this."

3rd Witness of the day: Lowell Mims, President and owner of the business since inception.

Gus and Lowell are the only 2 stockholders. Lowell owns 51% and Gus owns 49%. Lowell is a registered agent and director of the corporation "whatever that means". Gus and Lowell are the sole signers on the accounts discussed today.

Opposition covered the following points: excerpts from the website that were direct quotes from Lowell, the mission statement (where they tried to imply that of the 1,000 millionaires, he and Gus would be 2 of those and would be at the top of a pyramid. Lowell replied that was incorrect.), the 3rd ISO lab test, total sales for the company, Lowell's biography, representations regarding the performance of the fuel pill/powder. He has no interests with the people who produce the product.

Opposition kept trying to make a big deal about the size of the font used in the ‘no guarantees' wordings versus the size of the font in other statements.

Comment was made about the "Average fuel saving of 22.2% and send us an affidavit of your testimonies. Opposition asked, "You believe these testimonies are accurate?" yes. "Are there testimonies on the website reporting negative results?" No, we just print what comes in to us.

The PowerPoint presentation on the website was possibly provided to Gus from the manufacturer. Lowell said there were other tests than the 3rd lab test that keeps getting quoted. He also corrected the opposition by saying there were studies done, not ‘a study'.

Opposition continued to take info from website regarding benefits to the environment and the EPA registration, trying to make the case that the only reason we say those things is to imply scientific official endorsement. Lowell responded no and drew the counsel's attention to another page where he read a quote about the registration with the EPA not constituting an endorsement, certification or approval by any agency.

The opposition went right back to the size of the font used for this information.
Opposition asked "You don't dispute you and Gus made serious money in these past few months? As company prospers, we prosper.

Then, Lowell was grilled about setting up a trust for his family, the beneficiaries being his wife and 3 daughters. Says no money has been spent from that trust and no knowledge of any movement of any funds by the attorney who set it up.


COURT RECESS UNTIL 1:30

Spoke directly with Lowell, who seemed very calm about everything. In his words, "We haven't done anything wrong. We have followed the letter of the law in everything we've done. All I have to do is just tell the truth."

[I missed the rest of his testimony. My notes resumed at 3:50 when Gus Romero was on the stand.]

The discussions I heard were about:

• money being wired to lawyers possibly after the TRO in order to have money to defend themselves
• The Murk Art Account, which is his wife's account; she does arts and crafts and video sales for her company which has been in Mexico for about 30 years. She helped to create the BioP video and to market it through our website and another company that distributes the product (Now, I could have misunderstand that last sentence.)
• The trust set up (with the same lawyer Lowell used) for his wife and 3 daughters and how much money it contained
• What money has been spent for what
• Whether or not other governmental agencies have contacted him that he knows about (yes to Ohio State AG and Kentucky AG; doesn't know about Florida or the Federal Trade Commission; didn't even hear about problems with the Texas AG until the TRO)

After this, our attorneys asked for a recess. They had more witnesses to call.
Both sides wished to continue.

Our side requested permission to bring in some of our expert witnesses who
had come from out of town or out of state so they could return home.

The judge said, "You want me to order them to stay?"

Counsel said, "They are here voluntarily."

Judge, "Oh well then they'll likely be here tomorrow."

The opposition gave permission for the witnesses to be called out of order.

The judge said, "Isn't going to happen." and ended the court session right then and there, at 4:30.

[This is the second day in a row that court adjourned at 4:30 instead of 5:00.]

Court resumes tomorrow morning at 8:30.

June 1 Hearing -- Part I

The following was conveyed by the second source by phone.  The second source got this from L.W., who was in attendance.

The proceedings began by the Judge informing those assembled that this case would likely go into next week, because he had another case he needed to hear tomorrow.

The BP attorney cross examined Gus Romero, and determined that it was money that Gus earned from BioPerformance, not BioPerformance money, that was spent to pay for legal defense.

Master Mechanic Danny Shipp was called as a witness on behalf of BP, having had documented significant mileage improvement in a vehicle using the product in the fuel. 

The prosecuting attorney asked him whether he had documented the outside temperature, wind speeds and direction, and humidity.  Shipp responded that while these can contribute to gains or decreases in mileage, they would not come close to accounting for the differences observed. (This is also unnecessary, as such data can be looked up on weather archive websites for any location and for any day and time in the past.)

The prosecuting attorney then tried to allege that Shipp was "just in it for the money." To this, Schiff responded that actually the product would be bad for his business because cars when perform better, they do not need servicing as often. (This is a little misleading inasmuch as Shipp is a BP distributor and benefits from BP sales.)

Then Shipp told of a test he did in which he ran his lawn mower on regular gas (just letting it sit there); and then he ran it on gas that had the BP additive in the fuel. In the second non-moving test, it ran two hours longer. The Judge said, "a lawn mower?"

(Because the prosecution was claiming that the product does not work at all, only one viable exception would be adequate to disprove that assertion.)

At that point (around 10:30 am), the judge said he had heard enough.  He told the two sides to get together and see if they can come up with a mutually agreed upon outcome.  He gave them until 12:30 pm.  Otherwise, he said that he would render a decision at 1:30 pm.

The judge then gave each side five minutes for closing statements.

The prosecuting attorney put a lot of emphasis on the points relating to the charge that PB is a pyramid -- which charge they said they had withdrawn at the opening of the hearing on May 30.

The defense attorney took occasion to explain the procedural error which he believed at the outset constituted a "fatal error", and grounds for the case being thrown out.  He said that the extremes to which the Attorney General's office had gone to in freezing the assets of BP were too drastic, when less severe measures should have been pursued at first.  BP was not given any prior knowledge that they were under investigation, and only had 12 days to prepare its defense for this hearing, while the prosecution had much more time than that.  (They had around four moving-box-size boxes full of documentation that they brought to the hearing.)

more coming (the above timeframe has not yet passed).

June 1 Hearing -- Part II

The following was conveyed over the phone by the second source, who was present as the decision was issued.

The judge set a court date for Sept. 18. He authorized the release of enough from the frozen funds to cover legal expenses and product testing in preparation for court. The temporary restraining order was not lifted: BioPerformance will be unable to operate as a company until then.

He said there was not enough testimony brought to support BioPerformance's claims to drop the case.

He did not give any credence to the defense attorney's charge of a "fatal flaw."

From their talks over lunch, there is a chance that BP and TX AG may be near to an agreement.  If they reach an agreement, the court could take place prior to Sept. 18.

When the hearing ended, Lowell and Gus quickly left the building.  The second source (source for this material) caught up with them and asked them what they thought.  Lowell said that it would give them more time to get the data together and present a strong case, but he did seem downcast.

The second source then handed Lowell a copy of an email that I (Sterling D. Allan) had composed to have delivered to him, and recommended that he give it heed. (Posted here.)

Back at the courtroom, three news agencies were busy taking interviews.  Lowell had given permission to the distributors to share their personal accounts of experience with the product.  (In prior communications to the distributors, he had requested that they not speak with the media, but direct all media inquiries to the P.R. agency assigned to handle such things.)  An officer with the Attorney General's office was being interviewed, and was saying, "We're just trying to protect the consumer."

The following was reported by the first source, via the second.

At the hotel where Mims and Romero were staying, they said that they were pleased with the outcome.  The judge could have shut them down permanently, but instead he granted them time and financial allowances to prepare their defense.

The defense attorney actually rested the case today because the dynamics were such that the proper witnesses were not able to testify.  They opted instead to be able to get their day in court, with the proper preparations in place.

June 1 Notes

Notes taken by BioPerformance distributor, L.W.

LAST DAY OF STATE OF TX VS. BIOPERFORMANCE, GUS ROMERO AND LOWELL MIMS
June 1, 2006

The courtroom was almost empty, with about 8 BioPerformance supporters present (more would trickle in later on) and NO CAMERA CREWS or MEDIA except for a reporter from the local Express News Newspaper.
For the past 2 days, when the state was giving their testimonies and showcasing their witnesses, there were 2-4 cameras present each day! Now that it was time for our witnesses to take the stand, THERE WAS NO TV COVERAGE!

The morning began with Judge Andy Mireles saying that he needed an extension for this hearing. He had postponed other hearings twice this week on our behalf but the hearing was taking longer than anticipated. He couldn’t hear us tomorrow nor could he postpone other hearings again. Instead, he would extend our hearing until Monday or Tuesday of next week.

The opposition said they were prepared to rest after finishing Gus’s testimony.
The judges reply???? “It really doesn’t matter to me. There’s nothing I can do about it.”


FIRST WITNESS OF THE DAY: GUS ROMERO (CONTINUING FROM YESTERDAY)

Gus said he met with a lawyer on May 17 and discussed the TRO. He and his lawyer reviewed the TRO, discussed the specifics of it and spoke about all accounts that were frozen. He was asked by his lawyer if he had any accounts that were not BioPerformance accounts. His answer was yes, that he had a Burns and Sterns account. When asked if any money in this account was from BioPerformance, he replied no, that his BioPerformance money went to his personal Chase Bank Account. He considered the money to be ‘his’ and not “BioPerformance’.

Page 3 of the TRO document was read aloud that said Gus and Lowell were not prohibited from spending money for reasonable expenses and attorney’s fees from accounts which were not part of the BioPerformance operation.

Gus believed that because the money from BioPerformance was put into a personal account and from there moved to his B&S account, that it wasn’t considered “BioPerformance money.” He had no intention to violate the TRO. He believed the money was his. He was not even required to testify but chose to do so, because, like Lowell, he knows and believes they have followed the letter of the law and done nothing wrong. As the opposition continued to drag through this issue, the judge said, “All I’m going to do is grant or deny this injunction. If you need to file a motion, then do it, but not in front of me today. This is irrelevant.”

(The opposition was going to try and force the replacement of the $300,000 immediately or try and get Gus put in jail.)

Gus revealed that additional studies on BioPerformance Fuel had been ordered from an EPA lab and TRC. He had received the report from TRC and had reviewed it.

Judge: “Do you have an expert witness from the lab? No? Please, let’s get back on track. He’s not an expert witness.”

Opposition: “May I speak?”

Judge: “You may not. We’ve lost our way here. Put your case on. Let’s hear from an expert about the report. Otherwise, we’ll go 2 weeks on this case. That is not in your client’s best interests.”

The opposition then introduced exhibit #80, Well Fargo Bank Records and said it is part of what the state wants frozen.


2ND WITNESS OF THE DAY: DAVID POOLE

David maintains and repairs cars and does emissions test needed prior to state inspections. He has done the emissions testing for 10 years but has been associated with it for 20-21 years. He is the sole owner of European Performance. His experience in the ‘80’s was on private cars shipped here from Europe that had to be brought up to U.S. standards before they could be released. These cars needed to meet the EPA standards. His experience with emissions was limited to the 1980’s except for what he currently does, which is to help cars pass the emissions test for the state.

He is familiar with Wallace Environmental Testing labs and knows it is an EPA approved lab. In Houston, TX, he does FTP procedures so vehicles can be legally driven. He has had interaction with Wallace since the early 1980’s.

Opposition: How do you know they're an EPA approved lab? From their claims on their website and it has been common knowledge since the 80’s.

A document is passed out by our lawyers, but the last page is missing identification and so judge would not allow its use as evidence.

A second document with is submitted by our lawyers, but the sustained objection was that any comments by Mr. Poole on this document would be hearsay, as he is not from Wallace Labs.

Have you ever heard of Transportation Research Center in Ohio? Yes

Then the judge interrupted our form of questioning, saying to keep it to the witnesses personal knowledge.

Did BioPerformance contract with you for a test? Yes

Did you do it? It’s not completed, but some results are ready now.

What are some of the results performed by Wallace? A Ford Explorer with 120,000 miles is available at the lab for use with testing. We follow the FTP protocol (Federal Testing Procedures) which is the most stringent test. After establishing a base test, we drive 1,000 miles with the additive in the fuel; then another test is done in the next 2-3 days. It takes that long to accumulate the miles needed. Next it will be put into a lab and a test run following EPA mandates. I have seen the tests be performed.

The test results are submitted as evidence.

The opposition objects because no one from Wallace Labs is present to authenticate the tests. Sustained.

Based on the tests so far, does the product work? Yes, it reduces emissions across the board and increases fuel mileage.

Opposition objects: He is not an expert witness. The judge gives permission for the opposition to take over the questioning and to discover if Mr. Poole can be considered, from their point of view, as an expert witness.

What is your educational background? High School in Australia and 3 years of engineering college in heating and air conditioning.

Are you a member of SAE? No

Do you have engineering studies in the area of fuels or combustion? No, not in those days.

Do you have formal training in the area of ___, or have you done formal research, or chemical analysis? No

Do you have GSMS experience? No

Have you done specific gravity tests or run octane ratings on fuel? No

What is your experience in the auto field? Extensive testing of cars and what comes out of a gas analyzer?

The kind you can buy at the store and use yourself? Possibly you can buy it

Have you used an Engine dynamometer? Yes

Have you done EPA tests yourself? No, those are done by lab employees.

Opposition: I do not see how he can qualify as an expert.

Our attorneys: It is my understanding that personal and work experience as voluminous as his can compensate for lack of formal training. On Tuesday, their witness had no degrees in the area of ___ and Dr. Matthews was allowed to comment on tests that he did not perform.
Judge: Were you in the same room that I was? What qualifies him (referring to Poole)? Because he can do a gas station test?

Our attorneys: He has run dynamometer machines. We ask the court to give us some leeway based on his voluminous experience.

Judge: I don’t think he has voluminous experience. He can talk about what HE has done, but not someone else.

Our attorneys: He is a liaison between the lab and the company.

Judge: He is free to testify if he has done it himself.

Our attorneys: Have you done tests yourself? Yes, on my cars and my client’s cars. I’ve added fuel and done the 5 gas analyzer under the same starting conditions and seen a 15-20% decrease in CO and unburned hydrocarbons which help form smog. You must let the car sit 12 hours before restarting it because that is what the EPA lab requires.

Our attorneys: None of the ‘experts’ on Tuesday had put any fuel in a car. Do you think that’s foolish?

Opposition: Object to term ‘foolish’. Sustained.

Information obtained by opposition: He has tested 5 cars personally. One is his. He put additive in to other cars. He doesn’t know if the owners did anything else, if they added something else or took the car elsewhere, so you can’t say you’re 100% certain that they didn’t do something else.

The opposition then asked if protocol had been followed exactly as it is advised on the website. He hadn’t had time to finish a full 4 tests but he was present when the product was put into a 50 gallon drum and mixed in.

Mr. Poole then tried to explain how the 15-20% he saw in CO reductions could be equivalent to the 50% reduction claimed by the company: he said the car must be cold started as in the first 3 minutes, 70% of the emissions a car would put into the air for the day occurred then, so yes, on a weighted average it could be 50%. You are only measuring the cold start. That’s the major part of emissions.

________________________________________________________________________
We ask for a short recess.


Next and last witness allowed today: Danny Shipp

He is an auto mechanic with 26 years of field service in south Louisiana. He graduated from McKinney High School and has done continuing education in the auto industry. He has no college but has passed the master test for ASE (Auto Service Excellence) multiple times. He specializes in complete auto service. He has other certifications which I have not listed because they were said too quickly.
He has personally used the product since mid-June
and started on his own personal case study.
He uses an analytical approach and does more that is stated in the documentation.
A pastor showed him the product and said he’d received a fuel increase of 4 ½ mpg.

Danny himself received a 6mpg increase in his 2004 Dodge truck on his 3rd thankful. His wife’s 2003 Ford Taurus gets an average of 163 more miles per tank. He has also used this product in several other vehicles. He and his wife have 512-513 people in their downline and have testimonials from each and every one of them. He has also used it in a lawnmower and gotten an extra 2 hours of use from it. (Opposition asked for the relevance of this…answer was, “it’s a combustion engine”.)


Prior to use in your vehicles, did you do anything different, like air up the tires or change the filters? I know about the things you can do to help increase low mileage. I keep my tires inflated and know how to max my fuel economy. That’s where others in the country are failing themselves.

Opposition: Have you done fuel tests like specific gravity? No

Fuel analysis? No

Octane ratings? No

Heat index tests? No, but the 5 gas analytic work done for stations is different in Dallas than it is here. On cars 1996 and up you use (what sounded to me like ‘weedy 2’) but on 1995 and below, if it fails the 5 gas test, you have to be able to diagnose what component failed, so you need experience with the components because the machine doesn’t always tell the truth.

Were you with your wife most of the time she was driving? Most of the time.

Did you go the same route at the same time? Yes

Was the temperature and the humidity the same each time? Yes

Every time? Not every time

Was the barometric pressure the same? That information was not available

Was the sun out each day? Yes

Was it overcast? Sometimes

Did you take the same route, some roads up, some roads down? Yes, but I paid attention to the routs and the driving process

Was the wind direction the same? There are quite a bit of variables. Yes

Could any of these variables have had something to do with the test results? Sure, they had some.

You’ve been with BioPerformance since the end of January? Yes

What did you sign on as? Area Manager

What did you pay? $499 plus shipping and tax, since I live in Texas

How many people are in your downline? 513

What fee were you paid on the people you recruited? Wasn’t there a finder’s fee? NO, I was paid commissions on sales

To join, they had to buy a sales package, right? No

What was the $499 for? Product I purchased

You are on autoship? Yes

So the product comes to the house whether you use it or not? Yes

Where do you keep your product? In the house in a temperature controlled room.

How much product do you have right now? 15 bottles

So you have a vested interest in keeping the company afloat? I have integrity of character more than I have that.

What is your website address? (he gives his mybpbiz address)

Have you touched the website pursuant to the TRO? No

Have you altered any information on the site? No, the company has shut it down.

How many people have you recruited personally? 21 and none since the TRO

I assume the people all signed up based on your claims? No, not off my claims.

How are the 21 doing financially? Some are doing good, some are just using the product.

So they are directly under you? It’s not structured like that.

Do you have any testimony on the BioPerformance website? No

Were you called by BioPerformance for a test on their behalf? No

Everything you’re doing here today is on your own behalf? Yes

Have you ever given a testimony to BioPerformance? No, I wrote something for my wife and for our business and it just appeared on the website.

You don’t consider that a testimony for BioPerformance? No, I didn’t write it for BioPerformance; just for the people in my business.


Our attorneys take over:
Danny never stopped using the product until the negative media results hit and then he stopped but lost results in his vehicles and went back on the product. His letter used by the company was not a sworn affidavit, just his personal opinions. He said autoship could be stopped by just writing a letter to the company but he did not know about the policy totally because he’d never had anyone in his group interested in returning the product.

At this point, the judge calls for a 5 minute recess and tells each side they have 5 minutes to prepare a 15 minute summarization, after which he will make a ruling.
OUR EXPERT WITNESSES, PAID TO BE THERE, WERE STILL SITTING OUTSIDE THE COURTROOM, WAITING.
THE JUDGE SAID ON THE FIRST DAY OF THE TRIAL HE DID NOT CARE HOW LONG THE HEARING TOOK BECAUSE HE WANTED TO HEAR ALL OF THE EVIDENCE.

THE STATE HAD 2 DAYS OF WITNESS’S TESTIMONIALS AND 2 DAYS OF LIVE TV COVERAGE.

BIOPERFORMANCE HAD LESS THAN 2 HOURS OF WITNESS’S TESTIMONIALS AND NO DAYS OF LIVE TV COVERAGE.

By 10:30 or so, it was over with. The judge said both sides could confer and if they came to a compromise, he could be spoken with up until noon. If he had not heard from them by then, the would reconvene the hearing at 1:30

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

CONTINUATION OF THE 3RD DAY, JUNE 1, 2006
STATE OF TEXAS VS. BIOPERFORMANCE, LOWELL MIMS, GUS ROMERO
APPROXIMATELY 10:30 AM


Judge: The court has heard witnesses from both sides. I will now hear final arguments and how each side wishes the court to proceed.

Opposition summation: The defendant wants to fulfill the American Dream. We submit he is bilking consumers out of hard earned money and is not fulfilling such a dream. Product is sold via internet advertising. The website is replicated. Any distributor can take their own claims – outrageous. (My insert: this is not so, as much of what follows is not so). The product does not increase fuel mileage, is not safe, is toxic (etc. in terms of reiterating the points released in Tuesday’s notes). We gave experts and lab tests inappropriate standard formats from the scientific community. Dr. Matthews reviewed those tests and he said there are only 2 things that can result in an increase in fuel mileage…2 things only…. These tests were run on this opinion.

These tests did not increase the BTU’s and did not increase specific gravity. Without this increase in BTU’s, this cannot, will not, is not capable of performing the claims they say. It doesn’t work. The product is 70% naphthalene, which used to be the common ingredient in mothballs.

Their operation is an illegal pyramid. Their downline, Mims and Shipp, touched on that. Math shows it is a pyramid. It doesn’t matter how is has been marketed.

If it doesn’t work, it can’t be marketed as claimed. Prohibit this as a fuel additive with their own claims, that it decreases fuel consumption and reduces emissions.

If they want to sell it as something else, FINE, but not as represented.

They have 17.4 million in their own pockets, by their own admission. (you will not find this statement to be true anywhere in the hearing.) 5.1 million was put into irrevocable trusts in favor of their kids so as not to be subjected to the state of Texas. 2.7 million in 1 trust for Mr. Mims and 2.4 million in the other for Mr. Romero. We ask the court to continue to freeze these assets because the court has the power to undo these in a final trial.

The defendants own attorney admitted the Chase accounts had proceeds from BioPerformance funds. The #300,000 fee should be returned to the court and they should have to ask the court to release the money for court fees and a reasonable living experience.

1. Freeze assets and do not allow the use of fraudulently obtained money unless they can show they can’t take care of themselves and their family from other sources. (Here sec. 17/46C or something like that was quoted as saying the opposition was following those rules). The court may restore money on real property or personal, now so they can protect assets for distributors at the final trial for irreparable injury.
2. Order the $300,000 fees returned
3. Freeze the family trusts
4. Make the defendants show their personal finances if they can’t pay bills without these assets
5. other cases were quoted considered relevant to this issue
6. Defendants are personally liable if it can be shown they knowingly participated in wrong-doing, even if they didn’t know. They can’t be allowed to use the corporate shield.

Judge: “Wind it up, please.”

Defendants summation: Take a look at what’s happened to BioPerformance since the temporary restraining order. The AG has the right to investigate alleged wrong doing. It also has powers not as draconian as the temporary restraining order. (These other options that could have been used were listed.)

The state has not provided procedural due process. When a verified petition has been filed, it must be verified and certified. The state did not meet this burden.

Without the ability to do business, the company can’t go forward. The company has no ability to hire experts and provide additional information for a fair assessment of whether the product works.

Each state expert who testified about claims made regarding emissions, toxicity and fuel efficiency stated they did not run the tests! Dr. Matthews said he reviewed the test. He clearly stated the product worked on reducing emissions.

TRC is an EPA lab. Dr. Matthews said he would change his opinion if the test were done in an EPA lab!

We come to you for relief.
1. We don’t think the state has met its burden.
2. There are defects in the plea that can’t be fixed with testimony.
3. We want the opportunity to continue the litigation and have our experts heard.
4. We want to fly in the maker of our product.
5. We want opportunities like the state had. We had notice 14 days ago (actually the notice was 12 days before the hearing began, but it has gone on for the extra 2 days.)
6. Within 14 days we were supposed to muster our experts, where the state had the opportunity to get everyone in place before the court date.
7. We ask you to modify the injunction on living expenses and adequate defense.
8. We ask the court to do what is in the best interests of all consumers out there.

Judge: “I will take this under advisement.”

Opposition: Judge, there are two exhibits #50. It is OK with us if you make one of them #50A.

The judge speaks with the lawyers and says he will rule at 1:30. He gives the two sides the opportunity to speak with each other. If they can reach a compromise, he will hear what they have to say no later than noon. If he hasn’t heard from them, he will rule at 1:30.


SUMMATIONS AND RULING FOR LAST DAY OF HEARING
Wed. June 1, 2006


1:30 PM

The courtroom was filled with media: TV, radio and newspapers.
There were 26 present in support of BioPerformance. Standing room only.

The judge entered, apologizing for being late, saying that his clerk’s son had been in an accident but was OK. He also said he had heard from his clerk that the two sides had reached a compromise. Both sides denied this, saying they still wanted to talk. The judge said if you’re still conferring, that’s a good thing.

What I list next is according to my best ability to hear what was said and understand it. There may be minor errors in numbers or descriptions of causes quoted.

• Rule 260TRO..balance evidence, laws and rules of procedure as well as cases. He quotes the Walling case for purpose of review
• Motion to strike relative to pleadings DENIED, but preserved
• Rule 280…probable ___, probable ___ or irreparable harm if any; more consumer protection issues
• Scientific evidence and law (and the judge understands there is more evidence coming in the future); setting aside tests by users doesn’t validate claims being made for specific gravity, safety and toxicity
• Not substantiated, but that’s not to say your implied evidence may be helpful to a jury as to validating claims (commentary: with so much media showcasing ONLY the Attorney General’s side and NONE from BioPerformance, where will these unbiased jurors come from???)
• The temporary restraining order is in order, granted and subject to review.
• Judge believes that eventually, if judgment is rendered, some restitution may be in order
• The court freezes funds minus attorneys fees
• No bond because it’s the AG
• Jury trial set for Sept 18, 8:30 AM in monitoring court, but in Bexar County this can be extended or advanced if both sides agree
• You must make a motion if you need more funds for a trial
• As of June 1, 1:30 PM this original is to be filed.

Misc.

Naphthalene v Naphthenate

The following came from post-hearing dialogue, outside the courtroom.

One of the key questions in the hearing had to do with the allegation that the product is nothing more than Naphthalene (moth balls) -- which, incidentally, historically has been attributed to increasing mileage.  The company has denied that the product is Naphthalene, but has said it is Naphthenate.  However, when chemists have tested the product, it has registered as Naphthalene, with no Naphthenate signature.

A chemical engineer who was present to testify as a witness for BP (but ended up not being permitted due to termination of the hearings) explained to the first source (for the above information) as follows.

The difference between Naphthalene and Naphthenate is one carbon atom.  In the BioPerformance product, that one carbon is associated with enzymes that makes the product what it is in terms of its performance.  At 102 degrees Farenheit, the enzymes begin to break down.  At 116 degrees, they are inactivated.

The process used by the chemists to determine the chemical composition entails heating the product in an oven, which obviously is going to destroy the enzymes.  What effectively happens is that the individual Naphthenate-enzyme molecules are transformed into Naphthalene.

This heat factor may also explain why some customers do not see results -- the product may have been deactivated in the heat found at some point in delivery or storage, such as a hot mail truck – or the personal vehicle’s glove compartment. It may also explain why the samples tested by Central Florida University and the University of Texas came up null.

Danny Shipps (mechanic) recommends, therefore, to tell customers and distributors to put the powder in a thermos when they receive it, and this seems to help keep it viable -- if it was viable when it arrived.

Commentary

One has to wonder about the feasibility of a product designed to be added to a fuel system, that is inactivated in heat that is actually quite typical in the interior of a vehicle left sitting in the sun. Clearly, precautions in shipping and storage are in order, and should be part of the company documentation.

Ultimately, BioPerformance may become a season-specific product on the analogy of how in northern regions, owners of a Dairy Queen franchise routinely shut down their stores in mid fall and go south on holidays. These businesses re-open in the spring when the sunlight brightens and warmer weather makes people want to stand about in the sun and eat ice cream.

In the case of BP, the reverse may take place. When cool weather comes, people will be able to ship, store and use the product without any limitations, and the business will thrive. And during the hot months, BP distributors can all go on vacation.

EPA Tests Underway

Danny Shipp said that there are two tests on the product in progress by EPA labs.

# # #

SOURCES

• Notes received by email from L.W.  The notes were reviewed, and corrections noted by a second source, who was also in attendance, and who is also a BP dealer.
• Phone interview with the second source, who was in attendance both days, though not every minute.

ACKNOWLEDGEMENT

• Editing input provided by Mary-Sue Haliburton

Page posted by Sterling D. Allan May 31, 2006
Last updated June 03, 2006