New Brunswick·CBC Investigates

NB Power CEO confident Joi Scientific investigations 'will go away'

NB Power has paid the Florida company $13 million in licensing fees for technology that claims to be able to convert seawater to hydrogen energy on demand.

NB Power has paid Florida company $13M in licensing fees for mysterious technology

NB Power CEO Gaëtan Thomas said he believes the allegation comes from a disgruntled employee of Joi Scientific, a Florida company. (Jon Collicott/CBC)

A Florida startup involved in a multi-million-dollar hydrogen partnership with NB Power is the subject of two related investigations by two separate agencies in Florida, according to public records in that state.

But NB Power CEO Gaëtan Thomas said he is "confident" the investigations involving Joi Scientific, which has received $13 million in licensing fees from NB Power, "will go away."

"We believe that there has been no alleged violation and we believe it comes from a former disgruntled employee," Thomas said.

That includes an open and ongoing investigation by the Florida Office of Financial Regulation, the state's financial services regulator.

As a member of Joi Scientific's board of directors, Thomas was told about the agency's investigation "hours" after the company learned about it around February 2018, according to Joi Scientific CEO Traver Kennedy.

Both Thomas and Kennedy say they only learned about the second investigation, by the Brevard County Sheriff's Office in Cape Canaveral, Fla., when CBC News brought it to their attention last week.

That investigation involves a complaint of alleged extortion reported in 2018 by a former Joi Scientific executive. The police investigation is suspended pending the findings by the regulatory agency, according to Sgt. Chris Cardinal with the Brevard County Sheriff's Office.

"It's like deconflicting with other agencies — who's got the bigger case — and let them do their case," Cardinal said in an interview.

"Then once they're done, then we would pick up and say 'OK, now let's look at what we have and see if we can make any other case.'"

Cardinal confirmed he didn't speak to or contact anyone with Joi Scientific because of the "ongoing investigation" by the Office of Financial Regulation.

'We're assuming that we're in full compliance'

Neither investigation has resulted in a finding of wrongdoing involving Joi Scientific or its executives.

Kennedy said the company was asked to turn over information to the Florida Office of Financial Regulation in early 2018 and did so but hasn't heard anything since then.

"No allegations have been made or further questions have been asked," Kennedy said.

"We're assuming that we're in full compliance and must have satisfied the authorities."

NB Power has partnered with Joi Scientific to license technology the company claims can convert seawater to hydrogen energy on demand. (Michael Heenan/CBC)

A spokesperson for the regulatory agency wouldn't provide any further details on the nature of the investigation, other than to say it remains open and is continuing. That investigation began Nov. 14, 2017, the spokesperson confirmed via email.

Company denies extortion allegation

Some details about the complaint to the sheriff's office are laid out in a police report written by Cardinal with the Brevard County Sheriff's Office in Cape Canaveral, where Joi Scientific is located within the Kennedy Space Center's Space Life Sciences Lab. Many details have been redacted from the report.

Joseph Wiendl, who was chief financial officer with Joi Scientific until Oct. 20, 2016, told police he was given an alleged "extortion letter demanding he step away from the company," according to the report.

Wiendl alleged he was given the letter by two people, whose names have been redacted from the report, on Oct. 20, 2016 at a condominium, the report says. He contacted police on April 12, 2018.

According to the police report, an investigator with the Florida Office of Financial Regulation was already looking into Wiendl's claims by the time he went to police. Cardinal wrote that he told Wiendl he would contact the investigator from the regulatory agency and "ascertain where her investigation was at and then go from there with his claims of extortion."

Joi Scientific has been hesitant to reveal secrets behind what would be a major scientific breakthrough, pending further patents.

Through his lawyer, Wiendl said he is unable to comment.

Kennedy said the police complaint was "news to us."

"Unless we're notified by them [the sheriff's office] and requested for anything, as far as I know, this is either suspended or is going away or whatever," he said.

When asked whether he gave an extortion letter to Wiendl, Kennedy said, "I don't think any company would try to extort something from someone who is actually leaving the company anyway."

Kennedy said he cannot talk about employment matters, so he cannot say why Wiendl is no longer with Joi Scientific.

But Kennedy said he saw the parting at the time as being "on amicable terms."

"If there's something that a former employee is alleging and we can't even see what that is, it's a little hard for me to make any kind of comment," he said.

Thomas said the same thing happens at NB Power from time to time, when someone who is "disgruntled" makes a complaint.

Police in Brevard County in Florida filed this report after receiving allegations of extortion from a former Joi Scientific executive. (Brevard County Sheriff's Office)

"They go and make a complaint to the ombudsman or to some regulation and it's unfortunate but it happens," Thomas said.

Bought employee's home during divorce

Wiendl filed three separate court actions against Joi Scientific on Oct. 20, 2017, one year later.

That includes one accusing Joi Scientific of failing to transfer ownership of his Cocoa Beach home to him, after the company helped him finance the home during divorce proceedings.

The transaction happened in December 2015. NB Power was in discussions with the company in 2016, while Wiendl was still an employee.

According to court documents, Joi Scientific paid Wiendl $90,781 as bridge financing "for a down payment and transaction costs for the acquisition of a residence."

It also borrowed a $328,000 mortgage from a private lender in order to secure the house for Wiendl.

According to Wiendl's complaint, the house was supposed to be transferred to his name as soon as the divorce was finalized, but that didn't happen.

Kennedy says the company was helping Wiendl provide for his children, before the dispute.

"He needed a home for his kids," Kennedy said. "We decided that we would help him to provide for those children."

All of the litigation involving the company and Wiendl was settled and the terms are confidential.

NB Power declined comment on the dispute over the house.

Minister meeting with NB Power

People's Alliance Leader Kris Austin questioned the Joi Scientific partnership during question period on Tuesday, asking what due diligence the utility did before partnering with the company.

"It's gambling with New Brunswick money that they can't afford to lose on unproven technology," Austin said.

Energy and Resource Development Minister Mike Holland has promised to report back to the house with information on NB Power's partnership with Joi Scientific. (CBC)

Energy and Resource Development Minister Mike Holland said he would be meeting with NB Power "as early as [Tuesday] afternoon" to get more information. He said he would bring that information back to the house.

Holland said he's been pushing the Crown corporation to look for opportunities to invest in a greener economy.

"We are open for business, but it will not be at the expense of the taxpayer," said Holland, who became minister last November after the Progressive Conservatives came to power. 

"You can have my word I will bring reports back and accountability on any projects that this government enters into as we endeavour to move forward in a green economy in a way that benefits New Brunswick."

NB Power paid $13 million to license technology

Joi Scientific claims to have developed an efficient way to generate hydrogen gas from seawater on demand, something NB Power hopes will hold the key to powering the Belledune generating station beyond 2030, when coal is phased out.

Opening in 1993, the Belledune Generating Station was built to last until 2040. But with the federal Lliberal government's pledge to eliminate coal-fired electricity generation, it will now close in 2030. (Jacques Poitras/CBC)

Alternatively, NB Power would build multiple smaller hydrogen generating plants around the province.

But Joi is hesitant to reveal secrets behind what would be a major scientific breakthrough, pending further patents.

"In order to keep all of our licensees, including New Brunswick Power, safe and to have their licences have meaningful value, we need to be careful about what we divulge," Kennedy said.

A Vancouver-based energy consultant has described the technology as "too good to be true," but Kennedy said the company has already proved to its customers that its technology works.

The utility has paid Joi Scientific $13 million Canadian to license the technology, giving the utility first right to use it for power generation. NB Power could then market it outside the province and share in the profits.

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