FOUND HIDING IN SASKATOON
Turbine promoter facing U.S. charges
James Alan Rowan seemed to have a winner with his latest innovation, a wind turbine for the home that didn’t need a tower.
Celebrities like former Tonight Show host Jay Leno and actor Ed Begley Jr. endorsed the Canadian entrepreneur’s product. Rowan was making national headlines with his invention. But skeptics wondered if it actually worked.
Eventually, fame turned into notoriety. In October 2013, a grand jury indicted Rowan for wire and securities fraud in North Carolina. After four years in hiding, Rowan was located in Saskatoon in 2016. The allegations against him have not been proven in court.
Ultimately, it was one of Rowan’s former associates who located him.
In 2013, Heiner Philipp was driving through an Ontario ice storm, watching power transformers explode and wires and trees crash down. His plan was to serve Rowan with civil suit documents at his home in Fonthill, Ont.
The suit was filed by shareholders of one of Rowan’s successful ventures, OilSteam. It alleged, among other things, that he shared OilSteam’s intellectual property without authorization. Philipp said Rowan’s alleged activity with Enviro-Energies, which is at the heart of a looming criminal prosecution in the U.S., damaged OilSteam’s reputation to the point where it couldn’t go forward.
Philipp said Rowan’s house looked abandoned, the windows covered with cardboard. He was parking his vehicle at a nearby church and using a hole in a fence to get to his house. He stayed in his basement in the dark.
Philipp opened the basement window, pushed the drapes aside and said ‘Consider yourself served,’” Philipp recalled in a phone interview.
Last spring, Saskatoon Court of Queen’s Bench ruled that Rowan be extradited to the United States to be tried on one count of wire fraud and one count of securities fraud in connection to the Mag Wind turbines marketed by Enviro-Energies. Rowan has appealed the extradition ruling. The Saskatchewan Court of Appeal has set a hearing date for May 11.
The FBI alleges that Rowan aggressively marketed the wind turbine technology in person and online and that it was endorsed by celebrities. Marketing materials said the turbines didn’t need towers.
The grand jury that indicted Rowan in 2013 alleged he exaggerated the “power generation capacity, falsifying scientific and technical data, and falsifying information regarding his capacity to manufacture and distribute the Mag-Wind turbines.”
According to an RCMP affidavit, Rowan had a valid Saskatchewan driver’s licence listing his parents’ home as his address. Through a Privacy Act request, the RCMP learned that Rowan worked as a Statistics Canada field interviewer for a time while he was wanted by the FBI.
Philipp said he was introduced to Rowan one winter through a financial services company that had loaned money to Enviro-Energies. The lender mentioned that Enviro-Energies was having engineering problems and recommended he step in to help, Philipp said.
He works with major companies like Toyota, Honda, General Motors, Chrysler and WestJet. But he also enjoys working with dreamers, he said, charging them lower rates or offering his services for free.
Philipp said he signed on to design the mechanical elements of the turbine’s system and manufacture up to five prototypes. Each of the prototype turbines cost $12,500, which Philipp says he paid for. He was to be reimbursed “when the money was there,” he said. But the money would never come.
A hint that something was wrong came after Philipp built the first prototype but couldn’t test it.
“There was always a reason why we couldn’t. They don’t have a wire, they don’t have a crane, they don’t have an inverter.”
One potential buyer in Florida wanted to have the turbines hurricane tested. Philipp said Enviro-Energies went to Intertek in Vancouver, where the firm has a “big plane engine,” to conduct hurricane testing.
Philipp decided to see how much power the unit would produce. It fell 90 per cent short of its stated output at wind speeds of 40 kilometres per hour, but could produce substantial power at 200 km/ h, hurricane wind speeds.
When Philipp confronted Rowan, he said Rowan told him they needed to look into why the unit’s sails weren’t working properly and that there must have been a change — but the unit used in the test was the exact same form and shape as before.
Philipp contacted Roush Enterprises/PAS Inc., the firm he was told designed the turbine sails. He said the person he spoke to at Roush told him their engineers had told Rowan the design didn’t and couldn’t work and even showed him a PowerPoint presentation explaining why it wouldn’t work.
“They were very aware that it would never work and they made James Rowan aware of that fact,” Philipp said.
Philipp said he helped the FBI with its investigation into Rowan and his venture after one North Carolina investor’s complaint to authorities failed to gain traction.
A spokesperson for Roush declined to comment.
Investor Richard Holloman described Rowan as convincing and humble. Holloman paid hundreds of thousands of dollars to Rowan almost a decade ago for stock certificates he didn’t receive.
“I’d like to get my money back, but I’m beyond thinking that is possible,” he said via telephone from North Carolina.
Holloman and a business partner were looking at building a wind farm along the coast of North Carolina. Smaller turbines seemed to be the answer to environmental implications.
Before he met Rowan, Holloman said he learned about the MagWind turbine that had been built for Leno, lending credibility to the product.
Holloman said he told investigators he sent a wire transfer of funds to a Canadian bank account as designated by Rowan in October, 2008. But Holloman said Rowan could never demonstrate the turbine producing energy. He said Rowan expressed no doubt about how well the turbines would work but Holloman and others hadn’t verified Rowan’s numbers with someone who was using a unit.
Holloman built the turbines according to Rowan’s technology and tried to see if it would work. When Rowan made a trip to North Carolina, Holloman and two other investors confronted him, telling him what he was doing was a fraud.
“And he just got belligerent and all mad and everything else,” Holloman said. “That was the last time we ever spoke to him.”
Later, at a Las Vegas Homebuilder’s Convention, he saw Rowan speaking to potential distributors. In fact, Rowan’s booth was one of the most visited exhibits at the event, he said.
“I think he had convinced himself he wasn’t a fraud. He was so good at it he had to believe what he was doing was right.”
At that point, Holloman just wanted to move on — despite losing a “substantial” amount of money.
Six or eight months later, when he learned that Rowan was still seeking investments from other people, he went to the FBI. Holloman said he documented every conversation he had with Rowan and kept notes. He turned this information over to the FBI. He said he’s willing to testify if asked.
“I’d like to see justice brought to the situation,” he said. The wind farm idea that led him to Rowan has been abandoned.
Philipp, meanwhile, said he will travel to the U.S. at his own expense and attend court. He wants to warn potential investors to be cautious when picking projects.
“The biggest tragedy of the Enviro-Energies catastrophe ... (was) it could have been a very successful energy company, except that Mr. Rowan didn’t treat it as a real business entity. It was simply a skim for him,” Philipp said.
“Because he had the engineering, he had the financing, he had the distribution and the marketing, he had everything and had he not lied about the performance of his sails that he liked so much that didn’t work at all, we would have within a matter of days or weeks developed new sails.”
Philipp said he ended up developing new sails for the unit that were close to 38 to 40 per cent efficient. But he said no one wanted to continue with the project because millions of dollars had already been lost.
“But he had all the ingredients to build a successful operation.”
The StarPhoenix requested an interview with Rowan through his lawyer. Rowan has committed to an interview, which is scheduled for early April.