Florida sheriff's office closes extortion investigation involving Joi Scientific

A sheriff's office in Florida has closed an extortion investigation involving Joi Scientific, the Florida hydrogen startup that has a multimillion-dollar licensing agreement with NB Power.

The criminal complaint was filed by former Joi Scientific chief financial officer Joseph Wiendl in April 2018, alleging he'd been forced out of the company and given an extortion letterby company executives in 2016.

He told police the letter demanded he surrender a portion of his company shares.

Police records show the case was closed in May after Joi Scientific's attorney sent the sheriff's office a copy of an August 2018 settlement agreement with Wiendl.

"Based upon this, Wiendl vacated any criminal claims against Joi, including the extortion claim he made with the Brevard County Sheriff Office in 2018," areport from the sheriff's office says.

"As such there will be no further investigation into Wiendl's allegation by the Brevard County Sheriff's Office. This case shall be exceptionally cleared (closed) and referred to file."

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No one from Joi Scientific was made available for an interview.

"The fact that Joi Scientific has never been contacted by the Brevard County Sheriff's Office about any complaint indicates the baseless nature of the allegations by an ex-employee," Joi's vice president of marketing, Vicky Harris, wrote in an emailed statement to CBC News.

In May, Joi Scientific CEO Traver Kennedy said the company had only learned about the extortion complaint when CBC News askedabout it. He denied that Wiendl was given an extortion letter.

"I don't think any company would try to extort something from someone who is actually leaving the company anyway," Kennedy said in the May interview.

"I don't understand where this comes from or what that is."

Neither Wiendl nor Joi Scientific has discussed the circumstances of Wiendl's departure from the company, but Wiendl characterized it as a "coup" in his statement to police. In May, Kennedy described it as an "amicable" parting.

Now that the investigation is closed, the records associated with the case have become public.

They reveal that Wiendl, the former chief financial officer of the company, was "openly skeptical of the soundness of the technology" in the months before NB Power signed a licensing agreement with Joi Scientific in November 2016.

Joi Scientific claims to have found an efficient way to convert seawater to hydrogen, which would be a major scientific breakthrough. One of the company's patents claims it can generate hydrogen at 200 per cent efficiency. For one watt of input energy, the patent says two watts of energy in the form of hydrogen gas are produced.

But in addition to Wiendl, two former Joi Scientific employees have said the company's technology doesn't work as previously advertised.

'We were making all sorts of claims'

In a statement given to the sheriff's office on April 12, 2018, Wiendl wrote that he was "hypercritical of reckless, high-risk business practices and use of funds by Kennedy (and supported by [Joi Scientific president Robert] Koeneman), especially after significant funding (in $millions) was first received late in 2015 and early 2016."

Wiendl told Sgt. Chris Cardinal that Joi was spending that money "not to do the simple thing of just proving the technology unequivocally, that it worked at a simple level, but spending it on marketing and armies of consultants and public relations, communications-type stuff," according to an audio recording of Wiendl's April 18, 2018, interview with Cardinal.

"My fear was it could all be smoke and mirrors when the fundamental technology didn't work at all," Wiendl told Cardinal.

"We were making all sorts of claims that could be significant and doing things that could be significant securities laws issues and violations along the way."

The companycontinues to be the subject of an investigation by the Florida Office of Financial Regulation, the state's financial services regulator, a spokesperson confirmed on Friday. The agency hasn't commented on the nature of the investigation.

When asked in May about Wiendl becoming suspicious of the company's activities, Kennedy said, "I don't know anything about any suspicions or concerns that anyone would have related to our company."

The value of the company

The value of the company was a point of tension between Wiendl and other executives at Joi, Wiendl said in his interview with Cardinal.

"They were raising and insisting that the value of the company was $150, $250 or $500 million," Wiendl told Cardinal.

"And I said, no, you're lucky if it's $10 [million]."

Wiendl said Joi's "big demonstrations don't work" and "there's no PhD or academic credibility to it or pedigree or credentials behind it."

"I've been asking and screaming for a simple demonstration, self-evident demonstration that proves that it works," Wiendltold Cardinal.

An alleged meeting

Wiendl told police he was called to the Artesia condominium building inCape Canaveral on Oct. 20, 2016, to meet with three executives from the company.

Once inside,Kennedy slid a letter across the table with about six lines of text in it, Wiendl said.

"It basically said that we are prepared to take action against you unless you surrender two-thirds of your shares in the company," Wiendl told the officer.

Wiendl told the sheriff's office he was threatened with losing his home and with interference in his ongoing divorce and custody battle.

The company had helped Wiendl finance the Cocoa Beach home during divorce proceedings in December 2015, months before NB Power officials flew to Florida to check out the company's technology.

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 a separate civil complaint filed by Wiendl, the house was supposed to be transferred to his name as soon as the divorce was finalized, but that didn't happen.

All of the litigation involving the company and Wiendl was settled and is confidential. Property records show the home was transferred to Wiendl in September 2018.

Wiendl declined an interview requestthrough his lawyer.

Thomas thought investigation would 'go away'

NB Power did not respond to a request for comment before deadline on Friday.

In May, NB Power CEOGatanThomas told CBC News he was confident the extortion complaint and the Florida Office of Financial Regulationinvestigation would "go away."

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

Last month, Natural Resources and Energy Minister Mike Holland said Joi Scientific is in the midst of a final test that will show whether its technology is viable.

"Up until this point, we haven't seen results that prove viability, so therefore I'm assuming that maybe there is no viability," Holland said in a November interview.

"But I'm not in a position to say that because I don't have the expertise required."

Province's lab still running

In the meantime, NB Power is paying about $20,000 per month to run a lab in Florida. The utility is committed to the lab until the end of January.

Last month, a spokesperson with Joi Scientific acknowledged the company has "encountered delays and challenges" but is working through the issues with its "partners."

"We remain confident that Joi Scientific is on the right path to create a new, cost-effective, and clean energy source in the form of green hydrogen," the statement said.

On several occasions, the company has declined to discuss details about its technology, citing non-disclosure agreements.