Jasco Bio-Tek sues over alleged biofuel scam

Will Astor//March 4, 2011//

Listen to this article

See Corrections and Amplifications below

Confidence men took Jasco Bio-Tek LLC for more than $1.1 million and put it in line to suffer indirect damages totaling $25 million in an alleged scheme involving a never-built North Carolina ethanol plant, the company claims.

Jasco Bio-Tek states in a lawsuit that a trio of supposed environmental experts talked the Rochester company into investing in the biofuel plant. The deal was never more than "a confidence game intended and designed to induce an unsuspecting investor (hereinafter the mark) to transfer large sums of money to the conspirators without any countervailing benefit to the mark," the company claims.

In the complaint, filed Feb. 24 in U.S. District Court in Rochester, Jasco Bio-Tek gives its address as 1390 Mt. Read Blvd. That is the headquarters of Jasco Precision Machining, Jasco Heat Treating and other companies headed by industrialist John Summers, known as Dutch.

Jasco Bio-Tek attorney Alexander Geiger of Geiger & Rothenberg LLP in Lansdale, Pa., declined to comment.

The lawsuit names Luke Staengl, Maurizio Giabbai and Bruce Jones as main perpetrators of the alleged con. Staengl heads Pesco-Beam Environmental Solutions Inc. of Roanoke, Va.; Giabbai is president and CEO of Strategic Technologies and Resources Ltd. and Solv-It Technologies, two firms based in Marietta, Ga., the Jasco complaint states.

Jones, Giabbai and indirectly Staengl, through a share held by Pesco, are joint owners of Strategic Technologies, the Jasco Bio-Tek complaint states.

Staengl and Giabbai have partnered in various ventures since 2000. Jones has partnered with Staengl and Giabbai since 2006. Common themes in the trio’s enterprises have been the lack of technical expertise and financial wherewithal to complete the projects they proposed, Jasco Bio-Tek alleges.

The complaint claims that Solv-It struck a deal with Robeson County, N.C., to build a biofuel plant in 2006 at the county landfill in St. Pauls. Later, after Giabbai and Jones pitched the project to Jasco Bio-Tek in Rochester meetings, Jasco Bio-Tek and Solv-It formed St. Paul Bio-Tek LLC, a joint venture that was supposed to build the plant. Jasco Bio-Tek had a 75 percent interest and Solv-It had 25 percent.

To help convince Jasco Bio-Tek officials that the project would be successful, Giabbai and Jones introduced Staengl as an independent expert, hiding their longstanding ties to him, the complaint states. St. Paul struck a deal with Pesco in 2007, calling for the Staengl-owned firm to build a $4.3 million stainless and carbon steel ethanol fermentation and distillation plant.

Reports in North Carolina newspapers in 2006 and 2007 hailed the Robeson County ethanol plant as a project that could help local farmers by creating a new market for corn, since demand had plummeted for the tobacco they traditionally had grown.

Though the county agreed to spend $1.1 million to put in a methane-collection system and got a $690,000 grant to help pay for it, St. Paul Bio-Tek had missed several deadlines to show a construction schedule for the plant, the Fayetteville Observer reported in 2009.

Giabbai and Jones allowed Staengl to miss every deliverable date and "repeatedly attempted to cover up or smooth over the inability of defendant Staengl, Pesco and Pesco-Beam to live up to their obligations," Jasco Bio-Tek maintains in court papers.

After Staengl told Giabbai and Jones that his companies intended to default on the 2007 agreement, Giabbai and Jones failed to disclose that, urging Jasco Bio-Tek to keep making payments and to up the plant’s $4.3 million price, the complaint adds.

Staengl submitted fraudulent invoices totaling $6.2 million to St. Paul Bio-Tek in 2007 and 2008, seeking payment for work never done and goods not purchased, the brief alleges. Court papers do not state which of a dozen invoices listed might have been paid.

Staengl was engaged in out-of-office meetings for the next few days and would not be available for comment this week, said a woman identifying herself as Staengl’s executive assistant. Calls placed to Giabbai and Jones at Strategic Technologies were not returned.

Corrections and Amplications

The parties in this case reached a settlement and a stipulated order of dismissal was filed on March 28, 2011.