Bowling for GreenFuel

Who doesn't like bowling? Really?

If you can get past the retro Americana stigma (despite the sport's earliest origins dating back to ancient India, Finland and Germany), it's a satisfying, visceral experience, heady in drama and intrigue.

The long suspenseful roll down the laneway. The sweet smack. The clutter of pins falling in disarray. The reset button, which allows you to quickly and easily try it again, regardless of the mess.

All fun, even for a superhero.

And all apt as allegories for ailing algae company GreenFuel of Cambridge, Mass.

GreenFuel bowls a split

About half the pins were left standing after GreenFuel Technologies execs took employees out bowling last week.

Characterized as morale building, the event turned out to be something of a last hurrah—the company then proceeded to lay off approximately half its 50 employees, blaming disappointing technical and financial developments.

CEO Cary Bullock was moved into the role of VP of business development [ed.: uh, "spared?!"]. Bob Metcalfe, inventor of Ethernet, former InfoWorld columnist, co-founder of 3Com and partner at GreenFuel investor Polaris Venture Partners, has temporarily taken the helm of the company.

The dramatic actions came on the heels of the internally-acknowledged failure of GreenFuels' third generation algae bioreactor test in the deserts of Arizona.

Metcalfe put it this way in a note to GreenFuel staff: "Our current third-generation engineering scale greenhouse grew algae faster than expected ... however, this very success triggered failure, as we could not harvest the rapidly growing algae quickly enough. Their unexpected density limited light and nutrient supply, which caused them to start dying. As a result, the greenhouse had to be shut down."

GreenFuel is scaling back its operations in Arizona, and pressing the restart button there in a bid to make its process more economically viable.

Algae holds promise as a feedstock for biofuels because of the speed at which it can replicate, and the fact it can be grown anywhere—in theory. But new visibility suggests its economic viability is increasingly hard for even a superhero to brook.

For instance, GreenFuel's own estimates break down something like this:

• Max annual yield of biofuel per m²: 1-1.3 gallons
• Capital expenses per m²: $125-$150
• Operational costs: $1-2 a gallon (a third party said he "would not be surprised if actual costs were as much as $4 per gallon")

All of which suggests GreenFuel, in particular, is still a long way from being able to interest anyone in making and selling biofuel from algae with its technology at a profit.

GreenFuel is low on cash. In his letter, Metcalfe told employees he's trying to raise money to keep the company in business.

"I will speedily make the case to investors that last week’s setbacks can be reversed successfully. The proposed six months of interim cash will likely come from current investors in July."

The company plans to try to raise a further round of equity financing by the end of the year.

Lawyer charged in biofuel fraud, $17M seized

Louis W. Zehil, a corporate attorney until recently with the law firm of McGuireWoods LLP, has been charged with securities fraud for illegally profiting by as much as $17 million in the financing of several public biofuel companies.

The SEC alleges that between January 2006 and February 2007, Zehil represented seven OTCBB companies issuing their stock in PIPE transactions (private investments in public equity): Gran Tierra Energy, Foothills Resources, MMC Energy, Alternative Energy Sources, Ethanex Energy, GoFish and Kreido BioFuels.

A complaint alleges that Zehil personally invested in the issuers' PIPE transactions through two companies he controlled, and structured the deals so that all other investors but his companies were initially inhibited in their ability to trade publicly.

"As a result of their fraudulent conduct, the Defendants were able to receive shares without restrictive legends, which they quickly sold into the public market, and generated illicit profits of at least $17 million," the SEC said.

Zehil is 41, and a resident of Ponte Vedra Beach, Florida.

He could face a maximum sentence of 20 years if convicted, according to the U.S. Attorney's Office in Manhattan.

Which begs the question, can you bowl in prison?

Cleantech developments making news in the past 24 hours

• New year money goes to biofuels
• VeruTEK completes new green chemistry remediation project

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