Fuel Tech Investment Yields Family Sorrow

Timothy A. Larson bought a company working on a process to turn water into fuel because he believes in the technology.

LOS ANGELES (AP) — Timothy A. Larson bought a company working on a process to turn water into fuel because he believes in the technology.

But that belief has spelled heartbreak for Larson's family following a string of explosions at his research facilities, including a Tuesday night blast in Los Angeles' Sylmar section that buckled masonry walls and ripped off most of the building's roof.

The explosion, which left one of his sons with severe injuries, came just over a year after an earlier explosion at a facility in a nearby city killed another son.

"It's a terrible tragedy," said Assistant U.S. Attorney Kevin Dooley, who is pursuing fraud and other charges against the man who sold Larson the company and then, having gone to work for Larson a consultant, was also badly injured in this week's explosion.

Larson is a San Fernando-valley based attorney who represented some 640 Lockheed Corp. workers in Burbank when they received a $33 million settlement from the company in 1992 over claims that they were harmed by toxic chemicals while building aircraft.

The attorney, who did not return a phone call Thursday, was among the hundreds of investors who bought into supposed business opportunities being peddled by William Stehl and alleged co-conspirator Richard Rossignol, according to a federal indictment filed in New York.

The indictment charged the two men with conspiracy to commit mail and wire fraud. Stehl faces additional tax charges and a charge of making a false statement.

In addition to the alternative fuel firm, the pair had established ventures that purported to sell gold-backed bonds in Vietnam and to pursue online gaming businesses, according to court records that allege investors were guaranteed returns that were never delivered.

Stehl, who claimed to have developed the process by which water is converted into a gaseous fuel compound through an electromagnetic process, tended the enterprises from his home in Saranac Lake, N.Y., while Rossignol raised money from investors in California, the court filings said.

Some 300 investors in the energy company, called Rainbow Technologies LLC, were bilked out of more than $6 million, according to the filings.

Once word spread that prosecutors were investigating the businesses, Stehl was no longer able to raise money to support the ventures and in 2005 sold Rainbow Technology's patents and equipment to Larson, Stehl's attorney James Long said.

Stehl remained with the company as a business adviser after its sale, said Long, who insisted that his client's businesses were legitimate. Rossignol's lawyer Kevin Luibrand did not return a call.

Dooley said Larson appeared to have bought the company because he wasn't able to simply cut his investment losses.

"Larson's motivation was that he thought there was something to the technology," Dooley said. "He invested a lot of money and had gotten a lot of friends and family to invest."

The first signs of danger from the energy venture, which had been renamed Realm Industries, came as early as 2008, when a small explosion shook the building where it was then housed in the city of Simi Valley. Authorities said at the time that there were no serious injuries from that blast.

But in June 2010, a much bigger explosion rocked a new Realm Industries facility nearby, killing Larson's 28-year-old son, Tyson Larson, according to California Division of Occupational Safety and Health, or Cal/OSHA, documents.

A Cal/OSHA investigation couldn't determine exactly what Tyson Larson was doing at the time of the accident because no direct witnesses were identified and numerous documents were lost in the explosion.

The probe found, however, that three containers that were used to generate and store pressurized fuel failed.

No accident-related citation was issued because investigators had no conclusive evidence about what occurred, the agency said. Instead, Cal/OSHA issued Realm Industries three citations totaling $5,685 for using an unpermitted air compressor and tampering with a pressure vessel that wasn't adequately maintained.

The company appealed the citations and a hearing was held before a Los Angeles judge on Tuesday. Agency spokeswoman Patricia Ortiz did not know if the judge had completed her report on the hearing as of Thursday afternoon.

When the enormous explosion shook the firm, since renamed Rainbow of Hope, on Tuesday, workers were extracting hydrogen from water and had been transferring the gas from one cylinder to another, Cal/OSHA said.

Ortiz said it could take six months or longer for Cal/OSHA to complete its investigation into that explosion, in which Larson's 42-year-old son, Timothy B. Larson and Stehl were injured.

Timothy B. Larson, a Los Angeles firefighter who was on disability leave due to an existing injury, was being treated for his injuries in the blast at Providence Holy Cross Medical Center in Mission Hills, fire department spokesman Matt Spence said.

Hospital spokeswoman Patricia Aidem could not comment on his condition Thursday due to a request by his family, but Long said he was told by government officials involved in the court case that Larson lost "an upper extremity and a lower extremity."

Stehl, 68, was in a medically induced coma at a different hospital with severe shrapnel wounds to his face, Long said. Stehl would likely lose part of his left arm and possibly a leg, the attorney said.

Long said he had recently been with Larson and Stehl at the Sylmar facility to see a demonstration of the energy-production technology and had shrugged off concerns that the Simi Valley blast could repeat itself.

"I literally thought to myself, 'Could it happen again while I'm standing here?'" he said. "I guess I was lucky."