Denver fuel developer convicted of defrauding government

DENVER - A jury entered a guilty verdict for 22 of 26 charges against a man who solicited money from Congress to develop an alternative automobile fuel.

The case against businessman Bill Orr involved complex technical issues and nearly two months of testimony in federal court. The jury deliberated for a week before convicting him.

Orr had received a million dollars from private investors and a $3.7 million federal grant to test a fuel that he claimed was cleaner and more efficient than gasoline. Prosecutors argued that he misrepresented his research results and business prospects to obtain the grant from Congress in 2002.

Orr admitted he paid himself more than $500,000 of the federal funds during two years of research and development work at a small laboratory in Golden. He said he obtained the grant with the help of Congressional aides whom he met while working on other fuel and environmental issues.

Specifically, Orr worked with politicians on Capitol Hill when he tangled with the EPA in the 1990s.

"I sued the EPA for their bad science," Orr told 9NEWS. "Their (standard for fuel) is going to cost the American public and make the air dirtier."

His lawsuit against the EPA was finally dismissed in 2004. That was about the time the EPA was assigned to administer the earmark grant Orr had received from Congress. Orr claims the EPA instigated his prosecution in retaliation for his lawsuit. Federal investigators have denied that.

Justice Department prosecutors cross-examined Orr at length about his lack of scientific education and experience. Orr testified that he hired scientists to do the technical work, and he supervised. Orr and his scientists developed an alternative fuel that he called VPC, for Vapor Phase Combustion. It's a mixture of gasoline and ethanol, with a touch of the metal manganese.

"We thought it would probably result in a fuel that's less expensive to manufacture, with some fuel economy, more miles to the gallon," said Orr. "More importantly, we were trying to clean up the air."

Two scientists who worked on the project disagreed about the results.

"The more we measured it, the more we found his fuel was just like any other fuel," said Dr. Tom Reed.

Chemist Frank Cox was more impressed with VPC. "It was well worthwhile," he said. "The results, to me, indicated we should go to the next step: actual vehicle testing under realistic conditions."

Before Orr could move his research to a larger laboratory, the EPA suspended his grant for alleged mismanagement of the grant money. A year later, a federal grand jury indicted him for defrauding Congress and private investors by claiming that "VPC was superior to conventional gasoline," even though "all scientific testing on VPC failed to demonstrate any benefits regarding emissions or fuel efficiency."

An investor testified in court that Orr's newsletters bragged about connections to big oil companies like Exxon and investment banking firms like Prudential-Bache. Prosecutors said those connections never existed.

Orr's defense attorney, Paul Grant, said the verdict is a sad result of misrepresentations made to the jury. He said the prosecution's case hinged upon its allegations that Orr's fuel formula didn't work, but the prosecution failed to prove that. He said Orr and his supporters continue to believe that VPC is a valuable technology that needs to be fully tested.

A sentencing conference is scheduled in October. Each of the charges against Orr could result in federal prison time.