Judge gives inventor three years -- and his company a death sentence

One of the strangest sentencing hearings ever to unfold in Denver's federal court came to an end Wednesday, after five days of often-bewildering testimony. Convicted last year on 23 counts of fraud and failure to file tax returns, alternative fuel pioneer Bill Orr was facing up to twenty years in prison -- but he was also vigorously defended by several respected scientists and supposed victims of his fraud, who said they hadn't suffered any losses at Orr's hands and begged the court to let him continue with his work.

Late Wednesday afternoon, Judge Lewis Babcock sentenced a contrite and subdued Orr to three years in prison. That's considerably less time than the government sought, after a sprawling and costly investigation of Orr's company that stretches back to 2004. But Orr's supporters say sending him to prison will doom the patents on an octane-boost in an emissions-reducing fuel blend that took decades to develop. One analysis valued the patents at close to $200 million if the fuel is ever allowed to be marketed in the United States.

Orr attorney Paul Grant vowed after the hearing to appeal Babcock's decision -- and to seek bond for Orr pending the outcome of the appeal. "We have an excellent chance of overturning the conviction," said Grant, who railed against the government's conduct of the case in his closing argument. "But the company will probably die if he isn't released in the short term."

As detailed in my 2008 feature, "Nobody's Fuel," Orr has been working since the 1980s on patents involving a blend of gasoline, octane-enhancing manganese and ethanol. Despite EPA skepticism about the benefits of such a combination, he won a federal grant to develop the product and was on the verge of tests that would either demonstrate or invalidate his claims when the EPA shut him down, alleging a range of financial improprieties and fraud.

Judge Babcock found that the timing of the shutdown was suspicious and lamented that we'll probably never know if Orr's product would have lowered emissions -- or chewed up engines, as the EPA claimed. He ruled that the EPA suffered no losses in the way Orr spent the grant money. But the judge also found that shareholders in Orr's company, Octane, did suffer losses -- despite testimony from several investors that they didn't consider themselves victims at all (for details, see the blog "Alternative Fuel Guru's Investors Don't Feel Defrauded -- Except By the Feds").

"I wasn't a victim until he sentenced Bill," investor David Lewis told Westword after the hearing. "By sentencing him to prison, he did make us into victims, because now we'll lose our investment."

Testimony indicated that the Ethyl Corporation (now known as Newmarket) has been developing a similar fuel and testing it in Europe. "In a tearful statement to the court, Orr apologized to shareholders and asked to remain free on probation in order to defend his patents. "I've burdened a lot of people unfairly," he said. "I've harmed my family. I've hurt my shareholders. I've dragged them involuntarily into a nightmare."

Judge Babcock stayed the sentence for one month while he considers various motions from both sides, including Orr's request to remain free pending appeal while he continues to try to prove his product works.

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