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Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 1 of 68 PageID #: 151
UNITED STATES DISTRICT COURT DISTRICT OF DELAWARE
MARTIN BARTESCH, FRED BRYANT And JOSEPH P. CRAIG, Individually And On Behalf Of All Others Similarly Situated, Case No. C.A. No. 11-cv-1173-RGA
Plaintiffs, JURY TRIAL DEMANDED
vs.
BRENT M. COOK, MARTIN F. PETERSEN, JOHN T. PERRY, RICHARD D. CLAYTON, NICHOLAS GOODMAN, KRAIG T. HIGGINSON, REYNOLD ROEDER, BARRY MARKOWITZ, ALAN G. PERRITON, JAMES A. HERICKHOFF, and SCOTT E. DOUGHMAN,
Defendants.
AMENDED CLASS ACTION COMPLAINT
Martin Bartesch, Fred Bryant and Joseph P. Craig (collectively, “Lead Plaintiffs” or
“Plaintiffs”) allege the following based upon the investigation by Lead Plaintiffs’ counsel, which
included, among other things: a review of the public documents, media interviews and reports,
United States Securities and Exchange Commission (“SEC”) filings, wire and press releases
published by and regarding Raser Technologies, Inc. (“Raser” or the “Company”); information
provided a former employee of the Company; information obtained from publicly available
documents regarding litigation involving the Company; securities analysts’ reports and
advisories about the Company; and information readily available on the Internet. Lead Plaintiffs
believe that substantial additional evidentiary support will exist for the allegations set forth
herein after a reasonable opportunity for discovery.
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NATURE OF THE ACTION AND OVERVIEW
1. This is a federal class action on behalf of purchasers (the “Class”) of the common
stock of Raser, who purchased or otherwise acquired the Company’s common stock between
May 11, 2009 through April 29, 2011, inclusive (the “Class Period”), seeking to pursue remedies
under the Securities Exchange Act of 1934 (the “Exchange Act”).
2. During the Class Period, non-Party Raser described itself as an environmental
energy technology company focused on geothermal power development and technology
licensing. In 2008, Raser reported the completion of a new geothermal power plant in Beaver
County, Utah called “Thermo No. 1.” According to the Company, Thermo No. 1 was a 10
megawatt (“MW”) geothermal plant which was due to become operational at or near full
capacity in the third quarter of 2009. In April 2009, the Company began selling power generated
by Thermo No. 1 to the City of Anaheim, California.
3. Raser utilized modular, binary-cycle generation units (PWPS PureCycle units) in
the construction of its Thermo No. 1 plant in order to decrease the level of on-site construction
activities and shorten development timelines compared to traditional geothermal power plant
development. Major construction of the Thermo No. 1 plant was completed in less than nine
months. Under the terms of the Company’s various financing agreements, Thermo No. 1 was
required to achieve full capacity output, net 10 MW, on a cost-effective basis by June 30, 2010.
4. Unbeknownst to the investment community, however, in its rush to complete
construction of the Thermo No. 1 plant, Raser failed to conduct adequate, or indeed any, early
well field development activities prior to beginning the construction phase of development.
According to Charles E. Levey, Vice President, Pratt & Whitney Power Systems, whose
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subsidiary UTC Power Corp. supplied Raser with the generating units used at the Thermo No. 1
plant:
Back in 2006 Raser was a start-up company looking to “revolutionize” the geothermal power industry. Rather than drilling wells, developing well fields, and precisely characterizing geothermal resources prior to designing and building a powerplant - a process that can take years and cost millions of dollars - Raser would use land where they believed geothermal resources could be characterized at a fairly high level of certainty without expensive drilling, and would then develop the well field and build the power plant at the same time. [. . .]
Charles E. Levey, Lessons Learned from Raser Technologies’ “Revolutionary” Project , AOL
Energy (Oct. 20, 2011), http://energy.aol.com/2011/10/20/lessons-learned-from-raser -
technologies-revolutionary-project/ (emphasis added).
5. As a consequence of Raser’s failure to conduct adequate early well development
activities, the Company had selected a well field site for the Thermo No. 1 plant that was unable
to deliver output sufficient to generate net 10 MW of electricity. Specifically, the wells at the
field site selected by Raser, and the well designs utilized by the Company, did not yield water at
a sufficiently high temperature to maximize Thermo No.1’s output due to the seepage of cold
water into the wells.
6. Thus, by the start of the Class Period, Defendants knew, or recklessly disregarded,
that the Thermo No. 1 plant could not achieve the planned net 10 MW output and, therefore,
there was no reasonable basis for Defendants’ public Class Period statements that the Company
expected the Thermo No. 1 plant to become operational at or near full capacity in the third
quarter of 2009.
7. Furthermore, Defendants knew, or recklessly disregarded, that Thermo No. 1
could not generate more than a net 6.6 MW of power and, at this level, it was impossible for the
Thermo No. 1 plant to operate at a profit, or for the cost of the plant to be recovered through
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ongoing operations. Therefore, Defendants knew, or recklessly disregarded, that for accounting
purposes, the Thermo No. 1 plant was impaired and that the carrying value for the plant on the
Company’s publicly reported financial statements was materially overstated.
8. While Defendants belatedly acknowledged problems with Thermo No. 1 in the
second fiscal quarter of 2009, they continued to lead investors to believe that these issues could
be remediated. Moreover, it was not until the second fiscal quarter of 2010 that Defendants
belatedly acknowledged that the value of Thermo No. 1 was impaired, recognizing a $52.2
million impairment loss. While substantial, the impairment charge taken by the Company was,
nonetheless, inadequate as Raser failed to reduce the carrying value of the plant to an amount
reflecting the approximate discounted future operating cash flows based on a discount rate
reflecting Raser’s average cost of funds as required by generally accepted accounting principles
(“GAAP”). In other words, despite the impairment charge, Defendants knew or recklessly
disregarded that the value of Thermo No. 1 was still overstated by approximately $15.4 million.
9. That the carrying value of Thermo No. 1 continued to be overstated by more than
50% was amply demonstrated when the Company announced that it had commenced a
solicitation process to sell Thermo No. 1. Raser acknowledged that “[b]ased on the solicitation
process and further evaluation of the performance of the plant,” it had further reduced the fair
value of Thermo No. 1 and expensed an additional $15.4 million. Thus, Defendants finally
publicly acknowledged what they had known from the start of the Class Period, namely, that due
to the inability of the plant to actually generate the output for which it was designed, the fair
value of the Thermo No. 1 plant was approximately $14.6 million.
10. In April 2011, only two-weeks after acknowledging the true value of the Thermo
No. 1 plant, Raser and its wholly-owned subsidiaries filed voluntary petitions for reorganization
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in bankruptcy. All of the Company’s equity was ultimately wiped out in that restructuring,
eliminating millions of dollars in shareholder value.
11. Lead Plaintiffs and members of the Class, who were unaware of the undisclosed
problems with the Thermo No. 1 plant, purchased shares of Raser common stock at prices
artificially inflated by Defendants’ materially false and misleading statements and non-
disclosures during the Class Period, and were damaged thereby.
JURISDICTION AND VENUE
12. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of
the Exchange Act, (15 U.S.C. §§ 78j(b) and 78t(a)), and Rule 10b-5 promulgated under Section
10(b) of the Exchange Act (17 C.F.R. § 240.10b-5).
13. This Court has jurisdiction over the subject matter of this action pursuant to
Section 27 of the Exchange Act (15 U.S.C. § 78aa), and 28 U.S.C. § 1331.
14. Venue is proper in this Judicial District pursuant to Section 27 of the Exchange
Act, 15 U.S.C. § 78aa and 28 U.S.C. § 1391(b). Many of the acts and transactions alleged herein
occurred in substantial part in this Judicial District.
15. In connection with the acts, conduct and other wrongs alleged in this Complaint,
defendants, directly or indirectly, used the means and instrumentalities of interstate commerce,
including but not limited to, the United States mails, interstate telephone communications and
the facilities of the national securities exchange.
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PARTIES
Lead Plaintiffs
16. Plaintiff Martin Bartesch purchased Raser common stock at artificially inflated
prices during the Class Period as indicated in the certification attached hereto and has been
damaged thereby.
17. Plaintiff Fred Bryant purchased Raser common stock at artificially inflated
prices during the Class Period as indicated in the certification attached hereto and has been
damaged thereby.
18. Plaintiff Joseph P. Craig purchased Raser common stock at artificially inflated
prices during the Class Period as indicated in the certification attached hereto and has been
damaged thereby.
Non-Party
19. Non-party Raser was, during the Class Period, a Delaware corporation that
described itself as an environmental energy technology company focused on geothermal power
development and technology licensing. According to the Company’s periodic filings with the
SEC, Raser operated two business segments: (i) Power Systems and (ii) Transportation &
Industrial.
20. On April 29, 2011, Raser and its wholly-owned subsidiaries filed voluntary
petitions for reorganization under Chapter 11 of Title 11 of the United States Code in the United
States Bankruptcy Court for the District of Delaware. As a result of Raser’s filing for protection
under the Bankruptcy Code, it has not been named as a defendant. In September 2011, Raser
emerged from bankruptcy.
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Defendants
21. Defendant Brent M. Cook (“Cook”) was the Company’s Chief Executive Officer
(“CEO”) from January 2005 until August 5, 2009, and a Director of the Company from October
2004 to August 5, 2009. Defendant Cook resigned from the Company on August 5, 2009.
Defendant Cook signed the Company’s 2009 first quarter Form 10-Q.
22. Defendant Martin F. Petersen (“Petersen”) was, at all relevant times herein,
Chief Financial Officer (“CFO”) (Principal Financial and Accounting Officer) of the Company.
Defendant Petersen signed the Company’s 2009 first quarter Form 10-Q, the second quarter
Form 10-Q, and the 2009 third quarter Form 10-Q.
23. Defendant John T. Perry (“Perry”) has been the Company’s CFO from March
22, 2010 to the present. Defendant Perry signed the Company’s 2010 first quarter Form 10-Q,
the 2010 second quarter Form 10-Q, and the 2010 third quarter Form 10-Q.
24. Defendant Richard D. Clayton (“Clayton”) was, at all relevant times herein, the
Principal Executive Officer, General Counsel and Secretary of the Company. Defendant Clayton
signed the Company’s 2009 second quarter Form 10-Q, the 2009 third quarter Form 10-Q, and
the 2009 Form 10-K.
25. Defendant Nicholas Goodman (“Goodman”) began serving as Chief Executive
Officer on January 25, 2010. On April 22, 2010, the Board of Directors appointed defendant
Goodman as a Class II Director to fill the vacancy resulting from the resignation of defendant
Cook on August 5, 2009. Defendant Goodman signed the Company’s 2009 Form 10-K.
26. Defendant Kraig T. Higginson (“Higginson”) was, at all relevant times herein,
the Chairman of the Board of Directors of the Company (the “Board”). Defendant Higginson
also served as the Company’s President from October 2003 to March 2004 and as the
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Company’s CEO from March 2004 to January 2005. Defendant Higginson signed the
Company’s 2009 Form 10-K.
27. Defendant Reynold Roeder (“Roeder”) was, at all relevant times herein, a
Director of the Company and was also the Chairman of the Company’s Audit Committee.
Defendant Roeder signed the Company’s 2009 Form 10-K.
28. Defendant Barry Markowitz (“Markowitz”) was, all relevant times herein, a
Director of the Company. Defendant Markowitz also serves on the Audit, Nominating and
Governance, and Compensation Committees of the Company. Defendant Markowitz signed the
Company’s 2009 Form 10-K.
29. Defendant Alan G. Perriton (“Perriton”) was, at all relevant times herein, a
Director of the Company. Defendant Perriton signed the Company’s 2009 Form 10-K.
30. Defendant James A. Herickhoff (“Herickhoff”) was, at all relevant times herein,
a Director of the Company. Defendant Herickhoff signed the Company’s 2009 Form 10-K.
31. Defendant Scott E. Doughman (“Doughman”) was, at all relevant times herein, a
Director of the Company. Defendant Doughman signed the Company’s 2009 Form 10-K.
32. The individuals identified in paragraphs 21 through 31 above are collectively
referred to herein as “Defendants.”
BACKGROUND
33. At all relevant times, Raser operated two business segments: (i) Power Systems
and (ii) Transportation & Industrial.
34. The Company’s Power Systems segment was engaged in the development of
geothermal electric power plants, and its Transportation & Industrial segment was reported to be
engaged in improving the efficiency of electric motors, generators and power electronic drives
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used in electric and hybrid electric vehicle propulsion systems. At all relevant times, Raser
touted its business strategy of “rapid deployment” of its “geothermal power projects.”
35. In a Form S-3 filed with the SEC on November 14, 2008, Raser reported:
During the first quarter of 2008, we entered into power purchase agreements with the City of Anaheim, California to provide a total of 22 MW of electricity from two of our future plants. Our Thermo No. 1 project is expected to be one of the two geothermal power plants to provide electricity to the City of Anaheim in accordance with the Anaheim power purchase agreements, and we expect to begin providing power from the Thermo No. 1 project to Anaheim beginning in the fourth quarter of 2008.
36. According to a qui tam complaint filed in the action entitled United States of
America and ex rel. Prescott Lovern v. The Prudential Insurance Co., et al. , Cause No. 11-cv-
1304 TSZ (W. D. Wash), filed on April 2, 2012 (the “Qui Tam Complaint”), Raser, through its
subsidiaries, entered into an Equity Capital Contribution Agreement with Merrill Lynch L.P.
Holdings, Inc. (collectively with other Merrill Lynch-related entities, “Merrill”) for a total
commitment of up to $31,175,092 in capital contributions that included debt and tax equity
capital “Thermo Note” to complete the construction of Thermo No. 1. (Qui Tam Complaint, ¶
15). After a previously committed, subsequent Second Funding Date Capital Contribution,
Merrill ended up with 99% secured ownership of Thermo No. 1, via “Class A Shares” in Thermo
No. 1. (Id.). The Qui Tam Complaint further states that the Prudential Insurance Company of
America (“Prudential”) and the Zurich American Insurance Company (“Zurich”) subsequently
acquired interests in the Thermo Note. ( Id., ¶ 17).
37. According to the Qui Tam Complaint, the terms of the investment financing
agreement provided that Raser, which began construction of Thermo No. 1 in August 2008,
complete the plant by the earlier of 180 days of the “Substantial Completion Date” (the date
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construction of Thermo No. 1 was completed), or before June 15, 2009. (Qui Tam Complaint, ¶¶
18-19).
38. On November 10, 2008, an article in “Renewable Energy Development.com ”
reported that Raser had completed a new geothermal power plant in Beaver County, Utah called
“Thermo.” According to the article, the plant had a maximum capacity of 10 MW of electricity.
“This is a momentous occasion,” Defendant Cook at the plant’s ribbon cutting ceremony
reportedly stated. “This power generation plant with its ground-breaking, rapid-deployment
design and construction system and UTC Power’s low-temperature technology can make
geothermal a mainstream source of energy for the nation.” (Emphasis added).
39. It was Raser’s use of a “ground-breaking, rapid-deployment design,” however,
that caused the Thermo No. 1 plant to fail to meet its projected output. In its rush to meet the
deadlines specified in the investment financing agreement, Raser failed to conduct adequate field
development activities, such as the conduct of any seismic studies or targeted field surveys, prior
to the selection of its well field site for Thermo No. 1.
40. Confidential Witness No. 1 (“CW1”), a former employee of Raser who was
employed in a managerial position at the Company during part of 2008 and 2009, states that in or
about February 2009, Michael Albrecht (“Albrecht”), a geophysicist then-employed by Raser,
was asked to look into problems the Company was having at Thermo No. 1 by Raser’s Vice
President of Business Development. According to CW1, Albrecht was given unfettered access
to Raser’s files for that review.
41. CW1 stated that during that review, Albrecht determined that Raser had engaged
in little or no early well field development activities prior to the start of the construction of
Thermo No. 1. According to CW1, Albrecht learned that Raser had done no seismic studies and
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even refused to purchase earlier seismic studies that had been done in that same area. CW1
further stated that Albrecht learned that decisions concerning the location of the well field had
not been made by geophysicists, but rather by Company executives and attorneys.
42. The Company’s failure to conduct adequate early well field development
activities, as described by CW1, was corroborated in an opinion article by Charles E. Levey,
Vice President, Pratt & Whitney Power Systems, whose subsidiary UTC Power Corp. supplied
the Company with the generating units used at the Thermo No. 1 plant and was sued by Raser
following the Company’s reorganization in bankruptcy. In an article entitled Lessons Learned
from Raser Technologies’ “Revolutionary” Project, Levey described the Company’s
“revolutionary” approach to developing geothermal power plants which was used in the
construction of Thermo No. 1: “ [r] ather than drilling wells, developing well fields, and
precisely characterizing geothermal resources prior to designing and building a powerplant - a
process that can take years and cost millions of dollars - Raser would use land where they
believed geothermal resources could be characterized at a fairly high level of certainty without
expensive drilling , and would then develop the well field and build the power plant at the same
time. . . .” AOL Energy (Oct. 20, 2011), http://energy.aol.com/2011/10/20/lessons-learned -
from-raser-technologies-revolutionary-project/ (emphasis added).
43. CW1 further stated that Albrecht learned that while the Company had obtained
water with a temperature of 370 degrees Fahrenheit (a temperature more than adequate to
maximize Thermo No. 1’s output) at a depth of 7,000 feet from certain of its wells, errors in the
designs of the wells caused cold water seepage at the 2,500 feet depth. This, in turn, reduced the
temperature of the water from the wells to the point where Thermo No. 1 could not generate net
10 MW of electricity. According to CW1, Albrecht attributed the well design problems, as well
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as problems related to well field site selection, to Company executives and attorneys making
reservoir engineering and well design decisions, and intentionally deciding to forego
implementation of a fact based critical peer review process by adequate geo-scientists.
44. The allegations of the Qui Tam Complaint support CW1’s recitation of the
problems experienced at thermo No. 1 following its completion:
Thermo No. 1 was “substantially completed” in early 2009, but the plant did not work properly due to inadequate temperature and flow of hot water. The ... [Defendant Investors] were forced to continuously advance into the future, the “Guaranteed Final Completion Date”, because Thermo No. 1 never met the minimum functional specifications of the financing agreement’s terms and conditions, namely production of 6 MW of power. To date Thermo No. 1 does not meet these minimum specifications. Proof that Thermo No. 1 is an utter failure is the fact that the plant must draw power from the nearby fossil fuel “brown electric power” grid to power its own turbines, pumps and other equipment. Thermo No. 1 was supposed to produce [gross] 14 MW of power, but it produces no more than 2-3 MW of power with the aide of at 3-4 MW of brown electric power. At the time the Defendants applied for Section 1603 grant, Thermo No. 1 was not a commercially viable plant and shortly after receiving the Section 1603 grant Raser reclassified Thermo No. 1 as permanently impaired in accordance with “generally accepted accounting principles (GAAP) and the Energy Department should have been advised of this permanent impairment.
Qui Tam Complaint, ¶ 20 (insertions added).
45. According to CW1, Albrecht was also involved with planning for the drilling of a
new well in June 2009.1 CW1 states that Albrecht, Dr. Ben Barker, Raser’s Vice President of
Resource Management, other Company employees and the Company’s outside consultants met
at the Energy and Geoscience Institute in Salt Lake City, Utah, to design the well. CW1 states
that Albrecht believed that they had developed a well plan that would have been successful.
1 The Company’s interim report for the quarter ended June 31, 2009 filed with the SEC on Form 10-Q dated August 10, 2009 (the “2Q 2009 10-Q”) stated that “[a]s of June 30, 2009, we had finished drilling an additional well that we expect to use as a production well, pending the completion of testing.” Id., p. 9.
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46. According to CW1, however, Albrecht subsequently learned that the well design
had been changed in order to save money on the amount of concrete to be used in its
construction. CW1 states that Albrecht contacted Defendant Peterson, then-Raser’s CFO, and
informed him that the revised well design would not work.
47. According to CW1, Albrecht also confronted Raser’s Controller Richard Holt,
who reported directly to Defendant Peterson, about the publicly reported carrying value of
Thermo No. 1. CW1 stated that Albrecht told Defendant Peterson that based on the problems
being experienced at the plant, the value attributed to Thermo No. 1 in March of 2009 was
grossly overstated. CW1 stated that Albrecht believed that the value for Thermo No. 1 was
around $60-70 million, not $120 million as reported, was spent in construction costs. According
to CW1, approximately 30 minutes after Albrecht spoke with Holt, Albrecht overheard Holt and
Defendant Peterson discussing how the Company could justify the valuation of Thermo No. 1 if
questioned at an upcoming shareholder meeting.
48. According to CW1, shortly thereafter in May 2009, Albrecht was asked to resign
from Raser.
49. Despite the fact that Defendants knew that Thermo No. 1 did not, and would
never, operate to capacity, in or about December 2009, Raser applied for a grant pursuant to
Section 1603 of the American Recovery and Reinvestment Act (the “Recovery Act”). Under
that section, eligible persons who placed into service specified energy properties during 2009,
2010 or 2011, could receive payments equal to 30% of the basis of the property. Eligible
property under this program included only property used in a trade or business or held for the
production of income.
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50. According to the Qui Tam Complaint, Raser’s Section 1603 grant application
included reported Thermo No. 1 construction costs of $108 million. Corroborating the
information provided by CW1, the Qui Tam Complaint further alleged that these costs were
inflated by the Company:
The Conspirators knowingly submitted false, inflated construction costs as follows: 1) costs that were procured by kickbacks from contractors; 2) $4.9 million for the cost of turbine purchased from Pratt and Whitney in the fall of 2008, even though Raser never paid Pratt and Whitney for these turbines; 3) recording cost even when invoices were unpaid; 4) recording costs on a cash basis even when those invoices were paid in company stock rather than cash; 5) improperly reclassifying abandoned assets into capital expenses. (Raser drilled and abandoned several unsuccessful production wells in the fall and spring of 2008-2009 that it fraudulently included in its capital basis. It expensed these abandoned production wells on its balance sheet as abandoned, but when calculating its cost basis it recast the abandoned wells as “monitoring wells” and applied the cost to the Federal subsidy).
Id., ¶ 30.
THE MATERIALLY FALSE AND MISLEADING STATEMENTS
51. On May 11, 2009, the Company filed its interim report for the quarter ended
March 31, 2009 with the SEC on Form 10-Q (the “1Q 2009 10-Q”). In that filing, the Company
stated:
With the completion of the major construction items of the Thermo No. 1 geothermal power plant, we believe we have demonstrated our ability to quickly develop geothermal power projects using our rapid deployment business model .
Id. (emphasis added).
52. Defendants knew, or recklessly disregarded, that the foregoing statement was
materially false and misleading because Raser’s “rapid deployment business model,” which did
not utilize traditional early field development activities, such as seismic studies, was a failure.
As alleged above, inadequate well field testing and poor well design by Raser in the development
of Thermo No. 1 resulted in the seepage of cold water into the wells preventing the plant from
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achieving its planned output of net 10 MW of electricity. Moreover, Defendants were aware of
the problems based upon the February 2009 review of Thermo No. 1 performed by Michael
Albrecht.
53. The 1Q 2009 10-Q also stated:
Thermo No. 1 Plant (Utah) We completed major construction of the cooling towers and transmission lines and installed the power generating units at the Thermo No. 1 geothermal power plant, located in Beaver County, Utah, in the fourth quarter of 2008. In April 2009, we began selling electricity generated by the Thermo No. 1 geothermal power plant to the City of Anaheim pursuant to a power purchase agreement we previously entered into with Anaheim. We expect the Thermo No. 1 geothermal power plant to become operational at or near full capacity early in the third quarter of 2009 . We have obtained all necessary permits to develop and operate the plant.
In 2007, with the help of external consulting geologists, we began evaluating preliminary geologic studies of possible geothermal resources near Beaver, Utah referred to as the Thermo Known Geothermal Resource Area (the “Thermo KGRA”). The area in and around the Thermo KGRA was targeted initially because multiple geologic studies had been performed over many years in the area, and because a geothermal well had been drilled in the area that reached a temperature of 345 degrees Fahrenheit. Our consulting geologists reviewed numerous studies on the area, including gravity, ground magnetic, telluric-magnetotelluric and self-potential surveys. They also reviewed data from dozens of thermal-gradient wells that have been drilled in and around the Thermo KGRA. After analyzing all of the available data, our consulting geologists concluded that the Thermo area was a high-prospect area and likely suitable for at least a 10 MW geothermal power plant.
Id. (emphasis added).
54. Defendants knew, or recklessly disregarded, that the statement concerning their
expectation that the Thermo No. 1 plant would become operational at, or near, full capacity early
in the third quarter of 2009 was materially false and misleading because it lacked any reasonable
basis. As alleged above, Defendants were aware that poor well field location and well design
prevented Thermo No. 1 from achieving its designed output of net 10 MW of electricity because
the water temperature from the Thermo No. 1 production wells was too low.
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55. Similarly, the Defendants knew, or recklessly disregarded, that the statements
concerning the evaluation of the Thermo No. 1 site performed by Raser’s consultants were
materially misleading, even if literally true, because they created the impression that the
Company had performed adequate due diligence in its well field site selection prior to the start of
construction of Thermo No. 1. As described by CW1, Charles E. Levey of Pratt & Whitney
Power Systems, and as alleged in the Qui Tam Complaint, however, the Company failed to
conduct any traditional and adequate early well field development activities prior to the start of
the construction of Thermo No. 1. According to CW1, Albrecht learned that Dr. Joseph Moore,
of EGI, one of Raser’s outside consultants, used a self-potential survey that reaches only a few
hundred feet deep to determine well locations. The water at that depth, however, was cold water
that entered the wells at around 2500 ft. Raser used the self-potential survey method because
such surveys were very inexpensive. In addition, according to CW1, Albrecht learned that the
Company also used regional surveys, which did not focus on a specific local area, that were
inadequate to determine well field site selection. Albrecht, according to CW1, indicated that the
Company basically relied “on a cheap survey and Moore’s intuition and stretched imagination
instead of paying several hundred thousand dollars to conduct deep reaching surveys with
adequate resolution like the oil & gas industry . . . .” Thus, while Raser’s consultants may have
reviewed some earlier studies of the area as part of Raser’s rapid deployment business model, the
Company failed to conduct its own studies or drill its own wells in order to properly characterize
the well field prior to the start of construction of Thermo No. 1. As a consequence, the
temperature of the water from the Thermo No. 1 production wells was too low to operate the
plant at maximum capacity due to the presence of cooler water at the 2500 foot depth which
seeped into those wells.
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56. In addition, the 1Q 2009 10-Q reported that the carrying value of the Thermo No.
1 plant was $98,190,985 computed as follows:
March 31, 2009
Thermo No. 1 Geothermal Power Plant: Power project lease acquisitions..............................$2,320,601 Well field drilling costs........................................$36,074,138 Power plant......................................................$55,425,690 Transmission equipment.......................................$4,370,556 Net geothermal property, plant and equipment............. $98,190,985
FAA
57. Defendants knew, or recklessly disregarded, that the $98,190,985 carrying value
was overstated by approximately $83,590,985. Under GAAP, Raser was required to reduce the
carrying value of Thermo No. 1 to an amount equal to the discounted future operating cash
flows, using a discount rate that reflected Raser’s average cost of funds, or approximately
$14,600,000, by means of a charge to earnings. The Company’s publicly reported asset value
was, therefore, materially false and misleading.
58. Had Raser properly recognized impairment losses as of March 31, 2009: (i)
Plaintiffs and the Class would have been aware of the fact that Thermo No. 1 was incapable of
generating cash sufficient to recover its carrying value, and (ii) the Company’s balance sheet
would have reflected the fact that liabilities materially exceeded assets and that, accordingly, the
Company was in a technical state of bankruptcy, which might have triggered adverse actions by
Raser’s creditors. Defendants’ failure to disclose the existence of the design deficiencies that
limited Thermo No. 1’s output, and Defendants’ material overstatement of the carrying value of
Thermo No. 1, caused the market price of Raser’s common stock to be artificially inflated during
the Class Period.
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59. The 1Q 2009 Form 10-Q was signed by Defendants Cook and Peterson, who also
executed the Company’s Sarbanes-Oxley Section 302 CEO and CFO Certifications, respectively,
attached as exhibits to the Form 10-Q. Those Certifications, in pertinent part, both stated that:
1. I have reviewed this quarterly report on Form 10-Q of Raser Technologies, Inc. (the “Registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report . . . .
Id.
60. Defendants Cook and Peterson knew, or recklessly disregarded, that the foregoing
statements were materially false and misleading for the reasons stated in ¶¶ 52, 54, 55 and 57
supra.
61. Raser filed its 2Q 2009 10-Q with the SEC on August 10, 2012. In that Form 10-
Q, the Company belatedly described some of the difficulties it was then-experiencing with the
Thermo No. 1 plant:
The Thermo No. 1 plant is currently producing approximately 5 MW (net) of electricity, which represents slightly less than half of the plant’s designed capacity. Thus far, we have been unable to operate the plant at full capacity due to insufficient heat from the production wells that provide geothermal water to the plant.
Id.
62. Defendants knew, or recklessly disregarded, that the foregoing description of the
problems at Thermo No. 1 failed to disclose that these difficulties were the direct result of
Raser’s failure to conduct adequate early well field development activities prior to the start of the
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construction of Thermo No. 1, as well as poor well design, and, therefore, that the Company’s
“ground-breaking, rapid-deployment design and construction system” was a failure.
63. Moreover, despite the foregoing belated disclosure of the problems at the plant, in
the 2Q 2009 Form 10-Q, the carrying value of the Thermo No. 1 plant was reported as
$102,169,857, computed as follows:
June 30, 2009
Thermo No. 1 Geothermal Power Plant: Power project lease acquisitions..............................$2,370,016 Well field drilling costs........................................$38,370,803 Power plant......................................................$57,789,385 Transmission equipment.......................................$4,347,406 Accumulated depreciation.....................................($707,753) Net geothermal property, plant and equipment.............. $102,169,857
Id.
64. Defendants knew, or recklessly disregarded that the $102,169,857 carrying value
was overstated by approximately $87,569,857. Raser failed to reduce the carrying value of its
Thermo No. 1 geothermal power plant to approximately $14,600,000 (the approximate amount
of discounted future operating cash flows using a discount rate that reflected Raser’s average
cost of funds) by means of a charge to earnings, in violation of GAAP. The Company’s publicly
reported asset value was, therefore, materially false and misleading.
65. Had Raser properly recognized impairment losses as of June 30, 2009: (i) Plaintiff
and the Class would have been made aware of the fact that the Thermo No. 1 plant was incapable
of generating cash sufficient to recover its carrying value and (ii) the Company’s balance sheet
would have reflected the fact that liabilities materially exceeded assets and that, accordingly, the
Company was in a technical state of bankruptcy, which might have triggered adverse actions by
Raser’s creditors. Defendants’ failure to disclose the existence of the design deficiencies that
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limited Thermo No. 1’s output, and Defendants’ material overstatement of the carrying value of
Thermo No. 1, caused the market price of Raser’s common stock to be artificially inflated during
the Class Period.
66. The 2Q 2009 Form 10-Q was signed by Defendants Clayton and Peterson, who
also executed the Company’s Sarbanes-Oxley Section 302 CEO and CFO Certifications,
respectively, attached as exhibits to the Form 10-Q. In addition, Defendant Higginson executed
a Sarbanes-Oxley Section 302 CEO and Executive Chairman Certification which was attached as
an exhibit to the 2Q 2009 Form 10-Q. Those Certifications, in pertinent part, each stated that:
1. I have reviewed this quarterly report on Form 10-Q of Raser Technologies, Inc. (the “Registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report . . . .
Id. 67. Defendants Cook, Peterson, and Higginson knew, or recklessly disregarded, that
the foregoing statements were materially false and misleading for the reasons stated in ¶¶ 62 and
64 supra.
68. On November 9, 2009, the Company filed its interim report for the third fiscal
quarter of 2009 with the SEC on Form 10-Q (the 3Q 2009 Form 10-Q”). The 3Q 2009 Form 10-
Q, in pertinent part, stated:
The Thermo No. 1 plant is currently producing and transmitting approximately 5 MW of electricity, which represents approximately half of the plant’s designed capacity. Thus far, we have been unable to operate the plant at full capacity due to
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insufficient heat and flow from the production wells that provide geothermal water to the plant.
Id.
69. Defendants knew, or recklessly disregarded, that the foregoing description of the
problems at Thermo No. 1 failed to disclose that these difficulties were the direct result of
Raser’s failure to conduct adequate early well field development activities prior to the start of the
construction of Thermo No. 1, as well as poor well design, and, therefore, that the Company’s
“ground-breaking, rapid-deployment design and construction system” was a failure.
70. The 3Q 2009 Form 10-Q also reported the carrying value of the Thermo No. 1
plant as $107,708,919:
September 30, 2009 Thermo No. 1 Geothermal Power Plant: Power project lease acquisitions..............................$2,376,751 Well field drilling costs........................................$42,419,586 Power plant......................................................$60,003,521 Transmission equipment.......................................$4,347,406 Accumulated depreciation.................................... ($1,438,345) Net geothermal property, plant and equipment.............. $107,708,919
Id. 71. Defendants knew, or recklessly disregarded, that the $107,708,919 carrying value,
however, was overstated by approximately $93,108,919. Raser failed to reduce the carrying
value of its Thermo No. 1 geothermal power plant to approximately $14,600,000 (the
approximate amount of discounted future operating cash flows using a discount rate that
reflected Raser’s average cost of funds) by means of a charge to earnings, in violation of GAAP.
The Company’s publicly reported asset value was, therefore, materially false and misleading.
72. Had Raser properly recognized impairment losses as of September 30, 2009: (i)
Plaintiff and the Class would have been made aware of the fact that the Thermo No. 1
geothermal power plant was incapable of generating cash sufficient to recover its carrying value
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and (ii) the Company’s balance sheet would have reflected the fact that liabilities materially
exceeded assets and that, accordingly, the Company was in a technical state of bankruptcy,
which might have triggered adverse actions by Raser’s creditors. Defendants artificially inflated
the market price of Raser’s common stock by concealing the foregoing. Defendants’ failure to
disclose the existence of the design deficiencies that limited Thermo No. 1’s output, and
Defendants’ material overstatement of the carrying value of Thermo No. 1, caused the market
price of Raser’s common stock to be artificially inflated during the Class Period.
73. The 3Q 2009 Form 10-Q was signed by Defendants Clayton and Peterson, who
also executed the Company’s Sarbanes-Oxley Section 302 CEO and CFO Certifications,
respectively, attached as exhibits to the Form 10-Q. In addition, Defendant Higginson executed
a Sarbanes-Oxley Section 302 CEO Certification which was attached as an exhibit to the 3Q
2009 Form 10-Q. Those Certifications, in pertinent part, each stated that:
1. I have reviewed this quarterly report on Form 10-Q of Raser Technologies, Inc. (the “Registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report . . . .
Id.
74. Defendants Cook, Peterson, and Higginson knew, or recklessly disregarded, that
the foregoing statements were materially false and misleading for the reasons stated in ¶¶ 69 and
71 above.
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75. On March 18, 2010, Raser filed its annual report for the fiscal year ended
December 31, 2009 with the SEC on Form 10-K (the “2009 Form 10-K”). In that Form 10-K,
Raser reported that:
We have initiated the development of eight geothermal power plant projects in our Power Systems segment to date. We have placed one power plant in service to date, which we refer to as our Thermo No. 1 plant, and we are currently selling electricity generated by the Thermo No. 1 plant. The Thermo No. 1 plant is currently generating approximately 7 MW of electrical power (gross). After deducting the electricity required to power the plant, also known as parasitic load, the net power produced by the Thermo No. 1 plant is approximately 6 MW. In addition we also purchase power for remote pumps in our well field, which are required to ensure adequate flow of hot water. Both the gross output and the net output of the plant are below the amounts the plant was designed to produce, primarily due to issues related to the temperature of the resource from the well field. We are working to improve the electrical output of the plant and the temperature of the resource.
Id.
76. Defendants knew, or recklessly disregarded, that the foregoing description of the
problems at Thermo No. 1 failed to disclose that these difficulties were the direct result of
Raser’s failure to conduct adequate early well field development activities prior to the start of the
construction of Thermo No. 1, as well as poor well design, and, therefore, that the Company’s
“ground-breaking, rapid-deployment design and construction system” was a failure. Indeed,
Defendants tacitly admitted the failure of the Company’s rapid deployment strategy in
connection with Thermo No. 1 due to inadequate early well field activities in the section of the
2009 Form 10-K entitled Refine Rapid Deployment Strategy, stating “[w]e are also increasing
our focus on early well field development activities prior to beginning the construction phase of
development.” Id.
77. The 2009 Form 10-K further stated:
We obtained a grant of approximately $33.0 million, which we received in February 2010. Approximately $3.8 million of the grant funds were released to
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us, as owner of the project. The remainder of the grant funds will be held in escrow until June 30, 2010, and the amounts to be released to the other parties that provided the debt and equity financing for the project will be determined based on the electrical output and the operational costs of the plant at that time. Up to $4.3 million of any amounts not released to these parties will be paid to Pratt Whitney Power Systems (“PWPS”) as final payment for the turbines in production at the Thermo No. 1 plant. Any remaining amount, after the payment to PWPS, will be released to us.
Id.
78. Accordingly, the 2009 Form 10-K reported that as of year end 2009, Raser
decreased the carrying value of its Thermo No. 1 plant by $29.2 million due to receipt of the
Section 1603 grant. Accordingly, after a $29.2 million adjustment, the carrying value of the
Thermo No. 1 plant was reported as $80,433,597:
December 31, 2009 Thermo No. 1 Geothermal Power Plant: Power project lease acquisitions..............................$2,514,581 Well field drilling costs........................................$31,813,747 Power plant......................................................$43,046,062 Transmission equipment.......................................$5,301,379 Accumulated depreciation.....................................($2,242,172) Net geothermal property, plant and equipment............. $80,433,597
Id. 79. Defendants knew, or recklessly disregarded, that the $80,433,597 carrying value,
however, was overstated by approximately $69,833,597. In violation of GAAP, Raser failed to
reduce the carrying value of its Thermo No. 1 geothermal power plant to approximately
$14,600,000 (the approximate amount of discounted future operating cash flows using a discount
rate that reflected Raser’s average cost of funds) by means of a charge to earnings. The
Company’s publicly reported asset value was, therefore, materially false and misleading.
80. Had Raser appropriately recognized impairment losses as of December 31, 2009:
(i) Plaintiff and the Class would have been made aware of the fact that the Thermo No. 1
geothermal power plant was incapable of generating cash sufficient to recover its carrying value
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and (ii) the Company’s balance sheet would have reflected the fact that liabilities materially
exceeded assets and that, accordingly, the Company was in a technical state of bankruptcy, might
have triggered adverse actions by Raser’s creditors. Defendants’ failure to disclose the existence
of the design deficiencies that limited Thermo No. 1’s output, and Defendants’ material
overstatement of the carrying value of Thermo No. 1, caused the market price of Raser’s
common stock to be artificially inflated during the Class Period.
81. The 2009 Form 10-K was signed by Defendants Goodman, Higginson, Clayton,
Roeder, Markowitz, Perriton, Herrickhoff, and Doughman. In addition, Defendants Goodman
and Clayton executed Sarbanes-Oxley CEO and CFO Certifications, respectively, which were
attached as exhibits to the 2009 Form 10-K. Those Certifications, in pertinent part, each stated
that:
1. I have reviewed this annual report on Form 10-K of Raser Technologies, Inc. (the “Registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report . . . .
Id.
82. Defendants Goodman and Clayton knew, or recklessly disregarded, that the
foregoing statements were materially false and misleading for the reasons stated in ¶¶ 76 and 79
supra.
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83. On May 10, 2010, Raser filed its interim report for the quarter ended March 31,
2010 with the SEC on Form 10-Q (the “1Q 2010 Form 10-Q”). In that Form 10-Q, the Company
stated:
The Thermo No. 1 plant is currently generating approximately 7 MW of electrical power (gross). After deducting the electricity required to power the plant, also known as parasitic load, and power for remote pumps in the well field, the net power produced by the Thermo No. 1 plant is approximately 6 MW. Both the gross output and the net output of the plant are below the amounts the plant was designed to produce, primarily due to issues related to temperature of the resource from the well field.
Id.
84. Defendants knew, or recklessly disregarded, that the foregoing description of the
problems at Thermo No. 1 was materially false and misleading because Defendants failed to
disclose that these difficulties were the direct result of Raser’s failure to conduct adequate early
well field development activities prior to the start of the construction of Thermo No. 1, as well as
poor well design, and, therefore, that the Company’s “ground-breaking, rapid-deployment design
and construction system” was a failure.
85. In addition, the 1Q 2010 Form 10-Q stated:
The Thermo No. 1 plant is currently transmitting approximately 6 MW of electricity to the City of Anaheim, which represents approximately two-thirds of the plant’s designed capacity. Thus far, we have been unable to operate the plant at full capacity due to insufficient heat and flow from the production wells that provide geothermal water to the plant . . . .
The Thermo No. 1 plant is the first ever large-scale commercial application of the PWPS Pure-Cycle units and the first plant built under our rapid-deployment approach so delays and overruns are not entirely unexpected. Some of the key drivers of the delays and cost overruns are as follows:
Well Field Development:
Increased costs to broaden previous well field plans.
Complications encountered by drilling contractors.
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• High demand for drilling services and related materials due to the rapid increase in the price of oil.
• Higher than expected loads for well field pumps.
Construction:
• Wider than necessary step-outs for injection wells, which increased piping and electrical costs, due to concerns of lenders.
• Construction of primary access road improvements to accommodate wider access to Thermo No. 1 than previously anticipated.
• Additional costs incurred to connect piping from additional production wells to the plant.
• Additional costs incurred relating to establishing the greater Thermo area.
• Increased prices for steel, concrete and other commodities due to high demand.
• Payment of overtime and other additional costs in order to accelerate the construction schedule.
Equipment:
• Expenses associated with installing PWPS power generating units for the first time, which allowed us to identify design changes for the benefit of future plants.
Transmission:
• In anticipation of future plants, we built a larger transmission infrastructure.
If we are unable to find adequate solutions for the problems we are encountering with the construction and operation of the Thermo No. 1 plant, we may experience similar delays and cost overruns on subsequent projects.
Id.
86. Defendants also knew, or recklessly disregarded, that the foregoing description of
the causes of the delays and cost overruns was materially false and misleading because
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Defendants failed to disclose that the primary cause of the delays and cost overruns was Raser’s
failure to conduct adequate early well field development activities and poor well design.
87. The 1Q 2010 Form 10-Q also reported that, excluding ongoing
construction/remediation costs, the Thermo No. 1 geothermal power plant operated at a loss of
$1 million for the quarter. Nonetheless, Raser, one again, failed to reduce the carrying value of
its Thermo No. 1 geothermal power plant to an appropriate value, approximately $14,600,000,
by means of a charge to earnings. Defendants, thus, knew, or recklessly disregarded, that the
Company’s publicly reported asset value was materially false and misleading.
88. Had Raser appropriately recognized impairment losses as of March 31, 2010: (i)
Plaintiff and the Class would have been made aware of the fact that the Thermo No. 1
geothermal power plant was incapable of generating cash sufficient to recover its carrying value
and (ii) the Company’s balance sheet would have reflected the fact that liabilities materially
exceeded assets and that, accordingly, the Company was in a technical state of bankruptcy,
which might have triggered adverse actions by Raser’s creditors. Defendants’ failure to disclose
the existence of the design deficiencies that limited Thermo No. 1’s output, and Defendants’
material overstatement of the carrying value of Thermo No. 1, caused the market price of Raser’s
common stock to be artificially inflated during the Class Period.
89. The 1Q 2010 Form 10-Q was signed by Defendant Perry. In addition, Defendants
Goodman and Perry executed Sarbanes-Oxley 302 CEO and CFO Certifications, respectively,
which were attached as exhibits to the Form 10-Q. Those Certifications, in pertinent part, each
stated that:
1. I have reviewed this quarterly report on Form 10-Q of Raser Technologies, Inc. (the “Registrant”);
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2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report . . . .
Id.
90. Defendants Goodman and Perry knew, or recklessly disregarded, that the
foregoing statements were materially false and misleading for the reasons stated in ¶¶ 84 and 85
supra.
91. On August 11, 2010, Raser filed its interim report for the period ended June 30,
2010 with the SEC on Form 10-Q (the “2Q 2010 Form 10-Q”). In that Form 10-Q, Defendants
finally admitted that Raser was incapable of getting the Thermo No. 1 geothermal power plant to
increase its power generation capability and, therefore, the Company was recognizing a $52.2
million impairment loss:
Although we placed the Thermo No. 1 plant in service in the first quarter of 2009 for accounting purposes, we were unable to operate the plant at designed capacity due primarily to mechanical deficiencies of the power generating units, lower than anticipated well field temperature and flow from certain wells and other inefficiencies which occurred as a result of overall design of the plant. Accordingly, we initiated several actions to improve the electrical output of the plant and the resource. These efforts included reworking certain production wells, the installation of bottom cycling operations and the replacement of recirculation pumps on each of the generating units with more efficient pumps. These efforts culminated in June 2010, at which time we evaluated the actual impact of these initiatives and the resulting overall performance of the plant. The results of this evaluation indicate that plant performance may improve from the current output level of approximately 6.6 megawatts, but most likely will not achieve originally designed electrical output levels. After evaluating the performance of the plant, we determined an evaluation of possible impairment of the Thermo No. 1 plant as of June 30, 2010 was warranted.
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Based upon the impairment analysis, we determined that the Thermo No. 1 plant was impaired as of June 30, 2010. Accordingly, we computed the projected discounted future operating cash flows of the Thermo No. 1 plant using a discount rate that reflects the average cost of funds for our Thermo Subsidiary and determined that we incurred a loss resulting from the impairment totaling $52.2 million. This analysis required us to exercise significant judgments including, among other items, estimating that our geothermal power plant will produce electricity over the next 33.5 years, assuming our power purchase agreement will be renewed on similar terms upon expiration in 2028 and estimating operating and capital costs over the remaining useful life of the plant, the estimated cost of capital improvements required to upgrade the facility to produce 12 MW, the estimated cost of capital and the estimated selling price of the Thermo No. 1 plant at the end of its estimated useful life. Accordingly, we recognized an impairment of the Thermo No. 1 plant and expensed $52.2 million of capitalized costs during the second quarter of 2010. The effect of the impairment expense on net loss per share of common stock was $0.59 and $0.62 per share for the three months and six months ending June 30, 2010. Since the basis in the Thermo No. 1 plant decreased significantly as a result of the impairment, the new basis of $30.1 million will be depreciated on a straight-line basis over the remaining estimated useful life of the plant or 33.5 years. The reduction of the basis in the Thermo No. 1 plant on future periods will be to reduce quarterly depreciation expense from approximately $0.6 million per quarter to $0.2 million per quarter. The table below sets forth the capitalized costs relating to our property, plant and equipment, after reducing the costs for the impairment of the Thermo No. 1 plant as of June 30, 2010 and reducing the costs for the amount of the federal grant received as of December 31 2009, respectively:
June 30, 2010 Thermo No. 1 Plant: Power project lease acquisitions..............................$919,792 Well field drilling costs........................................$11,688,317 Power plant......................................................$16,827,944 Transmission equipment.......................................$1,927,957 Accumulated depreciation.....................................($1,264,010) Geothermal property, plant and equipment, net............ $30,100,000
Id.
92. Although a substantial impairment charge was recognized, Defendants knew, or
recklessly disregarded, that the $30,100,000 carrying value of Thermo No. 1 was still overstated
by approximately $15,500,000. In violation of GAAP, Raser failed to reduce the carrying value
of its Thermo No. 1 geothermal power plant to approximately $14,600,000 (the approximate
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amount of discounted future operating cash flows using a discount rate that reflected Raser’s
average cost of funds) by means of a charge to earnings. The Company’s publicly reported asset
value was, therefore, materially false and misleading.
93. In addition, the 2Q 2010 Form 10-Q stated:
Although we placed the Thermo No. 1 plant in service in the first quarter of 2009 for accounting purposes, we were unable to operate the plant at designed capacity due primarily to mechanical deficiencies of the power generating units, lower than anticipated well field temperature and flow from certain wells and other inefficiencies which occurred as a result of overall design of the plant. . . .
The Thermo No. 1 plant is the first ever large-scale commercial application of the PWPS Pure-Cycle units and the first plant built under our rapid-deployment approach so delays and overruns are not entirely unexpected. Some of the key drivers of the delays and cost overruns are as follows:
Well Field Development:
• Increased costs to broaden previous well field plans.
• Complications encountered by drilling contractors.
• High demand for drilling services and related materials due to the rapid increase in the price of oil.
• Higher than expected loads for well field pumps.
Construction:
• Wider than necessary step-outs for injection wells, which increased piping and electrical costs, due to concerns of lenders.
• Construction of primary access road improvements to accommodate wider access to Thermo No. 1 than previously anticipated.
• Additional costs incurred to connect piping from additional production wells to the plant.
• Additional costs incurred relating to establishing the greater Thermo area.
• Increased prices for steel, concrete and other commodities due to high demand.
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• Payment of overtime and other additional costs in order to accelerate the construction schedule.
Equipment:
• Expenses associated with installing PWPS power generating units for the first time, which allowed us to identify design changes for the benefit of future plants.
Transmission:
• In anticipation of future plants, we built a larger transmission infrastructure.
If we are unable to find adequate solutions for the problems we are encountering with the construction and operation of the Thermo No. 1 plant, we may experience similar delays and cost overruns on subsequent projects.
Id.
94. Defendants knew, or recklessly disregarded, that the foregoing description of the
causes of the delays and cost overruns was materially false and misleading because Defendants
failed to disclose that the primary cause of the delays and cost overruns was Raser’s failure to
conduct adequate early well field development activities and poor well design.
95. The 2Q 2010 Form 10-Q was signed by Defendants Clayton and Peterson. In
addition, Defendants Clayton, Peterson, and Higginson executed Sarbanes-Oxley 302 CEO,
General Counsel and Secretary Certification; CFO Certification; and CEO Executive Chairman
Certification, respectively, which were attached as exhibits to the Form 10-Q. Each of the
Certifications stated:
1. I have reviewed this quarterly report on Form 10-Q of Raser Technologies, Inc. (the “Registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
32
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3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report . . . .
Id.
96. Defendants Clayton, Peterson, and Higginson knew, or recklessly disregarded,
that the foregoing statements were materially false and misleading for the reasons stated in ¶¶ 92
and 94 supra.
97. On November 10, 2010, Raser filed its interim report for the quarter ended
September 30, 2009 with SEC on Form 10-Q (the “3Q 2010 10-Q”). In that Form 10-Q, Raser
stated:
Although we placed the Thermo No. 1 plant in service in the first quarter of 2009 for accounting purposes, we were unable to operate the plant at designed capacity due primarily to mechanical deficiencies of the power generating units, lower than anticipated well field temperature and flow from certain wells and other inefficiencies which occurred as a result of overall design of the plant.
Id.
98. Defendants knew, or recklessly disregarded, that the foregoing description of the
problems at Thermo No. 1 was materially false and misleading because Defendants failed to
disclose that these difficulties were the direct result of Raser’s failure to conduct adequate early
well field development activities prior to the start of the construction of Thermo No. 1, as well as
poor well design, and, therefore, that the Company’s “ground-breaking, rapid-deployment design
and construction system” was a failure.
99. The 3Q 2010 10-Q also reported that the carrying value of the Thermo No. 1 plant
as $30,013,891:
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September 30, 2010: Thermo No. 1 Geothermal Power Plant: Power project lease acquisitions...........................$919,791 Well field drilling costs.....................................$11,673,140 Power plant...................................................$16,773,036 Transmission equipment....................................$1,933,512 Accumulated depreciation.................................($1,285,588) Net geothermal property, plant and equipment.......... $30,013,891
Id.
100. Defendants knew, or recklessly disregarded, that the $30,013,891 carrying value
was overstated by approximately $15,413,891. In violation of GAAP, Raser failed to reduce the
carrying value of its Thermo No. 1 geothermal power plant to approximately $14,600,000 (the
approximate amount of discounted future operating cash flows using a discount rate that
reflected Raser’s average cost of funds) by means of a charge to earnings. The Company’s
publicly reported asset value was, therefore, materially false and misleading.
101. Raser also reported in the 3Q 2010 Form 10-Q that the Company’s Board had
authorized the sale of the Thermo No. 1 plant on July 9, 2010, and that as of the November 10,
2010 date of filing of the Form 10-Q, “the solicitation process is currently ongoing.”
Accordingly, as of the November 10, 2010 date of the filing of the third quarter Form 10-Q,
Defendants knew, or recklessly disregarded that the Thermo No. 1 geothermal power plant could
not be sold at its $30,013,891 carrying value, and that a further material impairment charge
approximating 50% of this carrying value was required. The impairment charge was, belatedly,
taken in the following quarter as discussed below.
102. The 3Q 2010 Form 10-Q was signed by Defendant Perry. In addition, Defendants
Goodman and Perry executed Sarbanes-Oxley 302 CEO and CFO Certifications, respectively,
which were attached as exhibits to that Form 10-Q. Both Certifications stated:
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1. I have reviewed this quarterly report on Form 10-Q of Raser Technologies, Inc. (the “Registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report . . . .
Id.
103. Defendants Goodman and Perry knew, or recklessly disregarded, that the
foregoing statements were materially false and misleading for the reasons stated in ¶¶ 100 and
102 supra.
104. On April 15, 2011, Raser filed its 2010 Form 10-K with the SEC (the “2010 Form
10-K”). In the 2010 Form 10-K, the Company disclosed “[d]uring the third quarter of 2010 we
commenced the solicitation process of the sale of Thermo No. 1, or an interest therein. Based on
the solicitation process and further evaluation of the performance of the plant we further reduced
the value of the Thermo No. 1 plant and expensed an additional $15.4 million of capitalized costs
during the fourth quarter of 2010. We estimate that the fair value of the Thermo No. 1 plant, less
selling costs at December 31, 2010 totaled $14.6 million.”
105. Two weeks later, on April 29, 2011, Raser and its wholly-owned subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of Title 11 of the United States Code in
the United States Bankruptcy Court for the District of Delaware. Upon the April 29, 2011 filing,
the common stock of Raser became virtually worthless.
106. On September 6, 2011, Raser filed a Form 8-K with the SEC. That Form 8-K
stated, in pertinent part, that:
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On June 21, 2011, the Company filed with the Bankruptcy Court a [sic] initial Joint Plan of Reorganization of Raser Technologies, Inc. and its Affiliated Debtors (as amended, the “Plan”) and the Disclosure Statement with Respect to the Plan (as amended, the “Disclosure Statement”). A [sic] hearings regarding the Plan and the Disclosure Statement were held before the Bankruptcy Court and on August 30, 2011, the Bankruptcy Court entered its Order Confirming the Third Amended Plan of Reorganization of Raser Technologies, Inc. and Its Affiliated Debtors (the “Order”).
Among other things, the Plan provides that all common stock and other equity ownership interests in the Company are cancelled and that the holders of such securities do not receive any property or distribution under the Plan on account of such securities. Reference should be made to the Plan for the description and treatment of all of the classes of claimants under the Plan and other terms and conditions regarding implementation of the Plan.
Id. (emphasis added).
GAAP
107. Due to the pervasiveness of the Company’s fraudulent accounting activities and
the magnitude of the amounts involved, Defendants could not avoid knowing of them, as well as
the fact that they were concealed.
108. Extensive accounting manipulations of the sort alleged here are, necessarily, the
product of conscious behavior of the Company and its high-level executives. Certainly,
corporate books cannot “cook” themselves.
109. SEC Staff Accounting Bulletin No. 104, Revenue Recognition in Financial
Statements, states:
MD&A requires a discussion of liquidity, capital resources, results of operations and other information necessary to an understanding of a registrant’s financial condition, changes in financial condition and results of operations. This includes unusual or infrequent transactions, known trends or uncertainties that have had, or might reasonably be expected to have, a favorable or unfavorable material effect on revenue, operating income or net income and the relationship between revenue and the costs of the revenue. Changes in revenue should not be evaluated solely in terms of volume and price changes, but should also include an analysis of the reasons and factors contributing to the increase or decrease. The Commission stated in FRR 36 that MD&A should “give investors an opportunity to look at the
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registrant through the eyes of management by providing a historical and prospective analysis of the registrant’s financial condition and results of operations, with a particular emphasis on the registrant’s prospects for the future.”
110. Item 7 of Form 10-K and Item 2 of Form 10-Q require the issuer to furnish
information required by Item 303 of Regulation S-K [17 C.F.R. § 229.303]. In discussing results
of operations, Item 303 of Regulation S-K requires the registrant to “[d]escribe any known trends
or uncertainties that have had or that the registrant reasonably expects will have a material
favorable or unfavorable or unfavorable impact on net sales or revenues or income from
continuing operations.”
111. The Instructions to Paragraph 303(a) further state, “[t]he discussion and analysis
shall focus specifically on material events and uncertainties known to management that would
cause reported financial information not to be necessarily indicative of future operating results.”
112. Thus, under these standards, the management of a public corporation must
disclose in its periodic reports filed with the SEC, known trends or any known demands,
commitments, events or uncertainties that are reasonably likely to have a material impact on a
company’s sales revenues, income or liquidity, or cause previously reported financial
information not to be indicative of future operating results. 17 C.F.R. § 229.303(a)(l)-(3) and
Instruction 3.
113. On May 18, 1989, the SEC issued an interpretive release (Securities Act Release
No. 6835), which stated, in relevant part:
The MD&A requirements are intended to provide, in one section of a filing, material historical and prospective textual disclosure enabling investors and other users to assess the financial condition and results of operations of the registrant, with particular emphasis on the registrant’s prospects for the future. As the Concept Release states:
The Commission has long recognized the need for a narrative explanation of the financial statements, because a numerical presentation and brief accompanying
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footnotes alone may be insufficient for an investor to judge the quality of earnings and the likelihood that past performance is indicative of future performance. MD&A is intended to give the investor an opportunity to look at the company through the eyes of management by providing both a short and long-term analysis of the business of the company. The Item asks management to discuss the dynamics of the business and to analyze the financials.
As the Commission has stated, “[i]t is the responsibility of management to identify and address those key variables and other qualitative and quantitative factors which are peculiar to and necessary for an understanding and evaluation of the individual company.”
114. For the reasons described above, Raser’s periodic filings with the SEC during the
Class Period failed to comply with MD&A disclosure requirements mandated by the SEC.
115. Defendants were required to cause Raser’s SEC filings and the financial
statements contained therein to disclose the existence of the material facts concerning its Thermo
No. 1 plant as alleged above, as well as properly recognize and report revenues and expenses in
conformity with GAAP. Defendants failed to cause the Company to make such disclosures and
to account for, and to report, expenses in conformity with GAAP.
116. Due to the pervasive non-disclosures, deceptive disclosures, and non-GAAP
accounting alleged above, the Forms 10-K and 10-Q (and the financial statements contained
therein) that Defendants caused the Company to file with the SEC during the Class Period were
materially false and misleading.
117. Defendants knew, or recklessly disregarded, the facts which indicated that the
above-specified Raser filings with the SEC, financial statements, and public statements were
materially false and misleading for the reasons set forth above.
PLAINTIFFS’ CLASS ACTION ALLEGATIONS
118. Plaintiffs bring this action as a class action pursuant to Federal Rule of Civil
Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased or
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otherwise acquired Raser securities between May 11, 2009 and April 29, 2011, inclusive,
seeking to pursue remedies under the Exchange Act.
119. The members of the Class are so numerous that joinder of all members is
impracticable. As of June 9, 2010, there were 88,360,007 shares of Raser common stock
outstanding. While the exact number of Class members is unknown to Plaintiffs at this time and
can only be ascertained through appropriate discovery, Plaintiffs believe that there are hundreds
or thousands of members in the proposed Class. Record owners and other members of the Class
may be identified from records maintained by Raser or its transfer agent and may be notified of
the pendency of this action by mail, using the form of notice similar to that customarily used in
securities class actions.
120. Plaintiffs’ claims are typical of the claims of the members of the Class, as all
members of the Class are similarly affected by Defendants’ wrongful conduct in violation of
federal law that is complained of herein.
121. Plaintiffs will fairly and adequately protect the interests of the members of the
Class and have retained counsel competent and experienced in class and securities litigation.
122. Common questions of law and fact exist as to all members of the Class and
predominate over any questions solely affecting individual members of the Class. Among the
questions of law and fact common to the Class are:
(a) whether the federal securities laws were violated by Defendants’ acts as
alleged herein;
(b) whether statements made by Defendants to the investing public during the
Class Period misrepresented material facts about the business, operations and management of
Raser; and
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(c) to what extent the members of the Class have sustained damages and the
proper measure of damages.
123. A class action is superior to all other available methods for the fair and efficient
adjudication of this controversy since joinder of all members is impracticable. Furthermore, as
the damages suffered by individual Class members may be relatively small, the expense and
burden of individual litigation make it impossible for members of the Class to individually
redress the wrongs done to them. There will be no difficulty in the management of this action as
a class action.
LOSS CAUSATION
124. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused
the economic loss suffered by Plaintiffs and the Class.
125. During the Class Period, Plaintiffs and the Class purchased common stock of
Raser at artificially inflated prices and were damaged thereby. The price of Raser common
stock, which had a Class Period high of $4.50 per share, was artificially inflated throughout the
Class Period, but declined with each partial disclosure of the truth concerning the extent of the
problems at the Company’s Thermo No. 1 plant. Finally, when the Company recognized the full
extent of the impairment of the Thermo No. 1 plant at the end of the Class Period, Raser had no
alternative but to seek protection in bankruptcy, completely wiping out all the equity in the
Company.
126. Plaintiffs, who were ignorant of the full extent of the impairment of the Thermo
No. 1 plant, or that Raser’s rapid deployment strategy was a complete failure, purchased the
Company’s securities at artificially inflated prices during the Class Period and were damaged
thereby.
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SCIENTER ALLEGATIONS
127. Defendants acted with scienter because they: (i) knew that the public statements
issued or disseminated in the name of the Company were materially false and misleading; (ii)
knew that such statements would be issued or disseminated to the investing public; and (iii)
knowingly and substantially participated or acquiesced in the issuance or dissemination of such
statements or documents as primary violations of the federal securities laws. As set forth
elsewhere herein in detail, Defendants, by virtue of their receipt of information reflecting the true
facts regarding the Thermo No. 1 plant, their control over, and/or receipt and/or modification of
Raser allegedly materially misleading misstatements and/or their associations with the Company,
which made them privy to confidential proprietary information concerning Raser, participated in
the fraudulent scheme alleged herein.
128. Specifically, CW1 stated that then-Raser employee Michael Albrecht was asked
to review the design and operations at the Thermo No. 1 plant as early as February 2009 by
Raser’s Vice President of Business Development because of difficulties in increasing the plant’s
output to design levels (10 MW (net)). As alleged above, CW1 stated that Albrecht was given
unfettered access to Raser’s files for that review.
129. CW1 stated that during that review, Albrecht determined that Raser had engaged
in little or no early well field development activities prior to the start of the construction of
Thermo No. 1. According to CW1, Albrecht learned that Raser had done no seismic studies and
even refused to purchase earlier seismic studies that had been done in that same area. CW1
further stated that Albrecht learned that decisions concerning the location of the well field had
not been made by geophysicists, but rather by Company executives and attorneys.
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130. The Company’s failure to conduct early well field development activities, as
described by CW1, was corroborated in an opinion article by Charles E. Levey, Vice President,
Pratt & Whitney Power Systems, in an article entitled Lessons Learned from Raser
Technologies’ “Revolutionary” Project. In that article, Levey described the Company’s
construction of Thermo No. 1: “ [r] ather than drilling wells, developing well fields, and
precisely characterizing geothermal resources prior to designing and building a powerplant - a
process that can take years and cost millions of dollars - Raser would use land where they
believed geothermal resources could be characterized at a fairly high level of certainty without
expensive drilling , and would then develop the well field and build the power plant at the same
time. . . .” AOL Energy (Oct. 20, 2011), http://energy.aol.com/2011/10/20/lessons-learned -
from-raser-technologies-revolutionary-project/ (emphasis added).
131. CW1 further stated that Albrecht learned that while the Company had obtained
water with a temperature of 370 degrees Fahrenheit (a temperature more than adequate to
maximize Thermo No. 1’s output) at a depth of 7,000 feet from certain of its wells, errors in the
designs of the wells caused cold water seepage at the 2,500 feet depth. This, in turn, reduced the
temperature of the water from the wells to the point where Thermo No. 1 could not generate net
10 MW of electricity. According to CW1, Albrecht attributed the well design problems, as well
as problems related to well field site selection, to Company executives and attorneys making
reservoir engineering and well design decisions, and intentionally deciding to forego
implementation of a fact based critical peer review process by adequate geo-scientists.
132. Defendants, who were well-aware of Raser’s self-described “rapid deployment
strategy” to build geothermal power plants, knew that Thermo No. 1 would never be
commercially viable because the Company’s failure to conduct adequate early field development
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activities resulted in the drilling of production wells in areas where cooler water seeped into the
poorly designed wells at higher depths.
133. Moreover, Defendants were aware that their belated attempts to remediate the
problem by drilling a new well in June of 2009 would be unsuccessful because, according to
CW1, Albrecht learned that they had changed the well design. In fact, CW1 stated that Albrecht
contacted Defendant Peterson, then-Raser’s CFO, and informed him that the revised well design
would not work.
134. Moreover, according to CW1, Albrecht also confronted Raser’s Controller
Richard Holt, who was a direct report of Defendant Peterson, about the publicly reported
carrying value of Thermo No. 1. CW1 stated that Albrecht told Defendant Peterson that based
on the problems being experienced at the plant, the value attributed to Thermo No. 1 in March of
2009 was grossly overstated. CW1 stated that Albrecht also believed that the reported
construction costs for Thermo No. 1 were inflated and that the actual value was only $60-70
million.
135. Defendants were motivated to delay recognizing the full impairment of Thermo
No. 1 in order to secure a grant pursuant to Section 1603 of the Recovery Act. As stated above,
under that section, eligible persons who placed into service specified energy properties during
2009, 2010 or 2011, could receive payments equal to 30% of the basis of the property. Eligible
property under this program included only property used in a trade or business or held for the
production of income.
136. According to the Qui Tam Complaint, Raser’s Section 1603 grant application
included reported Thermo No. 1 construction costs of $108 million. Corroborating the
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information provided by CW1, the Qui Tam Complaint further alleged that these costs were
inflated by the Company:
The Conspirators knowingly submitted false, inflated construction costs as follows: 1) costs that were procured by kickbacks from contractors; 2) $4.9 million for the cost of turbine purchased from Pratt and Whitney in the fall of 2008, even though Raser never paid Pratt and Whitney for these turbines; 3) recording cost even when invoices were unpaid; 4) recording costs on a cash basis even when those invoices were paid in company stock rather than cash; 5) improperly reclassifying abandoned assets into capital expenses. (Raser drilled and abandoned several unsuccessful production wells in the fall and spring of 2008-2009 that it fraudulently included in its capital basis. It expensed these abandoned production wells on its balance sheet as abandoned, but when calculating its cost basis it recast the abandoned wells as “monitoring wells” and applied the cost to the Federal subsidy).
Id., ¶ 30.
137. Moreover, in order to secure this grant, which enabled Raser to repay
approximately $30 million of the debt incurred in connection with the construction of Thermo
No. 1, Defendants had to delay recognizing the full impairment of Thermo No. 1 until after the
grant was awarded in February 2010.
Applicability of Presumption of Reliance: Fraud On The Market Doctrine
138. At all relevant times, the market for Raser securities was an efficient market for
the following reasons, among others:
(a) Raser’s stock was traded over-the-counter with trading volume of in the
hundreds of thousands and millions of shares throughout the Class Period;
(b) As a regulated issuer, Raser filed periodic public reports with the SEC;
(c) Raser regularly communicated with public investors via established
market communication mechanisms, including through regular disseminations of press releases
on the national circuits of major newswire services and through other wide-ranging public
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disclosures, such as communications with the financial press and other similar reporting services;
and
(d) Raser was followed by several securities analysts during the Class Period
which were publicly available and entered the public marketplace.
139. As a result of the foregoing, the market for Raser’s common stock promptly
digested current information regarding Raser from all publicly-available sources and reflected
such information in Raser’s stock price. Under these circumstances, all purchasers of Raser’s
common stock during the Class Period suffered similar injury through their purchase of Raser’s
common stock at artificially inflated prices and a presumption of reliance applies.
NO SAFE HARBOR
140. The statutory safe harbor that provided for forward-looking statements under
certain circumstances does not apply to any of the allegedly false statements pleaded in this
Complaint. Many of the specific statements pleaded herein were not identified as “forward-
looking statements” when made. To the extent there were any forward-looking statements, there
were no meaningful cautionary statements identifying important factors that could cause actual
results to differ materially from those in the purportedly forward-looking statements.
Alternatively, to the extent that the statutory safe harbor does apply to any forward-looking
statements pleaded herein, Defendants are liable for those false forward-looking statements
because, at the time each of those forward-looking statements was made, the particular speaker
knew that the particular forward-looking statement was false, and/or the forward-looking
statement was authorized and/or approved by an executive officer of Raser who knew that those
statements were false when made.
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FIRST CLAIM Violation of Section 10(b) Of The Exchange Act And Rule 10b-5
Promulgated Thereunder Against All Defendants
141. Plaintiffs repeat and reallege each and every allegation contained above as if fully
set forth herein.
142. During the Class Period, Defendants carried out a plan, scheme and course of
conduct that was intended to and, throughout the Class Period, did: (i) deceive the investing
public, including Plaintiffs and other Class members, as alleged herein; and (ii) cause Plaintiffs
and other members of the Class to purchase Raser’s common stock at artificially inflated prices.
In furtherance of this unlawful scheme, plan and course of conduct, Defendants, and each of
them, took the actions set forth herein.
143. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made
untrue statements of material fact and/or omitted to state material facts necessary to make the
statements not misleading; and (iii) engaged in acts, practices, and a course of business which
operated as a fraud and deceit upon the purchasers of the Company’s common stock in an effort
to maintain artificially high market prices for Raser’s common stock in violation of Section 10(b)
of the Exchange Act and Rule 10b-5. All Defendants are sued either as primary participants in
the wrongful and illegal conduct charged herein or as controlling persons as alleged below.
144. Defendants, individually and in concert, directly and indirectly, by the use, means
or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a
continuous course of conduct to conceal adverse material information about Raser’s financial
well-being and prospects, specifically the value of its Thermo No. 1 plant and the success of its
rapid deployment strategy, as specified herein.
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145. Defendants employed devices, schemes and artifices to defraud, while in
possession of material, adverse, non-public information and engaged in acts, practices, and a
course of conduct as alleged herein in an effort to assure investors of Raser’s value and
performance, which included the making of, or the participation in the making of, untrue
statements of material facts and omitting to state material facts necessary in order to make the
statements made about Raser and its business operations and value in light of the circumstances
under which they were made, not misleading, as set forth more particularly herein, and engaged
in transactions, practices and a course of business that operated as a fraud and deceit upon the
purchasers of Raser common stock during the Class Period.
146. Defendants had actual knowledge of the misrepresentations and omissions of
material facts set forth herein, or acted with reckless disregard for the truth, in that they failed to
ascertain and disclose such facts, even though such facts were available to them. Such
Defendants’ material misrepresentations and/or omissions were done knowingly or recklessly
and for the purpose and effect of supporting the artificially inflated price of its common stock.
147. As a result of the dissemination of the materially false and misleading information
and failure to disclose material facts, as set forth above, the market price of Raser’s common
stock was artificially inflated during the Class Period. In ignorance of the fact that market prices
of Raser’s common stock were artificially inflated, and relying directly or indirectly on the false
and misleading statements made by Defendants, or upon the integrity of the market in which the
common stock trades, and/or in the absence of material, adverse information that was known to
or recklessly disregarded by Defendants, but not disclosed in public statements by Defendants
during the Class Period, Plaintiffs and the other members of the Class acquired Raser’s common
stock during the Class Period at artificially high prices and were damaged thereby.
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148. At the time of said misrepresentations and omissions, Plaintiffs and other
members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiffs
and the other members of the Class and the marketplace known the truth regarding the Thermo
No. 1 plant and Raser, which were not disclosed by Defendants, Plaintiffs and other members of
the Class would not have purchased or otherwise acquired their Raser common stock, or, if they
had acquired such common stock during the Class Period, they would not have done so at the
artificially inflated prices which they paid.
149. By virtue of the foregoing, Defendants have violated Section 10(b) of the
Exchange Act and Rule 10b-5 promulgated thereunder.
150. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiffs and
the other members of the Class suffered damages in connection with their respective purchases
and sales of the Company’s common stock during the Class Period.
SECOND CLAIM Violation Of Section 20(a) Of The Exchange Act Against All Defendants
151. Plaintiffs repeat and reallege each and every allegation contained above as if fully
set forth herein.
152. Defendants acted as controlling persons of Raser within the meaning of Section
20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions, and
awareness of the Company’s operations and/or intimate knowledge of the false statements in
connection with the Thermo No. 1 plant that was disseminated to the investing public,
Defendants had the power to influence and control and did influence and control, directly or
indirectly, the decision-making of the Company, including the content and dissemination of the
various statements which Plaintiffs contends are false and misleading.
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153. As set forth above, Defendants violated Section 10(b) and Rule 10b-5 by their
acts and omissions as alleged in this Complaint. By virtue of their position as controlling person,
Defendants are liable pursuant to Section 20(a) of the Exchange Act. As a direct and proximate
result of Defendants’ wrongful conduct, Plaintiffs and other members of the Class suffered
damages in connection with their purchases of the Company’s common stock during the Class
Period.
WHEREFORE , Plaintiffs pray for relief and judgment, as follows:
(a) Determining that this action is a proper class action under Rule 23 of the
Federal Rules of Civil Procedure;
(b) Awarding damages in favor of Plaintiffs and the other Class members
against all Defendants for all damages sustained as a result of Defendants’ wrongdoing, in an
amount to be proven at trial, including interest thereon;
(c) Awarding Plaintiffs and the Class their reasonable costs and expenses
incurred in this action, including counsel fees and expert fees; and
(d) Such other and further relief as the Court may deem just and proper.
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JURY TRIAL DEMANDED
Plaintiffs hereby demand a trial by jury.
Dated: April 30, 2012
RIGRODSKY & LONG, P.A.
By: /s/ Brian D. Long Seth D. Rigrodsky (#3147) Brian D. Long (#4347) Gina M. Serra (#5387) 919 North Market Street, Suite 980 Wilmington, DE 19801 Telephone: (302) 295-5310 Facsimile: (302) 654-7530 Email: [email protected] Email: [email protected] Email: [email protected]
Attorneys for Lead Plaintiffs
OF COUNSEL:
RIGRODSKY & LONG, P.A. Timothy J. MacFall 825 East Gate Boulevard, Suite 300 Garden City, NY 11530 Telephone: (516) 683-3516 Email: [email protected]
EGLESTON LAW FIRM Gregory M. Egleston 440 Park Avenue South, 5th Floor New York, NY 10016 Telephone: (212) 683-3400 Facsimile: (212) 683-3402 Email: [email protected]
50
o1/0/22 L90 - 01 81455842
Case 1:11-cv-01173-RGA Document 14 Fi
CRTLFICATION OF NA
Tel: 21 GroY M-
Fax: Law Finn ij Park Avenue South,
5th Fl. e-mat1
Nu,w York, NOw York, lOol
LV BARTESCH
PAGE ai 04/30/12 Page 51 of
D #: 201
D PLAINTIFF
To:
wtech (P1aintit") bar-.by retain the
'4
t"n Law QffiOe and such coCW'd
appropriate to associate with, subject to th eir nvcsttgatton t4 pursue n chums on a catingt
counsel to advance the costs oi'the case, wftb no attorneys fej owing except as way be awarded 1
conclusion of the matter and paid out of any tecovely obmtn4l and I also hereby declare the folk
claims asserted under the law that: I Plaintiff did not purchase the security that is the subt of this action at the direction o
counsel or in order to participate in this private action.
Plaintiff is willing to serve as a representative party
I
bdialf of the class, including
at deposition and trial, if necessary-
PlaintiWs transactions inRaser Techiwlogies Inc. ecurity that is subject of this 2
Class Period are as follows:
sia ad for court at the as to the
S
testimony
the
Ne. Sara k Symbol I HIRS-1—W
VM
See Attached Rider A
Please on ottrr trassac6m on a aeperale sheet of
if mmmary.
Plaintiff has sought to serve as a class in the following cases within
the last three years: No
plaintiff will not accept any payment serving as a r4reaentative party on bthalf of
the class bcyojid Plaintiff's pro rata share of any recovery, cept such reasonable c" and
lost wages) directly relating to the representation of the clasj as ordered or approved by the c (inc)uding
I declare under penalty of perjury that the
Executed this yof October, 2Ol1
Sipature
/i1A-lAJ~f,i n (& ) -
n3
is true and correct.
Zip
jrcJ(
IJ1
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 52 of 68 PageID #: 202
RASER TECHNOLOGIES INC.
Rider A to the Martin Bartesch Certification
No. of Shares Stock Symbol Buy/Sell Date Price Per Share 5,000 RZTIQ.PK Buy 12/31/09 $1.35 5,000 RZTIQ.PK Buy 12/30/09 $1.208 1,000 RZTIQ.PK Buy 12/24/09 $1.0991 1,500 RZTIQ.PK Buy 12/21/09 $1.13 10,000 RZTIQ.PK Buy 12/18/09 $1.15 2,000 RZTIQ.PK Buy 12/08/09 $1.2385 1,000 RZTIQ.PK Buy 12/07/09 $1.19 2,000 RZTIQ.PK Buy 12/02/09 $1.1485 100 RZTIQ.PK Buy 12/01/09 $1.13 3,000 RZTIQ.PK Buy 12/01/09 $1.1395 3,500 RZTIQ.PK Buy 12/01/09 $1.14 2,400 RZTIQ.PK Buy 11/25/09 $1.2195 3,300 RZTIQ.PK Buy 11/25/09 $1.2195 240 RZTIQ.PK Buy 10/30/09 $1.2474 4,500 RZTIQ.PK Buy 03/11/10 $1.0199 8,000 RZTIQ.PK Buy 02/12/10 $0.9299 5,000 RZTIQ.PK Buy 01/27/10 $1.04 4,500 RZTIQ.PK Buy 06/23/10 $0.59 4,500 RZTIQ.PK Buy 06/15/10 $0.6399 800 RZTIQ.PK Buy 05/25/10 $0.5728 1,000 RZTIQ.PK Buy 05/25/10 $0.573 2,200 RZTIQ.PK Buy 05/25/10 $0.5734 800 RZTIQ.PK Buy 05/10/10 $0.7797 6,200 RZTIQ.PK Buy 05/10/10 $0.7795 350 RZTIQ.PK Buy 05/03/10 $0.8288 2,700 RZTIQ.PK Buy 04/30/10 $0.81 800 RZTIQ.PK Buy 04/29/10 $0.8299 4,000 RZTIQ.PK Buy 09/27/10 $0.2798 400 RZTIQ.PK Buy 09/21/10 $0.2693 1,600 RZTIQ.PK Buy 09/21/10 $0.2693 800 RZTIQ.PK Buy 08/18/10 $0.3461 2,400 RZTIQ.PK Buy 08/18/10 $0.345 100 RZTIQ.PK Buy 08/11/10 $0.3486 100 RZTIQ.PK Buy 08/11/10 $0.349 100 RZTIQ.PK Buy 08/11/10 $0.3385 200 RZTIQ.PK Buy 08/11/10 $0.33 200 RZTIQ.PK Buy 08/11/10 $0.3384 200 RZTIQ.PK Buy 08/11/10 $0.3398 200 RZTIQ.PK Buy 08/11/10 $0.3401 200 RZTIQ.PK Buy 08/11/10 $0.3449 300 RZTIQ.PK Buy 08/11/10 $0.3496
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 53 of 68 PageID #: 203
No. of Shares Stock Symbol Buy/Sell Date Price Per Share 600 RZTIQ.PK Buy 08/11/10 $0.3488 600 RZTIQ.PK Buy 08/11/10 $0.3398 800 RZTIQ.PK Buy 08/11/10 $0.3464 1,000 RZTIQ.PK Buy 08/11/10 $0.346 1,000 RZTIQ.PK Buy 08/11/10 $0.3487 1,200 RZTIQ.PK Buy 08/11/10 $0.34 1,500 RZTIQ.PK Buy 08/11/10 $0.3489 4,400 RZTIQ.PK Buy 08/11/10 $0.32 200 RZTIQ.PK Buy 08/09/10 $0.3978 3,800 RZTIQ.PK Buy 08/09/10 $0.3972 4,300 RZTIQ.PK Buy 08/09/10 $0.3979 200 RZTIQ.PK Buy 08/05/10 $0.4094 900 RZTIQ.PK Buy 08/05/10 $0.4092 1,400 RZTIQ.PK Buy 08/05/10 $0.4097 2,000 RZTIQ.PK Buy 08/05/10 $0.4096 10,000 RZTIQ.PK Buy 08/05/10 $0.40 200 RZTIQ.PK Buy 07/15/10 $0.5288 6,800 RZTIQ.PK Buy 07/15/10 $0.5289 4,999 RZTIQ.PK Buy 12/30/10 $0.157 2,800 RZTIQ.PK Buy 12/22/10 $0.146 4,500 RZTIQ.PK Buy 12/21/10 $0.157 4,800 RZTIQ.PK Buy 12/21/10 $0.157 4,999 RZTIQ.PK Buy 12/21/10 $0.152 4,999 RZTIQ.PK Buy 12/21/10 $0.154 4,999 RZTIQ.PK Buy 12/21/10 $0.158 500 RZTIQ.PK Buy 12/16/10 $0.161 1,000 RZTIQ.PK Buy 12/16/10 $0.162 1,500 RZTIQ.PK Buy 12/16/10 $0.163 4,800 RZTIQ.PK Buy 12/15/10 $0.16 7,000 RZTIQ.PK Buy 12/10/10 $0.165 5,000 RZTIQ.PK Buy 11/23/10 $0.1795 3,000 RZTIQ.PK Buy 10/01/10 $0.2386
9,000 RZTIQ.PK Sell 03/18/10 $1.05 5,000 RZTIQ.PK Sell 03/18/10 $1.0207 10,000 RZTIQ.PK Sell 03/03/10 $1.08 13,130 RZTIQ.PK Sell 02/04/10 $0.9333 8,200 RZTIQ.PK Sell 02/04/10 $0.9401 5,968 RZTIQ.PK Sell 02/04/10 $0.9406 5,518 RZTIQ.PK Sell 02/04/10 $0.95 2,950 RZTIQ.PK Sell 02/04/10 $0.9501 2,500 RZTIQ.PK Sell 02/04/10 $0.94 632 RZTIQ.PK Sell 02/04/10 $0.9453 502 RZTIQ.PK Sell 02/04/10 $0.9408 300 RZTIQ.PK Sell 02/04/10 $0.9506
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 54 of 68 PageID #: 204
No. of Shares Stock Symbol Buy/Sell Date Price Per Share 200 RZTIQ.PK Sell 02/04/10 $0.9402 100 RZTIQ.PK Sell 02/04/10 $0.9499 5,690 RZTIQ.PK Sell 04/05/10 $1.014 10,000 RZTIQ.PK Sell 01/27/10 $0.32 1,325 RZTIQ.PK Sell 01/27/10 $0.33 20,000 RZTIQ.PK Sell 01/24/10 $0.311 10,000 RZTIQ.PK Sell 01/24/10 $0.311 20,000 RZTIQ.PK Sell 01/05/10 $0.24 18,000 RZTIQ.PK Sell 01/05/10 $0.25 8,300 RZTIQ.PK Sell 01/05/10 $0.268 6,400 RZTIQ.PK Sell 01/05/10 $0.265 6,000 RZTIQ.PK Sell 01/05/10 $0.265
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 55 of 68 PageID #: 205
CERTIFICATION OF PLAINTIFF PURS.UANT TO THE FEDERAL SECURITIES LAWS
("Plaintiff'), hereby declare as to the following
claims asserted ubder the Federal securities laws that:
1. Plaintiff has reviewed a complaint and authorized its filing.
2. Plaintiff did not acquire the security that is the subject of this action at the
direction of Plaintiffs counsel or to participate in this action or any other litigation under
the federal securities laws.
3. Plaintiff is willing to serve as a representative party on behalf of the Class,
including providing testimony at deposition or trial, if necessary.
4. Plaintiff has made the following transaction(s) during the Class Period in
Raser Technologies, Inc. (Other OTC: RZTIQ.PK) securities that are the subject of this
action:
No. of Shares Stock Symbol Buy/Sell Transaction Date Price Per Share
Please list additional transactions on separate sheet ofpaper, if necessary.
5. Plaintiff will actively monitor and vigorously pursue this action for the
Class' benefit.
6. Plaintiff has not sought to serve or served as a representative party for a
class in an action filed under the federal securities laws except as detailed below during
the three years prior to the date of this Certification:
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 56 of 68 PageID #: 206
7. Plaintiff will not accept any payment for serving as a representative party
on behalf of the Class beyond Plaintiffs pro rata share of any recovery, except such
reasonable costs and expenses (including lost wages) directly relating to the
representation of the Class as the Court orders or approves.
I declare under the penalty of perjury that the foregoing is true and correct.
Executed this,,-29 day of ,2011.
Signature
ONJ
alZ? Y-/
2
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 57 of 68 PageID #: 207
Account Number 1917-1029 FRED HOWARD BRYANT & CHERYL LYNN BRYANT DESIGNATED BENE PLAN/TOD
Transaction
Date
Price
Shares
Total
4.54 4.54 4.54 4.54 4.54 3.40 3.40 3.40 3.40 3.60 3.40 3.40 3.60 3.60 3.60 2.10 2.10 1.75 1.77 1.77 1.75 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.57
Holdings Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale
5/11/2009 5/19/2009 $ 5/19/2009 $ 5/19/2009 $ 5/19/2009 $ 5/19/2009 $ 6/23/2009 $ 6/23/2009 $ 6/23/2009 $ 6/23/2009 $ 6/23/2009 $ 6/23/2009 $ 6/23/2009 $ 6/23/2009 $ 6/23/2009 $ 6/23/2009 $ 7/10/2009 $ 7/10/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $
18,300 300
$ 200
$ 200
$ 100
$ 200
$ 58
$ 100
$ 100
$ 142
$ 100
$ 600
$ 1,000
$ 200
$ 300
$ 1,400
$ 2,000
$ 2,000
$ 2,800
$ 100
$ 100
$ 200
$ 10
$ 190
$ 500
$ 300
$ 100
$ 100
$ 200
$ 300
$ 600
$ 100
$ 200
$ 200
$ 100
$
1,362.28 908.19 908.19 454.09 908.18 196.94 339.54 339.54 482.15 359.54
2,037.26 3,395.44
719.09 1,078.63 5,033.60 4,195.42 4,195.41 4,891.52
176.70 176.70 349.39
17.66 335.72 883.49 530.09 176.70 176.70 353.39 530.09
1,060.18 176.70 353.39 353.40 157.01
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 58 of 68 PageID #: 208
Sale
9/2/2009 $
1.57
100
$
157.01 Sale
9/2/2009 $
1.57
40
$
62.80 Sale
9/2/2009 $
1.57
60
$
94.21 Sale
9/23/2009 $
1.85
40
$
73.88 Sale
9/23/2009 $
1.85
160
$
295.51 Sale
9/23/2009 $
1.85
45
$
83.12 Sale
9/23/2009 $
1.85
45
$
83.11 Sale
9/23/2009 $
1.85
55
$
101.58 Sale
9/23/2009 $
1.85
55
$
101.58 Sale
9/23/2009 $
1.85
100
$
184.70 Sale
9/23/2009 $
1.85
200
$
369.39 Sale
9/23/2009 $
1.85
900
$
1,662.28 Sale
9/23/2009 $
1.85
1,100
$
2,031.66 Sale
9/23/2009 $
1.85
300
$
554.09
Account Number 9159-0807 Rollover IRA of FREDERICK H BRYANT CHARLES SCHWAB & CO INC CUST IRA ROLLOVER
Transaction
Date
Price
Shares
Total
3.86 2.77 2.77 2.77 3.01 2.81 2.78 2.78 2.57 2.51 1.98 2.03 2.06 2.06 2.06
Holdings Sale
Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase
5/11/2009 6/26/2009 $ 6/30/2009 $ 6/30/2009 $ 6/30/2009 $ 6/30/2009 $ 6/30/2009 $ 7/1/2009 $ 7/1/2009 $ 7/2/2009 $ 7/7/2009 $
7/15/2009 $ 7/16/2009 $ 7/17/2009 $ 7/17/2009 $ 7/17/2009 $
56,000 2,000
$ 10
$ 390
$ 600
$ 1,000
$ 2,000
$ 100
$ 900
$ 1,000
$ 1,000
$ 1,000
$ 1,000
$ 100
$ 100
$ 100
$
7,710.85 27.69
1,079.89 1,661.37 3,008.95 5,628.95
277.90 2,501.05 2,568.95 2,508.95 1,978.95 2,028.95
205.90 205.90 205.88
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 59 of 68 PageID #: 209
2.06 2.06 2.06 2.00 2.33 2.24 2.24 2.15 2.29 2.31 2.30 2.30 2.30 2.30 2.28 1.79 1.79 1.75 1.75 1.75 1.75 1.75 1.75 1.75 1.75 1.78 1.78 1.80 1.80 1.80 1.80 1.80 1.78 1.80 1.78 1.78 1.78 1.83 1.83 1.62 1.38 1.38
Purchase Purchase Purchase Purchase Purchase
Sale Sale Sale
Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase
Sale Sale Sale Sale Sale Sale Sale Sale
Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase
Sale Sale
7/17/2009 $ 7/17/2009 $ 7/17/2009 $ 7/22/2009 $ 7/28/2009 $
8/6/2009 $ 8/6/2009 $ 8/6/2009 $ 8/7/2009 $
8/10/2009 $ 8/11/2009 $ 8/11/2009 $ 8/11/2009 $ 8/11/2009 $ 8/14/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $ 9/2/2009 $
9/11/2009 $ 9/11/2009 $ 9/11/2009 $ 9/11/2009 $ 9/11/2009 $ 9/11/2009 $ 9/11/2009 $ 9/11/2009 $ 9/11/2009 $ 9/11/2009 $ 9/11/2009 $ 9/11/2009 $ 9/16/2009 $ 9/16/2009 $ 9/28/2009 $ 10/2/2009 $ 10/2/2009 $
200
$ 200
$ 300
$ 1,000
$ 1,000
$ 600
$ 1,400
$ 2,000
$ 1,000
$ 3,000
$ 100
$ 100
$ 300
$ 500
$ 1,000
$ 1,000
$ 1,000
$ 466
$ 1,000
$ 3,000
$ 15
$ 49
$ 85
$ 85
$ 300
$ 100
$ 100
$ 310
$ 390
$ 400
$ 400
$ 700
$ 700
$ 800
$ 200
$ 400
$ 500
$ 399
$ 1,601
$ 2,000
$ 15
$ 51
$
411.79 411.79 617.69
1,998.95 2,328.95 1,341.28 3,129.64 4,290.93 2,288.95 6,938.95
229.90 229.90 689.67
1,149.48 2,278.95 1,794.47 1,794.48
814.64 1,748.16 5,244.49
26.22 85.68
148.59 148.59 524.45 178.45 178.45 558.93 703.16 721.19 721.19
1,262.09 1,249.13 1,442.39
356.89 713.79 892.24 731.96
2,936.99 3,248.95
20.67 70.29
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 60 of 68 PageID #: 210
1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.37 1.37 1.37 1.38 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.47 1.66 1.66 1.66 1.15 1.15 1.15 1.15 1.15 1.25
Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale
Purchase Purchase Purchase Purchase
Sale Sale Sale Sale Sale
Purchase
10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/2/2009 $ 10/9/2009 $
10/12/2009 $ 10/12/2009 $ 10/12/2009 $ 11/11/2009 $ 11/11/2009 $ 11/11/2009 $ 11/11/2009 $ 11/11/2009 $ 12/8/2009 $
100
$ 200
$ 600
$ 8
$ 100
$ 100
$ 100
$ 192
$ 600
$ 100
$ 200
$ 200
$ 65
$ 70
$ 134
$ 231
$ 100
$ 200
$ 100
$ 100
$ 200
$ 108
$ 192
$ 200
$ 100
$ 70
$ 93
$ 100
$ 100
$ 137
$ 34
$ 100
$ 2,000
$ 800
$ 2,200
$ 3,000
$ 166
$ 200
$ 100
$ 100
$ 234
$ 800
$
137.82 275.63 826.90
11.03 137.82 137.82 137.82 264.61 826.90 137.82 275.63 275.63
88.93 95.77
183.34 318.36 136.82 273.64 136.82 136.82 273.64 147.76 262.69 273.64 136.82 95.77
127.24 136.82 136.82 187.44 46.49
136.82 2,948.95 1,331.72 3,662.23 4,988.95
190.70 229.76 114.88 114.88 268.80
1,000.95
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 61 of 68 PageID #: 211
1.38 0.99 0.94 0.96 0.94 1.02 1.02 1.02 1.02 1.02 1.02 1.02 1.02 1.02 1.02 1.02 1.02 1.02 0.93 1.02 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.76 0.73 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66
Purchase Purchase Purchase Purchase Purchase
Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale
Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase
Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale
1/11/2010 $ 2/5/2010 $ 2/8/2010 $ 2/8/2010 $ 2/8/2010 $
3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 3/19/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $
1,000
$ 200
$ 100
$ 800
$ 900
$ 66
$ 50
$ 100
$ 100
$ 400
$ 500
$ 500
$ 500
$ 100
$ 100
$ 100
$ 100
$ 100
$ 100
$ 284
$ 100
$ 100
$ 200
$ 200
$ 300
$ 400
$ 500
$ 1,100
$ 2,000
$ 2,100
$ 616
$ 20
$ 180
$ 200
$ 600
$ 300
$ 1,000
$ 500
$ 500
$ 100
$ 100
$ 184
$
1,378.95 198.95 93.90
768.95 845.05 67.12 50.85
101.70 101.70 406.80 508.50 508.50 508.50 101.70 101.70 101.70 101.70 101.70 93.04
288.84 73.18 73.16
146.36 146.36 219.54 292.72 365.90 804.97
1,528.95 1,536.75
406.00 13.18
118.64 131.82 395.46 197.73 659.09 329.55 329.55
65.91 65.91
121.27
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 62 of 68 PageID #: 212
0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.66 0.63 0.57 0.64 0.40 0.40 0.40 0.37 0.37 0.37 0.37 0.28 0.28 0.28 0.28 0.17 0.18
Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale
Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase
5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 5/6/2010 $ 6/1/2010 $ 6/4/2010 $
6/14/2010 $ 8/20/2010 $ 8/20/2010 $ 8/20/2010 $ 9/14/2010 $ 9/14/2010 $ 9/14/2010 $ 9/15/2010 $ 9/23/2010 $ 9/23/2010 $ 9/23/2010 $ 9/23/2010 $
10/29/2010 $ 11/9/2010 $
500
$ 500
$ 500
$ 4
$ 27
$ 38
$ 43
$ 47
$ 48
$ 72
$ 92
$ 96
$ 100
$ 99
$ 134
$ 89
$ 411
$ 44
$ 100
$ 400
$ 456
$ 700
$ 500
$ 200
$ 300
$ 200
$ 1,100
$ 1,000
$ 1,000
$ 200
$ 300
$ 2,500
$ 100
$ 900
$ 3,800
$ 200
$ 3,698
$ 300
$ 402
$ 600
$ 10,000
$ 10,000
$
329.55 329.55 329.55
2.64 17.80 25.05 28.34 30.98 31.64 47.45 60.64 63.27 65.91 65.25 88.32 58.66
270.89 29.00 65.91
263.64 300.55 461.37 329.55 131.82 197.73 131.76 690.84 568.95 635.85
80.19 120.30
1,004.96 36.99
332.81 1,409.00
73.90 1,042.06
84.54 113.28 169.07
1,708.95 1,808.95
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 63 of 68 PageID #: 213
0.17 0.16 0.21 0.17 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01
Purchase Purchase Purchase Purchase
Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale
12/14/2010 $ 12/27/2010 $
1/4/2011 $ 3/4/2011 $
06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $ 06/07/2011 $
10,000
$ 10,000
$ 10,000
$ 10,000
$ 2
$ 100
$ 400
$ 498
$ 500
$ 46
$ 54
$ 100
$ 100
$ 300
$ 500
$ 100
$ 200
$ 200
$ 300
$ 100
$ 100
$ 100
$ 100
$ 100
$ 100
$ 200
$ 400
$ 300
$ 500
$ 400
$ 100
$ 100
$ 100
$ 500
$ 300
$ 300
$ 400
$ 500
$ 20
$ 100
$ 180
$ 200
$
1,708.95 1,608.95 2,108.95 1,708.95
0.03 1.28 5.13 6.38 6.41 0.59 0.69 1.28 1.28 3.85 6.41 1.28 2.56 2.56 3.85 1.28 1.28 1.28 1.28 1.28 1.28 2.56 5.13 3.85 6.41 5.13 1.28 1.28 1.28 6.41 3.85 3.85 5.13 6.41 0.26 1.28 2.31 2.56
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 64 of 68 PageID #: 214
Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale
06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011
200
$ 300
$ 500
$ 500
$ 100
$ 100
$ 200
$ 300
$ 300
$ 500
$ 500
$ 925
$ 96
$ 500
$ 500
$ 904
$ 500
$ 1,000
$ 200
$ 400
$ 400
$ 575
$ 100
$ 144
$ 256
$ 500
$ 300
$ 700
$ 500
$ 38
$ 100
$ 100
$ 262
$ 500
$ 100
$ 100
$ 300
$ 500
$ 500
$ 1,000
$ 1,000
$ 200
$
2.56 3.85 6.41 6.41 1.28 1.28 2.56 3.85 3.85 6.41 6.41
11.86 1.23 6.41 6.41
11.59 6.41
12.82 2.56 5.13 5.13 7.37 1.28 1.85 3.28 6.41 3.85 8.97 6.41 0.49 1.28 1.28 3.36 6.41 1.28 1.28 3.85 6.41 6.41
12.82 12.82 2.56
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 65 of 68 PageID #: 215
Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale
06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/07/2011 06/15/2011 06/15/2011 06/15/2011
300
$ 500
$ 10
$ 390
$ 600
$ 1,000
$ 2,000
$ 100
$ 900
$ 1,000
$ 1,000
$ 1,000
$ 1,000
$ 100
$ 100
$ 100
$ 200
$ 200
$ 300
$ 1,000
$ 1,000
$ 1,000
$ 3,000
$ 100
$ 100
$ 300
$ 500
$ 1,000
$ 1,000
$ 1,000
$ 100
$ 100
$ 310
$ 390
$ 400
$ 400
$ 700
$ 700
$ 800
$ 200
$ 400
$ 500
$
3.85 6.41 0.13 5.00 7.69
12.82 25.64
1.28 11.54 12.82 12.82 12.82 12.82
1.28 1.28 1.28 2.56 2.56 3.85
12.82 12.82 12.82 38.46
1.28 1.28 3.85 6.41
12.82 12.82 12.82
1.28 1.28 3.97 5.00 5.13 5.13 8.97 9.04
10.26 1.97 3.94 4.93
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 66 of 68 PageID #: 216
Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale
06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011 06/15/2011
399
$ 1,601
$ 2,000
$ 2,000
$ 800
$ 2,200
$ 3,000
$ 800
$ 1,000
$ 200
$ 100
$ 800
$ 900
$ 100
$ 100
$ 200
$ 200
$ 300
$ 400
$ 500
$ 1,100
$ 2,000
$ 2,100
$ 1,100
$ 1,000
$ 1,000
$ 200
$ 300
$ 2,500
$ 100
$ 900
$ 3,800
$ 200
$ 300
$ 402
$ 600
$
3.93 15.77 19.71 19.71 7.88
21.68 29.56
7.88 9.85 1.97 0.99 7.68 8.87 0.99 0.99 1.97 1.97 2.96 3.94 4.93
10.84 19.71 20.69 10.84 9.85 9.85 1.97 2.96
24.63 0.99 8.87
37.44 1.97 2.96 3.94 5.91
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 67 of 68 PageID #: 217
CERTIFICATION OF NAMED FL1AINTIFI
iTft4 ' <2774 ("Plaintiff) hereby retain the 4gleston Law Office and such co-counsel it
deems appropriate to associate with, subject to their investigation, to ptjrsue my claims on a contingent fee basis and for counsel to advance the costs of the case, with no attorneys fee cwing except as may be awarded by the
court at the conclusion of the matter and paid Out of any recovery obtaiied and I also hereby declare the following
as to the claims asserted under the law that:
Plaintiff did not purchase the security that is the subject of this action at the direction of Plaintiff's counsel or in order to participate in this private action.
Plaintiff is wilting to serve as a representative panty on behalf f the class, including providing testimony
at deposition and trial, if necessary.
Plaintiffs transactions in Raser Technologies, Inc., security is subject of this action during the
Class Period are as follows:
No. of SM I Stock Symbol j Buy/Sell
Price Per Share
Please list other trilutuictiolis on a separate sheet of paper 1 if
Plaintiff has sought to serve as a class representative in the fol the last three years: No
Plaintiff will not accept any payment serving as a represer the class beyond Plaintiff's pro rata share of any recovery, except
lost wages) directly releting to the representation of the class as or
I declare under penalty of perjury that the foregoing is true
Executed this.V_day of — L_, 2012 . 7. y
W1ture Address
Print Name (& 'Title if applicable) city, State.
(3 7i E-mail Phone
wing cases within
party on behalf of reasonable costs and expenses (including or approved by the coUyt.
correct.
c- c78.
'p
Other telephone numbers
II 8L1
EE:E w2/2/1
WO.i.J IIIAN19 XHI 3ti9fl 2XIIJ
Rd Gh:L
Case 1:11-cv-01173-RGA Document 14 Filed 04/30/12 Page 68 of 68 PageID #: 218
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