Friday, February 4, 2011
CIA technical venture capital firm scandal: IN-Q-TEL, May 6, 06
07/05/06 - IN-Q-TEL... La SEC enquêterait sur un scandale qui pourrait éclabousser la CIA
WMR May 6, 2006 -- "General Hayden's nomination to be the next CIA Director came as another scandal involving the intelligence agency emerged in addition to the "Hookergate" scandal centered on the Watergate and another Washington hotel. Under Goss, the CIA's venture capital arm, IN-Q-TEL, which provides CIA money to promising high-tech start-up firms, became the subject of a Securities and Exchange Commission (SEC) investigation for possible massive misappropriation of taxpayer money and private money involving IN-Q-TEL, NASA's venture capital branch -- Red Planet Capital -- The US Special Operations Command's venture capital firm On Point, and the infamous Carlyle Group -- the war profiteering company in which George H. W. Bush, the Bin Laden family, and former Secretary of State James Baker have held major financial interests.
Suspicions about IN-Q-TEL were raised in late April when its 35-year-old CEO, Amit Yoran, abruptly resigned to "spend more time with his family." Yoran, an Israeli-American, had been on the job for just four months after he succeeded IN-Q-TEL's first CEO, Gilman Louie, a well-known Silicon Valley investor and technical guru. Before taking over IN-Q-TEL, Yoran was the director of the National Cyber Security Division at the Department of Homeland Security. Under Yoran, IN-Q-TEL's operating budget increased exponentially and the firm began negotiating with various high-tech firms to develop deep data mining programs and spy technology. Yoran's rumored successor was said to be Mark Frantz, who Yoran brought from The Carlyle Group to be IN-Q-TEL's managing general partner and board of trustees member. Frantz worked for George H. W. Bush and held a senior position with Alex Brown, later merged with Deutsche Bank, the firm where the CIA's former Executive Director, A. B. "Buzzy" Krongard served as Chairman. IN-Q-TEL's board of trustees chairman is Lee A. Ault III of Delray Beach, Florida, who also serves on the board of Office Depot.
Individuals familiar with IN-Q-TEL report that the company is suspected of steering CIA funds to start-up firms with close ties to the GOP as well as "pump and dump" penny stock firms tied to three foreign nations -- Israel, Dubai, and Malaysia. The emerging IN-Q-TEL scandal is mirrored by the financial scandal involving favoritism in CIA contracts to Brent Wilkes' ADCS and its subsidiaries.
Deputy DNI Gen. Michael Hayden, who presided over dubious multi-billion dollar contracts -- including Groundbreaker and Trailblazer -- as NSA director, has a great deal of experience in covering up cost overruns, contractor fraud, and contract favoritism. Beyond the need to have a good foot soldier at the helm of the CIA, the Bush administration is clearly hoping that Hayden, using his special form of intimidation through the use of psychiatric and security personnel to threaten whistleblowers, can tamp down the emerging financial "Watergate" emerging at the CIA."
CIA Venture Capital Firm in Alternative Energy: In-Q-Tel website
adapt, and deliver innovative technology solutions to support
the missions of the Central Intelligence Agency and the broader
U.S. Intelligence Community (IC). Launched in 1999 as a private,
independent, not-for-profit organization, IQT's mission is to identify
and partner with companies developing cutting-edge technologies
that serve the national security interests of the United States.
Working from an evolving strategic blueprint defining the
Intelligence Community's critical technology needs, IQT engages
with entrepreneurs, growth companies, researchers, and venture
capitalists to deliver technologies that provide superior capabilities
for the CIA and the broader IC.
In-Q-Tel: The CIA’s Silicon Valley Bridge, Aug.9, 05
In-Q-Tel: The CIA’s Silicon Valley Bridge
Shortly after September 11, 2001, U.S. Secretary of Defense Donald Rumsfeld summoned a group of venture capitalists, techies, and high-finance types to the Pentagon. He wanted to talk about ways to deliver new technologies into the fight on terror. Fast.
The scheme hatched in that meeting was to start a pilot program designed to match venture capital and startups to specific problems the U.S. Department of Defense wasn’t solving. With VCs such as Wilber James from Rockport Partners, Ted Schlein from Kleiner Perkins, and John Kasich, a former U.S. Congressman and a partner at Lehman Brothers, in Mr. Rumsfeld’s office that day, it is likely that the participants already had a model in mind that would solve the problem. But knowing Mr. Rumsfeld’s hostility toward a certain government agency, it may be no surprise that it didn’t come up.
Lehman BrothersTwo years earlier, the Central Intelligence Agency had opened a venture capital arm in Silicon Valley. When the VC spooks first moved to Sand Hill Road, In-Q-Tel was regarded with no small measure of amusement and bemusement by its new neighbors. The firm got off to a slow start, but by the time al Qaeda destroyed the WorldTradeCenter, In-Q-Tel, named for James Bond’s gadget expert Q, had started to see some serious deals.
In-Q-Tel and the new Pentagon venture startup are not the only attempts to crank up the lugubrious pace of federal procurement with a snort of Silicon Valley speed: Both NASA and the U.S. Army have programs closely modeled on In-Q-Tel.
Even as the Pentagon keeps its plans quiet for now, it’s worth looking at In-Q-Tel six years after it started as an experiment in putting venture capital in the service of the feds.
Secret Success
To date, the CIA-backed venture firm can boast an impressive run. It has reviewed 5,000 business plans and invested $100 million in 80 companies and 10 projects in university research labs. Of those, only four have gone bust—impressive considering the 50 percent failure rate typical in the venture business. In 2004, In-Q-Tel invested in about two dozen companies. It has been involved in the development of 100 technologies central to its intelligence mission, and 12 of its portfolio companies have been named to Red Herring’s 100 Top Private Companies lists.
Red HerringDespite such successes, critics remain. They think the lack of oversight and compensation schemes for employees in In-Q-Tel are not adequately addressed.
Indeed, much about In-Q-Tel remains undercover. Calls to Senators’ offices involved in direct oversight of In-Q-Tel invariably provoke the response, “How do you spell that?” Congress’ research arm, the Government Accountability Office, has never issued a report on In-Q-Tel. The most recent study of In-Q-Tel came out in 2001.
Released one month before 9/11, the congressionally mandated Business Executives for National Security report on In-Q-Tel found that the CIA’s Silicon Valley experiment had experienced early success, and that “creating a model like In-Q-Tel makes good business sense.”
But no follow-up study has been made available to the public; the intelligence committees in both the U.S. House of Representatives and the Senate say that whatever reports they have on In-Q-Tel are classified.
Keeping Up
When the Berlin Wall came down in November 1989, it marked the end of the Cold War and spelled a new era for intelligence agencies. In the past, technologies were black-boxed, custom-designed and built for the intelligence agency. It was clear the old model was outdated, too expensive, and didn’t get the agency access to the latest and best technological innovations.
By the mid-1990s, the PC revolution was in full swing and the emergence of the World Wide Web spawned a flurry of technological innovations. It became obvious to the intelligence community that it couldn’t keep pace.
Technology ages fast, and delivering cutting-edge technology requires lots of money and talented engineers and scientists. The new generation of spy gadgets had moved past microphones hidden in a pack of gum to biological sensors to monitor toxic chemicals and language-processing software.
The pool of young talent from university campuses helping to fuel this revolution was attracted to Silicon Valley, with its thriving entrepreneurial community and rich rewards. It was a much larger talent pool than the CIA could possibly afford to assemble inside the walls of its headquarters in Langley, Virginia.
Why not take advantage of the market economics of technological innovation and ride that same curve to build the next generation of spy technologies, many of which would find broader use in the public markets? In-Q-Tel was born.
But early on in the creation of In-Q-Tel, doubters questioned the risk that goes hand-in-hand with the opportunity to gain access to innovative technology. How risky should the gambles made with taxpayer dollars be?
Because In-Q-Tel invests in much the same way a corporate venture firm does, it looks for those technologies that are central to solving problems its customer—the CIA—faces. While those needs change and evolve depending on the challenges faced by the CIA, In-Q-Tel is primarily interested in knowledge management technologies, information security tools, and security technologies that help authenticate access to data and services.
The most immediate need of the intelligence community is finding innovative technologies to address the gaps laid out in the 9/11 Commission Report. “All the good things that the government should have been doing that we didn’t have the capability to do,” says In-Q-Tel President and CEO Gilman Louie. “Any technologies to help people share that information, and leverage information that they’ve already collected and can be useful,” he says.
In-Q-Tel is also giving back to Silicon Valley. One of the key strengths that In-Q-Tel has brought to the venture industry is its deep expertise in technology. Three-quarters of its 66-member firm provides that deep knowledge from its Arlington, Virginia, location.In its first few years, the government-backed firm was a curiosity to venture capitalists in Silicon Valley. Its initial approach of leading investments was refined to one that followed alongside bigger, more experienced venture firms with bigger wallets, and hence larger stakes in the game.
Many of the companies that have received In-Q-Tel investments (which range from $250,000 to $3 million) laud its focused approach and high degree of expertise in science and technology. “You don’t approach them, they approach you—which is the opposite model of Silicon Valley,” says Robert Shaw, president and CEO of ArcSight, an In-Q-Tel investment that provides data collection and analysis for security products and corporate networks. “They’d done a year’s worth of due diligence and research before they approached us.”
One of the biggest doors that In-Q-Tel opens for its venture-backed companies is introductions and reference to other government agencies with budgets and needs for technology. “They introduced us and spread our name around the government. I’d say In-Q-Tel is as good or better than any other VC I’ve worked with,” says Mr. Shaw.
There is other evidence of In-Q-Tel’s ability to pick strong startups that are not only solid fits for intelligence agencies, but also innovators in business and consumer markets. In January, IBM acquired Systems Research & Development (SRD), which provides software applications to combat fraud and theft. Last fall, Google acquired Keyhole, which had developed clever map visualization software. That move triggered acquisitions by Yahoo and MSN to bolster map search technology. And in 2003, Symantec purchased network security firm SafeWeb.
IBMYahooThese successes have led to copycat venture firms like the Army’s OnPoint Technologies. Started in 2002, OnPoint has invested in eight companies ranging from thin solar technology to next-generation rechargeable batteries and fuel cells. Its overall investment objectives are to develop power or energy sources capable of operating in long missions without re-charging. Portable power is a big pain point for equipping U.S. Army soldiers, who typically lug around 40 pounds of spare batteries in their packs. In June, OnPoint invested in Nanosolar, which has developed a thin film solar technology for printing of solar cells on flexible polymer-based substrates.
OnPoint’s fund is less than $50 million. “We like to invest alongside other venture investors, butmore importantly, we focus on strategic investment opportunities for the Army,” says Jason Rottenberg, managing director of OnPoint Technologies. “We are much smaller than In-Q-Tel and we’re trying to leverage from what they’ve learned.”
“We like to invest alongside other venture investors, butmore importantly, we focus on strategic investment opportunities for the Army,” says Jason Rottenberg, managing director of OnPoint Technologies.NASA is also planning an In-Q-Tel-like foray into cultivating technology with venture capital, but declined to comment on its plans.
And of course, there is the result of Mr. Rumsfeld’s meeting. Mr. Kasich, co-founder of the Pentagon’s venture capital pilot program and now a managing partner at Lehman Brothers, says the Pentagon pilot program did not have the same slow start. The experiment—called Defense Venture Catalyst Initiative, or DaVinci—is in the process of becoming a more formalized Pentagon institution.
Venture CatalystThis is because it has been a smashing success, says Mr. James, a managing general partner at Rockport Capital, which specializes in cleantech energy investments. A couple of years after DaVinci started, Mr. Rumsfeld called some of the original attendees from that first meeting back to the Pentagon. According to Mr. James, the Secretary of Defense held up a full binder and said, “This is what you guys have done, but I can’t tell you what it is.”
The Pentagon is still tight-lipped about what plans it has for DaVinci. Steven King, special advisor for critical infrastructure protection at the Pentagon, and one of the lead people working on DaVinci, declined to be interviewed for this article. Mr. James and Mr. Kasich both say DaVinci will not be a Pentagon version of In-Q-Tel.
But Mr. James says he does fear that as DaVinci evolves and becomes an institution inside the Pentagon, it will lose some of its effectiveness. Government bureaucracy could slow it down.
No G.I. Pay Rates
Comparisons with the traditional practice of government have led to some criticism of In-Q-Tel. An investigative story that appeared in the New York Post in May raised questions about compensation for In-Q-Tel employees.
Two years after In-Q-Tel opened its doors, it designed a compensation scheme for its employees that departed from a typical salary model to give staffers incentive to work harder. The 66 employees of the venture firm receive a salary and equity positions in all of the companies In-Q-Tel has funded.
Roughly 9 to 40 percent of an employee’s salary is invested into the Employee Investment Fund, a mandatory long-term incentive component. The plan is unlike a typical 401K retirement fund in that each staffer cannot choose which of the companies in the In-Q-Tel portfolio to invest their money into. What’s more, employees don’t have any control over the timing and distribution of the equity proceeds from the fund.
The stakes are evenly spread across the spectrum of companies, says Mr. Louie. Each employee is issued what is defined as 144 restrictive stock, which 501c3 nonprofits abide by. The guidelines are designed to ensure that the nonprofit, In-Q-Tel in this case, doesn’t gamble and jeopardize taxpayers’ investments in technology startups. Essentially, for every $4 invested in a company, $1 is invested in the employee fund.
In-Q-Tel’s tax returns for 2001 and 2002 reveal that employee compensation is definitely out of line with a typical government agency. The base salary for the CEO is determined based on the Mercer, Watson Wyatt, and PricewaterhouseCoopers compensation survey for comparable positions in the High Technology, Nonprofit, Government Contractors and Venture Capital Firms.
According to In-Q-Tel’s 2002 tax returns obtained by Red Herring, Mr. Louie’s compensation in 2001 totaled $760,706 and his contributions to employee benefit plans and deferred compensation was $15,822. Of the nine officers listed in that 2002 return, the total compensation to CEO, nine officers and seven directors was $3,715,511.
Red Herring“Compensation depends on the staff member,” says Mr. Louie. “For myself, 30 percent of my compensation is salary, two-thirds is based on performance, and 20 percent is based on long-term equity positions.”He sad he donates the equity to charity.
The six-year In-Q-Tel experiment, designed to give intelligence agencies access to the cutting-edge technologies, has forged a strong foundation in Silicon Valley’s entrepreneurial culture. As other similar government efforts move ahead, questions remain about adequate oversight and value delivered to taxpayers. All the while, other foreign governments are watching closely to see if this U.S. approach can be leveraged on theirCIA front org. invests in Microhydro Oct. 18, 05
SkyBuilt Power Press Releases
In-Q-Tel Announces Strategic Investment In Skybuilt Power To Develop Mobile, Renewable Energy Power Stations
Arlington, VA; October 18, 2005. SkyBuilt Power, an energy solutions company, announced today it has signed a strategic investment and development agreement with In-Q-Tel, a private venture group established by the U.S. Central Intelligence Agency (CIA), to develop innovative, mobile, renewable energy power stations.
“SkyBuilt Power provides innovative energy solutions with the potential to help meet a wide variety of critical government and commercial power needs,” said Gilman Louie, president and CEO of In-Q-Tel. “In-Q-Tel's portfolio is made up of innovative and critically important commercial technologies that can address the most difficult technology challenges faced by both commercial enterprises and the national security community. SkyBuilt Power's proprietary technology offers great promise for leading edge applications for customers in the government and private sector."
SkyBuilt has developed rugged, rapidly deployable, plug and play, low maintenance, and mobile, energy Systems that can use any combination of commercial solar, wind, micro-hydro, diesel, and other energy sources. According to Bill Buck, SkyBuilt's chairman, “SkyBuilt's power Systems can provide power with no fuel. They can be used for backup power, remote telecom power, an emergency operations center for disaster relief teams, water pumping, a mobile medical clinic to refrigerate medicines in developing countries, infrastructure security, village grids, border patrols or a classroom with internet service.”
One of SkyBuilt's innovative Systems is the Mobile Power Station TM (MPS), the world's first plug and play, modular, containerized, mobile power system, with over 100 patent claims filed for its revolutionary drop and operate design. “The PC revolutionized the computer industry and made computers mobile and plug and play. Now the MPS can do the same thing for renewable and other energy Systems,” according to David Muchow, President and CEO of SkyBuilt.
The MPS sets up in hours and is a complete power system prepackaged in a standard freight container that can be shipped easily worldwide by sea, air, truck and rail. SkyBuilt's vice president, Scott Sklar noted that, “the MPS operates in any climate, needs no fuel, is very low maintenance, rugged, and can be remotely controlled. It can provide power from 3.5kW to 150kW or more at much lower fuel and maintenance costs than traditional fuel-based Systems. It can use any combination of off the shelf components and provides more reliable power than most other Systems on or off the power grid — and, the MPS can run for decades with relatively little maintenance.”
About SkyBuilt Power
SkyBuilt Power provides simpler, smarter, and more reliable energy solutions for military, homeland security, and commercial power needs worldwide. SkyBuilt's team includes experts in solar, wind, fuel cells, batteries, electricity, fossil fuels, engineering, telecommunications, law, utility and energy regulation, and other disciplines to provide better energy solutions. www.SkyBuilt.com .
About In-Q-Tel
In-Q-Tel is a private, independent, not-for-profit venture group established by the CIA. Launched in 1999, In-Q-Tel's mission is to identify and invest in companies developing cutting-edge information technologies that serve United States' national security interests. Working from an evolving strategic blueprint that defines the Intelligence Community's critical technology needs, In-Q-Tel engages with entrepreneurs, established companies, researchers and venture capitalists to deliver technologies that pay out in superior intelligence capabilities for the larger Intelligence Community. Learn more at www.in-q-tel.org .
CIA enters Alternative Energy Field Oct. 20, 05
by John Laumer, Philadelphia 
on 10.20.05
The story goes on to explain that "The power stations could have important uses for disaster relief, homeland security, military operations, intelligence work, and a variety of commercial applications. The units are not yet designed for use by homeowners". Well "Duh".
"While SkyBuilt has 140 patent claims on its energy system, most of its individual component parts are widely available".
We have an idea for how the CIA could save a lot of money. Order an Amish built shed for about $500. They'll send the skid mounted pieces strapped and shrink wrapped on a flatbed, in a matter of days, ready for setup in a few hours. Lancaster's not too far from DC after all. The other route is to order some small steel dumpsters. Turnkey, modular SPV kits are available from Home Depot for under a grand. If that's not custom enough, we know a college kid that could use some IPO help from the CIA as well. TreeHugger has also covered all sorts of dandy do-it-yourself wind turbine kits.
Do an editorial page search of a certain business journal's archive from last decade and we're pretty sure you'll find numerous rants about how naive Treehuggers 'keep pushing those "uneconomical" and "naive" technology ideas like wind and solar power'. Typical of such pieces would be a proclamation that it is always best to 'leave our energy future in the hands of the private sector' and 'keep the government incentives out'. This is one time we TreeHuggers agree. Hundreds of patents indeed.
"Nando" on Hartvigsen's "illegal" Watermotors Claim to worldwide Yahoo microhydro Group, March 10, 09
| more information… |
 m : microhydro@yahoogroups.com | 2009-03-10 22:32:32.0 • 2009-03-10 22:32:32.0 |
Re: [microhydro] COPYRIGHT LAW
by Nando
| | |
Michael:
I see that you do not understand the law.
Though somebody may have "invented" " designed" "developed" , let's say in this case a spoon for a Turgo Turbine ( done by Gilkes in England in the early 1930 ) -- his spoon lacked certain properties that some others improved and could patent as patentable improvements -- quite common in all the world industries -- some chose instead of a patent to keep their work as a copyright product -- which does not allow the "cloning" of the product .
The Turgo spoons though existing in different form -- several types I have known along my life -- can be copyright to protect against "cloning" Which is what RON Davis have done and initially recognized by him when confronted by Joe Hartvigsen and the owner of the copyright Peter Ruyter agree to allow RON to do the copy by paying a royalty -- which "offended" RON.
It seems by the way you wrote the message that RON is connecting with you -- to call "foul" because it seems that he is not allowed to respond to those things..
I believe you are wrong -- that is RON's cry, because the only thing that RON does is to demand and demand and demand where the Widow Carlsson is-- for sure to harass her to no end -- the way that it seems that has or used to harass Joe Hartvigsen.
Question, somebody should have paid to make the molds to cast the spoons, also the technician to form the physical model to make the molds -- the owner of the molds must have the copyright to those spoons made with those molds .!!!!!!!
RON has not, to this day, responded to direct questions regarding this problem -- He is the spam to Joe -- he used to be to me, but one time, I got a message , I think, from a group from AFRICA and confronted him and called : Pathological Liar and from there on I blocked him from my internet and every time he used another email address, I added it to the blocked and send the emails to a SCUM BAG Folder.
His site watermotor.net still today ( march, 10, 2009, 8:10 AM CDT) has the PURCHASE tab showing that his turbines specify SWEDISH NYLON and SWEDISH BRONZE Spoons.
This is in addition a classical illegal advertisement it is called : BAIT & SWITCH -- because he is not selling the SWEDISH NYLON or BRONZE spoon design -- It seems that he is selling Aluminum Spoons cloned from a SWEDISH Designed Spoon. -- STILL ILLEGAL .
I wonder how many people have been giving the aluminum spoons which is a soft metal, even if silicon is added -- very bad for sites with some head and carrying some sand.
I do not believe that the moderator will not allow RON to respond to the questions -- without always asking for the widow Carlsson.
Widow Carlsson is out of the picture.
RON included me because I was assisting JOE in sending a mechanical counter and I included a cheap DVM as a gift to HIM, the counter donated by Joe -- I was going to visit him when going to Bolivia to assist in his turbine design and to see how his idea of CAMPO NUEVO was to even help him financially, but his shenanigans made me cancel my visit and I told him so --which automatically included me in the problem and feud he chose to generate..
The truth is coming out -- and his behavior is damaging, deeply, his wife dream of CAMPO NUEVO.
Personal defense is done, responding directly to those that present the points and not by ONLY asking about widow Carlsson.
RON , normally, runs to capture those that may indicate a slight position toward him -- reason why I believe he has connected with you .
I assist people freely, and in many cases I have assisted even financially to some that needed --
So, I am clarifying my position and for one, I have been told that the says that I send HATE email all over --THAT is a LIE - I do not waste my time in efforts that do not good to me or my character.
Nando
----- Original Message -----
From: Michael Welch
To: microhydro@yaho...
Sent: Tuesday, March 10, 2009 1:38 AM
Subject: Re: [microhydro] COPYRIGHT LAW
Hi Nando. I am sure that you believe you are right.
What *I* personally find dubious is that there was a "creation of an original work." (note: dubious is different than "wrong." Like those that say they "know" god exists, I do not believe you can "know" that the Swedish spoons were an "original work." Like true believers around the world, you are taking a leap of faith.)
I do know that you can't just take an already existing thing, spit polish it, and call it an original work. The next person has every right in the world to use their own spit on a copy, even if it burnishes it.
BTW, apparently Ron is not allowed by the list owner to respond to these things -- for whatever reason -- I am not passing judgement on those reasons. But it is quite obvious that anti-Rons are frequent posters here without Ron's personal defense.
Like I said before, it takes a leap of faith to throw in with either side in this feud.
Nando wrote at 04:50 PM 3/9/2009:
>Group:
>
>This is a basic analysis. The infringer RON was " willful" !!!!!
>
>I found this link that I think is quite logical to send due to what is happening right now in the group.
>
>NOTICE that the BENE CONVENTION allows : "after the transfer of the said rights", the author shall have the right to claim authorship of the work .
>
>It does not matter if the Carlsson have died or not and there is another owner of such copyright -- notice as well -- the damages .
>
>It is time that RON stops witch hunting for the widow Carlsson and have the character to accept that he is wrong and do behave accordingly.
>
>Widow Carlsson hunting is the excuse of RON to continue refusing to accept the truth --
>
>It is RON's Teflon raincoat !!
>
>Another reason why he just asks the same question and NEVER answered a direct question or questions posted to RON.
>
>Nando
Nando, hartvigsen, turgo, wim klunne, brian kunzler, yahoo microhydro, internet fraud, watermotor, ron davis, bolivia, ceramatec, inl, coorstek, turgo turbine peter ruyter, bolivia,
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