Investors in "green energy" projects which supposedly had the backing of the leading conservationist David Bellamy have lost nearly £3m.
One of the projects promoted by Yorkshire businessmen John Montgomery, 43, of Knaresborough, and Stephen Mongan, 57, of Hemingbrough, near Selby, was a contract with the Burger King fast food chain, said to be worth £780m.
But last week, Mr Montgomery admitted that he had used investors' money to buy property for development. He and his company MM Modular Construction now own property in Ripon, Yorkshire, estimated to be worth £1.6m.
One group particularly targeted was based at the Findhorn spiritual community in northern Scotland, an internationally known centre supporting eastern and new age beliefs. Wealthy members of the group contributed at least £1.6m.
Most of the money went to companies which have been struck off or are about to be struck off. In 2000, Mr Mongan announced that he had landed the multi-million- pound contract with Burger King. Potential new investors in his company, Powercut, were sent a video featuring Dr Bellamy and asked to invest £100,000 or more.
In a promotional video circulated in 2000, Dr Bellamy appeared to praise Mr Mongan and Powercut's environmentally friendly "portfolio of products which can save you 50 per cent of all the energy you use". "Stephen Mongan," said Dr Bellamy "has all the answers".
But the video had been used out of context and without permission, Dr Bellamy said last week. "I had no idea that video had been used. That really annoyed me very much," he told investigators for tomorrow night's Inside Out on BBC1.
The video had been made in 1994 but early in 1995 Dr Bellamy feared that his name and reputation might be exploited and warned this would be "intolerable".
"It's the last thing a conservationist would do - to push hamburgers," he told the BBC. The invention promoted by Mr Mongan was a "patented heat exchange" called the Omnihandler. He said it would let Burger King make huge savings on its annual worldwide £150m electricity bill by recycling heat from its "flame grilled" Whoppas and other products. Burger King initially supported the idea and installed three Powercut units at outlets in the north of England.
They did not work. Burger King had them removed. But prospective investors were not told that the scheme had flopped. "It was Mr Montgomery and Mr Mongan who were cooking whoppas," according to Vita de Waal, a former member of Findhorn who made personal loans of £1.2m to their companies. When the projects failed, she was forced to sell a hotel she had owned for 12 years and moved.
"They told me story after story about the millions they were about to make from Steve's inventions. I later discovered that none of it was true," said Claudia Genest, a social worker in the Findhorn area. "I gave them my life savings, £29,000. They gave me 10 per cent back, then a series of excuses."
Powercut, the company behind the Omnihandler and other inventions "doesn't do any business any more", according to its accountant. Investors had lost "several hundred thousands". According to the filed accounts, the company has lost £1.35m.
In September 1995, Mr Mongan admitted trading with intent to defraud creditors while running a Newcastle company. He was banned from being a company director for 10 years and ordered not to take part in running, promoting or operating any companies without permission. He then moved to Yorkshire.
Since then, Mr Montgomery and the two men's wives have set up and operated at least 19 companies. One of them was New Energy Innovations, set up in Edinburgh in 1999. Investors put £580,000 into the company, which claimed to have valuable patent rights in Mongan inventions.
Investors were not told that the company accountant for New Energy Innovations had previously been jailed for stealing money. The accountant, who cannot be named for legal reasons, admitted in 1991 to 10 charges of theft from clients, most of the proceeds of which were used to finance Mr Mongan's businesses, the court was told. Mr Mongan paid back £70,000. He was sentenced to two and a half years.
Stephen Mongan does hold a patent, for a heat combustion system based on "magnetic ionisation". Powercut claims that "Powertron" magnets wrapped round heating pipes or car fuel intakes reduce pollution and save fuel costs. Scientists say it could never work. According to Leeds University chemistry professor John Griffiths, "it's not going to have any effect whatsoever".
Mr Mongan's latest invention, called Hypergen, is claimed to be an eco-friendly power station system that can make electricity and huge profits from waste cooking oil and other sources. Mr Mongan told investors last month that he had an agreement to sell electricity to the national grid. "The Hypergen plant is within weeks of running," he said.Investors were then invited to come and inspect the "Wakefield power station" he said he had built. But photographs of the "Hypergen" obtained by the BBC show the invention to be an assortment of oil containers and diesel generators with no connection to the national grid. The Hypergen was originally supposed to have been installed at a different factory in Wakefield. That factory has now been repossessed. The landlords say the company disappeared in March 2003, owing £80,000 rent.
Part of the men's scheme involved an Isle of Man company, which received over £1m from investors, passing most of it to personal bank accounts in their joint names.
Some investors say that they still have faith in Mr Mongan and his Hypergen. But others, whose joint losses exceed £2.5m, are not convinced. Some are calling for a police investigation. "I'm very angry that money I gave for environmentally friendly engineering was used for property speculation," said Ms de Waal.
Mr Montgomery and his wife left their home in Knaresborough two days ago, telling friends they expected to be away for some time. Mr Mongan said that he did not believe that his role in their joint companies had breached his disqualification order.
'Inside Out' is on BBC1 (North), tomorrow at 7.30pm. BBC regional programmes can be viewed on satellite channelsReuse content