By ZAZ HOLLANDER, Anchorage Daily News

BOB FOWLER: The man behind the methane accused of kickback scheme in San Francisco case.

PALMER -- Bob Fowler has come home to pioneer a new energy boom in coal bed methane.

Bob Fowler is chief executive of Fowler Oil and Gas. He was the chief executive of a Seattle-based company that sold computer technology and services.

He graduated in 1962 from Palmer High School and left the state years ago but has kept ties to Alaska, as well as connections with longtime Palmer families. These local roots and reputation have served him well: His relatively young company, Fowler Oil and Gas Corp., last fall became the first to score permission from the Matanuska-Susitna Borough to drill for methane. He hasn't endured the firestorm of public protest that battered another company with the same idea several years ago. But Fowler's business track record of recent years is marred by a multimillion-dollar loan default, a lingering bankruptcy and an ongoing connection to a San Francisco corruption case, including allegations his company paid kickbacks to a city official there.

That company was the now-defunct Government Computer Sales Inc., which Fowler ran as its chief executive. Based outside Seattle, the company sold computer hardware, software and services.

The corruption case surfaced in 2003 in a civil lawsuit filed by the city of San Francisco. That case remains open and prompted an FBI investigation that led to the criminal conviction of a city building inspection official for obstruction of justice, mail fraud and wire fraud connected to the kickbacks. In the civil suit, the city accuses Fowler's company and others of paying kickbacks to the building official to land city business. The lawsuit also accused Fowler himself of "stealing" money from San Francisco, money the city accused Fowler of sending to offshore bank accounts in the Caribbean.

In several interviews, Fowler said that he has never been charged with a crime because he did nothing wrong, and he thinks it is unfair for the Daily News to bring up his past. He said in the San Francisco case he was victimized by a rogue employee.

As for the bankruptcy, "Bankruptcy can happen to a lot of people," he said. "The big question is whether you have committed criminal acts along the way. And everyone had their day in court to ventilate those questions, both for the company and me personally. And I was vindicated."
THE SCANDAL

The kickback story landed on the front page of the San Francisco Chronicle in 2003.

Most recently amended a year ago, the city's 35-page civil complaint in California Superior Court against Fowler's former company and others, as well as the criminal case against the city official, lays out the case this way:

Fowler's Government Computer Sales signed three contracts with the city building inspection division in late 2000 and 2001 to help streamline building permitting.

Marcus O. Armstrong, the division's top technology officer, had recommended the city hire Fowler's company. Armstrong set up Monarch Enterprises Inc. to receive kickbacks from Government Computer Sales and other companies.

In four payments between Sept. 19, 2000, and April 3, 2001, Fowler's company paid Monarch a total of $239,638 after Monarch submitted phony invoices for work never done.

Armstrong was charged in June 2003 and pleaded guilty a month later.

Fowler and his company never finished the projects for San Francisco, according to the city complaint.

Instead, the city alleged, "Fowler began shutting down GCSI and stealing funds from San Francisco for his own benefit. ... Fowler began at this time to transfer his and GCSI's assets to offshore bank accounts."

The "stealing" involved Fowler's company billing the city for $240,000 in false invoices for Monarch's "work," then passing the money to Monarch after skimming a fee off the top, according to Armstrong's plea agreement, filed in July 2003.

The offshore bank referenced is Baltic Bank Ltd. on the Caribbean island of St. Vincent. Fowler bought Baltic Bank for $1.3 million in March 2000, according to a sworn declaration he filed in his personal bankruptcy case. In the document, he said he "planned to use the bank as an investment company or vehicle for personal and business investments."

Asked about the allegations that he stole money from San Francisco, Fowler said: "That's absolutely untrue and they have no proof of that whatsoever."

Fowler is also named as a defendant in the civil case, as is his company, but he technically appears to be not part of the case for now.

The city tried to serve Fowler with court documents but was never actually able to do so, at least in part because he lived in a gated community, according to Matt Dorsey, a spokesman for the city attorney's office. "He wasn't sued if he wasn't served ... technically speaking, he was never within the court jurisdiction," said Kristine Poplawski, a city attorney once involved in the case.

Asked why Fowler's name remains on the city's complaint, Poplawski said it's easier to leave a defendant's name on a complaint than to remove it.

Although the civil case remains open, it is unclear whether San Francisco will pursue its case against Fowler.

A private attorney now handling the case for the city said Fowler's bankruptcy had prevented the city from pursuing civil action against him. Asked if the case against him would go forward once the bankruptcy case closed, attorney Nancy Fineman said she couldn't say.

Fowler said he was never charged because he personally was not at fault.

A Government Computer Sales employee working in the company's California office bribed city officials "unbeknownst to us," because he was trying to meet a sales quota, Fowler explained.

He couldn't remember the employee's name -- "we had over a hundred people working for us " -- but said the person was arrested, charged, pleaded guilty and "is serving time right now."

Pressed as to how he could forget an employee who brought his company so much negative attention, Fowler said the city case came as his company was being sued by a creditor and "everything was in turmoil."

"I just don't remember. I'm sorry," he said. "It's been a while. It was very stressful times back then."

Poplawski said she was not aware of any criminal prosecutions of any GCSI employee. The attorney who prosecuted Armstrong declined to comment. A representative of the U.S. Attorney's Office did not return numerous calls. A reporter at the Chronicle could find no mention of a GCSI employee convicted in the case in the newspaper's story archives.

An attorney who represented Armstrong said he didn't recall much about the case. The attorney said he was unable to get in touch with Armstrong to verify Fowler's claim.

THE DEFAULT

As Fowler's company was signing the city contracts in San Francisco, the business was falling apart. Government Computer Sales was defaulting on most of a $20 million loan from its main creditor, Finova Capital Corp., various court documents show.

Fowler, in an interview, blamed Finova's decision to terminate his company's credit on the fact that Finova itself was in bankruptcy. Without the credit, he said, Government Computer Sales couldn't survive.

However, a different story is told in a civil lawsuit in Seattle federal court that Finova filed in May 2001 against Government Computer Sales and its officers, including Fowler. Finova was seeking to recover $16 million from the loan.

GCSI countersued for breach of contract. But the company "ran out of money" before the claim could be decided, Fowler said.

The Caribbean bank also surfaces in this case.

Among Finova's accusations: Fowler, his company going under, bought Baltic Bank. Without Finova's knowledge, Fowler converted the collateral underpinning his loan into certificates of deposit issued by Baltic Bank, according to the lawsuit as well as filings in Bankruptcy Court. Finova claimed in Fowler's bankruptcy case that the certificates were "worthless."

The judge put a temporary restraining order on spending from GCSI's accounts in June 2001, then assigned someone to watch spending. An accounts manager made "an emergency phone call" to a Finova senior credit officer in August, telling him that $113,000 in checks from San Francisco had gone to a company manager instead of the court-ordered "lockbox," according to the Finova officer's sworn declaration. The accountant also said she processed a wire transfer for $100,000 to an unfamiliar Fowler-controlled account, according to the sworn declaration.

On Sept. 7, 2001, U.S. District Judge Marsha J. Pechman held Fowler and his company in contempt, fining him $10,000 a day until he showed up in court. According to her contempt order, the company moved more than $700,000 while the restraining order was in place. Records also showed that GCSI wired $250,000 to Fowler and $85,000 to his brother, Ralf, in a two-day period leading up to the June order. The brothers said the transfers repaid them for tax payments. The judge wrote, "the court has seen no documentation to substantiate this claim and finds the timing of these disbursements highly suspicious."

Fowler said recently that the order was only to get him to come to court, which he did.

The judge never required the brothers to return the money, and they provided documentation the company owed it to them, Fowler said.

In September 2002, the federal court ordered Fowler's company to pay Finova the $16 million.

But the money Fowler owed Finova became entwined in the bankruptcy cases.

THE BANKRUPTCY

Government Computer Sales and Fowler each filed for Chapter 7 bankruptcy in July 2002, according to U.S. Bankruptcy Court records from Southern California.

In his personal filing, Fowler listed his debt as $1 million to $10 million, and his assets as $50,000 or less. He did not list the city of San Francisco among his company's creditors in either case, according to bankruptcy documents. Finova was a creditor in Fowler's personal and corporate bankruptcies.

The corporate bankruptcy case was discharged in 2004. Finova ultimately got paid upwards of $10 million by a securities firm also involved in the loan, said Jim Mitchell, Fowler's attorney during the bankruptcy.

The personal bankruptcy remains open, but only to resolve some administrative details, said Richard Kipperman, the government-contracted bankruptcy trustee in the case.

He said a judge denied Fowler's bid to discharge debts in his personal bankruptcy petition, something Kipperman called a "very unusual" move.

The judge cited "legal issues" surrounding Fowler's Baltic Bank transactions, as well as some San Diego County property transfers, Mitchell said.

Fowler said he plans to pay off his personal debts "when I have the chance."

"Some creditors have received money along the way," he said. "Finova has received a huge chunk of money."

He described his current debt as "several million."

Asked if that financial burden is driving his methane prospects, Fowler said, "Well, yeah, but I'm not doing it just for that. It would be a nice side benefit to finish off paying all the creditors, 100 percent."

Meanwhile, he said, he's regularly hearing from additional Mat-Su property owners interested in methane wells on their land.

"There's a lot of interest," he said.

Coal bed methane: Bumpy road to drilling in the Valley

Four years ago, Evergreen Natural Resources came to Alaska to drill for methane gas trapped in coal seams.

Instead of gas, the Colorado company got fire.

Evergreen secured state leases across the Valley, some beneath neighborhoods and homes where drilling got priority over property rights. The company hired Palmer state Sen. Scott Ogan as a consultant.

By fall of 2003, Mat-Su residents rose up against perceived threats to property and drinking water, angrily packing town hall meetings; in Sutton, outraged locals hung effigies of Ogan and then-Rep. Vic Kohring, who sponsored legislation written by Evergreen executives.

By the next summer, Ogan resigned, citing health concerns and facing an upcoming recall election. Evergreen left without a commercially viable well. The company merged with Dallas-based Pioneer Natural Resources, which returned most of Evergreen's leases to the state in October 2004.

Out of the fracas rose a new Matanuska-Susitna Borough law requiring that methane drillers get a local permit.

Fowler Oil and Gas Corp. last year became the first applicant. Officials and even former Evergreen detractors praised Fowler's straightforward style, as well as plans to use new technology and initially work only with willing landowners.

Just a scattering of onlookers witnessed the borough planning commission's unanimous approval of Fowler's permit in October.

-- Zaz Hollander, Anchorage Daily News, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

New York firm linked to Fowler's company investigated

NAEG: The company partnered "to provide development support" but the feds suspended trading activity.

By ZAZ HOLLANDER, Anchorage Daily News, April 7th, 2008

Fowler Oil and Gas Corp. needs approval from the Alaska Oil and Gas Conservation Commission before drilling its first coal bed methane well off Trunk Road in Mat-Su.

Asked if an applicant's past factors into such a decision, commissioner Cathy Foerster said the three-person body doesn't have the statutory authority to judge "who's a good guy or a bad guy in general." Instead, Foerster said, the state requires at least a $100,000 bond to cover the costs of plugging a well if the operator abandons it.

She didn't know when the commission might decide on Fowler's permit. Company chairman Bob Fowler did post a $100,000 surety bond through a Texas insurance company, according to a copy of the bond stamped March 17.

Fowler Oil and Gas is headquartered in Las Vegas but operates an office in Palmer. The company shares financing, staff and engineers with Native American Energy Group, headquartered in Forest Hills, N.Y., according to paperwork filed last year with the Matanuska-Susitna Borough.

Fowler's president and chief operations officer, Arlen Ehm, resigned from the company in February. Ehm, a longtime petroleum geologist, said he wasn't paid.

The same day Ehm resigned -- Feb. 1 -- NAEG told shareholders the company "will not be able to operate the business" due to insufficient capital and was looking for investors to buy out shares, according to a post on the company's Web site.

On March 13, the U.S. Securities and Exchange Commission suspended trading in NAEG stocks -- and those of 25 other companies -- for 10 days as part of an ongoing investigation into claims the company "hijacked" the identity of a defunct firm to skirt investor protection laws. The company is still not trading; an NAEG statement issued March 19 says the company is evaluating the issues involved and evaluating legal options.

An NAEG official in New York did not return calls for comment. Fowler issued a statement the same day distancing his company from the New York firm and making it clear the federal investigation "does not affect the validity of the Fowler Oil & Gas permits, nor its efforts to bring a new energy resource to Alaska."

Fowler applied for permits on its own, without NAEG, Fowler states. His company "formed a strategic relationship with NAEG to provide development support services."

Until very recently, Fowler was identified as NAEG's "Director of Alaskan Native projects" on the company's Web site. The company has no Alaska Native projects. Fowler, in an interview last winter, said "that's just a title they gave me" and it doesn't represent what he does -- advise the company on coal bed methane. Fowler has no previous experience with methane drilling.

His position as NAEG director, still posted on the corporate site March 17, disappeared from the Web site by March 19.

-- ZAZ HOLLANDER, Anchorage Daily News, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Fowler geologist resigns over pay

40-YEAR VETERAN: Announcement won't affect review process.

By ZAZ HOLLANDER, Anchorage Daily News, February 7th, 2008

WASILLA -- Veteran petroleum geologist Arlen Ehm, claiming he wasn't paid for his services, has resigned from the company that touts a new kind of coal bed methane boom for the Matanuska-Susitna Borough.

Ehm announced Friday that he had resigned as president and chief operations officer of Fowler Oil and Gas Corp. Chairman and chief executive Bob Fowler did not return calls seeking comment on Ehm's resignation.

Ehm described his decision Wednesday in a terse, two-sentence statement: "I am a firm believer that compensation for services should be made in a full and in a timely manner. Fowler Oil and Gas did neither."

The 30-year geological consultant would not disclose how much Fowler owed him.

Ehm's Alaska reputation began 40 years ago as one of the geologists who worked on the first well on the first offshore platform for Shell Oil Co. in Cook Inlet in 1965.

Since then, Ehm served as an expert witness and co-authored geologic studies of Cook Inlet, the North Slope and the Arctic National Wildlife Refuge. A partial list of clients on his eight-page resume lists 84 oil and gas companies, Native corporations and government agencies.

Fowler Oil and Gas Corp. is headquartered in Las Vegas but operates out of an Alaska field office above the Wells Fargo bank in Palmer. The company in October secured permission from the borough to drill the first coal bed methane well under a law enacted in 2004. The law came in response to public outcry over attempts by Evergreen Resources of Colorado to scatter industrial wells across the Valley in residential neighborhoods.

Fowler describes what would be his company's first well, on privately owned farmlands near the intersection of Trunk and Bogard roads, as a different kind of methane operation: on property owned by willing parties who stand to gain royalties, with a kind of horizontal drilling that is quiet and protects water.

He still needs approval from the Alaska Oil and Gas Conservation Commission.

The three commissioners got word last week of Ehm's resignation, said commissioner Cathy Foerster.

The announcement doesn't change the commission's review process, unless Fowler notifies them he plans to do something differently because of Ehm's departure, Foerster said.

"People come and go from companies all the time," she said. "We don't let personnel changes affect what we do."

 -- ZAZ HOLLANDER, Anchorage Daily News, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it