History

Readers,

Here is an article that was provided to me by a reader. It discusses some of Joe Merlo's history in the business:

Burton, Peter. "Checking vendor stability seen crucial in EMS buy. " Energy User News. 9 (Feb 20, 1984): 1(3). Academic OneFile. Gale. Public Library (CELPLO). 3 Nov. 2008 find.galegroup.com/itx/

Abstract: As an industry shakeout occurs among EMS suppliers, buyers of energy management systems are urged to scrutinize the stability of vendors. Customers should look at the vendor's financial statements or annual report, credit reports from service firms, and trade-payment reports to determine the firm's total sales, assets, liabilities, and profit or loss. Assets ratio should be 1.5 the size of liabilities.

Full Text:COPYRIGHT Chilton Company 1984

MEC Folds After Furor; Owners Form 2 New Firms

The owners of Multi Energy Concepts (MEC), an energy management firm that recently came under fire from a number of its customers, have dissolved the firm and formed two separate companies under new names. One of the former principals, Joseph Merlo, said his new company, Energy Automation Systems Inc., Hauppauge, N.Y., will assume no warranties or liabilities of MEC. The other principal, Phillip DeRosa, said his new firm, Diversified Energy Controls, will honor all warranties and service obligations, but he claimed to have no records of former customers. "We had 30 to 50 salesmen--I just don't know where the files are,' said DeRosa. While both Merlo and DeRosa say that the new companies have no link to MEC, the two men were the owners of MEC, and the president and vice president, respectively. The two new companies also sell the same basic equipment and service as MEC had offered. Further, Energy Automation Systems is using sales literature nearly identical to MEC's, and Diversified is located at EMC's old address in Syosett, N.Y. The dissolution of MEC closely followed a story in Energy User News detailing a number of user complaints about unfulfilled savings promises, careless installations, and slow service. (See Aug. 30, 1982, EUN, page 1.) MEC operated by reviewing a prospective firm's electricity bills, then projecting savings-- typically 20 percent. Then the company would install a package of equipment that generally included power factor controls, small energy management systems, and fluorescent lighting controls. The cost would be based on the users' electricity costs--usually four or five times his monthly bill --rather than on the type and amount of equipment installed. In October, the principals dissolved the company and the Suffolk County, N.Y., Supreme Court appointed a receiver--a type of trustee--to resolve any outstanding business affairs, a Diversified Energy spokesman said. However, four customers of MEC told EUN that as of last week they had received no notification of the company's dissolution. One said he has tried unsuccessfully to contact the company since November to get information on a load-shedding device that MEC installed at his plant. According to Joseph Merlo, former president of MEC, former customers will be contacted within a month, notifying them of the dissolution and advising them how service can be obtained. All equipment warranties will be honored by the manufacturers, Merlo said, but any warranties issued by MEC are void. "If customers want service, they'll have to contract someone from outside,' he said. However, DeRosa said his firm would honor any outstanding MEC warranties at no cost. Because he has no records of who the customers were, he said, he invites any MEC customers needing service to contact Diversified Energy Controls in Syosset, N.Y. Warranties for some of the MEC equipment will be honored by the original equipment manufacturers. Mac Victor Mfg. Co., Concord, N.C., manufactured the MEC energy management systems, and will honor all warranties, according to Dean Pfliger, Mac Victor's director of marketing. MEC's Phase Liner power factor controllers will remain under warranty through its original equipment manufacturer, Queen Electric Co., Fort Worth, Tex., a Queen spokeswoman said. Service problems occuring outside the warranty period can be handled by these manufacturers for a service fee, both sources said. MEC itself manufactured the FLC II, a fluorescent light controller, and the warranty for these systems was carried by MEC. Temporarily, neither Diversified nor Energy Automation Systems is selling this product due to legal problems between the two new companies.

Gale Document Number:A2595767© 2008 Gale, Cengage Learning.

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Can you rely on the Better Business Bureau?

When I was considering becoming an EASI Affiliate, one of the many inadequate steps that I took was to check with the Better Business Bureau. After all, everyone has heard of the BBB, and surely their information can be relied upon. Correct? They are reputable, aren't they? Don't they exist to help protect the little guy?

At that time, BBB indicated no red flags. That was encouraging, and contributed to my decision to move forward with EASI.

Fast forward a few years to when I filed a complaint against EASI with the BBB and pursued it over a period of time. The BBB facilitated a correspondence between myself and EASI which consisted of me laying out my basis for complaint with the BBB and EASI admitting nothing, denying everything, and making counteraccusations. After a few rounds of this correspondence, the BBB dropped out of the process, citing an unfortunate inability to resolve the dispute. The reality is that they didn't really do anything but pass written communications between myself and EASI.

If you were to look on the BBB website during the time of this complaint and after, it showed that there were zero complaints on file about EASI. I don't really understand that. Clearly, they were mediating an active complaint. I could be wrong, but the impression I got from the BBB was that their process only works if the defending party agrees that there was a wrong and agrees to take action to make it right. If that does not happen, the BBB drops out of the process, and will not record it as a complaint. Since I am not aware of EASI ever admitting to wrongdoing, I guess I should not be surprised to see zero complaints against EASI on the BBB website.

Here is a link to another blog on the web (with which I have no affiliation) that discusses the subject of EASI and the BBB:

http://bizop.ca/blog2/due-diligence/better-business-bureau-of-midd.html

Are you confused yet? Me too. Apparently I do not understand what the BBB is all about and how it works.

Do you? If you don't fully understand how the BBB works and whose interests they serve, maybe that's reason enough to not rely on their information.

Washington State Law Violated by EASI

I have added a new link to the January 5, 2009 document from Washington (State):

"STATEMENT OF CHARGES AND NOTICE OF INTENT TO ENTER ORDER TO CEASE AND DESIST" filed by the State of Washington against EASI.

Similar to recent findings by the State of Maryland, Investigation by the State of Washington found that EASI sold dealerships to individuals in the State of Washington while not registered to do so, and failed to disclose required information to those dealers, including a 2002 Chapter 7 Bankruptcy of Paul Bleiweis and various lawsuits.

EASI had been registered to sell their business opportunities in Washington on more than one occasion in the past, dating back to June 1999, indicating their awareness of the responsibility to meet state-mandated requirements to sell dealerships there.

A prospective dealer must ask the question, "Why, when EASI has been aware of state requirements to register and to disclose required information to prospective dealers since at least 1999, do they continue a pattern of behavior in which they fail to disclose material information to prospective dealers?" Have they been sloppy and negligent about complying with state laws that are designed to protect prospective buyers of business opportunities, or is this behavior intentional? Either way, neither answer is good for a prospective dealer.

The document may be found by searching for "EASI" at http://dfi.wa.gov/sd/ordersearchengine.htm

Which leads to:
http://dfi.wa.gov/sd/orders/S-07-480-08-SC01.pdf

Maryland Law Violated by EASI

I have added a new link to the disclosure portion of the Maryland law that EASI violated, resulting in their recent 2008 settlement there. The law requires 28 items of information be provided to prospective buyers of a business opportunity at least 10 days prior to entering into the agreement. EASI did not comply with this law, resulting in the state's action.

http://mlis.state.md.us/asp/web_statutes.asp?gbr&14-114

If you are considering becoming an EASI dealer, this list of 28 items might be a good list of questions to ask EASI before you sign with them, even if you are not in a state that requires such disclosures by sellers of business opportunities.

The other part of the MD law that EASI violated was that they had not registered their business opportunity with the state, as required.

Maryland Orders EASI to Offer Refunds to Eleven Affiliates

Readers,

I have added a link to the recent Consent Order from the State of Maryland which requires EASI to offer refunds to eleven affiliates in Maryland.

If you are aware of any successful legal actions against EASI that you do not see posted here on this blog, please let me know about them by commenting this post.

Thanks!
HVW

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