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CMU ordered to pay $5.7 million to investor

| Thursday, April 8, 2010, 12:00 p.m.

Carnegie Mellon University owes a London investor $5.7 million for falsely claiming in 1999 that a proposed technology for cracking heavy hydrocarbons was ready to be commercialized, a federal judge ruled Tuesday.

CMU spokeswoman Teresa Thomas said the university would appeal.

U.S. District Judge Arthur Schwab said Christian Bouriez and his company, Montanelle Beheer, relied on CMU officials' claims when he invested $5 million into Governors Refining Technologies, a company that was going to bring the technology to market.

CMU officials said they had a hydrocarbon-cracking technology using microwaves and a catalyst that would convert heavy hydrocarbons such as pitch or paraffin wax into lighter hydrocarbons such as diesel fuel, according to the lawsuit.

When CMU asked for more money in 2000, Bouriez hired an independent auditor who determined the technology "did not work and has never worked," according to a 3rd U.S. Circuit Court of Appeals ruling that overturned an earlier ruling from Schwab in favor of CMU. The judge on Tuesday found that CMU is liable to Bouriez because it made "material misrepresentations" about the viability of its technology.

Thomas said the university disagrees.

"We believe the court erroneously concluded that Carnegie Mellon Research Institute negligently misrepresented the commercial viability of the technology at issue in this case. We strenuously disagree with this finding," she said.

An arbitrator in 2006 concluded that CMU misled Governors Refining Technology about the viability of the process and awarded the company $10 million in damages. CMU did not contest that ruling, according to the 3rd Circuit ruling.

Asked whether the appeals and district courts' rulings concluding CMU misled investors could affect the university's ability to attract private research dollars, Thomas said CMU "has an excellent reputation for applied research and has for decades produced important positive results, both scientifically and commercially, around the world."

"Because this matter involves ongoing litigation, we are not in a position to comment further on the specifics of the case," Thomas said.

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