Originally created 09/16/97

Arrests made in reclamation scheme



ATLANTA - Leon Green wanted to believe in the magic of garbage-eating bugs.

Enough to bet his business on it, and to work eight months for just the promise of a paycheck, swept along in the go-getting optimism of his partners in Bearehaven Reclamation Inc.

Then last fall, the Aiken engineer got his first inkling that something might be seriously wrong.

A company vice president, Fred Gilliard, resigned abruptly. Weeks later, the former south Georgia doctor resurfaced in federal court, facing Medicare fraud charges and a long prison stay - not, Mr. Green would later learn, for the first time.

"Seems like every two or three months after that, we would learn someone else had been in jail," Mr. Green recalls.

"The straw that broke the camel's back," as he tells it, was finding out that the company's smooth-talking founder, John H. Candler Jr., was freshly off parole for a check-kiting scheme in Tennessee that bankrupted a savings and loan and netted him eight years in prison.

"He had some fairly impressive people around him and that's what convinced us," said Mr. Green, who traded away his engineering firm to Mr. Candler for stock that recently bottomed out at 7 cents a share. "All the indicators were there that this was legitimate. It was a real eye-opening experience for me."

Mr. Green is not the only one who came away from Bearehaven with an expensive education - $60,000 out of pocket, by his estimate.

Armed with a leading-edge scientific concept, the credibility of some well-regarded business partners and the door-opening clout of the Candler family name, Mr. Candler and Mr. Gilliard sold Bearehaven to a far-flung audience of investors, vendors and researchers.

Among those infatuated by the concept - garbage-eating microbes injected into the soil under landfills - were managers at Westinghouse-Savannah River Site, operators of the federal nuclear plant and research lab near Augusta.

Westinghouse and the Energy Department invested about $650,000 in a joint research venture with Bearehaven. According to an Energy Department spokesman, the project was shut down for lack of results months before its targeted completion.

"They sucked me in big time," said Gene Lunn, who worked with Bearehaven at the SRS research lab, then joined the company as a consultant after his retirement from the plant in 1995.

"They had no laboratory, no facilities. What they were bringing to the table was supposedly financing and management expertise to take this to the commercial level, and of course they bombed on both of those," Mr. Lunn said. "I was gullible. I just ate it up because I believed in the technology."

A federal grand jury in Kentucky, meanwhile, is probing securities fraud allegations against the company that sold Mr. Candler the rights to use Bearehaven's technology in 12 Southern states and paid Mr. Candler more than $30,000 as a consultant.

Mr. Candler, 61, a great-grandson of the founder of Coca-Cola Corp., declined several requests to be interviewed for this story.

In a brief telephone conversation, he insisted that Bearehaven is an active concern with promising prospects for landfill cleanup jobs.

Outward signs suggest otherwise. The company has disconnected its telephones and lists only an Atlanta post office box as its address. Its stock, for the few still trading it, is worth a small fraction of the $6.50-a-share peak it hit in July of last year.

The SRS name figured prominently in Bearheaven's promotions, as did its relationship with the University of Georgia.

Stockholder reports and Internet stock promotions say the University of Georgia's biological and agricultural engineering department helped develop the company's bio-remediation techniques - a claim UGA officials say is exaggerated.

"The only thing we've actually done for them is analyze some sludge samples from a pulp-and-paper pond they were thinking about remediating," UGA biologist Matt Smith said. "We did talk to them about the landfill stuff, but it never went anywhere."

Dr. Robert Windom, a Sarasota, Fla., physician who was assistant secretary of health and human services in the Reagan administration, was among luminaries brought into Mr. Candler's circle for their credibility.

Dr. Windom learned of Bearehaven through a medical colleague and contacted Mr. Candler seeking to invest some money and perhaps get consulting work.

Soon he was made a vice president and recruited to join Mr. Candler on a month-long trip through Europe and Asia, using his medical contacts to try to drum up deals.

But Dr. Windom said he learned only months after joining Bearehaven that the company had no proof of its technology actually working in the field. When he found out about Mr. Candler's criminal record and problems paying bills, he distanced himself from the venture.

"They used my name, used my credentials. I was gullible and I let them do it. It was my error," Dr. Windom said.