# [EVDL] zap



## EVDL List (Jul 27, 2007)

Hype Machine: Searching for ZAP's Fleet of No-Show Green Cars

By Randall Sullivan

03.24.08 | 6:00 PM

*In September 2006*, Ehab Youssef, an intellectual property lawyer in
San Jose, California, was shopping for a new car. With gas prices
surging above $3 a gallon and headlines warning of a disappearing ice
cap, Youssef and his wife were looking to offset their Toyota Land
Cruiser with something more fuel-efficient. One day, while researching
vehicles on the Web, he came across ZAP Corporation. A small California
company, ZAP seemed to be doing what Detroit couldn't: bringing
environmentally friendly cars to the masses. For starters, ZAP was
selling the Xebra, an electric three-wheel buggie imported from China.
The Xebra wasn't quite ready to take on the freeways of Silicon Valley,
but it was cute and cost less than $10,000. Then there was the Obvio
828, a sleek vehicle from Brazil capable of running on pure ethanol. It
was expected to reach showrooms in 2007. ZAP also had a $99,000
fuel-cell vehicle called the Worldcar in the pipeline, and the company
said it would soon be selling the Smart Fortwo ? the dramatically
designed, Mercedes-engineered micro-vehicle from DaimlerChrysler. The
Fortwo ran on gasoline but got 37 miles to the gallon and fit in nicely
with ZAP's eco line.

The topper, however, was the ZAP-X. Youssef learned about the company's
planned supercar from ZAP's chair, Gary Starr, when he visited the
company's headquarters that fall. The all-electric crossover SUV ? due
sometime in 2007 ? would not only produce 644 horsepower, rocketing it
from 0 to 60 miles per hour in a Ferrari-esque 4.8 seconds, but would
travel 350 miles on a single 10-minute charge.

Youssef was no longer just shopping for a car; he was ready to change
careers. In November, he and his wife plunked down $100,000 for a ZAP
franchise territory covering most of Los Gatos, a wealthy town near San
Jose. "We felt that we could do something that was not only good for
society but also profitable for us," Youssef says.

The first disappointment came in January, when Youssef went to ZAP
headquarters to pick up the new Smart car he intended to drive as his
personal vehicle. There were "some problems" getting Smart cars, Starr
told Youssef. What Starr didn't say was that DaimlerChrysler had told
ZAP more than a year earlier that it wouldn't sell the California
company any of its vehicles.

Youssef was frustrated, but he still believed in ZAP's vision. "I
thought, Well, OK, at least they have these great new vehicles coming
out ? the Obvio and the ZAP-X. And the Xebra cars, which are available
now, do incredible things for under $10,000.'" It wasn't long, though,
before Youssef learned that the Obvio was not coming anytime soon.

Even more crushing, Youssef discovered that the all-electric Xebra sedan
did not come close to achieving the 40-mph speed and 40-mile range ZAP
claimed. In fact, the Xebra "went about 34 miles per hour on very flat
ground with the wind behind it," Youssef says. It stalled on steep hills
and, worst of all, had a range of less than 20 miles. When he complained
that it would be impossible to sell an electric vehicle with such
limited range, Youssef says, he was referred by ZAP's dealer liaison to
a larger and more powerful battery set; with that installed, the Xebra
would go almost 40 mph and travel nearly 40 miles on a single charge.
"Only they wanted us to pay for the battery upgrade out of our own
pockets," recalls Youssef, who realized that after expenses he would be
making, at most, $100 per vehicle.

Youssef tried to persevere. The ZAP-X was in the news, and he was
getting as many as 20 calls a day from people asking to sign up for the
supercar. In February 2007, he asked when exactly the company intended
to begin delivering the ZAP-X. "Gary Starr told me, Well, it may be two
years out, it may be four years out, it may never happen.' I was
stunned," Youssef recalls. "That was when I realized what an idiot I had
been to trust this guy."

He was hardly alone. Over the years, ZAP has taken millions from
investors and dealers eager to see the company's line of green cars hit
the road. But that line has never materialized. Of nearly a dozen
groundbreaking eco-vehicles ZAP has promised in public announcements and
on its Web site, only the Xebra and its sibling, a truck version, have
ever made it to market. As a result, fans of electric cars have grown
disillusioned, while individuals like Youssef have been financially
devastated. What's more, investment firms around the country have become
cautious about financing electric vehicles after being repeatedly misled
by one of the industry's most visible companies.

In spite of all this, the pair now running the company, Starr and CEO
Steve Schneider, enjoy lucrative employment packages that have made them
millions. Their compensation ? and ZAP's continued existence as a
business ? heavily depends on the continual issuance of new stock
shares. And although ZAP has earned an annual profit only once in its 16
years of existence (even that was the result of a one-time debt
conversion) and its stock has been delisted from the New York Stock
Exchange, Nasdaq, and the Pacific Stock Exchange, Starr and Schneider
have managed to keep ZAP shares from becoming worthless. They've
achieved this almost entirely through a relentless flow of press
releases in which ZAP describes itself as "a world leader in electric
transportation" and constantly claims to be on the verge of innovations
and business deals that will yield breakthroughs in green transportation
? claims that consistently fall short.

None of this would be possible without the optimism and na?vet? of those
eager to put their faith in the electric car future. When it comes to
green technology, some people just /want/ to believe. It's easy to see
why: Electric cars, after all, don't run on gas, so they produce
virtually no emissions. They do consume some fossil fuels, since they
charge their batteries from the grid, which mostly uses coal and natural
gas to generate power. But because electric cars are more efficient than
gas cars at turning energy into miles, their carbon footprint averages
out to be 50 to 90 percent less than that of traditional vehicles. (And
that figure drops to nearly zero if the car is plugged into a renewable
energy source like a solar panel array.) Electric cars could decrease
dependence on oil, reduce global carbon emissions, and save consumers
money. But while Honda, Toyota, Nissan, Ford, and General Motors all
toyed with electric vehicles in the '90s, these companies had
effectively ended development by 2003, when California stopped requiring
automakers to offer zero-emissions vehicles. Since then, electric car
enthusiasts have been forced to pin their hopes on small independent
companies ? like ZAP.

"They tug at your heartstrings," says Joseph Gottlieb, a ZAP dealer from
the San Diego area who has filed an official complaint against ZAP with
the Securities and Exchange Commission. "If ZAP was in any other
business, the company would have been dead long ago. But they keep
taking advantage of how much environmentalists ? like me ? want to see
electric cars come to market."

ZAP declined to comment on the allegations in this article on several
occasions. Starr and Schneider cut off communication with Wired when
they learned "the direction you're going with this story," as Schneider
put it. Wired also ran the major points of the story by a PR consultant
working for the company, but ZAP again declined to address most of the
issues raised here. Schneider will only say that he and Starr never
knowingly committed any illegal acts. While "mistakes have been made,"
he admits, "it's all been based on trying to make the company work."

ZAP began as the vision of the aptly named Jim McGreen. In 1991,
McGreen, then 38, was looking to start a business that would be "both
green and profitable." A consummate garage inventor, he began building
and selling parts and kits for electric bicycles. The next year, McGreen
launched ZAP Power Systems (for zero air pollution), his electric
vehicle company.

Based in Alameda, across the bay from San Francisco, McGreen was looking
for cash to expand his operation when he met Gary Starr. A short, wiry
fellow with bushy brown hair and a habit of giggling at awkward moments,
Starr had founded the electric vehicle division of Solar Electric
Engineering, a struggling solar cell company based in Sonoma County,
California, in 1983. After settling in Santa Rosa, the company changed
its name to US Electricar in February 1994. Soon thereafter Starr was
asked to leave, according to a former company executive.

McGreen knew only that Starr had departed US Electricar with a pile of
cash and was looking for investment opportunities. "There were a lot of
money people who came to Jim," McGreen's wife, Nancy Cadigan, says, "but
Gary was the first one who wrote a check."

On September 21, 1994, ZAP filed incorporation papers. There were four
people on the board of directors: McGreen, Cadigan, Starr, and Starr's
wife, Susan. The next year, ZAP moved to Sebastopol, a hamlet just west
of Santa Rosa. In the fall of 1996, ZAP made a direct public offering of
its stock, eventually netting over $2 million.

In 1997, McGreen invented the Zappy, a two-wheeled stand-up scooter with
a top speed of 15 mph. It quickly became a national sensation. "When
Kevin Spacey rode it on Letterman's show, we felt like screaming,"
Cadigan recalls. "Edward Norton was calling me," McGreen says, "saying
he wanted his Zappy to be faster than Spacey's."

In 1998, ZAP sold more than 2,000 scooters at $650 a pop ? for a total
of $1.4 million. But the company still wasn't making a profit, and
tensions started to grow between Starr and McGreen. Starr wanted to
relocate manufacturing to Asia to cut costs, but McGreen worried quality
would suffer.

Starr, who had persuaded investors to support the expansion of ZAP's
board to seven members, decided to push McGreen out. In September 1999,
the board voted five to two (McGreen and Cadigan being the only
dissenters) to remove McGreen as president and CEO. Gary Starr was now
in charge.

Under starr, ZAP all but collapsed. The trouble started right away:
Between December 1999 ? the month McGreen officially resigned from the
board ? and April 2000, ZAP's stock price dropped from an all-time high
of $13 a share to $5.50. This fall was fueled in part by the company's
botched attempt to purchase a North Dakota-based electric cart maker
named Global Electric Motorcars.

To repair the damage, ZAP's new board brought in electric-vehicle
veteran John Dabels to manage operations with Starr. Dabels, who was
appointed president in June 2000, made rapid progress: In just seven
months, year-on-year sales more than doubled. But Dabels, like McGreen
before him, fought with Starr over moving manufacturing to China and
resigned in January 2001.

As always, Starr was hungry for more money. But a deal he started
shortly before Dabels left ZAP would soon make raising capital almost
impossible. According to Scott Cronk, ZAP's chief engineer at the time,
Starr told the board that the investment group Union Atlantic was going
to buy several million dollars worth of ZAP stock. The plan, Starr said,
was for Union Atlantic to quickly sell the shares if the price
increased. Starr assured the board, however ? according to both Cronk
and Dabels ? that Union Atlantic couldn't sell below a certain price.

By the summer of 2001, with Dabels gone and the threat of Zappy
knockoffs hurting ZAP's share price, Union Atlantic had started
unloading its investment. In September, the share price fell below 50
cents, but the sell-off continued. "That's when we all knew there was no
floor," says Cronk, who resigned a short time later.

By 2002, the company had laid off 80 of its 100 workers and moved the
bulk of manufacturing to Taiwan. Cheap Zappy copies from Asia soon
flooded the market. "ZAP was still selling the Zappy for $500," Cronk
says, "while Wal-Mart was offering knockoffs for a quarter of that."
Annual revenue, which had reached $12 million in 2000 under Dabels, was
down to less than $5 million. Operating expenses, on the other hand,
continued to rise.

With its stock price decimated and its sales sinking, ZAP filed for
Chapter 11 bankruptcy
<http://sec.edgar-online.com/2002/04/16/0001162677-02-000015/Section5.asp>
reorganization on March 1, 2002. The company's stock was suspended by
Nasdaq with a final share price of 21 cents.

Convinced that Starr had destroyed the value of the options he and other
employees had taken in lieu of higher salaries, Cronk contacted the SEC
in May 2002, faxing a detailed summary of concerns to the agency's San
Francisco office. In his complaint, Cronk alleged that Starr had
guaranteed Union Atlantic a return and cost the company $25 million in
market capitalization. Cronk also provided the SEC with a chart
correlating the decline of ZAP's stock price with the Global Electric
and Union Atlantic deals, which he said were promoted with false or
misleading press releases.

Cronk says an SEC rep told him that the agency was swamped with
complaints against small-cap companies and might not be able to take
immediate action. Pat Huddleston, a former enforcement branch chief with
the Atlanta office of the SEC, isn't surprised. "Because of its limited
resources, the SEC has to target bigger companies first," says
Huddleston, who now runs the site Investor's Watchdog. "The commission
simply can't investigate all the companies it should." SEC spokesperson
John Heine will say only that the commission refuses comment "on any
case other than those in which we have filed a complaint."

In July 2002, ZAP emerged from the Chapter 11 reorganization
<http://sec.edgar-online.com/2002/04/16/0001162677-02-000015/Section5.asp>
with Starr as ZAP's new board chair. This position would permit him to
bring in a new partner, Steve Schneider, a used-car dealer with stable
cash flow and his own grandiose ambitions. Their new direction would
drastically reshape ZAP, enrich both men, and leave a new round of green
believers feeling burned.

Schneider is handsome and charming
<http://video.google.com/videoplay?docid=8055595401607202899>, though he
can come across as the used-car salesman that he is. In the late 1990s,
he made his living as owner of the Repo Outlet, a lot specializing in
automobiles that had been seized for nonpayment. The business is a
quarter-acre of asphalt just beyond the city limits of Santa Rosa in a
neighborhood inhabited primarily by working-class Latino immigrants.
Repo Outlet did well, but Schneider's methods were sometimes
questionable. According to the Santa Rosa Press Democrat, in 1997 the
Sonoma County District Attorney sued Schneider's enterprise for selling
unsafe vehicles and engaging in misleading advertising. Schneider
settled for $9,382. Then, in 2001, the business was fined $40,000 by the
state of California for importing uncertified Volkswagen Beetles from
Mexico.

Schneider joined ZAP while it was going through bankruptcy proceedings.
The idea was that Schneider, as a car guy with steady income, would help
the company move from electric scooters and bikes to selling full-blown
electric cars.

ZAP purchased Schneider's business with stock (which it also used to pay
off its creditors), giving him 39 percent of the company and making him
the largest single shareholder. Since Starr held on to 16 percent of
ZAP, the pair were now in control of the company.

In April 2003, ZAP relocated its headquarters to one of the most
historically significant buildings in Santa Rosa, which the company
purchased with stock, warrants (the right to buy stock at a preset
price), and a $2 million note
<
http://sec.gov/Archives/edgar/data/1024628/000107261304000703/exh3-10_12581.txt
>.
In fact, according to SEC filings, after the bankruptcy ZAP began using
stock to cover a range of expenses, from legal fees and advertising to
"janitorial services." As it happened, Schneider and Starr had written
themselves employment agreements
<http://sec.edgar-online.com/2007/04/02/0001072613-07-000846/Section25.asp>
? still in effect today ? that allowed them to issue stock freely: Every
year, each receives "a grant of stock options or warrants equal to 1
percent of the outstanding common stock of ZAP." In other words, the
more shares ZAP issues, the greater the number of options or warrants
the duo gets annually. "This is the sort of thing that can happen when
the officers of a company control its board of directors," says
Huddleston, the former SEC enforcement branch chief. "Investors should
realize that, unless they're prepared to read and understand SEC filings
<
http://sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001024628&owner=include&count=40
>,
they can't possibly understand what they're getting into with a company
like this."

Although Schneider boasted about how little he was paid as CEO of a
publicly traded company ($74,100 in 2003, ZAP's first full year of
business after emerging from bankruptcy), the truth was that his
portfolio, like Starr's, was expanding. Schneider's holdings of stock,
warrants, and options ballooned from the 2,822,222 shares he received
after the bankruptcy deal to more than 14 million in 2004. Starr's
holdings rose from around 1 million shares to more than 5 million during
this period.

Such massive issuances of purchase rights dilute the stock, of course.
In fact, even as their holdings increased, the percentage of Starr and
Schneider's stake in the company had actually slightly declined. And all
those warrants and options weren't worth very much at the beginning of
2004, when ZAP stock was trading at a mere 60 cents a share. But soon a
wave of press releases promised new business connections and potential
acquisitions. That was on top of the introduction of new vehicles, like
the remarkable $99,000 fuel-cell Worldcar that ZAP said it would soon be
importing. All the attention helped push ZAP's stock to $1.85 a share by
May. The share price jumped to $2.60, though, after Schneider announced
later that month that DaimlerChrysler Smart cars ? all but unavailable
in America ? would soon be sold through "ZAP dealers in select states."

In the fall of 2004, Steven Kim, an analyst at the Bank of New York,
flew to California to hear Steve Schneider lay out the company's
ambitious Smart car plan. Kim was so impressed that he decided to take a
pay cut of more than 50 percent and relocate to become ZAP's director of
investor relations. He was convinced that the stock options he received
as a signing bonus would more than make up the difference in his salary.

For the first few months, the news was good. ZAP had managed to purchase
roughly 100 imported Smart cars from a US dealer and reported that they
were being converted to meet US emissions standards at a plant in
Southern California. Once it secured approval from the EPA, ZAP planned
to begin selling Smart cars to American customers by mid-2005 at the
latest. The only sour note, Kim says, came when several institutional
investors he knew refused to buy ZAP stock, citing the company's history
of promising things it couldn't deliver.

In January 2005, Schneider created a sensation at the annual convention
of the National Automobile Dealers Association. Standing in front of a
gleaming new Smart car, Schneider offered dealers the opportunity to
take delivery of the micro-vehicles within the year, and returned to
Santa Rosa claiming $55 million in purchase orders. Soon, investors all
over the country began to pony up as much as $150,000 to secure their
territorial rights as ZAP dealers.

Though ZAP still hadn't sold any Smart cars, Schneider was styling
himself as an auto industry big shot. He and Starr tooled around Santa
Rosa in cars that were hardly the eco-vehicles ZAP promoted ? a Porsche
for Schneider and a BMW for Starr. And under Schneider's leadership, ZAP
started recruiting a team of attractive young women. "Get Known as a
ZAP! Girl," urged the heading on an application asking for both a
full-body photo and head shot. At zapgirls.org <http://zapgirls.org>,
the company depicted the life of a ZAP! Girl as one of almost constant
parties and public promotions. Photo galleries
<http://zapgirls.org/Photo%20Gallery.htm> provided "the Latest, Hottest
Pics of ZAP! Girls in Action."

The ZAP! Girl-in-chief was Renay Cude, who, according to former
employees, including a president and a director of consumer products,
had been engaged in a romantic relationship with the married Schneider
for several years. (Cude declined to comment for this article.) The two
allegedly became involved during the Chapter 11 reorganization, when
Cude was working for the attorney who represented Schneider. The affair
was an open secret at ZAP headquarters, where Cude rose rapidly through
the ranks. She had earned an associate's degree in general education
from Santa Rosa Junior College but now served as ZAP's corporate
secretary. She also had a seat on the ZAP board, which included Starr
and Schneider among its five members, allowing the trio to exercise
control of the company. And Cude, now 31, received the same generous
package of options and warrants as Schneider and Starr.

While ZAP execs worked at getting the Smart cars it already owned to
pass US emissions standards, company reps traveled to Germany on March
21, 2005, to propose a direct relationship with DaimlerChrysler. Daimler
executives heard the pitch but said they wouldn't consider a deal until
ZAP signed a nondisclosure agreement and revealed more about its plans.
Schneider refused to sign the agreement. Instead he simply submitted a
purchase order to Daimler for 76,500 Smart cars ? worth more than $1
billion. Never mind the fact that ZAP had only a few million in cash and
the garage it was using to bring Smart cars up to US standards could
convert only 15,000 vehicles a year.

The audacious move was met with silence. "Steve heard nothing," Kim
recalls. "It was obvious the company was blowing him off." Early on the
morning of May 24, 2005, ZAP turned up the pressure, publicly announcing
the deal with a florid press release. Later that day, DaimlerChrysler
informed Reuters that the company had no idea what Schneider was talking
about. Two weeks later, DaimlerChrysler made its first formal statement
regarding ZAP. Ulrich Walker, head of DaimlerChrysler's Smart division,
said he and his associates had decided not to sell any Smart cars to
ZAP. The automaker had taken a closer look at the California company,
Walker explained, and "decided that we do not want to have any kind of
business relationship with ZAP, either now or in the future."

By June, after touting its Smart car distributorships for more than a
year, ZAP had sold just one of the vehicles. Nevertheless, Schneider
told the Press Democrat that ZAP was negotiating with unidentified
secondary dealers for the purchase of Smart cars to meet US demand and
even claimed ZAP would begin delivering vehicles to dealers within the
week.

Eventually, ZAP would manage to buy and sell just over 300 Smart cars
through the gray market. But without Daimler's support, ZAP wouldn't
come close to delivering as many cars as the company had promised.

In October, ZAP sued DaimlerChrysler in Los Angeles County Superior
Court. In the complaint, ZAP claimed that it had been "systematically
targeted for destruction by one of the world's largest auto industry
conglomerates." More specific charges included defamation and unfair
business practices; ZAP was seeking more than $500 million in damages.
DaimlerChrysler filed a motion to dismiss the lawsuit, declaring that
ZAP's behavior revealed "both the sham nature of its purported business
and a lack of trustworthiness that is nothing short of stunning."
Daimler's filing also said that the company's Smart division never had
any intention of engaging in a partnership with ZAP, despite ZAP's
"misleading press release clearly issued to create the false impression
that ZAP would have a steady supply of Smart vehicles." In June 2006, a
superior court judge ruled that ZAP had no jurisdiction to sue Daimler
in a California court. (ZAP lost its appeal and is taking its case to
the California Supreme Court.)

Meanwhile, ZAP was turning to other ventures. Just prior to filing the
lawsuit, the company announced it had signed an agreement to become the
exclusive US distributor for the Obvio 828, a Brazilian subcompact under
development that would run on gas, pure ethanol, or a blend of the two.
ZAP said it planned to start selling the "trybrid" in 2007.

Disillusioned, Kim was preparing to resign when he learned the company
had hired a new consultant: Max Scheder-Bieschin. "I did some research
on Max and found he had amazing credentials," says Kim, who was
impressed with his track record at Deutsche Bank in Germany. "I thought
I'd stick around and see what happened."

A tall, trim triathlete with an easy smile and elegant manners,
Scheder-Bieschin grew up in New York, earned his bachelor's in economics
at Stanford, and worked for several years in Europe. He moved to Sonoma
County in 2005 at the behest of his wife, who had family nearby, and
followed the Smart fiasco at ZAP through the pages of the Press
Democrat. "I thought I could be of assistance," says Scheder-Bieschin.
Like others before him, Scheder-Bieschin loved the idea of building a
profitable company on a foundation of environmental idealism. "I am for
electric vehicles," he explains. "The electric motor is just a much more
efficient technology than the internal combustion engine, far superior
in terms of emissions and noise. We as a society will go that way
eventually."

Scheder-Bieschin became ZAP's president in December 2005. Six months
later he was in negotiations with the brokerage and investment firm
National Securities for an infusion of $15 million to $20 million to
help ZAP further develop its vehicle line. But, like so many before it,
the deal fell through. There were several reasons, according to both
Scheder-Bieschin and National Securities. The first was that Schneider
and Starr refused to tear up their stock-contingent employment
agreements. "Those two have a staked interest in continuing to issue
more and more shares to anybody," Scheder-Bieschin says. "No bank is
going to loan money to a company run that way." Another problem was that
ZAP's board was controlled by the company's executives rather than
independent outsiders. But what really killed the deal was ZAP's refusal
to address these issues. "ZAP's management made absolutely no effort to
correct any of the problems we pointed out to them," says a National
Securities official involved in the negotiations who asked not to be
identified.

As he watched the deal fall through, Scheder-Bieschin realized how
little influence he had, even as president. Melissa Brandao, hired by
Scheder-Bieschin to serve as ZAP's director of consumer products, felt
similarly powerless. She says Starr not only interfered with her sales,
but he and Schneider also refused to honor warranty claims on recently
introduced Xebras, leaving her to deal with irate customers. After six
months at ZAP, Brandao says, the only time she felt enthusiasm for her
job was when someone brought in one of the old Zappy scooters built by
Jim McGreen for service. "They were 10 years old but beautiful, like
vintage cars," she recalls. "They make the stuff ZAP sells now look like
crap."

"From a fundamental standpoint, the company has never been at a better
place," Schneider told reporters at the San Francisco International Auto
Show in November 2005. The company's display unapologetically included a
Smart car alongside the flex-fuel Obvio, the fuel-cell Worldcar, and the
all-electric Xebra. Schneider urged investors "not to wait another
second" before purchasing ZAP stock.

Not everyone was impressed. Larry Martin, a Bay Area investor in
clean-air companies, told the Press Democrat that ZAP had marketed "a
fabulous dream" but that "consistently, the results have disappointed
us." And Wayne Schenk, owner of Subaru Santa Cruz, who had signed up as
a ZAP dealer, also complained to the paper that ZAP has issued "a
million press releases on stuff that has never happened." By the end of
2005, ZAP's stock price was back down to 26 cents.

Starr <http://www.secform4.com/insider-trading/1257782.htm> and
Schneider, though, would demonstrate once again the power of PR. On
March 22, 2006, USA Today ran a story that sympathetically chronicled
ZAP's efforts to sell the Smart car in domestic markets. The day the
article came out, ZAP's stock price shot up, closing at $1.23. That same
day, SEC records show, Schneider cashed out
<http://www.secform4.com/insider-trading/1257783.htm> 200,000 warrants.
(He also notified the commission of nine other transactions dating back
to January 2005 for which he had yet to file paperwork.) Two days later,
Renay Cude <http://www.secform4.com/insider-trading/1343792.htm>
exercised 75,000 ZAP options at a price of 25 cents per share. During
the next three weeks, as ZAP's stock price climbed steadily, Cude sold
that same number of shares in eight separate transactions for an average
price of over $2 per share, netting more than $150,000. These cashed-out
shares were soon replaced. On August 11, 2006, ZAP awarded Schneider,
Cude, and Starr an additional 355,424 in warrants and 355,424 in options
? part of their yearly compensation package, which would come to just
over $500,000 each. In fact, even though Schneider had unloaded more
than a million and a half shares in 2005 and 2006, his total holdings of
warrants, stock, and options reached 15 million in April 2006.

By early 2007, Kim, Scheder-Bieschin, and Brandao had all resigned their
positions. Brandao filed a sexual discrimination complaint against ZAP
with the state of California, alleging that she had been underpaid
because of her gender and that Starr had verbally abused her.

Scheder-Bieschin says that Starr and Schneider have been insulated from
criticism because of the business they are in. "Steve plays the game
that nobody's ever gonna be tough on us because we're the EV guys.'"
(Indeed, Robert Taicher, a consultant for ZAP, called Wired editors as
this story was in process, asking the magazine to tread lightly on ZAP,
given that "we're in the green space.") "Gary Starr and Steve Schneider
have likely done more damage to the EV industry than Detroit and the
Japanese combined," Scheder-Bieschin says. "And the failure of this
industry to thrive has affected everything from global warming to the
war on terror. How do you put a price on that?"

Brandao thinks the EV industry itself bears some responsibility for
ZAP's depredations. "Nobody wants to talk about how bad ZAP is," she
says. "Everybody wants the EV space to be protected from scandal or bad
publicity."

There have been a few official complaints, however. In addition to
Cronk's grievance to the SEC, Gottlieb, the San Diego-area ZAP dealer,
also filed a report with the agency, alleging that senior ZAP executives
had misled him when he purchased 100,000 shares of ZAP stock in exchange
for a dealership territory. So far, though, Wired has found no evidence
that the SEC has followed up on either complaint.

Meanwhile, ZAP continues to do what it always has: claim it is on the
verge of delivering the dream. In February 2007, Schneider officially
unveiled plans for the ZAP-X supercar at the National Automobile Dealers
Association convention in Las Vegas, telling potential dealers and
customers that they could place a $25,000 deposit on the vehicle. The
ZAP-X, Schneider said, would be based on a car design by Lotus, much
like the Tesla Roadster electric sports car, which had been unveiled six
months earlier. A Lotus Engineering official confirms that Lotus made a
deal with ZAP allowing the Santa Rosa firm to use Lotus' gas-powered APX
prototype as a physical model for a new car, but that was all. And the
deal, as far as he knows, has gone dormant. Though the APX could
conceivably be adapted to an electric motor, the exec told Wired, the
expense and engineering challenge would be enormous. Would it be
possible to manufacture and sell such a vehicle for ZAP's promised price
of $60,000? "That depends," the exec replied with a laugh, "on whether
you want to make money or lose money."

Regardless of the limited nature of the official relationship between
Lotus and ZAP, Lotus CEO Albert Lam was clearly impressed with the
California company. In September, Lam brokered a joint venture agreement
between ZAP and Youngman Automotive Group, a Chinese bus maker, that ZAP
says will allow it to get the fabled ZAP-X on American roads in 2009.
Lam ? who had been with Lotus four years ? left the company a month
later and signed on with Starr and Schneider, first as a new member of
the ZAP board, then as part of ZAP's management team. (Lam didn't
respond to Wired's requests for an interview.) Almost as soon as he
arrived, ZAP unveiled specs for a second high-performance electric
vehicle ? a three-wheel, 322-horsepower two-seater called the Alias.

The Alias, ZAP says, will be built and marketed by the venture jointly
run by ZAP and Youngman Automotive Group. The name of this partnership
is Detroit Electric, a brand originally created by the Anderson Electric
Car company, which existed between 1907 and 1939. Detroit Electric (now
located in California and run by Lam) says it will be bringing a whole
range of electric vehicles to market in the next 14 months. "Our plan is
to launch with a 12-meter pure electric transit bus, the ZAP Alias, and
two family sedans as early as the summer of 2009," Lam said in a press
release. Analysts familiar with the Alias say delivering even that car
on this timeline is unlikely, given that ZAP is reportedly still looking
for suppliers to design components to make the car feasible.

In February, after losing more than $500,000 on his dealership, Ehab
Youssef was preparing a lawsuit against ZAP when the company offered to
settle his claim for 50,000 shares of ZAP stock. Youssef declined, and a
few weeks later ZAP filed a suit of its own claiming that Youssef hadn't
lived up to the terms of his ZAP dealership contract. At press time, the
matter was pending in Sonoma County Superior Court, and Youssef was
preparing a counter claim. Earlier, Youssef had talked to a number of
other dealers about a possible class action case. Among those who
considered joining was John Martin, a schoolteacher from Austin, Texas.

Martin says he met Schneider once, in spring 2006, when "I flew to
California to sign the papers and write a check." He says he made it
clear that he had limited funds ? less than $160,000 from savings and a
small inheritance. Company officials assured Martin that this would be
enough to get "up and running."

After quitting his job, Martin leased a prime Austin location and spent
much of his remaining cash remodeling and rewiring the building for his
new dealership. He was thrilled by the publicity his October 2006 grand
opening generated among the local media. Attracted by stories in the
newspaper and on TV, dozens of potential customers showed up at the
dealership that first week, though Martin could offer them little more
than a ride in the Xebra sedan he had purchased as his personal car ?
ZAP had failed to deliver any vehicles for him to sell.

In December 2006, Martin laid off his staff and became a one-man
operation. He received his first shipment of Xebras shortly before
Christmas. But by then, Martin explains, he had realized how quickly the
Xebras ran out of charge. "When I had to tell people about the range, I
could see it in their eyes," Martin recalls. "This was the deal killer."

Martin sold one Xebra in January 2007, two in February, and three in
March. "Then business just dried up completely," he says. Martin's first
customer, an attorney, had to have his car hauled back to the dealership
for warranty repairs four times in the first month. Martin managed to
remain optimistic, he says, because he knew that the new Obvio model was
supposed to begin arriving from ZAP sometime in the spring. "But of
course the Obvio never came," Martin says, and he was forced to close
the doors of his new business at the beginning of August. By then, his
$160,000 was gone. The lawyer who bought that first Xebra from Martin
sent a threatening letter to ZAP on Martin's behalf, and ZAP replied by
promising to repay at least some of the money he had lost. Then Martin
heard nothing for five months ? ZAP didn't return his calls. Finally, in
January, as Wired prepared this story for print, ZAP settled with
Martin, giving him 50,000 shares of ZAP stock in exchange for his
agreement not to sue and not to talk to the media.

Martin was able to get his teaching job back, but the school soon had to
lay him off. Strapped for cash, he had to pull two of his three young
daughters from the private school where they had been enrolled since
kindergarten. (Parents, teachers, and friends took up a collection to
pay the tuition of his oldest daughter.) As of January, Martin was
supporting his family by working construction during the day and
delivering pizzas in the evening.

"I wanted so much to believe," he says.

/Randall Sullivan/ ([email protected] <mailto:[email protected]>) /wrote
about the rise and fall of game device outfit Gizmondo in issue 14.10
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## EVDL List (Jul 27, 2007)

Thanks for posting this.

--- "Brian D. Hall" <[email protected]>


> wrote:
> 
> > Hype Machine: Searching for ZAP's Fleet of No-Show
> > Green Cars
> ...


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## EVDL List (Jul 27, 2007)

boy this list is doomed! I think this should be posted 50 more
times.Ireally do not understand why you want to censor news articles,
it's was a
good place to see them in one place.Please retire your post and let freedom
ring.
Brian



> EVDL Administrator <[email protected]> wrote:
> 
> > Hi Brian,
> >
> ...


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## EVDL List (Jul 27, 2007)

So.... it's defined as censorship if it's only on here three times?
Instead of 50. Hmmmmm....... interesting definition.

Z

On Sat, Mar 29, 2008 at 1:32 PM, Brian D. Hall
<[email protected]> wrote:
> boy this list is doomed! I think this should be posted 50 more
> times.Ireally do not understand why you want to censor news articles,
> it's was a
> good place to see them in one place.Please retire your post and let freedom
> ring.
> Brian
>
>


> EVDL Administrator <[email protected]> wrote:
> >
> > > Hi Brian,
> > >
> ...


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## EVDL List (Jul 27, 2007)

What is that buzzing noise? Must be a ground loop.

The list polices are pretty clear. Read them and follow them. 

http://www.evdl.org/help/index.html#conv

It's a big internet. If you want to republish copyright material 50 times, 
or a dozen, or a hundred, please go start your own list, forum, website, 
blog, wiki, whatever. Then you can copy and paste as many times as you want 
- at least until you get sued.

David Roden - Akron, Ohio, USA
EVDL Administrator

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EVDL Information: http://www.evdl.org/help/
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Note: mail sent to "evpost" or "etpost" addresses will not 
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## EVDL List (Jul 27, 2007)

> So.... it's defined as censorship if it's only on here three times?
> Instead of 50. Hmmmmm....... interesting definition.

And apparently asking folks not to plagiarize other peoples work is also
censorship.

Or is the censorship in his asking folks to be kind to others and post a
link instead of posting the exact same, lengthly, article over and over
again.

Or is it simply David asking anyone to do anything that's censorship?

I'm a little confused about this since none of these match my
understanding of the definition of censorship.




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## EVDL List (Jul 27, 2007)

> -- Brian wrote:
> > Please retire your post and let freedom ring.
> 
> Why not say instead "let chaos rule".
> ...


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## EVDL List (Jul 27, 2007)

Does anyone have a zap xebra wiring diagram?

I was trying to troubleshoot the contactors.

Thanks,

Michael Golub
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## EVDL List (Jul 27, 2007)

Contact Larry at electricwheelsinc.com .


Joseph H. Strubhar

Web: www.gremcoinc.com

E-mail: [email protected]


----- Original Message ----- 
From: "m gol" <[email protected]>
To: "Electric Vehicle Discussion List" <[email protected]>
Sent: Monday, September 21, 2009 2:34 PM
Subject: [EVDL] zap


> Does anyone have a zap xebra wiring diagram?
>
> I was trying to troubleshoot the contactors.
>
> Thanks,
>
> Michael Golub
> -------------- next part --------------
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