PhD claim made Philip Whitley believable

Data compression fraud trial continues in Nelson

Richmond businessman Philip Whitley told a business associate he had a PhD from the University of California Los Angeles, and had worked with software giants Computer Associates, a court has heard.

Nelson businessman David Harvey gave evidence yesterday at Whitley's fraud trial in the Nelson District Court.

Harvey said he met Whitley about 1999 and was introduced to him through Nelson businessmen Mark Christensen and Geiri Petursson, who asked him to look at the point-of-sale software Whitley was developing for the State Cinema.

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The men were financially supporting Whitley to develop the technology.

Whitley has denied two charges laid by the Serious Fraud Office (SFO), of making false statements as a promoter to get people to invest in his company NearZero between July 2006 and May 2007.

The SFO says NearZero attracted $5.3 million from 490 investors, and Whitley claimed to have developed a revolutionary "lossless" method of compressing data – which, if genuine, would have been worth billions.

Harvey said he was told that the data compression technology, which was a component of the point-of-sale system, was what made the software unique.

He said Whitley demonstrated the technology and showed him that he could compress data at a rate of 93.5 percent. Harvey said he was interested in the compression software, not the point-of-sale system.

He tested the compression system over a number of days, with Whitley using a range of tests, and was satisfied with the consistent results achieved.

The fact that Whitley told him he had a PhD from the University of California Los Angeles (UCLA) and had worked at Computer Associates also made him think Whitley was genuine, he said.

Harvey said he sent further tests to be run when he was working in Australia, and again was satisfied with the consistent results. However, Whitley was the person configuring the computers during the tests.

Harvey said he set up a company with Mr Christensen and Mr Petursson around the compression software, giving them a non-controlling share of the company.

An agreement was reached that the software would be delivered in three months, which he said was a fair timeframe, as the technology supposedly already existed as part of the point-of-sale software.

Harvey said that deadline was not met by Whitley, and further deadlines were repeatedly not met, which concerned and disheartened him. He said Whitley always had a range of excuses, but the software was never delivered.

Harvey also gave evidence that Whitley had a pattern of falling out with people who pushed him. He said he did not speak to Whitley for 18 months after he had confronted Whitley about why a Christchurch company was using programs that had the same names as the components of the software Whitley had developed.

Harvey said Whitley did not like people asking him hard questions.

In 2002, Whitley became ill with what he said was encephalitis, and work on the technology stopped.

Harvey said that while Whitley was ill, some of his computers used for testing the compression software were searched, but no signs of the software were found.

Harvey said he agreed to invest $120,000 after Whitley recovered, and he was told that the technology had been resurrected and was at the stage where it could be patented.

He said Whitley agreed to do a new deal and to give him shares worth $600,000 for his time and investment in the project, but he never received anything.

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