Desperate investor 'tried to recreate software'

An investor used the text book Programming for Dummies to help him try to recreate the data compression technology Richmond businessman Philip Whitley claimed to have invented, a court has heard.

Auckland-based electrical technician Richard Cohen said he tried to recreate the software out of desperation after Whitley became so unwell he couldn't work in 2002.

Mr Cohen said he met Whitley through his cousin, Nelson businessman David Harvey, and they formed a company to try to market the compression software.

He invested $35,000 in developing the technology, but said the biggest contribution he made to the project was the huge amount of time and effort he spent on it.

Whitley, 48, has denied two charges of making false statements as a promoter to get people to invest in his company NearZero.

The charges have been laid by the Serious Fraud Office, which said 490 people invested $5.3 million in NearZero between August 2006 and May 2007.

Whitley claimed to have invented a revolutionary data compression technology, which if it was genuine would have been worth billions.

Mr Cohen said in 2002 Whitley kept coming up with reasons why he couldn't get the technology to market and Mr Cohen started feeling pressured by the delays.

By mid 2002 he said he was putting Whitley under a lot of pressure about the holdups to getting the product to market.

Mr Cohen said Whitley eventually agreed to take the technology in the form he had to market, but later called him and said he had mistakenly burnt it.

Mr Cohen said Whitley told him that he had cleared out his safe where he kept a version of the software that was working and that he burnt the pile of disks which contained his copy of the technology by accident.

Mr Cohen said he was absolutely dismayed at that news.

He said Whitley's health started deteriorating rapidly after he told him he had burnt the technology.

In an attempt to restore the technology, Mr Cohen said he flew in a professor in mathematics from Sydney – and via conference calls from Auckland with Whitley they tried to glean what information they could about his software.

Mr Cohen said he then tried to work on the information from Whitley to see if he could recreate it.

He bought the book Programming for Dummies and hired a student to help him work on the technology.

"All I wanted was to try and salvage the effort and money and emotional energy that had gone into it."

He said he worked on the technology, achieving "some interesting results" including being able to compress some files that had already been compressed.

He lodged patent applications in New Zealand on the theories he had developed, but this application was never meant to represent Whitley's technology. He included Whitley's name on the New Zealand patent application, he said.

Mr Cohen said Whitley became well again and later started working on the technology in 2004, but by the end of that year Mr Cohen was "emotionally and financially spent" from working on the project and pulled out.

Mr Cohen said he was relieved to hear in 2005 the project was back on track and Whitley told him in 2006 that he had $20m in investment from America.

He attended investor seminars led by Whitley and got Whitley to visit a financial adviser as he was concerned Whitley was selling shares without a prospectus.

He said Whitley told him he had applied for patent protection for his technology, and was later "gobsmacked, astounded and dismayed" when Whitley told him he had not lodged patent applications.

- © Fairfax NZ News