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SEPTA unveils antiterror weapons

(The following article by Larry King was posted on the Philadelphia Inquirer website on February 9.)

PHILADELPHIA -- SEPTA showed off its newest antiterror weapons yesterday: two frisky dogs and a pair of shiny suitcases.

In the age of homeland security, they could become a rider's best friends.

The dogs are part of a recent doubling of SEPTA's canine corps, bringing the transit authority's complement of four-legged bomb-sniffers to 10.

The silver suitcases are portable neutron scanners - $300,000 devices designed to detect not only the presence of explosives in an unattended package, but also the chemical nature of those explosives.

The technology has never before been put to civilian use in the United States. SEPTA's purchase has made the transit system a proving ground for the wares of a struggling California firm, one that is millions of dollars in the red and trying to emerge from the twin clouds of expensive lawsuits and a federal securities investigation.

"There is no higher technology than what is inside these suitcases," said Bogdan Maglich, a former University of Pennsylvania physics professor whose Irvine, Calif.-based company, HiEnergy Technologies Inc., developed the scanner. "We have many potential customers waiting to hear what Philadelphia has to say about them."

With money from a federal homeland security grant, SEPTA ordered the scanners last June. Officials hope to have them ready for use by March.

SEPTA security manager Jim Jordan said the scanners - which can detect explosives in two minutes or less - should shorten service interruptions caused whenever a suspicious, unattended bag or package turns up on a bus or train.

The scanners will also supplement the dogs, which already patrol nearly 20 miles of rail tunnels but are sometimes prone to false positives when sniffing out a parcel.

Both were on display for the media yesterday on SEPTA's Market East concourse. First the dogs - a German shepherd and a Belgian Malinois - detected a batch of ammonium nitrate concealed within a fire hose case in the concourse wall.

Then it was the suitcase's turn.

The metal case - 105 pounds and about 2.5 feet by 1.5 feet - was wheeled next to a black backpack on the concourse floor. A long cord connected it to a laptop computer about 20 yards away.

A red activation button flashed as the detector released neutrons that penetrated the backpack. The concealed contents of the backpack then emitted gamma rays identifying the chemicals inside.

Within about a minute, a red box flashed on the laptop screen, confirming the presence of an explosive. The screen identified it: cloratita, a chlorate-based explosive used in recent Basque attacks in Spain.

Maglich said X-ray machines and metal detectors aren't discerning enough for modern security needs.

"Can we fight 21st-century terrorism with 19th-century technology?" he asked. "It's like having a black-and-white camera to determine the color of an object."

Whether Maglich's company will survive long enough for its devices to catch on is another matter.

In its most recent quarterly report to the Securities and Exchange Commission, HiEnergy disclosed an accumulated debt of $36 million, with no "meaningful" sales revenues from the detector devices that Maglich has been developing since 1995.

"These factors raise substantial doubt about the company's ability to continue as a going concern," the report said.

"We are undercapitalized," acknowledged Maglich, whose company's stock price has ranged from $1.08 to low of 33 cents in the last year.

Such fluctuations have plagued HiEnergy since it merged in 2002 with a public shell company. Since that merger, HiEnergy has contended with allegations of fraud, first from the SEC and now in a federal lawsuit filed in California by disgruntled investors.

The lawsuit, which has not been scheduled for trial, says a group of investors and company officials conspired to illegally manipulate HiEnergy's stock price, defrauding as many as 1,000 other investors. It also accuses HiEnergy of filing false financial statements and quarterly reports with the SEC, and failing to fully disclose the backgrounds of its directors and officers, some of whom had histories of securities fraud.
Maglich blames some unsavory officers, directors and investors whom he unwittingly inherited in the 2002 merger.

"We were told it was just a corporate shell, but inside that shell was a can of worms," Maglich said yesterday.

Among Maglich's co-defendants in the lawsuit is Philip Gurian, a convicted stock manipulator from Florida with connections to New Jersey's DeCavalcante organized crime family.

According to the lawsuit, Gurian's relatives and friends controlled the shell company that merged with HiEnergy. Gurian helped manipulate HiEnergy's stock price by planting a glowing "analysis" of the company on a Web site he owned. The company then trumpeted the report in news releases.

Details of the scheme, and Gurian's mob connection, were published in 2003 by the Dow Jones News Wire, causing HiEnergy's stock to plummet. The stock dropped again in July 2004 after the SEC threatened to file charges against HiEnergy.

The SEC dropped its investigation in September, but the allegations live on in the federal lawsuit.

Maglich now is banking on SEPTA's satisfaction to bring on a wave of new customers and investors.

"What I need is $100 million," he said. "Within a year, this would be a $3- to $4-billion company."

Thursday, February 9, 2006

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