Federal jury awards $10.4 million judgement against cellulosic ethanol’s Cello Energy

In Alabama, a federal jury ruled that mysterious cellulosic ethanol firm Cello Energy must pay $10.4 million to Parsons & Wittemore, a New York-based paper company and company investor. P&W had alleged that Cello Energy had fraudulently claimed it could produce low-cost fuel from cellulosic feedstocks.  The company was found liable for $2.8 million in breach of contract, $104,537 for fraud and awarded $7.5 million in punitive damages.

Cello Energy said it would continue to pursue its cellulosic biofuels goals. The suit revolved around a $2.5 million investment by P&W in Cello Energy and a $10 million investment from Khosla Ventures that P&W said diluted its investment in Cello.

P&W had also sued Khosla for interfering in its business relationship with Cello, but the jury ruled in favor of Khosla.

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