CHEYENNE, Wyo. -- Three defendants are set to stand trial in June on federal charges that they defrauded investors of more than $4 million by promoting non-existent wind farms projects in Wyoming and South Dakota.
U.S. District Judge Scott Skavdahl of Casper has set aside three weeks for a trial starting June 3. The U.S. Attorney's Office in Cheyenne is prosecuting the case. Spokesman John Powell said the office wouldn't discuss it before trial.
Defendants Robert Arthur Reed of Salt Lake City, Lauren Elizabeth Scott of Morgan, Utah, and Gregory Lee Doss of Burbank, Calif., are charged with conspiracy to commit mail and wire fraud and conspiracy to launder money. Reed faces additional charges of mail fraud, wire fraud and money laundering.
Defense lawyers either declined comment or didn't respond to requests for comment.
According to the latest in a string of federal indictments, Reed, Scott and Doss used aliases as well as the company names of Mountain State Power Group, Inc., Mountain State Power, Inc. and Sovereign Energy Partners in the scheme.
The indictment alleges they hired phone solicitors to make cold calls to investors, telling them that the wind farms were being constructed jointly by private investors and the U.S. government. The indictment lists victims only by their initials, stating that many of them mailed in checks for $25,000 or more. Prosecutors have declined to identify victims.
Two other defendants pleaded guilty last year to one count each of conspiracy to commit mail and wire fraud, court records show. Defendant Joseph Richard Adams of California pleaded guilty in August. Defendant Christopher Ponish of Panorama City, Calif., pleaded guilty in October.
Neither Adams nor Ponish has been sentenced yet. Prosecutors have stated in court papers they expect the two will testify for the government at trial for Reed, Scott and Doss.
The first indictment, filed in mid-March 2012, pegged total investor losses in the wind farm scheme at $3.7 million. The figure had climbed to $4.3 million by the latest indictment, filed in July.
Prosecutors Lisa Leschuk and Eric Heimann, both assistant U.S. attorneys in Wyoming, filed papers in December detailing what they maintain were the significant business dealings in California by Reed, Scott and Doss. The prosecutors stated they intend to present information about the California operations at the Wyoming criminal trial.
The prosecutors' filing states that Reed, Scott and Doss as well as Adams and Ponish began working together in about 2007 soliciting investors for a series of related companies called SmartWear Technologies and Applied Digital Technologies. The stated purpose of the companies was to develop clothing using radio-frequency technology to allow tracking of children and others.
The California Department of Corporations started civil litigation against SmartWear and Applied Digital Technologies in 2008 charging that principals were illegally selling securities in the state. As a result of cease-and-desist orders, Leschuk and Heimann wrote, the defendants shut down Applied Digital Technologies in 2009.
The California Department of Corporations issued a statement last June announcing a court judgment against SmartWear Technologies, Inc., and its principals including Reed. The state sanctioned Reed and others for the unlawful sale of securities and ordered them to pay $9 million restitution to defrauded investors, according to state filings. Total restitution ordered from the company and officers amounted to $25 million. Civil litigation is continuing on the matter in California.
After the SmartWear solicitations ended, prosecutors Leschuk and Heimann wrote, Reed and Scott created Mountain State Power. The prosecutors stated that Reed presented the wind farm idea to Doss, Ponish, Adams and other salesmen.
"The defendants then developed a sales script and the telephone salesmen began cold-calling unwitting investors to sell investments in the non-existent wind farms," the prosecutors wrote. Reed and Doss told Adams and Ponish and other salesmen to use aliases when soliciting investors for the wind farm because of "bad publicity from the SmartWear/ADTI litigation," prosecutors wrote.
Prosecutors say Reed would send 45 percent of the investors' money to Doss, who paid the sales commissions. They say Reed and Scott split the remaining money, spending some to keep the scheme going but mostly paying for their personal expenses.
Prosecutors allege the defendants had acquired land near Casper and in Butte County, S.D., to satisfy investors that projects were moving forward. They charge that they put up signs at the South Dakota site and took pictures of contractors they hired to push dirt around there to make it appear construction was ongoing.
"The defendants used these pictures to lull unhappy Mountain State Power/Sovereign investors and entice new victims," prosecutors wrote.