FAYETTEVILLE – Fraud is not a high risk / high reward investment, a man from Fayetteville told jurors during the federal trial of two men charged with fraud in connection with a wind farm project in Elm Springs that failed is never materialized.
Dragonfly Incorporated’s Jody Davis and Phillip Vincent Ridings are accused of scamming investors in a proposed wind farm project in Elm Springs, Arkansas One. They are charged with several counts of wire fraud, aiding and abetting wire fraud, money laundering and aiding and abetting money laundering. Both men pleaded not guilty.
Jim Lefler said he and a friend gave Davis a 2015 $ 30,000 cashier’s check made out to Dragonfly which was supposed to be used to pay engineers, who he said were working on validating the technology and development of the Dragonfly wind turbine for production.
Lefler would later learn that Belcan Global Engineering was not working on the project at all because they had not been paid. Lefler also later learned from the FBI that the money was split between Davis and Ridings and some of it was spent at fast food outlets, a bookstore, Walmart and even a Land Rover dealership, among others. But, Dragonfly did not send a check to pay the engineers.
Prosecutors on Friday explained to jurors how the money was transferred to one of Ridings’ accounts, which was nearly overdrawn, and then to Davis and showed them the debit transactions made by Ridings for personal use. The account was soon back below $ 200 again.
“My money was sent directly to Belcan, that’s what they told me,” Lefler said. “It was always up to Belcan to validate it. “
Lefler said that for him the risk and a loss he could live with would have been to invest and then find out through engineers that the technology was not working, but to be intentionally cheated is fraud.
“The technology never worked,” Lefler said. “No one has ever proven that it works.”
Lefler said he was probably naive about the situation, but Davis prayed during their meetings and then lied to his face and fabricated documents.
“Much of this was presented from a religious context,” Lefler said. “Unfortunately, I believed that everything presented to me was the truth.”
Lefler said he knew Davis had had legal issues in the past, but only knew the extent of them later.
Davis, CEO of Dragonfly, pleaded guilty in 2009 to wire fraud and money laundering after embezzling approximately $ 785,000 in Oklahoma. He served a sentence in federal prison.
Lefler said it was sobering when he saw Davis taken away by police on the local news.
“It was probably one of the biggest disappointments of my professional career,” said Lefler.
Davis and Ridings scammed six investors in northwest Arkansas and southwest Missouri, indictment says. They are only identified by their initials. Investors lost amounts ranging from $ 13,000 to $ 300,000, according to the indictment.
Brandon Smith, a residential development contractor from Fayetteville, said he was left behind on a $ 2 million property in Elm Springs that was to be part of the wind farm site after agreeing to guarantee repayment of the loan. After trying to keep the note itself for several months, spending some $ 100,000, the 200 acres returned to the bank.
It was part of a deal with Cody Fell of Springdale, an entrepreneur and principal of the company, who pleaded guilty to federal wire fraud and tax evasion charges in December 2018. Fell agreed to cooperate with the government and was not convicted.
Smith said he was led to believe the wind farm would be up and running in a year. Instead, nothing was being done on the site and Smith was left with nothing to show for his money.
Smith also gave Dragonfly $ 75,000 for a wind study, borrowing half from a friend, $ 8,400 for site work and $ 13,930 to help pay Belcan. He would later learn that Davis gave the $ 13,930 to Fell, who Smith said he had previously made several personal loans in the amount of around $ 25,000.
“I felt betrayed,” Smith said. “I just gave you $ 13,930 and you returned it to Cody Fell.”
When asked why he put the money in, Smith said he felt he had to continue with the project if he ever wanted to see his money back.
“I’m for $ 2 million and I have to find a way to pay for it,” Smith said.
Dragonfly sought to rezon 312 acres in Elm Springs at the end of 2015.
Opponents of the wind farm have gathered petitions to force a special election on March 1, 2016, to cancel the annexation of the wind farm site in October 2015 by the city. The cancellation of the annexation passed 483-273. Dragonfly announced that it was dropping the project later in the same week.
The cancellation of the annexation placed the necessary site approval within the purview of Washington County officials, who were skeptical of the project, according to press reports at the time.
Dragonfly has also caught the attention of the Arkansas Securities Department. The department issued a cease and desist order against the company on August 11, 2016, prohibiting Dragonfly from attempting to sell unregistered securities to investors.
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The federal fraud trial of Jody Davis and Phillip Vincent Ridings will resume Monday morning and could continue the following week, according to lawyers in the case.
Davis and Ridings intentionally misled investors in the wind farm project about the project’s financial viability and potential returns on investment, according to their indictment. Specifically, they told investors they had developed cutting-edge wind turbine technology, a prototype was being developed, companies were lining up to buy, and a federal grant of $ 10 million. was imminent while none were true, the indictment says.
Davis and Ridings hid bank accounts from their accountants and used investor money transferred to those accounts to buy a luxury vehicle, pay for fitness club fees, make a down payment for a house and a trip to Walt Disney World. in Florida, according to the indictment.
Source: Staff reports