A Utah man who defrauded investors nationwide of more than $4.4 million by promoting investment in nonexistent wind farms in Wyoming and South Dakota must serve more than 12 years in prison, a federal judge ordered Tuesday.
U.S. District Judge Scott Skavdahl heard hours of testimony in Casper from state and federal investigators before rejecting a claim from defendant Robert Arthur Reed, 53, of Salt Lake City, that he didn’t deserve extra prison time for organizing the scam that claimed money from 83 victims.
Skavdahl called Reed a manipulative person and said it was clear he served as “puppeteer,” directing others how to perpetuate the fraud.
Reed pleaded guilty in May to conspiracy to commit mail and wire fraud, and conspiracy to launder money. Yet Reed persisted at Tuesday’s sentencing hearing that while he was guilty of moral failings, he and other co-defendants were arrested before they committed crimes.
Reed said the unsuspecting people who sent in their money in response to telephone solicitations had agreed to lend it to a wind farm development company for three years. He said he was a consultant to the company, and that the three-year loan period hadn’t run out before he and the others were arrested.
Victims were told they had to make a minimum investment of $25,000, an indictment states. Prosecutors charged that Reed and co-defendants used personal aliases and the company names of Mountain State Power Group, Mountain State Power and Sovereign Energy Partners in the scheme.
“I believe, and I believe the evidence shows _ it’s actually uncontroverted _ that Mountain State Power borrowed money,” Reed said.
According to court records, Reed and others acquired land near Casper and in Butte County, S.D., to satisfy investors that the projects were moving forward with construction of the promised wind farms. They put up signs at the South Dakota site and took pictures of contractors they hired to push dirt around to make it appear construction was ongoing, prosecutors said.
Skavdahl approved a request from prosecutors to forfeit investment accounts, real estate and a high-end motor home that they said had been purchased with proceeds from the fraud. A state investigator testified that Reed had exclusive control of company bank accounts.
Lisa Leschuck, a federal prosecutor, told Skavdahl it was clear from Reed’s testimony that he was a sociopath. She urged the judge to depart upward from federal sentencing guidelines and sentence Reed to 15 years in prison.
Skavdahl read letters from elderly victims without giving their names, including some who had retired early and left jobs where they had health insurance based on promises of high rates of return from their investment in wind farms that were never built. He said they all lost all their money.
The judge quoted from one elderly woman’s letter, in which she said, “I think these guys are more cruel than if they had just gone ahead and killed me.”
Two other major players in the scam, Lauren Elizabeth Scott, of Morgan, Utah, and Gregory Lee Doss, of Burbank, Calif., pleaded guilty in May to conspiracy to commit mail and wire fraud, and conspiracy to launder money. Skavdahl earlier this month sentenced Scott to 4 3/4 years in prison and sentenced Doss to six years in prison this week.
Federal prosecutors filed papers in court in December laying out what they claimed were significant earlier business dealings in California by Reed and the others. The group solicited investors for companies called SmartWear Technologies and Applied Digital Technologies, whose stated purpose was to develop clothing using radio-frequency technology to allow tracking of children and others.
The California Department of Corporations in 2008 started civil litigation against SmartWear and Applied Digital Technologies, charging that principals were illegally selling securities in the state. 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.
In announcing Reed’s sentence, Skavdahl emphasized that no real work was done on any aspect of building turbines over the few years the scam was running before Reed and others were arrested last year.
“I have less compassion for a white-collar crook than I do for a drug user,” Skavdahl said. “The drug user puts it in his own vein. The white-collar crook takes it from everyone and leaves them hanging.”
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