FAYETTEVILLE – A federal judge refused Thursday to dismiss criminal charges against two men accused of scamming investors in a proposed wind-farm project in Elm Springs.
Jody Douglas Davis and Phillip Vincent Ridings are charged with several counts of wire fraud, aiding and abetting wire fraud, money laundering and aiding and abetting money laundering.
Both men have pleaded innocent. They will be tried together, and the trial is set for Sept. 20 in Fayetteville.
Dragonfly Industries International of Frisco, Texas, purported to build a wind farm for electric power generation in Elm Springs.
The indictment claims that Davis and Ridings of Dragonfly scammed six investors in Northwest Arkansas and southwest Missouri. The investors are identified only by their initials. Investors lost amounts ranging from $13,000 to $300,000, the indictment says.
Davis and Ridings are accused of intentionally misleading investors about the financial viability of the wind project and potential returns on investment, according to the indictment. Specifically, they told investors they had developed cutting-edge wind turbine technology, a prototype was being developed that companies were lining up to buy and a $10 million federal grant was imminent, though none of that was true, the indictment says.
According to the indictment, Davis and Ridings hid bank accounts from their accountants and used investor money transferred to those accounts to buy a luxury vehicle, pay fitness club fees, make a down payment on a home and take a trip to Walt Disney World in Florida.
U.S. District Judge Timothy Brooks issued an order Thursday addressing a stack of motions from Davis and Ridings.
Brooks found several motions to dismiss to be without merit, including an argument that a jury trial would inevitably expose defendants and jurors to the coronavirus.
Brooks agreed with the government that it can use at trial a plea agreement Ridings backed out of after signing it. Brooks said the agreement, which lays out the basis for Ridings pleading guilty, must be redacted in such a way as not to identify Davis. Brooks rejected the government’s first redaction attempt.
Brooks ruled that the government also can use evidence related to an engineering firm, Belcan, that Ridings sought to suppress.
Ridings argued that Belcan incorrectly concluded that Dragonfly’s wind turbine wouldn’t work and therefore all evidence regarding Belcan’s conclusions should be prohibited.
The government contends Belcan presented a report in September 2015 to Davis and Ridings that their wind turbine wouldn’t perform as expected, and they continued to solicit investments.
Brooks denied a motion from Ridings to disallow a video of him talking with a government informant.
The judge rejected a motion from Davis to withhold evidence of an earlier conviction. Davis, chief executive officer for Dragonfly, pleaded guilty in 2009 to wire fraud and money laundering after embezzling about $785,000 in Oklahoma.
Dragonfly sought to rezone 312 acres in Elm Springs in late 2015.
Opponents of the wind farm collected petitions to force a special election in March 1, 2016, to undo the October 2015 annexation of the wind farm site by the city. Voiding the annexation passed 483-273. Dragonfly announced that it was dropping the project later the same week.
Rescinding the annexation placed the needed site approval into the purview of Washington County officials, who were skeptical of the project, according to news accounts at the time.
Dragonfly also drew the scrutiny of the Arkansas Securities Department. It issued a cease-and-desist order against the company Aug. 11, 2016, which prohibited Dragonfly from efforts to sell unregistered securities to investors.
Cody Fell of Springdale, a contractor and principal in the firm, pleaded guilty to federal wire-fraud and tax-evasion charges in December 2018. Fell agreed to cooperate with the government and hasn’t been sentenced.