FAYETTEVILLE – Two men on trial in federal court on fraud charges involving an Elm Springs wind farm that was never built left a string of unpaid bills and broken promises in their wake, according to testimony Wednesday.
Nathan Rudolf said he did some work for the company free because he believed in the wind farm’s concept. Later on, Rudolf was hired at Dragonfly, the company promoting the project, in 2015 as director of project management with a promised salary of $125,000 a year. But, that salary was deferred until the company had enough money to start building the wind farm. Dragonfly needed someone with an Arkansas general contractor’s license, and he had one, Rudolf said.
Rudolf also invested $40,000 in Dragonfly and was promised he would be repaid, with interest, in a few months. He was also promised 33% of the net profit from the Elm Springs project, Rudolf said. All of the investment money was to be used for general business operations to build the wind farm, Rudolf said. He testified that he has yet to see a dime.
“I received zero from Dragonfly,” Rudolf told jurors Wednesday.
Prosecutors say Jody Davis and Phillip Vincent Ridings instead used the money for personal expenses, including cars, houses and vacations.
Rudolf said Davis told him that all of the employees were deferring their salaries for the good of the company, Rudolf said.
“He was really adamant about not taking money for his own use,” Rudolf said of Davis.
There was also talk of using the technology Ridings claimed to have invented for new projects in Nigeria, Malaysia and Iowa, as well as military contracts and players from Chicago who were ready to invest but none ever materialized, Rudolf said.
At one point, Davis asked Rudolf to invest more money because there was “an emergency,” and Dragonfly was short of money to pay an engineering company that Davis said was working on the project, according to Rudolf. It turned out the company wasn’t really working on the project because it was never paid to begin with, according to Rudolf.
Only later did Rudolf learn of Davis’ previous conviction for fraud in Oklahoma and that validation tests of the Dragonfly concept hadn’t been done as he had been led to believe.
Davis’ attorney, John Wesley Hall, argued that the investment agreement Rudolf signed included a clause that any projections for potential growth of the Elm Springs wind farm were only opinions and weren’t legally binding and, further, that the signer had done due diligence.
Ridings and Davis are accused of scamming investors in the proposed wind farm project. They are charged with multiple counts of wire fraud, aiding and abetting wire fraud, money laundering, and aiding and abetting money laundering. Both men have entered innocent pleas.
Patricia Ryan, a Realtor and business consultant in Palm Beach, Fla., said she helped Ridings find an apartment with a nice view in Jupiter, Fla., and helped him make a grant application to the U.S. Department of Energy on behalf of Dragonfly.
Ryan later learned that information in the grant application, provided by Ridings, wasn’t true, she testified. That revelation came after Ryan called the engineering company that was named and learned that it wasn’t working on a prototype for the Dragonfly because it wasn’t being paid.
The Department of Energy ultimately discouraged Dragonfly from continuing with the grant application process, but the company later claimed to investors that a grant was imminent, according to testimony.
Davis and Ridings scammed six investors in Northwest Arkansas and southwest Missouri, according to an indictment. They are identified only by their initials. Investors lost amounts ranging from $13,000 to $300,000, the indictment claims.
Carl TenBrink, president of Sonos Project Development, said he was asked by Ridings in 2011 or 2012 to make a visual model of his wind turbine but was paid only $5,000 of the $40,000 that the project cost, and that was late.
Ridings called TenBrink occasionally, wanting him to build various models, over the next six years, but the company didn’t build them because Ridings would never pay him, TenBrink testified. Ridings would always say the money was just about to come in or contracts were about to be signed, he said.
“Months would go by, and he’d pop up again wanting something,” TenBrink said.
TenBrink said he was never provided enough information to determine whether Riding’s turbine would actually work and never tested it himself.
Willem Anemaat, president of DAR, a Lawrence, Kan., engineering company that did design and testing of aircraft and wind turbine designs, said his company did some initial computer modeling of the air flow through Riding’s turbine design beginning about 10 years ago. It wouldn’t produce the power claimed, and Ridings wouldn’t pay the bills, so the work stopped, Anemaat said.
Ridings persisted, wanting more work done. Anemaat eventually told Ridings that his design wouldn’t work in the real world.
“What you have drawn will not work, and we have told you that before, too,” Anemaat eventually told Ridings in an email exchange.
Anemaat said he later learned from the FBI that Ridings was telling investors that the testing at DAR showed his turbine design was superior to existing designs and would produce more energy.
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