FAYETTEVILLE – Fraud is not a high-risk/high-reward investment, a Fayetteville man told jurors hearing the federal trial of two men accused of fraud in connection with a proposed wind farm in Elm Springs that never came to fruition.
Jody Davis and Phillip Vincent Ridings, of Dragonfly Incorporated, are accused of scamming investors in a proposed wind farm project at Elm Springs, Arkansas One. 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 not guilty pleas.
Jim Lefler said he and a friend gave Davis a $30,000 cashier’s check in 2015 made out to Dragonfly that was supposed to be used to pay engineers, who he thought were working on validating the technology and developing Dragonfly’s wind turbine for production.
Lefler would later learn Belcan Global Engineering wasn’t working on the project at all because they had not been paid. Lefler also learned later from the FBI that the money was split between Davis and Ridings and part of it was spent at fast food establishments, a bookstore, Walmart and even a Land Rover dealership, among other things. But, Dragonfly didn’t send a check to pay the engineers.
Prosecutors Friday laid out for jurors how the money moved into one of Ridings’ accounts, which was almost overdrawn, then out to Davis and showed them the debit transactions Ridings made for personal use. The account was soon under $200 again.
“My money was sent directly to Belcan, that’s what they told me,” Lefler said. “It always went back to Belcan validating it.”
Lefler said for him, risk, and a loss he could live with, would have been investing and then finding out from the engineers that the technology did not work, but being intentionally deceived is fraud.
“The technology has never worked,” Lefler said. “Nobody has ever proved it worked.”
Lefler said he was probably naive about the situation, but that Davis prayed over their meetings, then lied to his face and fabricated documents.
“So much of this was presented from a faith background,” Lefler said.”Unfortunately, I believed everything presented to me to be the truth.”
Lefler said he knew Davis had been in some legal trouble in the past but did not know the extent until later.
Davis, chief executive officer for Dragonfly, pleaded guilty in 2009 to wire fraud and money laundering after embezzling about $785,000 in Oklahoma. He served time in federal prison.
Lefler said it was sobering when he saw Davis being led away by police on the local news.
“It was probably one of the biggest single letdowns in my professional career,” Lefler said.
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.
Brandon Smith, a residential development contractor from Fayetteville, said he was left on the hook for a $2 million piece of property at Elm Springs that was to have been part of the site of the wind farm after he agreed to guarantee repayment of the loan. After trying to keep up the note himself for several months, spending some $100,000, the 200 acres went back to the bank.
That was part of a deal with Cody Fell of Springdale, a contractor and principal in the firm, who 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.
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 ended up 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 already given several personal loans amounting to about $25,000.
“I felt betrayed,” Smith said. “I just gave you guys $13,930 and you gave it back to Cody Fell.”
Asked why he put the money up, Smith said he felt he had to keep the project going if he was to ever see any of his money again.
“I’m in for $2 million dollars and I gotta find a way to pay for that,” Smith said.
Dragonfly sought to rezone 312 acres in Elm Springs in late 2015.
Opponents of the wind farm collected petitions to force a special election 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 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. The department issued a cease-and-desist order against the company Aug. 11, 2016, which prohibited Dragonfly from efforts to sell unregistered securities to investors.
[rest of article available at source]