FAYETTEVILLE – The fate of two men charged with defrauding investors in a failed Elm Springs wind-farm project and the development of a wind turbine that was never built was put in the hands of a federal jury Thursday afternoon.
Jody Davis and Phillip Vincent Ridings are charged with counts of wire fraud, aiding and abetting wire fraud, money laundering, and aiding and abetting money laundering. Both men pleaded innocent.
In a closing argument Thursday, Kenneth Elser, deputy U.S. attorney, told jurors Dragonfly Industries International was nothing but a long-term scam netting Davis, Ridings and others more than $700,000 in 2014-18.
That figure doesn’t include the losses suffered by people who did work for Dragonfly and were never paid or the person who was left holding a $2.3 million property loan.
Investors were told their money was going to pay for specific work on the turbine design or prototype and models or studies, none of which were not being done, he said.
“That’s a lie and that’s what happened over and over and over again,” Elser said. “It was fraud from the beginning and it was fraud throughout.”
Promises to pay people back were intended to keep them quiet so Davis and Ridings could move on to the next scam, Elser said.
John Wesley Hall, Davis’ attorney, told jurors the two men made mistakes and bad choices in how they handled money and used bad judgement but had no intent to defraud.
“They believed in Dragonfly,” Hall said. “They still believe in Dragonfly.”
Hall also said much of the fraud was perpetuated by a third man, Cody Fell, who is Davis’ brother-in-law and worked at Dragonfly for a time.
Fell of Springdale pleaded guilty to federal wire-fraud and tax-evasion charges in December 2018. He agreed to cooperate with the government and testified earlier in the week that he was given more than $100,000 of investors’ money by Davis and Ridings. He will be sentenced after the trial of Ridings and Davis is completed.
Hall said Davis and Ridings used investor money for living expenses because they were trying to get the company off the ground and didn’t have other jobs.
Davis and Ridings scammed six investors in Northwest Arkansas and southwest Missouri, according to an indictment. There were other victims in Iowa and Texas, according to prosecutors.
Ridings represented himself during the trial. When he testified Thursday morning, Ridings read questions to himself and then answered them, all in third person.
During his closing argument, Ridings told jurors he’s an inventor, not a businessman and Davis, a felon with a past fraud conviction in Oklahoma, ran the business while he dealt with the technology side.
Ridings said he never questioned where the investor money was coming from and believed it was to help support the company by paying business expenses.
Ridings said, “I believed it to be a personal investment, that’s all.”
The company needed at least $1.5 million to build a prototype of its wind turbine, he said, and he and Davis were just trying to keep the company going until they could get the money they needed while also having money to live on.
“They want to say we committed a crime,” Ridings said. “We want to say we were building a business and this was the only way we could do it.”
Asked if he had a legal and moral obligation to be truthful with investors about Davis’ fraud conviction, Ridings said, “No.”
Elser said the scam blew up when Dragonfly 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. They also called the FBI, which began an investigation.
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