The U.S. attorney's office says a Rogers businessman should be sentenced to 27 to nearly 34 years in prison for swindling hundreds of people out of more than $1 million in a fraudulent business investment scheme, according to federal court records.
Allen Wichtendahl, 62, is scheduled to go before U.S. District Judge Timothy L. Brooks on Wednesday for a sentencing hearing in Fayetteville that is expected to last three days.
Wichtendahl pleaded guilty in October to one count each of mail fraud, securities fraud and money laundering as part of a plea agreement with the government. He and his then-wife Diana Stewart were charged last year in a 36-count federal indictment with mail, wire and securities fraud, selling unregistered securities and money laundering.
The government has agreed to drop the charges against Stewart after Wichtendahl's sentencing. The couple divorced in March.
The charges accuse Wichtendahl of luring people to invest in his fictitious New Vision Technology, which purported to operate Amway and tractor businesses in Bulgaria and power plant construction and cassava processing plant projects in Nigeria. Cassava is a versatile tuber used mostly for food.
The government alleged that instead of putting investor money into the enterprises, Wichtendahl spent the money on, among other things, rent for two $300,000 houses in Bentonville, a Mercedes-Benz for himself and a 2006 Cadillac Escalade for Stewart, his wedding to Stewart, lawn mowing equipment for a son-in-law's new business, clothing, jewelry, dental work, and child support.
Wichtendahl misled investors about the financial stability of the company by sending out monthly reports inflating projected revenues while withholding that he had been convicted of two felony fraud offenses in Florida, according to federal records.
Local and federal law enforcement began investigating Wichtendahl in June 2011 when an employee at the New Vision Technology office in Rogers went to Rogers police and told them about the illegal enterprise.
During the expected three days of hearings, the government and Wichtendahl will put evidence before Brooks on how long of a sentence he should get. The length will be determined, in part, by the number of points Brooks thinks should be added to or subtracted from federal sentencing guidelines based on various factors.
The government is arguing in its sentencing memorandum that Wichtendahl's sentence should be increased because of his criminal history; the number of victims in the fraud scheme; the amount of money they lost; that he moved from Rogers to Florida to evade federal investigators; that he acted as a securities investment adviser or abused investors' trust in him; that he was the leader of an organized criminal activity; and the amount of restitution he should repay.
In the memorandum, the government calculated that, with all those factors, Wichtendahl should be sentenced to 27 years to 33 years 9 months.
It contends he defrauded 331 investors in an amount intended to reach more than $6.9 million. Investors actually lost $1.06 million, and the government is seeking that amount in restitution.
Investors were sold "parts" in the company, $20,000 for an agricultural division part for the tractor and cassava operations, and $10,000 for a power division part for the Nigerian power plant. Most investors couldn't pay for the parts all at once, the intended loss, so made monthly payments, the actual loss.
In his sentencing memorandum, Wichtendahl, through Federal Public Defender Bruce Eddy, argued that his criminal enterprise was not as expansive as the government contends.
Wichtendahl argued that even though he used the company's Bulgaria operation to commit crimes, for example, not all aspects of the operation were fraudulent.
He argued that he carried on legitimate business activities through his companies, such as traveling to Nigeria to negotiate with Nigerian government officials and viewed prospective locations for processing plants.
Wichtendahl argued that the number of victims in his scheme is less than 50, not the 331 victims as claimed by the government. His memorandum said he planned to call several investors during the hearing who would testify they did not believe they were victims of fraud. And they were not victims because, Wichtendahl contends, he did not misrepresent his business or products to them.
The actual loss of $1.06 million is the more appropriate figure for the intended loss amount, Wichtendahl argued.
The government overstated the intended loss amount, he argued. He pointed out that part contracts for investors, for example, stated that they would be required to pay only half of the part price and that dividends would be used to pay for the rest.
NW News on 07/08/2014