FAYETTEVILLE -- A jury was seated Monday in U.S. District Court to hear the case of two men accused of bilking investors in a wind-farm development that was never built.
Phillip Vincent Ridings and Jody Davis are accused of scamming investors in a proposed wind-farm project at Elm Springs. 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. They are being tried together.
U.S. District Judge Timothy L. Brooks sent the jury home Monday after selection was complete. The jury was told to return this morning for opening statements and the beginning of testimony.
Dragonfly Industries International of Frisco, Texas, purported to build a wind farm for electric power generation in Elm Springs.
Davis and Ridings of Dragonfly scammed six investors in Northwest Arkansas and southwest Missouri, according to an indictment. The investors are identified only by their initials. They lost amounts ranging from $13,000 to $300,000, the indictment claims.
The men intentionally misled investors in the wind-farm project about the financial viability of the project and potential returns on investment, federal prosecutors allege. Specifically, they told investors they developed cutting-edge wind turbine technology, a prototype was being developed, companies were lining up to buy it and a $10 million federal grant was imminent when none of it was true, the indictment states.
Davis and Ridings also 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 a trip to Walt Disney World in Florida, according to the indictment.
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.
Last year, 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.
Brooks also agreed with the government last year that a plea agreement Ridings backed out of after signing could be used at trial. Ridings, who is representing himself at trial, has argued in court filings the government is prosecuting him because they don't believe the turbine technology Dragonfly planned to use actually works.
"The government's position is that ducted wind turbines are neither feasible nor possible," Ridings wrote. "Thus, they think Ridings' invention is part of a scheme to defraud interested parties who financially supported this idea in the beginning, but were aggressively persuaded by government agencies to claim it as a fraud or scheme to defraud."
The government contends Belcan, an engineering firm, presented a report in September 2015 to Davis and Ridings that their wind turbine wouldn't perform as expected, yet Davis and Ridings continued to solicit investments.
Ridings said that report was outdated and wrong and plans to call an expert witness to testify the technology does indeed work.
Dragonfly sought to rezone 312 acres in Elm Springs in late 2015 for the development. 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. It issued a cease-and-desist order against the company Aug. 11, 2016, which prohibited Dragonfly from efforts to sell unregistered securities to investors.