FAYETTEVILLE -- A federal jury Friday morning returned all guilty verdicts against 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.
Jody Davis and Phillip Vincent Ridings were charged with nine counts of wire fraud, aiding and abetting wire fraud, money laundering, and aiding and abetting money laundering.
The men will be sentenced in about four months, after a pre-sentencing report is completed. The jury deliberated about three hours over two days before reaching a verdict.
Ridings and Davis, Dragonfly's CEO, were found guilty of conspiring to commit wire fraud. Both were also found guilty of four counts of wire fraud and aiding and abetting wire fraud.
Both men were also found guilty, jointly, of two counts of money laundering, and both were found guilty individually of another count each.
U.S. District Judge Timothy L. Brooks allowed Davis and Ridings to remain free on existing bond and conditions until their sentencing, although he was somewhat reluctant to do so in Davis' case.
Both will be monitored by GPS and have their travel severely restricted. Ridings lives in Little Rock and Davis has a residence near Searcy.
Brooks said he was concerned Davis may be in violation of terms of his release because he may not have properly reported assets and debt related to a house he is buying and the way payments are being made on that house.
Davis told the judge his employer was making house payments for him and the house is in his wife's name. His employer's name came up in connection with Dragonfly and the wind turbine as a possible investor during the trial.
"It seems unusual," Brooks said. "You may be in violation of not incurring new debt."
Brooks asked for more information on the house arrangement.
Brooks specifically prohibited Ridings from soliciting any investments for any kind of wind turbine, regardless of what it is called. He also cannot incur any new debt. Davis cannot be involved in any way with the books, accounts or soliciting of of business for his employer, which he said builds homes out of shipping containers.
Both are prohibited from having guns.
Brooks urged the men to carefully go over their release conditions.
"Any violation of bond conditions whatsoever, and I will have no hesitation to remand you to custody," Brooks warned.
A federal grand jury handed down a nine-count indictment in January 2020 against Davis and Ridings.
Davis and Ridings intentionally misled investors in the wind-farm project about the financial viability of the project and potential returns on investment, according to the indictment.
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, the indictment states. None of it was true.
A third man, Cody Fell, who is Davis' brother-in-law and worked at Dragonfly for a time, pleaded guilty in December 2018 to federal wire fraud and tax evasion charges.
Fell agreed to cooperate with the government and testified he was given more than $100,000 of investors' money by Davis and Ridings. Fell has not been sentenced.
In a closing argument Thursday, Deputy U.S. Attorney Kenneth Elser told jurors Dragonfly was nothing but a long-term scam netting Davis, Ridings and others more than $700,000 between 2014-18.
Davis and Ridings maintained they had no intent to defraud investors, but they used investor money for personal expenses including cars, food, jewelry, vacations and a down payment on a house.
Prosecutors said they lied to investors about what their money would be used for and about progress on their wind turbine, sent fraudulent documents and split investors' money. Jurors were shown in detail how money that came in moved through bank accounts and was ultimately spent.
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 selling unregistered securities to investors. The FBI began an investigation shortly after.
Davis and Ridings scammed six investors in Northwest Arkansas and southwest Missouri, according to the indictment. Investors lost amounts ranging from $13,000 to $300,000, according to the indictment. There were other victims in Iowa and Texas, according to prosecutors.
Dragonfly sought to rezone 312 acres in Elm Springs in late 2015 to purportedly build a wind farm. Opponents of the wind farm collected petitions to force a special election that prompted Dragonfly to drop the project.
Davis pleaded guilty in 2009 to wire fraud and money laundering after embezzling about $785,000 in Oklahoma. He served time in federal prison.