Last defendant pleads guilty in wind farm fraud

Last defendant pleads guilty in Wyo. and SD wind farm fraud that cost investors millions

Associated Press

CHEYENNE, Wyo. (AP) -- The last of five defendants charged with defrauding investors of more than $4 million by promoting non-existent wind farm projects in Wyoming and South Dakota pleaded guilty Tuesday to felony charges.

Robert Arthur Reed, of Salt Lake City, pleaded guilty in federal court in Casper to conspiracy to commit mail and wire fraud and conspiracy to launder money. Four other co-defendants have entered earlier guilty pleas to various charges.

Prosecutors charged that Reed and the others used personal aliases as well as the company names of Mountain State Power Group, Mountain State Power and Sovereign Energy Partners.

An indictment alleges that they hired phone solicitors to make cold calls to investors, urging them to invest in wind farms by falsely claiming they were being constructed jointly by private investors and the U.S. government.

The indictment lists victims only by their initials and prosecutors have declined to identify them. It states that victims were told that they had to make a minimum investment of $25,000 and that they sent in a total of about $4.3 million.

U.S. District Judge Scott Skavdahl set sentencing for Reed for Aug. 1. Each of the charges that Reed pleaded guilty to carries a possible sentence of up to 20 years in prison, according to court records, and prosecutors have indicated they intend to ask the judge to impose prison time.

Prosecutors agreed to drop seven other charges against Reed at sentencing in exchange for his guilty plea. He had been scheduled to go to trial in Casper next month.

Kip Crofts, U.S. attorney for Wyoming, declined comment after Tuesday's hearing, his office said. An attempt to reach Reed's defense lawyer, Eric Palen of Glendo, for comment after the hearing wasn't successful.

According to court records, Reed and other defendants had acquired land near Casper and in Butte County, S.D., to satisfy investors that projects were moving forward. Prosecutors say the defendants put up signs at the South Dakota site and took pictures of contractors they hired to push dirt around to make it appear construction was ongoing.

"The defendants used these pictures to lull unhappy Mountain State Power/Sovereign investors and entice new victims," prosecutors wrote.

Prosecutors Lisa Leschuk and Eric Heimann, both assistant U.S. attorneys in Wyoming, filed papers in court in December laying out what they claimed were significant earlier business dealings in California by Reed and co-defendants Lauren Elizabeth Scott of Morgan, Utah, and Gregory Lee Doss of Burbank, Calif.

Both Scott and Doss pleaded guilty earlier this month to conspiracy to commit mail and wire fraud and conspiracy to launder money. Neither has been sentenced yet.

Two other defendants pleaded guilty last year to one count each of conspiracy to commit mail and wire fraud, court records show. Defendant Joseph Richard Adams of California pleaded guilty in August. Defendant Christopher Ponish of Panorama City, Calif., pleaded guilty in October.

The prosecutors' December court filing states that Reed, Scott and Doss as well as Adams and Ponish began working together in about 2007 soliciting investors for a series of related companies called SmartWear Technologies and Applied Digital Technologies. The stated purpose of the companies was to develop clothing using radio-frequency technology to allow tracking of children and others.

The California Department of Corporations in 2008 started civil litigation against SmartWear and Applied Digital Technologies, charging that principals were illegally selling securities in the state. The state sanctioned Reed and others for the unlawful sale of securities and ordered them to pay $9 million restitution to defrauded investors, according to state filings.

After the SmartWear solicitations ended, prosecutors Leschuk and Heimann wrote, Reed and Scott created Mountain State Power. The prosecutors stated that Reed presented the wind farm idea to Doss, Ponish, Adams and other salesmen.

Prosecutors wrote that Reed and Doss told Adams and Ponish and other salesmen to use aliases when soliciting investors for the wind farm because of "bad publicity from the SmartWear/ADTI litigation."

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