CHEYENNE, Wyo. (AP) -- The pitch on behalf of Mountain State Power sounded enticing: For $25,000 and with minimal risk, you could cash in on the green energy boom in Wyoming and South Dakota, taking advantage of a wind farm project partly funded by the federal government.
Contracts with local power companies already were in place to buy the wind-driven power, so you'd get your initial investment back quickly, along with a 40 percent annual return on it for the next decade or so.
Contractors using heavy machinery already could be seen working land in Butte County, S.D., a sign to investors that the plan was under way and viable.
All of it was little more than hot air, say federal prosecutors.
An indictment filed March 15 accuses three people of defrauding investors of $3.7 million. Robert Arthur Reed and Lauren Elizabeth Scott of Morgan, Utah, and Christopher Ponish, of Panorama City, Calif., were charged with conspiracy to commit mail and wire fraud. Reed faces other charges of mail fraud and wire fraud.
All three pleaded not guilty at arraignments in federal court last week. Their attorneys didn't respond to telephone messages seeking comment.
John Powell, spokesman for the U.S. Attorney's Office in Cheyenne, declined comment on the case and declined to identify any of the alleged victims.
According to the indictment, Reed and Scott used aliases as well as the company names of Mountain State Power Group, Inc., Mountain State Power, Inc. and Sovereign Energy Partners in the scheme.
Reed and Scott paid phone solicitors to make cold calls to investors, telling them that the wind farms were being constructed jointly by private investors and the U.S. government, the indictment says. Potential stakeholders were told that "government funds had been set aside by the President of the United States for the development of green energy for these alleged wind farm projects."
The indictment also states that Scott incorporated Mountain State Power. Bank and postal accounts were opened in Wyoming and other states in 2009. Scott allegedly moved to acquire a parcel of land near Casper while investors were told more land was under development in South Dakota.
Ponish even traveled to Butte County in August to allegedly pay contractors $2,800 in cash "to move earth around with heavy equipment to create a false illusion that the Sovereign wind farm project was actually under construction," the indictment says.
Through it all, investors received letters stating that the wind projects were under way or had been completed, it said.
The indictment charges that Reed, Scott and Ponish variously used investors' money for personal investments as well as to buy a motor coach and make payments on Scott's residence in Morgan.
U.S. District Judge Scott W. Skavdahl of Casper on Tuesday ordered Reed detained. Court papers state Reed has several aliases and drivers licenses and poses a flight risk. Skavdahl set bail for Scott at $20,000, unsecured, allowing her to be released to the custody of her daughter.
Skavdahl arraigned Ponish on April 5, allowing him to remain out of custody.
Investors might have been taken in by the buzz over the past several years surrounding green energy, while the notion that the federal government might jump into an alternative power project isn't far-fetched. Federal agencies are investigating the Obama administration's loan of more than $500 million to Solyndra Inc., a California solar energy company that collapsed soon after receiving the federal funds
Ron Rebenitsch, executive director for the South Dakota Wind Energy Association, said he had never heard of the defendants or the companies.
Some in the wind-energy field in Wyoming also said they hadn't heard of the defendants.
"It's no secret that starting in about 2002 and 2003, the speculation market for Wyoming wind was a hotbed of activity, and continued to be, all the way up until three major things came to a head," said Dave Picard, a state lobbyist for the Wyoming Power Producers Coalition, an association of wind energy companies. Development recently has slowed because of changes in state tax policy, uncertainty over the federal tax credit and concern about development's effect on sage grouse, a bird that could be placed on the federal endangered species list.
Picard said Wyoming also suffers from a lack of power-line capacity to move more power out of the state even if more farms are built.