A Northwest Arkansas man charged in federal court with bilking investors out of more than $1 million has been ordered into isolation in jail to prevent him from attempting to hide money being donated to him by supporters for his criminal defense, according to court records.
U.S. Magistrate Judge Erin Setser issued the order on April 16 so that Allen Wichtendahl of Lowell couldn’t use other inmates in the Washington County jail to communicate to others for him.
The government filed a notice to Setser on April 16 that it had a recording of a telephone conversation from jail inmate Eric Frankenhauser to Wichtendahl’s co-defendant Diana Stewart telling her that he would write a letter from Wichtendahl to her and that she could write to him and he would forward the letter to Wichtendahl.
According to a transcript of the phone call included in the notice, Frankenhauser told Stewart he was making the call under another inmate’s name because jail officials were blocking some of his calls because they had seen him talking to Wichtendahl.
All phone calls made by inmates in the Washington County jail are monitored and inmates are warned the call is being monitored, Assistant U.S. Attorney Kyra Jenner said in a motion filedin court.
Setser suspended visitation and mail privileges to stop Wichtendahl from directing an associate to move the donated money to a bank account Wichtendahl controls in Bulgaria.
Setser also ordered Wichtendahl’s mail seized from his jail cell so she could review it for evidence of whether he can pay for his representation in the criminal case.
“The court believes … that the restrictions are necessary to ensure that any assets or funds which the defendant currently has under his control are not disposed of by defendant to avoid paying the costs of his representation,” Setser wrote.
She issued an order April 19 directing the probation office to have Wichtendahl complete a monthly net worth and cash flow statement to include any money or assets for his use or control and to provide that information to her by the 15th of each month.
Wichtendahl is charged along with Stewart in a federal court indictment with 40 counts of mail, wire and securities fraud and selling unregistered securities.
The two are accused of running a scam out of an office in Rogers to lure investors to buy into fictitious business ventures in Bulgaria and Nigeria. The government said 123 people have invested and lost more than $1 million in the enterprises.
The government contends Wichtendahl and Stewart used the investment money for personal purposes. The couple used the money to buy two homes in Bentonville, a Mercedes-Benz for him and a Cadillac Escalade for her along with clothing and jewelry, wedding and dental expenses and child support payments, authorities said.
They are scheduled to go on trial in federal court in Fayetteville on July 15. Wichtendahl has been in jail since his arrest in January. Stewart is free on $15,000 bond.
Setser’s order resulted from a request April 9 by Wichtendahl to fire his retained lawyers, W. Blair Brady and Kathryn Platt of Fayetteville, because he claimed he didn’t have the money to paythem. He asked in an affidavit filed in court that the public defender be appointed to represent him.
Brady and Platt brought the request before Setser in a motion to withdraw with Wichtendahl’s affidavit claiming poverty attached.
In her April 16 order, Setser stated she was “skeptical of Defendant’s alleged inability to hire counsel,” but appointed federal public defender Bruce Eddy as his attorney to ensure he had representation. Eddy did not return a request for comment Friday.
Setser had ruled shortly after Wichtendahl’s arrest in January that he did not qualify for the public defender because of his financial status, which was filed in court under seal.
After Wichtendahl’s request to fire his attorneys and to have appointed counsel, Jenner filed a motion April 12 for disclosure of the finances and assets Wichtendahl controls.
The motion stated that on the day Wichtendahl’s attorneys filed the motion to withdraw, Brady told Setser he had collected $35,000 in legal fees from Wichtendahl supporters who sent him money for Wichtendahl’s defense. The individual contributions ranged from $25 to thousands of dollars, according to the motion.
Brady told Setzer, according to the Jenner’s motion, that he refunded $11,320 of the $35,000 with $10,000 of the refunded money going to Lou Weberman who was identified as an investor and supporter of Wichtendahl.
Setzer told Brady the money donated for Wichtendahl’s defense expenses, less the amount retained for the attorneys’ fee, should be returned to those doners.
Jenner’s motion also included a partial transcript of a phone call Wichtendahl made to Weberman on March 29 informing him of Brady’s refund decision and instructing him to put the refunded money into the Bulgarian bank account Wichtendahl controls.
“I want all the money sent to the account in Bulgaria,” the transcript quotes Wichtendahl as saying.
According to court documents, Wichtendahl and Stewart ran New Vision Technologies, which was purported to have two divisions. One was an agriculture division that Wichtendahl told investors provided agricultural equipment, such as John Deere tractors, to Bulgaria and Nigeria. Wichtendahl claimed the division also was working on building plants in Nigeriato process cassava, a versatile tuber used mostly for food.
The other division was said to be a power division that was attempting to get a contract to build power plants in Nigeria.
The company’s websitelisted offices in Bulgaria, Nigeria and the United States that were manned by employees with impressive biographies. When FBI agents investigating New Vision Technologies contacted those people, they said they had never heard of the company or Wichtendahl and didn’t know their photographs and biographies were being used on the website.
A company officer told the FBI people invested in the company by buying “parts,” $20,000 for an agricultural division part and $10,000 for a power division part. Investors often made monthly payments as most were unable to buy the parts in lump sums.
The company officer told the FBI Wichtendahl told investors in one meeting they could expect dividends of $4,400 a month on the Nigerian power plant project.
The only money the government has recovered is just more than $87,000 from a Bank of America account in Rogers that Wichtendahl controlled.
Northwest Arkansas, Pages 17 on 04/28/2013