More than 100 people around the country who thought they were investing in a company aimed at benefiting Third World nations were actually contributing to the lavish lifestyle of a Northwest Arkansas couple who operated the company as a scam, according to federal authorities.
Documents in a U.S. District Court criminal file in Fayetteville show that 123 people in Arkansas and several other states paid more than a total of $1 million over three years to the company on promises of hefty returns on their investments.
Most of that money is gone, according to the FBI, squandered by transplanted Florida resident Allen Frederick Wichtendahl, owner of the fictitious New Vision Technologies Ltd., and its Rogers office operations director Diana Stewart.
The only money left from the $1 million collected by the couple from July 2009 until September is just more than $87,000 that the U.S. attorney’s office reported seizing in September from a Bank of America account in Rogers that Wichtendahl controlled.
Fayetteville’s FBI Special Agent Keith Frutiger’s investigation revealed that Wichtendahl and Stewart used more than $48,000 of investors’ money to pay rent on two $300,000 houses in Bentonville. Wichtendahl and Stewart lived in one of the houses, and Stewart’sson, Aaron Horton, who also worked for New Vision Technologies, lived in the other, according to an affidavit by Frutiger.
The affidavit stated that Wichtendahl also bought a Mercedes-Benz for himself with investor money and Stewart bought a 2006 Cadillac Escalade.
Frutiger’s affidavit chronicled Wichtendahl’s and Stewart’s activities, including a list of purchases made with investors’ money. Among the purchases and uses were $1,200 for childsupport payments, $8,838.05 for dental services, $1,615.06 spent at Victoria’s Secret, $4,119.18 at the White House Black Market clothing store, $3,972.15 for wedding expenses, $8,520.87 at Lowe’s for mowers to help another son of Stewart start a mowing business, $4,783.68 at Zales Jewelers, $2,428.52 at World Gym and $13,227.56 atSam’s Club.
While most of the investor money went to fund Wichtendahl’s and Stewart’s lifestyles, Frutiger wrote, nearly $300,000 was used to set up and run the company’s office at 6028 Stoney Brook Road, Suite 2, in Rogers. The office’s expenses were $96,246.93 for payroll, $36,200 for rent, $51,403 for salesmen commissions, $46,546.92 for travel expenses and $64,500 that was wired to two unnamed people in Nigeria and Bulgaria.
After an investigation by the FBI, Internal RevenueService Criminal Investigation Division, U.S. Postal Inspector Service, U.S. attorney’s office and the Rogers Police Department that began in June 2011, a warrant was issued Jan. 7 based on the information in Frutiger’s affidavit for the arrest of Wichtendahl, 60, and Stewart, 49.
They were arrested Jan. 10 and charged in a magistrate’s complaint with 16 counts of mail, wire and securities fraud, selling unregistered securities and money laundering. The complaint was replaced Thursday with an indictment containing the same charges as in the magistrate’s complaint.
The indictment “demonstrates the continued commitment of the FBI and our law enforcement partners to identify and root out investment fraud schemes,” FBI Agent in Charge Randall Coleman said. “We will continue to work together to aggressively investigate those who choose to participate in these fraud schemes, no matter how elaborate, which deprive our citizens of their hard-earned dollars.”
Wichtendahl has been in jail since his arrest. Stewart was freed after posting a $15,000 signature bond after an initial appearance Monday before U.S. Magistrate Erin Setser.
According to the U.S. attorney’s office, the two are scheduled to be arraigned on the indictment at 2 p.m. Wednesday in federal court in Fayetteville.
The telephone number listed with district court for Stewart’s attorney, John Van-Winkle of Fayetteville, wasn’t working Friday.
Although Wichtendahl was found to be ineligible to have a court-appointed attorney, Setser temporarily appointed federal public defender Bruce Eddy on Jan. 14 to represent Wichtendahl.
The public defender’s office was no longer representing Wichtendahl as of Friday, but there was no record that he had obtained an attorney.
Wichtendahl and Stewart had amassed more than $850,000 of investors’ money in six accounts at Northwest Arkansas banks, according to Frutiger’s affidavit. When federal authorities confronted them in May with a search warrant, the two lost access to those accounts.
However, within days of discovering the government’s investigation, Wichtendahl reportedly sent e-mails to investors instructing them to begin sending their payments to two accounts he opened at a Pensacola, Fla., bank.
Frutiger’s affidavit showed that from May 10 to Sept. 5, investors sent almost $191,000 to those bank accounts. That money has not been recovered.
Wichtendahl was viewed as good at persuading people to invest in him and his projects. According to Frutiger’s affidavit, he told investors, reinforced with a website, that the prosperous Bulgarian-based company also had offices in Nigeria and the United States.
New Vision Technologies was billed as having two divisions, according to reports.One was an agriculture division that provided agricultural equipment, such as John Deere tractors, to Bulgaria and Nigeria, and was working on building plants in Nigeria to process cassava, a versatile tuber used mostly for food. The company also was said to have a power division that was working on getting a contract to build power plants in Nigeria.
The company’s website showed that the offices in Bulgaria, Nigeria and the U.S. were manned by employees with impressive biographies.It included a long list of other businesses the company was affiliated with and files of news releases with glowing reports of progress on all its offices’ projects.
One investor Frutiger spoke with said the information he saw on the website, “sealed the deal” for him and convinced him that investing in New Vision Technologies was a good idea.
When Frutiger contacted many of those company officers, however, he found that they were real business people but they had never heard of New Vision Technologies or Wichtendahl. And they didn’t know their pictures and biographies were being used on the website, according to the affidavit.
Frutiger’s affidavit showed that he contacted several investors, many of whom put money in the company to supplement their retirements. A school librarian in Osceola, Frutiger wrote, told him she hoped New Vision Technologies would improve the lives of people in the Third World but her main reason for investing was to build her retirement.
The investigation of Wichtendahl, Stewart and New Vision Technologies was launched in June 2011 when former employee Andrea Howard, 33, walked into the Rogers Police Department and told them about what she believed was a fraudulent scheme.
Other employees were having their doubts about New Vision Technologies and their bosses, they and Howard told the FBI. One company salesman in the Rogers office told Frutiger that Wichtendahl was so convincing that New Vision Technologies was such a good investment that salesman persuaded his own family and friends to invest.
Howard reportedly told Rogers police detectives that Wichtendahl coaxed peopleinto signing contracts to invest in either the agriculture or power divisions, or both, which would make them “part holders” in the company.
A part in the agricultural division cost $20,000, and a part in the power division cost $10,000, she told the detectives. Most people couldn’t afford to pay the lump sum, so monthly payment plans were set up that varied in amount depending on the number of parts owned.
Through direct meetings or written monthly reports, Wichtendahl gave investors progress reports, always optimistic, on each project they had invested in, Howard told police.
She said in one meeting Wichtendahl told investors that they could expect dividends of $4,400 a month on the Nigerian power plant project.
Frutiger’s affidavit stated that in April an FBI undercover investigator posing as a potential investor met with Wichtendahl. When the investigator asked Wichtendahl if he could lose his money, Wichtendahl replied that the only way he could lose money “is you walk away. The best advice I can give you is this is very limited risk at this point.”
Investors were always cautioned, Howard told the detectives, to keep sending in their payments. If they missed two monthly payments in a row, the company would “absorb” their part, which would be re-sold, and the investor would forfeit any money he had put in.
Howard told detectives that part of her job was to keep records of investor payments on a laptop computer that she was furnished when she worked for New Vision Technologies. She stated that $20,000 to $30,000 in checks came into the Rogers office each month, according to Frutiger’s affidavit.
Northwest Arkansas, Pages 9 on 01/21/2013