FAYETTEVILLE -- A proposed wind farm in Elm Springs that prompted a special election to de-annex its chosen site was always a scam, according to a recent guilty plea by one of its principal boosters.
Dragonfly Industries LLC of Frisco, Texas, purported to build a wind farm for electric power generation and sought to rezone 312 acres in Elm Springs in late 2015.
Instead, the scheme bilked investors out of at least $397,330, according to the guilty plea entered Thursday by Cody Fell of Springdale. Fell is a contractor and principal in the firm.
The money went to pay rent, buy furniture and a boat, acquire a lifetime hunting license and pay $8,000 toward a late-model GMC pickup, among other personal expenses by Fell and two co-conspirators, according to the plea. Fell pledged to cooperate with the ongoing investigation.
Dragonfly's website is no longer available and the phone number listed for the company reached a message recorder Monday afternoon. A message requesting comment was not returned.
"Thank God they were stopped. That property is a developed neighborhood now," said Jonathon Hamby of Elm Springs, one of the opponents of the wind farm idea.
The opposition brought about a successful special election March 1, 2016, to undo the annexation of the wind farm site by the city. Opponents forced the special election by petition. Voiding the annexation passed 483 to 273. Dragonfly announced it was dropping the project at the Elm Springs site later the same week.
Rescinding the annexation placed the needed site approval into the purview of Washington County officials, who were more skeptical of the project, according to news accounts at the time.
Dragonfly also drew the scrutiny of the Arkansas Securities Department. The department issued a cease-and-desist order against the company on Aug. 11, 2016, that prohibited Dragonfly from efforts to sell unregistered securities to investors.
On Thursday, Fell waived indictment by a grand jury. He pleaded guilty in federal court in Fayetteville to wire fraud and tax evasion.
He could receive up to 20 years in federal prison on the wire fraud count along with a maximum fine of $250,000. The tax evasion charge could carry a maximum prison term of five years and have a maximum fine of $250,000. He will also be liable to pay restitution. No hearing date is set for sentencing, according to court records.
Fell's plea implicates "Person 1," described as a co-conspirator who had been convicted in 2009 for wire fraud and money laundering, and a "Person 2," who claimed to have invented a very efficient form of wind-powered turbine for Dragonfly.
Jody Davis, chief executive for Dragonfly, pleaded guilty in 2009 to wire fraud and money laundering after embezzling about $785,000 in Oklahoma.
"Person 1" and "Person 2" formed Dragonfly Industries International in September 2014, according to Fell's plea. Dragonfly claimed its new turbine "would revolutionize the wind energy industry," according to the plea.
Person 1 asked Fell to help market and build a wind farm in Arkansas. Fell is a close relative of Person 1, the plea says.
Experts in wind power technology saw from the start Dragonfly's project was unrealistic, Hamby said. "The location wasn't good. The design wasn't good," he said. "It would defy the laws of physics."
"It never passed the smell test, but people didn't start believing that until their past history came out," Hamby said of the Oklahoma fraud case and past hot check charges in Arkansas against both Davis and Fell.
From 2014 through 2015, Fell and his co-conspirators sought investments they claimed would go for engineering studies, permits, prototypes and so forth. The scheme drew in at least three investors, two from Arkansas and one from Missouri. None of the investors' identities are revealed in the plea.
In June 2014, Fell made "fraudulent pretenses, misrepresentations and promises to solicit money" from two of the investors, who wrote checks to Dragonfly amounting to $75,000 total. "Fell concealed from the investors that Fell intended to use the money to pay rent and buy furniture, a boat and a lifetime hunting license." One of those first two investors was later bilked out of another $8,400, according to the plea.
A third investor was bilked out of $300,000 in late 2014, the plea states, supposedly for an engineering study.
"In truth and fact, the $300,000 from Investor C was split among Fell, Person 1 and Person 2 and was used for personal expenditures," the plea says. "Specifically, Fell received $94,200 of Investor C's $300,000 investment." Person 2 received $197,000 and Person 1 received the rest, according to the plea.
Fell got another $13,930 from "Investor A" on Jan. 12, 2016. That went to Person 1, with most of the money going to a down payment on a 2015 GMC pickup.
Along the way, Fell and his co-conspirators did not document Fell's takings as income for tax purposes, according to the plea. In all, Fell received a total of $191,530 from the scheme.
NW News on 12/25/2018