FAYETTEVILLE -- Federal prosecutors are trying a fraud case, but one of the defendants, who doesn't have a lawyer, seemed more intent Tuesday on arguing the merits of his windmill technology, telling jurors it actually works.
"The dream is not dead," Phillip Vincent Ridings told jurors in an opening statement. "I still think about this every day because I know it works."
But prosecutors were more focused Tuesday on what happened to the hundreds of thousands of dollars people invested in Dragonfly.
Ridings and Jody Davis are accused of scamming investors in the proposed wind farm project at Elm Springs that was never built. They are charged with multiple counts of wire fraud, aiding and abetting wire fraud, money laundering and aiding and abetting money laundering. They are being tried together.
Both men have entered not guilty pleas.
"It's the money where you need to focus," Kenneth Elser, deputy U.S. Attorney, told jurors.
Elser said the scam was years in the making and a working ducted wind turbine prototype was never built. Instead, Davis and Ridings misrepresented engineers' opinions about the concept to scam investors and divvied up their money with a third man, Cody Fell of Springdale. They used their ill-gotten gains for personal expenses such as houses and cars, Elser said.
Fell pleaded guilty in a plea bargain and will be sentenced after the trial of Ridings and Davis is completed. He's expected to testify for the prosecution.
While prosecutors are more interested in the criminal aspect of the case, they also contend various engineers who looked at the concept concluded it wouldn't have worked if it had been built.
Ridings contends the engineers applied a 100-year-old formula and their conclusions were wrong.
Davis' attorney, John Wesley Hall, told jurors there was no intent to defraud investors because the idea sold itself and people were willing to put money into the project.
"People came into this with their eyes open," Hall said.
But, one investor in the project, Nonye Ozonoh of Houston, testified Tuesday he and others were repeatedly told by Ridings and Davis they needed money to finish a prototype of the machine. They kept asking for more money from investors but never produced anything, he said. There were always excuses.
Davis and Ridings promised Ozonoh he and several friends who invested would be given the rights to sell the turbines in Africa, Ozonoh's native country.
Ozonoh said Ridings and Davis showed them what they purported to be documents from engineers saying the technology worked, but prosecutors said those were misrepresentations of what the engineers actually said.
Ozonoh said Ridings and Davis offered to give his money back if he wouldn't talk to the FBI when they came calling in 2018.
"The money never headed my way. They never paid anything back," Ozonoh said. "I gave our money to Dragonfly, and they threw it away."
Stephen Makrino, who helped people pitch ideas to the military, and Jeffrey Marchetta, an engineering professor at the University of Memphis, told jurors they were asked to help Davis and Ridings but were never given sufficient information to determine if the idea was practical. Davis and Ridings then misrepresented some of their findings and opinions and used others without permission in documents to lure investors, they said.
Marchetta said he thought the idea was interesting but never determined if it was viable because there was never a working model to compare with his computer simulations.
"I didn't have a great vibe about it," Marchetta said.
Dragonfly Industries International of Frisco, Texas, purported to build a wind farm for electric power generation in Elm Springs.
Davis and Ridings, of Dragonfly, scammed six investors in Northwest Arkansas and southwest Missouri, according to an indictment. The investors are identified only by their initials. They lost amounts ranging from $13,000 to $300,000, the indictment claims.
Davis and Ridings intentionally misled investors in the wind farm project about the financial viability of the project and potential returns on investment, according to the indictment.
Specifically, they told investors they developed cutting-edge wind turbine technology, a prototype was being developed, companies were lining up to buy it and a $10 million federal grant was imminent when none of it was true, the indictment says.
Davis and Ridings also hid bank accounts from their accountants and used investor money transferred to those accounts to buy a luxury vehicle, pay fitness club fees, make a down payment on a home and a trip to Walt Disney World in Florida, according to the indictment.
Fell, a contractor and principal in the firm, pleaded guilty to federal wire-fraud and tax-evasion charges in December 2018.
U.S. District Judge Timothy L. Brooks last year rejected a motion from Davis to withhold evidence of an earlier conviction. Davis, chief executive officer for Dragonfly, pleaded guilty in 2009 to wire fraud and money laundering after embezzling about $785,000 in Oklahoma.
The judge also agreed with the government last year that a plea agreement Ridings backed out of after signing could be used at trial.
Harvesting the wind
Ducted wind turbines use the venture effect to concentrate the air flow to enhance the performance. A ducted turbine has the ability to accelerate the air flow through a converging intake, thereby increasing the power that can be extracted from the air flow. As the wind passes through a converging duct, the velocity increases while the pressure decreases.
Source: Staff report