FAYETTEVILLE -- The fate of two men charged with defrauding investors in a failed Elm Springs wind farm project and the development of a wind turbine that was never built was put in the hands of a federal jury Thursday afternoon.
Jody Davis and Phillip Vincent Ridings are charged with multiple counts of wire fraud, aiding and abetting wire fraud, money laundering, and aiding and abetting money laundering. Both men pleaded not guilty.
In a closing argument Thursday, Kenneth Elser, deputy U.S. attorney, told jurors Dragonfly was nothing but a long-term scam netting Davis, Ridings and others more than $700,000 between 2014 and 2018.
"Tell 'em whatever you need to tell them to get their money," Elser told jurors in his closing. "That's what this case is about."
That figure doesn't include the losses suffered by people who did work for Dragonfly and were never paid or the person who was left holding a $2.3 million property loan.
Elser told jurors Davis and Ridings lied, concealed information, and used half-truths and fraudulent documents to lure investors, then they'd split the take and live on it. Investors were told their money was going to pay for specific work on the turbine design or prototype and models or studies, none of which were not being done, he said.
"That's a lie, and that's what happened over and over and over again," Elser said. "It was fraud from the beginning, and it was fraud throughout."
Promises to pay people back were intended to keep them quiet so Davis and Ridings could move on to the next scam, Elser said.
Elser called Dragonfly a paper company with a paper wind turbine being used to build a paper wind farm.
"This was not ever going to work," Elser said.
John Wesley Hall, Davis' attorney, told jurors the two men made mistakes and bad choices in how they handled money and used bad judgement but had no intent to defraud.
"They believed in Dragonfly," Hall said. "They still believe in Dragonfly."
Hall also said much of the fraud was perpetuated by a third man, Cody Fell, who is Davis' brother-in-law and worked at Dragonfly for a time.
Fell of Springdale pleaded guilty to federal wire-fraud and tax-evasion charges in December 2018. Fell agreed to cooperate with the government and testified earlier in the week that he was given more than $100,000 of investors' money by Davis and Ridings. He'll be sentenced after the trial of Ridings and Davis is completed.
Hall said Davis and Ridings used investor money for living expenses because they were trying to get the company off the ground and didn't have other jobs.
"Spending money to support the operation is part of the operation," Hall told jurors.
Davis and Ridings of Dragonfly scammed six investors in Northwest Arkansas and southwest Missouri, according to an indictment. Investors lost amounts ranging from $13,000 to $300,000, the indictment claims. There were other victims in Iowa and Texas, according to prosecutors.
Ridings represented himself during the trial which led to some awkward situations. When he testified Thursday morning, Ridings read questions to himself and then answered them, all in third person.
During his closing argument Ridings told jurors he's an inventor, not a businessman, and Davis, a felon with a past fraud conviction in Oklahoma, ran the business while he dealt with the technology side. There was never any intent to defraud investors, he said.
"No, I never talked to any of the investors," Ridings said, telling jurors he was in Florida much of the time.
Ridings said he never questioned where the investor money was coming from and believed it was to help support the company by paying business expenses.
"We had to live on it, too," Ridings said. "I believed it to be a personal investment; that's all."
Ridings said the company needed at least $1.5 million to build a prototype of its wind turbine and he and Davis were just trying to keep the company going until they could get the money they needed while also having money to live on.
"They want to say we committed a crime," Ridings said. "We want to say we were building a business and this was the only way we could do it."
Asked if he had a legal and moral obligation to be truthful with investors about Davis' fraud conviction, Ridings said no.
"If he wanted to tell people that, he could," Ridings said.
Elser said the scam blew up when Dragonfly drew the scrutiny of the Arkansas Securities Department. The department issued a cease-and-desist order against the company Aug. 11, 2016, which prohibited Dragonfly from efforts to sell unregistered securities to investors. They also called the FBI which began an investigation.
Jurors hearing the federal fraud case of Jody Davis and Phillip Vincent Ridings deliberated for about an hour Thursday before going home for the evening. They’ll reconvene this morning to keep working on verdicts. The trial began Aug. 23. A federal grand jury in January 2020 handed down a nine-count indictment against Davis and Ridings.
Source: Staff report