Taxpayers will cover Spitzauer's defense

Kristin M. Kraemer, Tri-City HeraldMarch 14, 2014 

Green Power Sun

March 10, 2014 - The Port of Pasco is evicting Green Power, a tenant since 2007, from this warehouse in the Big Pasco Industrial Park. The company's CEO is facing federal criminal fraud charges and the company has filed for bankruptcy with an estimated $30.5 million in debts.

PAUL T. ERICKSON — Tri-City Herald Buy Photo

YAKIMA -- Taxpayers will cover defense fees for a Kennewick man who claims to have no income since he was indicted on charges that he defrauded investors in his multimillion dollar company.

Judge Fred Van Sickle said Friday that documents filed and arguments made in U.S. District Court persuaded him there's a financial need for appointing a lawyer to represent Michael Spitzauer.

Spitzauer is CEO of Green Power, a troubled Pasco biofuels company.

He is accused of orchestrating a $7 million investment scheme involving multiple U.S. and international companies and spending the money on personal expenses and a lavish lifestyle for his family.

Spitzauer said he had no way to pay an attorney to defend him against 18 charges.

Van Sickle started off the 17-minute hearing by saying he didn't need to hear from Assistant U.S. Attorney Kit Dimke.

He acknowledged there may be credibility issues with some records or statements in court briefs, but said he would give the benefit of doubt to Spitzauer.

The judge then closed the Yakima courtroom to the public for 10 minutes to talk with Seattle attorney Christopher Black about his client's situation. Once back in open session, Van Sickle ruled that Black would stay on the case but now on the public's dime.

Black is a member of the Criminal Justice Act panel. That means he is one of a number of attorneys who have been screened and approved by the federal judiciary to take on indigent defendants and receive compensation for their expenses and payment of expert and investigative services.

"The appointment of Mr. Black is appropriate because he's aware of CJA procedures and has been involved (with Spitzauer's case) for a long time," Van Sickle said.

Spitzauer hired Black a year ago after the businessman learned of the possible indictment.

Black has said in court documents that he has not been paid since his client was arrested in December. Van Sickle made Black's appointment retroactive to when the indictment was filed, which suggests that the lawyer now can recoup those costs through the court.

Black declined to talk to the Herald after Friday's hearing.

Spitzauer is in federal custody in Yakima. He was indicted on 10 counts of wire fraud, two counts of aggravated identity theft and six counts of money laundering.

Trial is set for Nov. 14. If convicted, Spitzauer faces up to 20 years in federal prison and the possibility of deportation. He's a legal permanent resident who moved from Austria to the United States in 1995, weeks after he was released from a prison in his native country for forgery and fraud.

Spitzauer claimed he developed technology to turn municipal waste into biofuels, although he never finished building a plant in the Port of Pasco's Big Pasco Industrial Park. The state Department of Ecology closed the plant in 2009 because he lacked the necessary air quality permits.

Federal prosecutors allege he entered into deposit agreements with companies in Texas, British Columbia, Slovenia and Ireland and an Australian citizen, with the intent of not complying with the terms.

He then used the money to buy a $1 million, 16-room Kennewick home, repay previous investors and pay for home furnishings, private school tuition and donations, professional sports tickets and memorabilia, legal fees and Green Power business expenses, court documents said.

Spitzauer's family claims to have no income since the charges were filed.

But Green Power is said to have assets of $10 million, according to the company's recent bankruptcy filing. And acting CEO Judith Calhoun gave documents to the Port of Pasco that indicated the company would be sold for about $16 million.

However, a check of public records shows Calhoun filed just last week to incorporate Atlantis Renewable Energy Systems in Washington and listed herself as the sole owner. That's the company she said wants to buy Green Power and its unfinished Pasco plant.

Federal prosecutors had argued in court documents that Spitzauer has failed to prove that he does not have enough money to pay for his defense.

They allege that Spitzauer has mastered using trusts and corporations in other people's names to hold assets so they can be spent on personal expenses instead of to pay the civil judgments against him.

Black responded that disclosing financial documents and holding an open hearing on Spitzauer's assets threatens the client's rights under the Fifth Amendment to not incriminate himself.

Spitzauer has reported his expenses from last year to the court in a sealed document that accounts for the cash federal prosecutors allege he may still have access to, Black said.

Spitzauer owes more than $35 million to former employees, investors, credit card companies, Tri-City businesses, a cellphone company, the IRS and to state and local governments, according to public records.

Spitzauer's Sunset Meadow Loop home is owned by a trust company for his four children, who range in age from pre-teens to teenagers.

And the family's five cars -- a Cadillac Escalade, Hummer, Mercedes, Ford Mustang and Dodge Charger -- are owned by Prarex International, a company owned by husband-and-wife Michael and Melissa Spitzauer.

On Friday, Judge Van Sickle said "it is unnecessary for a family to have five cars and (Spitzauer) knows the cars will be reduced."

The judge recognized that Spitzauer lives in a "rural area," but said that number seems excessive for the size of his family.

"It should be reduced to two, maximum three vehicles," said Van Sickle, noting that would fit with an ordinary family's transportation needs.

When federal prosecutors suggested in court documents that the family sell the vehicles with a total value of about $100,000 to help pay for Spitzauer's defense, Black replied that Melissa Spitzauer and their two teenage sons need them for transportation on a daily basis.

A federal judge previously refused to allow Spitzauer to put the cars up for his bond so he could be released pending his trial.

-- Staff writer Kristi Pihl contributed to this report.

-- Kristin M. Kraemer: 582-1531; kkraemer@tricityherald.com; Twitter: @KristinMKraemer

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