YAKIMA -- A federal judge denied Green Power CEO Michael Spitzauer's request to be released from jail so he can have surgery and recover at his Kennewick home.
Magistrate Judge James P. Hutton concluded that Spitzauer remains a flight risk and denied him bail for the second time Wednesday in U.S. District Court in Yakima.
Spitzauer also pleaded innocent Wednesday to the recently amended indictment, which added bank fraud, filing a false tax return and additional instances of wire fraud. He was already charged with wire fraud, aggravated identity theft and money laundering.
Spitzauer is accused of defrauding up to $7.6 million from seven victims.
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Federal prosecutors said Spitzauer perpetrated a Ponzi-like scheme. A number of the allegations stem from his business dealings as the founder and CEO of Green Power, a Pasco biofuels company.
He has been in federal custody since he was initially indicted in December, with most of his time spent in Yakima. However, he was transferred to the Benton County jail so he could get medical treatment.
Spitzauer has a large tumor on his thyroid that needs to be removed, said Christopher Black, his Seattle attorney. A recent CT scan showed the tumor is expanding into his chest cavity, although an earlier test found it was not cancerous.
Spitzauer would prefer to have surgery at Richland's Kadlec Regional Medical Center, which has been his primary care facility, and not Pasco's Lourdes Health Network, which is what federal marshals have arranged, Black told the court.
Recovering at home after his stay in the hospital would be safer and more sanitary, Black argued.
"Mr. Spitzauer is terrified of having to recover in jail," he said.
Spitzauer stood for most of the hearing with his head slightly bowed. Some of his family members, including his two sons, were in the courtroom.
Mary Dimke, an assistant U.S. attorney, said none of Spitzauer's treating physicians have said the surgery couldn't be done at Lourdes or have advised that he be allowed to recover at home.
After a hospital stay supervised by federal marshals, Spitzauer will be housed in the medical ward of the Benton County jail with 24-hour care available until he is healed enough to return to the general jail population, Dimke said.
Hutton believes the marshals have gone to "extraordinary lengths" to make sure Spitzauer is getting the care he needs, he said.
He also questioned why Spitzauer would ask his doctor to wait to schedule a surgery date until after the bail hearing if it was a serious medical issue.
Black said Spitzauer is not a flight risk and is not in control of Green Power. He claimed it is only natural that the current acting CEO would discuss business with Spitzauer, because there are some things about the company only Spitzauer knows.
Prosecutors counter that Spitzauer has remained intimately involved in Green Power while in jail. They describe his supposed lack of control as a "farce" in court documents.
Dimke argued Spitzauer is not supervisable, considering some of the new charges occurred while he knew he was under investigation.
New allegations include that Spitzauer defrauded a Maryland investor in September and October as part of his business dealings with Green Power.
Spitzauer created counterfeit checks from a JPMorgan Chase bank account belonging to a Lebanese citizen living in Spain whom Spitzauer had authorized to negotiate Green Power business deals, according to court documents.
Spitzauer also lied on federal tax returns he filed in October for the 2007-09 tax years, claiming he received no income, documents said. He received almost $1 million in 2007 from an Australian resident whom he allegedly defrauded in a false bank stock deal and almost $3.5 million in 2009 from allegedly defrauding three companies from Ireland, Canada and Texas.
Spitzauer, who emigrated from Austria to the U.S. shortly after his release from an Austrian prison, could be deported if he is convicted because he is a legal permanent resident, not a citizen. Federal prosecutors are asking him to forfeit $4.9 million involved in the alleged wire fraud and money laundering, as well as his $1 million, 16-room Kennewick home.
If found guilty, he could face 30 years imprisonment and a $1 million fine in connection with bank fraud and three years imprisonment and a $250,000 fine in connection with filing a false tax return.
If found guilty on the earlier charges, he could face up to 20 years imprisonment and a $250,000 fine in connection with wire fraud, two years imprisonment and a $250,000 fine in connection with identity theft, and 10 years imprisonment and a fine up to twice the amount of criminally derived proceeds in connection with money laundering.
-- Kristi Pihl: 509-582-1512; firstname.lastname@example.org