A U.S. District Court judge expressed concern about allegations that information may have been withheld when he previously denied dismissing the fraud case against the founder of a failed Pasco biofuels company.
Judge Sal Mendoza Jr. on Wednesday approved postponing sentencing Green Power CEO Michael Spitzauer until May to allow time for his attorney and federal prosecutors to investigate new information about phone calls recorded while Spitzauer was in the Yakima County jail.
Spitzauer, who has admitted to scheming to defraud investors of $10.4 million, was previously scheduled to be sentenced Wednesday. He admitted to two of the 45 charges made by a federal grand jury in exchange for prosecutors recommending four years imprisonment as part of a plea bargain deal made in January.
Spitzauer, 46, of Kennewick, was indicted on wire and bank fraud, aggravated identity theft, money laundering, tax evasion and lying on his federal tax return. Many of the charges stem from his actions as Green Power’s CEO.
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Spitzauer’s victims include companies and investors from Texas, Maryland, British Columbia, Ireland, Australia, China and Slovenia.
Mendoza said he is hopeful that they do not have a situation where private conversations between an attorney and his client were recorded and shared with the involvement of federal prosecutors.
“The court is extremely concerned by the allegations that have been made,” Mendoza said.
Mendoza previously turned down a December attempt by Spitzauer to get the case against him dismissed based on claims that prosecutors illegally recorded his phone calls with his attorney, violating his Fifth and Sixth Amendment rights.
Mendoza ruled then that the indictment against Spitzauer stood and prosecutors could use information from other recorded phone conversations at trial because prosecutors took significant measures to ensure that they didn’t listen in on calls between Spitzauer and Black.
Spitzauer’s attorney, Christopher Black, told Mendoza he received new information about the recorded jail calls after Spitzauer already had pleaded guilty to reduced charges as part of the plea deal.
Judith Calhoun, Spitzauer’s business colleague, made a records request for information on recorded phone calls from the Yakima County jail and provided the records she received to Black, Black said. Calhoun had been the acting CEO since Spitzauer was federally indicted.
Black said the result was a set of records that showed which calls were recorded and burned to a CD. Such records had not been previously supplied by the Yakima County jail.
Benton County jail provided a similar set of records when Mendoza considered the earlier dismissal request, Black said. He said he was under the impression similar information was not available from Yakima County.
Mendoza said he also was under a similar impression.
Black asked for more time to investigate to determine what the records show and what affect that may have on the case against Spitzauer, who has been in federal custody since December 2013. He is being held in the Benton County jail currently.
“Those records show, on numerous instances, CDs were burned containing calls from Mr. Spitzauer to my office,” Black said.
He said that directly conflicts with the testimony of Jeremy Welch, a Yakima County jail officer, who told Mendoza only one copy of the phone calls had been made.
Assistant U.S. Attorney Mary Dimke said she recently received the records from Black and had just begun to analyze them. She has started working with Securus Technologies, the company that operates Yakima County jail’s call recording system, to get more information.
It appears that the phrasing in the reports may be misleading, indicating a CD was burned when the information was actually accessed to generate a link, she said. But she said she is working to find the right person with the technical expertise to confirm that.
Mendoza said he was not going to be satisfied with only explanations. It’s likely testimony will be needed.
Dimke said she will provide Black with whatever information she uncovers.
“I feel as though we are working collaboratively on this effort,” she said.
Mendoza set a hearing date for 10:30 a.m. May 14 at the Richland federal courthouse. At that time, he said he will consider whatever motions are filed as a result of the newly discovered information.
If Black and Spitzauer are satisfied with whatever they and federal prosecutors discover in the meantime, Mendoza said he intends to sentence Spitzauer during the May 14 hearing.
Under the plea deal with Spitzauer that has not been finalized, federal prosecutors will ask Mendoza to dismiss the other 43 charges at the time he’s sentenced.
Mendoza is not obligated to sentence Spitzauer to the four years agreed on in the plea bargain. But Spitzauer and prosecutors would have the option to withdraw from the deal if the sentence is less than or more than the recommendation.
Spitzauer would be ordered to repay his victims $10.4 million and pay the IRS $2.6 million. He would forfeit his 16-room Kennewick home, which would be sold to pay the investors and the IRS.
He also could be deported after serving his prison time. His legal permanent residency could be revoked based on the crimes. Spitzauer told Mendoza he would fight any deportation attempt.
If Spitzauer dies before paying the full amount, his heirs would be on the hook for repaying it.