Green Power founder to be sentenced this week

The founder of a failed Pasco biofuels company may be sentenced this week, 17 months after he was federally indicted for fraud and other financial crimes.

But even if the federal case against Michael Spitzauer ends, his victims are unlikely to recoup the $10.4 million they lost investing in Green Power and other business ventures.

Spitzauer, 47, of Kennewick, pleaded guilty to wire fraud and tax evasion earlier this year. He had been 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.

U.S. District Court Judge Sal Mendoza Jr. will be asked to dismiss 43 of the 45 charges filed against Spitzauer when he is sentenced, which is scheduled for 10:30 a.m. May 14 at the federal courthouse in Richland.

Spitzauer will serve four years in prison if Mendoza accepts the plea deal. He has been in custody since December 2013.

His attorney, friends and family try to paint a picture of a man who unintentionally broke the law in an honest attempt to bring a beneficial biofuels technology into reality.

But federal prosecutors call Spitzauer a “serial fraudster” who started stealing money from people in his teens, according to court documents.

Long list of creditors

In addition to dozens of victims in the federal criminal case, Spitzauer and his company owe a long list of creditors more than $30 million.

One of his early victims was Carol Chapman of Kenmore, in the Seattle area. She invested her retirement money in Spitzauer’s first U.S. company. A son-in-law of her best friend introduced her to him and urged her to invest.

For two years, she tried to get her money back alone. Then she spent a decade trying to get repayment through the civil court system. While she was awarded a judgment and pursued Spitzauer through his company’s various bankruptcy cases, she’s never managed to get her money back.

Instead, she has boxes and boxes of court documents.

“I have never felt so helpless,” Chapman said.

Spitzauer owes her in excess of $1 million. And Chapman said he has destroyed her life, causing her to lose everything, including her home.

Chapman still hopes to see some of her money back.

Mostly, she said, “I want some justice.”

And she hopes that Spitzauer is put in a place where he won’t be able to defraud anyone again.

If Spitzauer is convicted, he could be deported to his native Austria. His legal permanent residency could be revoked based on the charges to which he pleaded guilty. He has told Mendoza he would fight any deportation attempt.

Restitution sought, not found

Federal prosecutors are asking that Spitzauer be required to pay nearly $13 million in restitution to his victims.

They also have asked for a money judgment in the amount of $7.2 million and the forfeiture of his Kennewick home.

“I will work as hard as I can so that I will be able to pay the restitution imposed by this court in a timely manner and once again become a law-abiding member of this country,” Spitzauer wrote.

Whether that will be possible is questionable. His past history — illustrated by court documents — shows few of his creditors have been successful in attempts at repayment.

Spitzauer has said he is broke. The public is paying for Spitzauer’s defense in the federal criminal case — a pattern in massive fraud cases, said Anita Ramasastry, a University of Washington professor of law.

Victims of financial fraud rarely get their money back, Ramasastry said. A pattern of high spending often corresponds with fraud.

And if a defendant hasn’t spent the money, it’s often hidden in shell companies and through offshore financial transfers, something Ramasastry researches.

“It’s easy to hide money,” she said.

Prosecuting attorneys have to seek restitution, even if the money or assets can’t be claimed initially, she said.

The important thing is to get a judgment so if any assets are found later, then the government can seize them to repay the victims.

Lengthy criminal history

Spitzauer was convicted of fraud and forgery in 1989 and fraud again in 1991. He was sentenced to a total of eight years in prison, but only served three.

After he was released from an Austrian prison, he came to the U.S. and lied on his immigration entry form about his previous convictions and later lied on his Legal Permanent Resident application.

While he operated his first business venture in the U.S., Spitzauer ran a check fraud scheme, causing losses of more than $400,000, federal prosecutors said.

Spitzauer “perpetrated a massive international fraud, cheating numerous victims out of millions of dollars,” prosecutors said.

He provided false documents to his victims to convince them their money was safe, they wrote. “(Spitzauer) engaged in such deceit, despite the fact he had already spent their money, much of which went to personal expenditures to support his extravagant lifestyle.”

And he continued to scheme, cheat and steal even after he knew he was being investigated by the FBI, prosecutors said.

But the plea bargain will provide closure for many of Spitzauer’s victims, prosecutors said.

“For the victims, their primary concern was recovery of funds,” prosecutors wrote. “Unfortunately, (Spitzauer) spent the victims’ funds immediately after he received them. By the time federal law enforcement became aware of the criminal conduct and initiated its investigation, there was little left to forfeit for restitution.”

Taking the case to trial would not make any more money available for the victims and would be a substantial cost to the federal government, prosecutors said.

And it would be a hardship for witnesses and victims, many of whom live outside the U.S.

Spitzauer’s victims include companies and investors from Texas, Maryland, British Columbia, Ireland, Australia, China and Slovenia.

‘Success at any cost’

Spitzauer overzealously pursued a dream of building plants to convert municipal waste to biofuels, wrote Christopher Black, Spitzauer’s attorney.

But when his business fell behind, he used investor funds to keep the business going and for his family’s living expenses.

He used the money to repay previous investors, for unauthorized business expenses, to buy and furnish a $1 million Kennewick home, and on personal expenses, including private school tuition for his children, sporting events tickets and memorabilia, prosecutors said.

Spitzauer always intended to reimburse his company’s investors, but Green Power’s financial failure made him unable to do so and led to other financial crimes, Black wrote.

He had an admirable goal but was too focused to realize his methods were illegal and inflicting large losses on his investors, Black wrote.

“I wanted the business to be a success at any cost, overlooking rules and laws,” Spitzauer wrote in a letter to Mendoza.

Spitzauer made positive contributions to the community as an “outstanding husband and father,” Black wrote. His family has struggled financially during his imprisonment.

Spitzauer’s wife, Melissa, wrote that their lives have fallen apart since her husband was jailed. The couple has four children, ages 19, 18, 12 and 11.

“We were such a close family, we did everything together,” she wrote. “He is a really good man, never would intentionally hurt anyone.”

Spitzauer’s children wrote that he is a supportive father who always spent lots of time with them and was there when times were rough. They all asked for him to be able to come home soon.

Spitzauer wrote that getting caught was a good thing because he had been drinking heavily for two years and started using cocaine about eight months earlier when alcohol was not enough to deal with the pressure.

Spitzauer hopes to participate in a treatment program for drug addiction during his sentence, Black wrote. He is asking to be sent to the prison in Sheridan, Ore., so his family can visit him. His wife’s sister lives in Eugene.

This story was originally published May 9, 2015 at 8:36 PM with the headline "Green Power founder to be sentenced this week."