Green Power CEO to go to trial for fraud

A serial fraudster charged with swindling investors in his failed Pasco biofuel company will stand trial after all.

U.S. District Court Judge Sal Mendoza Jr. rejected on Thursday a plea deal to allow Michael Spitzauer to serve four years for defrauding investors of $10.4 million.

Mendoza said Spitzauer’s long history of committing fraud was too concerning for him to agree to sentence him below the recommended range of five to six years. He said he planned to sentence him within that range, even though he believed the facts of the case would support a longer sentence.

With a four-year sentence no longer on the table, Spitzauer, 47, of Kennewick, decided to withdraw his guilty plea. A hearing is planned on June 9 to set a trial. He’s been in federal custody since December 2013.

Spitzauer previously pleaded guilty to wire fraud and tax evasion. He was federally 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 CEO of Green Power, a Pasco-based company that was building a waste-to-fuel plant.

Spitzauer told the judge Thursday he worked hard to create a system to transform garbage into fuel, but suffered a lot of setbacks.

“I am sorry for what I did,” he said. “I did not plan that anybody gets hurt.”

The pressure caused Spitzauer to excessively drink alcohol for about two years and use cocaine for about eight months when alcohol was not enough to deal with the pressure, he and his attorney said.

He said he hopes his victims forgive him, and that he wanted to get the sentence done with as soon as possible so he could work to repay them.

What happened was something that got out of Spitzauer’s control and was not cold-blooded or calculated, said his attorney, Christopher Black.

He said Spitzauer has a long history as an entrepreneur, and through Green Power, wanted to benefit society and pursued that goal for about a decade.

He started to build a plant at the Port of Pasco that functioned but wasn’t viable since he never was able to receive the necessary air quality permits for it.

Most of the money Spitzauer received from investors went to running the business, including paying employees, developing the technology and repaying other investors, Black said.

The plant was auctioned off by some of creditors who foreclosed on liens against the company’s personal property.

“He always believed that this would work and that he eventually would be able to pay everybody back,” Black said. “He acknowledges that those means were inappropriate and illegal and caused a lot of people to lose money.”

Assistant U.S. Attorney Mary Dimke said Spitzauer’s history makes it likely he would commit fraud again.

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

Black said most of Spitzauer’s criminal history is old. He argued that it did not represent his nature, rather, that his active involvement in his children’s lives shows his overall good nature. Spitzauer’s wife, Melissa, and their two oldest sons were in the courtroom Thursday.

Dimke argued that going to trial would be expensive for the government and ultimately would not make any more money available to Spitzauer’s alleged victims.

Those alleged victims are the heads of various international companies, and it would be costly to bring the more than 20 victims to Eastern Washington, as well as being a burden on them, she said. It also would be embarrassing to them to have to admit to the public they were taken in by a fraudster.

Through civil cases and the criminal investigation, victims have wanted to recover the money they invested with Spitzauer, Dimke said. But that is not going to happen, since as soon as Spitzauer received their money, he spent it.

The government would be able to seize any assets found later to repay the victims, Dimke said.

Federal prosecutors had asked that Spitzauer be required to pay nearly $13 million in restitution to his victims. They also asked for a judgment in the amount of $7.2 million and the forfeiture of his Kennewick home.

“We aren’t going to be able to do any better for the victims,” she said.

Spitzauer would be deported to his native Austria after serving the proposed four-year sentence based on current immigration law, Dimke said. That would protect the American public from him.

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.

Among those creditors are the state Department of Labor and Industries and the state Department of Ecology. Green Power owes about $84,000 for industrial insurance premiums and about $38,000 in unpaid wages to employees from eight different wage complaints. The company also owes the Department of Ecology about $61,000 in penalties and interest.

One alleged victim was in the courtroom Thursday. Since Victoria Figueroa was not named a victim in the federal criminal case, Mendoza did not let her speak, but Dimke said she would be interviewed by an FBI agent.

Figueroa and her company A.S. Framing Co. have a May 2010 civil judgment against Spitzauer, according to court records. The judgment and interest is about $450,000.

This story was originally published May 14, 2015 at 1:19 PM with the headline "Green Power CEO to go to trial for fraud."