DALLAS (CN) - A federal jury Wednesday convicted a Texas man of bilking investors of $3.7 million in a wind farm scam, and spending the money on a pricey suburban home and extravagant foreign trips.
David Lyman Spalding, 62, of Colleyville, was convicted of two counts of wire fraud, two counts of making false testimony under oath in a bankruptcy proceeding and one count of making a false statement in a bankruptcy case.
He faces up to 20 years in federal prison and $250,000 in fines on each of the fraud counts and up to five years and $250,000 in fines on each of the other counts.
During the seven-day trial before U.S. District Judge Barbara M.G. Lynn, prosecutors said Spalding raised the money from 97 investors in 11 states.
"Spalding made false representations to get investors to invest in promissory notes issued by Wind Plus, Inc. and Baseload Energy LLC and diverted the funds for his own benefit, to include purchasing real estate and extensive international travel not related to either Wind Plus or Baseload," prosecutors said in a statement.
According to the 9-page indictment, Spalding bought his Colleyville home with investor money within six months of telling investors that Wind Plus was continuing to "plow-thru cash" to pay its bills and that cash was "very tight."
Spalding continued to solicit investors for Baseload after he filed for bankruptcy for Irving-based Wind Plus and Wind Plus Holdings Inc., promising the money would be used for infrastructure for renewable energy projects.
"He also represented that the changes in management were for business purposes when in fact the staff had quit Wind Plus because they were not paid," prosecutors said. "As part of his fraud, Spalding also represented that investors would be repaid their investments, within varying timeframes from 60 days to one year, when in fact, Spalding did not repay investors within any of the specified timeframes."
Spalding also failed to tell investors that both he and Wind Plus had been sued by earlier investors in July 2007 and November 2008 and by two consulting firms in October 2008 for breach of contract, according to the indictment.
Spalding lied under oath in the bankruptcy case about the number of noteholders and the amount of distributions and withdrawals he made, prosecutors said.
Investor Don Delaney said he gave Spalding a total of $225,000 after initially investing $50,000. Delaney's notes supposedly accrued 10 percent interest if they were not paid back within a year, he told the Fort Worth Star-Telegram.
"He turned deals down because he thought he would find a deeper pocket who would give him more money," Delaney said. "He knew the game, and he knew the technology. He talked the talk, but he didn't walk the walk. He got too deep into it. He had a colossal ego."
Spalding is free on bond. He will be sentenced on July 9.
Follow @davejourno
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