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Jan. 29, 2020

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Green Power founder pleads guilty to defrauding investors of $10.4 million

The Columbian

Kennewick — The founder of a failed Pasco biofuels company has admitted to scheming to defraud investors of $10.4 million.

Michael Spitzauer, founder and CEO of Green Power, pleaded guilty Monday in U.S. District Court in Richland to wire fraud and tax evasion.

As part of a plea bargain, Spitzauer admitted to two of the 45 charges by a federal grand jury.

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.

Federal prosecutors will ask U.S. District Court Judge Sal Mendoza Jr. to dismiss the other 43 charges at the time he’s sentenced.

Mendoza did not immediately accept the plea bargain, instead postponing his decision until a sentencing hearing April 9.

Mendoza does not have 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 has been in federal custody since December 2013.

A conviction could mean that Spitzauer could be deported to his native Austria. His legal permanent residency could be revoked based on the charges to which he pleaded guilty, Mendoza said.

Spitzauer told Mendoza that he would fight any deportation attempt.

Under the plea agreement, 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.

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If Spitzauer dies before paying the full amount, his heirs would be on the hook for repayment, according to the plea deal signed by Spitzauer, his attorney and prosecutors.

Taxpayers are footing the bill for Spitzauer’s defense. He claimed to have no income, so Seattle attorney Christopher Black, whom Spitzauer had hired to defend him before being indicted, was appointed to continue on the case, but with his pay coming from the government.

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

As the CEO of Green Power, Spitzauer recruited investors for joint ventures to build waste-to-fuel plants in various countries, said Assistant U.S. Attorney Mary Dimke. His scheme to defraud investors lasted at least from January 2007 to November 2014, said officials.

He entered into agreements with investors that made them believe that the money they transferred to Green Power would be held in interest-bearing accounts, Dimke said. The money was supposed to be controlled by an attorney, only used with written permission from the investor and refundable on request.

Instead, 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, Dimke said.

Spitzauer generated false bank account statements to make it look like the money he spent was still there, Dimke said.

He communicated with investors using phone and email and asked them to wire him money, which is the basis for the wire fraud charge, she said.

He also admitted to avoiding paying taxes by filing false tax returns for 2007 and 2009 and not filing a tax return for 2008.

The U.S. District Court will complete an investigation before sentencing, which will result in a report that will be provided to Spitzauer and his attorney, prosecutors and Mendoza.