Prosecutor: Investors backed ethanol plant that wasn’t built
A former Spokane man persuaded 50 investors to pay about $1.5 million to build an ethanol plant on the West Plains that never materialized, according to an indictment unsealed in federal court Wednesday.
Robert J. Braun, 53, faces up to 20 years in prison and a fine of up to $5 million after he was indicted on 27 felony counts of wire and securities fraud.
Court records say that instead of building the ethanol plant, Braun used the money to pay mortgages on three homes, for department store and clothing purchases, for car loans and to subsidize a women’s shoe and accessory store that he owned in Spokane.
Braun, who now lives in Seattle, appeared Wednesday before U.S. Magistrate Judge Cynthia Imbrogno, who allowed him to remain out of jail as long as he follows release conditions. He and his attorney, Robert Seines, declined to comment following the hearing.
According to court records, Braun founded several limited liability companies, including S & B Energy, Novahol Spokane and Novahol Medical Lake, to lure investors into providing cash for an ethanol plant that would be built in either Airway Heights or Medical Lake.
Between August 2008 and January 2012, court records allege that Braun persuaded as many as 50 investors to spend $25,000 or more on promises that their investments would produce annual dividend payments of up to $200,000, court records state.
That money was obtained “through false and fraudulent pretenses,” Assistant U.S. Attorney K. Jill Bolton wrote.
Braun used some of the funds from investors to make payments on homes that were going into foreclosure, Bolton wrote.
To keep the investors from going to law enforcement, Bolton wrote that Braun “attempted to lull investors into a false sense of security, by sending a series of interstate e-mails … representing that funding for the proposed ethanol plant was imminent, when, in truth … no such funding was imminent and no repayments to investors ever materialized.”