SEATTLE (AP) -- The biofuels company claimed it had developed a promising new technology to convert household trash into diesel fuel, but even from the start, Michael Spitzauer and his company, Green Power Inc., raised some eyebrows.
The company once envisioned setting up hundreds of waste-to-fuel plants, pitching facilities in Fife, Wash., and Cheyenne, Wyo., as an answer to rising gasoline prices.
But the synthetic fuel reactor it began installing on leased Port of Pasco property quickly ran into trouble. Washington state regulators in 2009 ordered Green Power to stop operating that plant because it didn't have the necessary air-quality permits.
Undeterred by that and other financial troubles, the Kennewick-based company continued to do business, paying to lease port space and hire workers.
Now, the company's CEO is being held without bail in federal custody, accused in a federal indictment of scheming to defraud investors who entered into joint ventures with Green Power Inc. to build waste-to-fuel plants around the world.
Spitzauer pleaded not guilty in federal court in Yakima last month to charges of wire fraud, aggravated identity theft and money laundering.
The indictment in December alleges that the CEO received millions of dollars in deposits from investors to build and operate plants in Slovenia, India and Canada. Instead, the indictment alleges, he spent that money, using a $1 million for a home in Kennewick and $65,000 for furnishings and other personal expenses.
Spitzauer, who lived in Issaquah before moving to Kennewick, is seeking release from custody pending trial. A hearing is set Thursday.
Federal prosecutors say in court records that Spitzauer is a flight risk and a danger to the community, noting his prior fraud convictions in his native Austria and a 1997 conviction in the U.S. for lying in his application for permanent residence by denying his criminal record.
Seattle defense attorney, Christopher Black, argued in court documents that Spitzauer isn't a flight risk because his wife and children live in Kennewick and that he has limited assets. Spitzauer would step down from his CEO post and give up control over Green Power's financial dealings if he is released pending trial, Black said in court records.
Black declined to talk about the charges when reached by telephone. He also declined questions about Green Power, saying he did not represent the company.
Messages left with the company seeking comment were not immediately returned.
Green Power's lease at the port expired in December, and the port has started the process of evicting the company, said Randy Hayden, the port's executive director.
"They built a plant, they ran some testing on the plant, and at some point, their permit wasn't adequate," he said. They weren't allowed to operate the plant, but they had a few different facilities that they leased at the port.
It has been a turn of events for a company that said it could convert 100 tons of municipal solid waste into 12,000 gallons of diesel fuel and had boasted on its website and Facebook page of landing orders overseas and money from private investors.
"They were tight-lipped about their technology, so I can't comment on the viability about it," Peter Moulton, the state's bioenergy coordinator, said about Green Power. Moulton said plenty of companies are turning municipal waste into ethanol or other fuels.
Corinne Drennan, an engineer with the Pacific Northwest National Laboratory in Richland, said she couldn't validate Green Power's technology without knowing more specifics.
But she said there are technologies such as gasification that provide the opportunity to convert municipal solid waste into liquid fuels, and companies are working at a commercial-scale level.
It's unclear whether Green Power was on the path to becoming one of them.
Greg Flibbert, an air-quality unit supervisor with the Department of Ecology in Spokane, said: "I don't believe we ever saw it (the plant) operate. If it was, we would have taken appropriate action."