(Continued from page 24)

criminal trial.
• The prosecutors' filing states that Reed, Scott and Doss as well as Adams and Ponish began working together in about 2007 soliciting investors for a series of related companies called SmartWear Technologies and Applied Digital Technologies. The stated purpose of the companies was to develop clothing using radio-frequency technology to allow tracking of children and others.
• The California Department of Corporations started civil litigation against SmartWear and Applied Digital Technologies in 2008 charging that principals were illegally selling securities in the state. As a result of cease-and-desist orders, Leschuk and Heimann wrote, the defendants shut down Applied Digital Technologies in 2009.
• The California Department of Corporations issued a statement last June announcing a court judgment against SmartWear Technologies, Inc., and its principals including Reed. The state sanctioned Reed and others for the unlawful sale of securities and ordered them to pay $9 million restitution to defrauded investors, according to state filings. Total restitution ordered from the company and officers amounted to $25 million. Civil litigation is continuing on the matter in California.
• After the SmartWear solicitations ended, prosecutors Leschuk and Heimann wrote, Reed and Scott created Mountain State Power. The prosecutors stated that Reed presented the wind farm idea to Doss, Ponish, Adams and other salesmen.
• "The defendants then developed a sales script and the telephone salesmen began cold-calling unwitting investors to sell investments in the non-existent wind farms," the prosecutors wrote. Reed and Doss told Adams and Ponish and other salesmen to use aliases when soliciting investors for the wind farm because of "bad publicity from the SmartWear/ADTI litigation," prosecutors wrote.
• Prosecutors say Reed would send 45 percent of the investors' money to Doss, who paid the sales commissions. They say Reed and Scott split the remaining money, spending some to keep the scheme going but mostly paying for their personal expenses.
• Prosecutors allege the defendants had acquired land near Casper and in Butte County, S.D., to satisfy investors that projects were moving forward. They charge that they put up signs at the South Dakota site and took pictures of contractors they hired to push dirt around there to make it appear construction was ongoing.
• "The defendants used these pictures to lull unhappy Mountain State Power/Sovereign investors and entice new victims," prosecutors wrote.
•

(Continued on page 26)