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Two Elk sentencing delayed while Ruffatto sells assets

A federal judge has granted Two Elk promoter Michael J. Ruffatto a two-month delay in his sentencing for criminal fraud.

Ruffatto’s attorneys told the court he needed the time to repay the $5.7 million the government says he took from an economic stimulus research grant and used to make luxury personal purchases.

Pittsburgh Chief U.S. District Judge Joy Flowers Conti set the new sentencing date for June 19. Sentencing had originally been set for Feb. 3 and then was extended until April 7.

Defense attorneys said in a March 21 motion that Ruffatto needed the additional time to sell assets of his Colorado-based North American Power Group, including his remaining half-interest in two small California biomass-fueled electric power plants.

According to defense attorney Jason Schall, “Mr. Ruffatto has made significant progress towards the sale of specific company assets” in order to make full restitution before sentencing. So far, court records and federal documents show Ruffatto has repaid the government $3.7 million of the $5.7 million the government said he billed illegally to the stimulus program research project.

Read reporter Tempest’s complete Two Elk Saga here

“Millions of dollars of the government’s award monies were never used on the project,” Assistant U.S. Attorney Mary McKeen Houghton told the court in October, “but spent and dissipated by the defendant on extravagant personal expenses, totally unrelated to the project, including payments for the defendant’s personal residence in Englewood, Colorado, payments for the defendant’s Mercedes Benz, payments for personal purchases at Neiman Marcus, payment for carpeting worth thousands of dollars, payments for expensive jewelry, and payments for the defendant’s international travel.”

Schall said his client hoped to make “another significant restitution payment” by the first week of April.

Ruffatto has asked the court to take into consideration his willingness to make restitution — along with this advanced age, poor health and family responsibilities — at the time of sentencing. After pleading guilty to one count of fraud on Oct. 21, 2016, Ruffatto faces a maximum sentence of five years in prison.

His attorneys argue that Ruffatto — an Air Force veteran, attorney and former Arizona state prosecutor — should be spared jail time because of the health and family issues as well as his sincere effort to repay the money he took.

“At 70 years old,” Schall wrote in one federal court filing, “Mr. Ruffatto is nearing the end of his life and any period of incarceration may well be a life sentence.” The attorneys said Ruffatto suffers from a multitude of physical ailments including “coronary heart disease, hypertension, high cholesterol, type 2 diabetes, obesity, and hypothyroidism.”

However, even if he does not go to federal prison, Ruffatto could still end up owing the government much more money in civil damages under the federal False Claims Act. The False Claims Act — also known as the Lincoln Law because it was used against Civil War profiteers under President Abraham Lincoln — carries treble damages. In Ruffatto’s case this amount could be as great as $17 million.

In March, the Pittsburgh U.S. attorney’s office told WyoFile that it was engaged in “ongoing discussion” with Ruffatto and his attorneys to reach a False Claims Act settlement that would avoid the necessity of a civil trial. Although not likely to reach the full $17 million, any settlement would put Ruffatto under even greater financial pressure than he is now.

North American Power Group’s portfolio of half an interest in four California power plants has been reduced to two after creditor AIG recently took control of the company’s two Bakersfield plants, Rio Bravo Poso and Rio Bravo Jasmin.


The two small 25 MW California biomass power plants that Michael Ruffatto is trying to sell are Rio Bravo Rocklin and Rio Bravo Fresno. Ruffatto’s North American Power Group Ltd owns half interest in both plants. They have an estimated combined value of $5 million, mainly because of 5-year power purchase agreements with Southern California Edison that begins in 2018. The plants are managed and co-owned by the Japanese company IHI. (IHI – Fresno, top; Rocklin, bottom). More detail on these links: Fresno, Rocklin.

Ruffatto has put up for sale his interest in the two remaining plants, both 25 MW biomass plants in Rocklin and Fresno. Industry experts place their combined value at about $5 million mainly based on five-year power purchase agreements they have with Southern California Edison.

Meanwhile, on March 16, Ruffatto dropped — from $12,995,000 to $11,500,000 — the asking price for his sprawling estate in the horsey Cherry Hills Village subdivision outside Denver. Ruffatto has been trying to sell the six-bedroom, 10-bathroom property with its own six-stall stable and heated swimming pool since 2015, originally asking $14 million.

Even at the reduced price, listing agencies put the monthly mortgage payment on the estate at $52,483. Annual property taxes alone are $62,232.

It is not publically known how much debt, if any, Ruffatto owes on the suburban Denver estate or on the two remaining California power plants.

The 2009-2010 Two Elk Carbon Sequestration research grant that is at the center of the federal case was part of the Obama administration’s effort to create jobs and revive the moribund American economy. The money was supposed to be used to study the underground CO2 storage potential on Wyoming’s Powder River Basin as one way of addressing global warming.

Located on the same site south of Gillette where Ruffatto had told state officials he would build the $500 million-$1 billion Two Elk coal-fired power plant, the research grant created no new jobs.

Instead, Ruffatto used part of the money to pay himself and his North American Power Group Vice President Brad Enzi more than $1.2 million in salaries over a two-year period. Brad Enzi, son of Wyoming’s senior U.S. Sen. Mike Enzi, has said he was unaware of how the stimulus funds were spent and has not been named in the federal case.

DOE suspended the federal grant in January 2012 because of accounting irregularities but not until $7.3 million had already been spent.

Assistant U.S. Attorney Houghton said Ruffatto submitted “hundreds of fraudulent backup documents allegedly evidencing millions of dollars of work performed on the project, by contractors, well specialists, and engineers when, as the defendant well knew, no such work was performed on the project.”

Even when he knew he was under federal investigation, Ruffatto continued to maintain the high-profile life of a wealthy philanthropist with an expensive home in Newport Beach, California, and the Cherry Hills Village estate in Colorado.

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For example, on July 30, 2016, Ruffatto and his wife Eve Kornyei Ruffatto were honored for their “generous support” of the marine environmental group, Oceana, at a star-studded gala in Orange County, California.

Only 10 days later Ruffatto was charged with criminal fraud in the Pittsburgh federal court that has jurisdiction over the National Energy Technology Laboratory that issued the stimulus grant.

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About the Author

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Rone Tempest was a longtime national and foreign correspondent for the Los Angeles Times. In 2004 he was part of a team of reporters to win the Pulitzer Prize for coverage of the massive wildfires in Southern California. From 2000-2007 he was a lecturer at the Graduate School of Journalism of the University of California, Berkeley. One of the co-founders of WyoFile, he served as its editor from 2008 to 2011. Rone lives in Lander.

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One Response to Two Elk sentencing delayed while Ruffatto sells assets

  1. Timothy Dexter April 5, 2017 at 12:25 pm #

    Thanks Rone. Don’t forget that there were also cartloads of “impact dollars” related to Two Elks that were distributed to several northeast Wyoming communities over the years. Any plans in the works to us tell all the tales of the creative ways in which that windfall was frittered away???

    Newcastle, Wyoming

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