Two Elk promoter Michael Ruffatto’s sentencing at the Joseph F. Weis Jr. Courthouse in Pittsburgh is now, following a fourth delay, scheduled for October 24. (Alan Karchmer)

A federal judge this week granted yet another delay in the sentencing of Two Elk developer Michael J. Ruffatto for stealing millions of dollars from a Department of Energy research program in Wyoming’s Powder River Basin.

U.S. District Judge Joy Flowers Conti set the new sentencing date for October 24 after Ruffatto said he needed more time to reach a settlement with the government on civil damages in the case. It was the fourth sentencing delay since Ruffatto pleaded guilty to criminal fraud charges last October.

Meanwhile, terms of the potential settlement — believed to be in the neighborhood of $12 million — are now beginning to come into focus. In addition to the monetary penalties, prosecutors urged the court to sentence Ruffatto, 71, a Colorado-based businessman and lawyer, to a minimum of three years in federal prison.

Defense attorneys argue that Ruffatto’s purported willingness to repay the money he took, and pay substantial civil damages, entitle him to supervised probation instead of incarceration. They have also argued that Ruffatto’s age and failing health merit consideration at sentencing.

Federal prosecutors said Ruffatto illegally siphoned at least $5.7 million from a DOE stimulus grant and spent the money on personal luxuries, including a new Mercedes, jewelry, oriental carpets and foreign travel.

In addition, Ruffatto used stimulus grant funds to pay himself and his longtime North American Power Group Vice President Brad Enzi more than $1.2 million in wages and benefits over a two-year span, 2009-2010.

Brad Enzi, son of Wyoming U.S. Senator Mike Enzi, said he has no knowledge of how the stimulus funds were used. Sen. Enzi, who once called the federal stimulus program “bailout baloney,” said he has never met Ruffatto.

At the peak of the spending spree, in December 2010, Ruffatto also made a $12,000 contribution to newly elected Gov. Matt Mead’s political action committee, Wyoming for Matt Mead. It was the third largest individual contribution that Mead received after his first term election.

So far, it is unclear if the $12,000 came from the pilfered federal funds. Through a spokesman, Mead said that he never met or corresponded with Ruffatto directly. However, he said that he did meet at least once with Brad Enzi and that the two of them discussed the Two Elk power plant project that since 1997 Ruffatto has said he’s building on his Campbell County property.

However, Mead, who served as US Attorney in Wyoming from 2001-2007, said the meeting or meetings took place before the federal investigation into the stimulus grant became public.

The stimulus grant that Ruffatto received from the DOE National Energy Technology Laboratory outside Pittsburgh, PA, was supposed to fund research into carbon storage potential on the same Two Elk power plant development site south of Gillette, as well as create new jobs and stimulate the Wyoming economy.

But Assistant U.S. Attorney Mary Houghton told the court “millions of dollars of the government’s award monies were never used on the project.”

Instead, Houghton said, the monies were “spent and dissipated by the defendant on extravagant personal expenses, totally unrelated to the project.”

After Ruffatto pleaded guilty in the criminal case, the government has continued to pursue him for civil damages under the federal False Claims Act. If Ruffatto were to go to court and lose in the civil case, he would face a mandatory penalty of treble damages, or $17 million.

By seeking a negotiated settlement, court records in such cases show that “double damages” — or in this case about $12 million — is more likely. Ruffatto would also get credit for the $3.7 million he has already paid the government in restitution on the criminal charges.

In addition to the $5.7 million in false claims that were paid by the DOE, Ruffatto is also civilly liable for hundreds of thousands of dollars in false bills he submitted to the government but which were not approved before the grant was abruptly suspended in January 2011.

Any settlement with the government must first be approved by the Department of Justice in Washington, but “double damages” are generally considered an acceptable result in such cases.

To reach this settlement Ruffatto will need to come up with approximately $8 million before the October 24 sentencing date. For more than a year he has been trying to sell his half-interest in two California power plants and his Colorado estate, listed at more than $11 million.

A source familiar with the California power plant sales says Ruffatto now has an interested buyer in the power plants, both of which have five-year power purchase agreements with Pacific Gas & Electric, but that concluding the deal before the October deadline will be difficult.

As for the sprawling six-bedroom, ten-bathroom mansion and horse property in Denver’s exclusive Cherry Hills Village suburb, it is unclear how much equity Ruffatto actually has that could contribute to a settlement. Court records show that he used at least some of the money he took from the stimulus grant to make mortgage payments on his Colorado home.

The latest continuance in Ruffatto’s sentencing date should not come as a surprise to those who have followed his checkered dealings with Wyoming state and local officials.

Since 1997 when Ruffatto first proposed his Two Elk power plant project he has proven to be a master of delay, repeatedly winning extensions on state air quality and industrial construction permits despite little sign of actual work on the power plant, one of seven phantom plants that he has proposed in Wyoming coal country.

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Wyoming and Campbell County officials also awarded Ruffatto $11 million in industrial impact funds and authority to raise $445 million more through tax-exempt bonding.

If he is successful in his latest efforts, it will be the second time that he has negotiated a civil settlement with the Department of Energy.

In 1983, Ruffatto was vice president and general counsel for Crysen Corp., a Southern California energy company that agreed to pay a $9 million penalty for cheating on DOE price regulations.

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Rone Tempest

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...

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  1. Thank you, Rone, for the continued reporting on this major league thief. I wonder how many postponements a *regular* person can get for stealing $20…