Attorney General James Blocks Fraudster ‘Green’ Inventor from Using Investor Funds as Personal Piggy Bank During Coronavirus Pandemic
Self-Professed Developer of “Revolutionary” Wind Turbine Preyed on Investors
Looking to Support Green Industry and Local Business in Western New York
Court Order Protects Investors, Stops Founder and CEO Who Used
Investments to Pay for Penthouse, Personal Aide, Cruise, and Piano
NEW YORK – New York Attorney General Letitia James today secured an important victory for environmentally-conscious “green” investors in Upstate New York by obtaining an order that blocks a Western New York company and its founder from offering and selling unregistered securities and from using investor funds to subsidize the founder’s lifestyle. The Office of the Attorney General (OAG) today sought and obtained a temporary restraining order by the Erie County State Supreme Court against Kean Wind Turbines, Inc. and its founder, Kean Stimm — blocking both from continuing to commit fraud against Western New Yorkers by marketing unregistered securities and diverting investor monies to pay for Stimm’s personal expenses, including the payment of a penthouse apartment and a personal assistant, among other items. After the OAG opened up an investigation into Kean Wind, Stimm and his company made assurances that they would no longer seek investments and would stop using investor money for personal expenses, but still continued to do so, even as the coronavirus disease 2019 (COVID-19) public health crisis spread across the nation and many New Yorkers were left struggling financially.
“Kean Wind and its founder targeted environmentally-conscious individuals who wanted to invest in green energy and were sold on a ‘revolutionary’ wind turbine, but all investors got were empty promises full of hot air,” said Attorney General James. “As the coronavirus continues to spread across our state and millions of New Yorkers worry about dwindling savings, it is unconscionable that Kean Wind has continued to cheat New Yorkers out of their hard-earned money. We are pleased that the court has immediately halted this company from further preying on innocent New Yorkers and making a mockery out of efforts to combat climate change.”
As stated in the complaint and memorandum of law — both filed simultaneously with the request for a temporary restraining order — Stimm raised more than $3.5 million from 435 investors in Western New York through years of illegal sales and false and misleading statements. According to Kean Wind, the company has supposedly engaged in developing a windmill called “the Newtonian Wind Turbine,” meant to generate electricity. But, while Stimm has assured investors that production was planned for “later this year,” each year, since 2013, the turbine has never gone into production. Among the other false and misleading statements listed in today’s complaint are that Stimm assured investors that their money had “[v]irtually zero risk with an incredible potential yearly return for 17 years” and that his never-produced invention would be 50 to 100 times more efficient than existing wind turbines. To date, investors have not received any returns on their investments and — seven years after Stimm began soliciting investments — the company is nowhere close to production on a turbine, let alone one that is more efficient than existing wind turbines.
An investigation by the OAG commenced after a complaint was filed with the office. The investigation found that Stimm and his company diverted investor funds to pay for a penthouse apartment, a personal aide, a cruise, and even a piano — all while he denied the use of these funds to pay for personal expenses. As recently as last month, Stimm continued to use investor funds for personal use.
The OAG sought today’s court order after the defendants violated assurances they gave the office earlier this year that they would no longer sell securities and would stop using investor money for personal expenses. But evidence obtained by the OAG shows that, over the last few months, Stimm and Kean Wind continued their fraudulent behavior. As COVID-19 swept the nation and emergency mandated social-distancing was implemented in New York State, Stimm and his company used the coronavirus public health crisis to further their financial situation. Last month, Stimm announced, “we will use this [coronavirus] shut down period to continue marketing promotions,” and said that when new prospects were identified, “I will give them a personal presentation at the office with a six-foot separation with just one other person present.” Stimm also solicited investments by instilling a sense of patriotism: “Our nation cannot recover without abundant low-cost energy…Energy from wind…is free.”
In direct response to the defendants’ ongoing efforts to defraud Western New Yorkers, the OAG sought and successfully received a temporary restraining order from the Erie County State Supreme Court today. The order forbids the defendants from selling or marketing any additional securities or from further dissipating investor assets — ensuring investments cannot be expended as the case proceeds to trial or there is a final disposition.
Stimm and Kean Wind are accused of violating New York State’s Martin Act and Executive Law 63(12).
This matter is being handled by Assistant Attorney General Christopher L. Boyd of the Buffalo Regional Office, under the supervision of Assistant Attorney General-in-Charge of the Buffalo Regional Office Michael Russo; and Assistant Attorney General Tanya Trakht of the Investor Protection Bureau (IPB), with assistance from Legal Assistant Renata Bodner, under the supervision of IPB Deputy Bureau Chief Kevin Wallace and IPB Bureau Chief Peter Pope. The Buffalo Regional Office is part of the Division of Regional Affairs, which is led by Deputy Attorney General for Regional Affairs Jill Faber. The Investor Protection Bureau is a bureau of the Division of Economic Justice, which is led by Chief Deputy Attorney General Christopher D'Angelo. The Division of Regional Affairs and the Division of Economic Justice are both overseen by First Deputy Attorney General Jennifer Levy.