Man Is Sentenced in $9 Million Cow Manure Ponzi Scheme

A California man was sentenced on Monday to more than six years in prison for running an $8.75 million Ponzi scheme that hinged on a nonexistent factory that was supposed to create green energy out of cow manure, federal prosecutors said.

For five years, Raymond Holcomb Brewer falsely claimed to be an engineer who ran a company that built anaerobic digestion plants, which convert manure into biogas, the United States attorney’s office for the Eastern District of California said in a statement on Monday.

Mr. Brewer, 66, of Porterville, Calif., told his investors that he was building the plants and would generate millions of dollars in revenue by selling the biogas, the statement said. He told the investors that they would receive two-thirds of the profits, as well as tax incentives.

“None of this was true,” Phillip A. Talbert, the U.S. attorney for the Eastern District of California, wrote in a sentencing memorandum. “Mr. Brewer did not begin construction on a single digester. He simply took his investors’ money and ran.”

Mr. Brewer, who pleaded guilty to fraud charges in February, spent the money on a 3,700-square-foot custom home in California, a 12-acre plot of land in Montana and new Dodge Ram pickup trucks, federal prosecutors said.

Anaerobic digesters use bacteria to break down organic material, producing a gas that consists mainly of methane and carbon dioxide. New York City and other places around the world have turned to the process to deal with sewage, food scraps and farm waste, generating a renewable natural gas.

Mr. Brewer’s elaborate scheme of pretending to run such a process began in 2014, according to a federal indictment. He conducted the affairs primarily through a Wyoming corporation with its principal place of business in California. The company was named CH4 Power, after the chemical formula for methane.

Mr. Brewer went to great lengths to convince his investors that his manure project was real, Mr. Talbert said. Mr. Brewer took them on tours of dairies where he said he was going to build digesters, and he presented them with fake lease agreements that he said he had reached with dairy owners across California. He obtained stock photographs of digesters and sent them to investors, sometimes altering the images so they would appear to show construction progress. He fabricated a detailed schedule for the project to show purported progress, court filings showed.

After receiving money from his investors, Mr. Brewer tried to hide it by transferring it to other bank accounts that he had opened in the names of other business entities, family members and an alias, Mr. Talbert said.

Mr. Brewer’s scheme began breaking down in 2019, when some of his investors found out that he was issuing refunds with money he had received from other investors, even though they had not authorized him to use it in this way.

Mr. Brewer’s investors obtained multiple civil judgments against him that year, Mr. Talbert said. Mr. Brewer responded by closing CH4 Power, putting his remaining assets in his wife’s name, obtaining a fraudulent business loan with stolen investor money and fleeing to Montana, where he lived part time, according to the indictment.

Even then, he continued to engage in fraud, purporting to build more manure-processing through a new company he created with an alias, Mr. Talbert said.

Sheriff’s deputies arrested Mr. Brewer in Montana in 2020 and detained him on 24 counts, including wire fraud, money laundering and aggravated identity theft.

But Mr. Brewer continued to lie, telling the authorities that they had the wrong man and that he was a Navy veteran hero who had once saved several soldiers from a fire by blocking the flames with his body, Mr. Talbert wrote in the sentencing memorandum. Mr. Brewer has since admitted that these lies were meant to curry favor with law enforcement, Mr. Talbert said.

“He is a fraudster through and through,” Mr. Talbert wrote, “and needs to be punished harshly to ensure both specific and general deterrence.”

Mr. Brewer was sentenced to six years and nine months in prison for the fraud scheme, and he was ordered to pay $8.75 million in restitution to the investors who fell victim, Mr. Talbert said.