Former director of OSU’s Multispectral Laboratories charged with multi-million-dollar fraud
Team Radio Marketing Group - December 14, 2017 3:47 pm
OKLAHOMA CITY — A federal grand jury has charged Daniel Webster “Web” Keogh, 47, and Danielle Keogh, 36, both of Edmond, Oklahoma, with fraud crimes against First Pryority Bank, the U.S. Department of Agriculture, Commuter Air Technology, Inc., and Oklahoma State University’s Multispectral Laboratories, announced Mark A. Yancey, United States Attorney for the Western District of Oklahoma.
According to the 23-count indictment, Web Keogh was Chief Executive Officer of both EMB Energy, Inc., and Triton Scientific, LLC. The first 10 counts of the indictment concern a $3.2 million loan to Triton from First Pryority Bank, which has offices in Tulsa and Pryor, Oklahoma.
The indictment explains that in the fall of 2010, Web Keogh signed an agreement between EMB Energy and Lawrence Livermore National Security, LLC (“Livermore”) concerning the development of new battery technology for electric utilities. Under the agreement, EMB Energy agreed to invest approximately $22 million in a collaborative project with Livermore. If Livermore and EMB Energy succeeded in building a small electromechanical battery prototype and scaling it to larger sizes, EMB Energy could own and commercialize a utility-sized battery.
To pursue this opportunity, Web Keogh, along with his wife Danielle Keogh, who was EMB Energy’s Senior Vice President of Finance, sought a $3.2 million loan to Triton from First Pryority Bank, secured by a battery to be purchased for $4 million. Several of the Keoghs’ statements to the bank, however, are alleged to have been false.
In 2010, Web Keogh is alleged to have supported the loan application by claiming Triton would use the money to “purchase and install a significant piece of capital equipment for electrical storage.”
He also allegedly stated the loan would be for “equipment purchase only” and would support a project at Triton’s facility in Chilocco, Oklahoma. He later allegedly told the bank falsely that Triton had acquired the battery and substantially completed development of the battery.
According to the indictment, Triton was engaging only in research and development—no battery prototype had been built, and no battery existed to serve as collateral. Furthermore, the indictment states battery research was to take place in California rather than at Chilocco.
According to the indictment, identifying Chilocco as the location of the project qualified Triton for a loan guarantee by the U.S. Department of Agriculture’s Rural Development Administration, which supports the development of infrastructure in rural and economically depressed areas.
The indictment alleges Web and Danielle Keogh both made false statements in early 2011 when they gave the bank false invoices from EMB Energy to Triton to support the loan proceeds. In particular, these invoices made allegedly false references to a 2.0 MWh battery system, component parts, the shipment of items to Ponca City, Oklahoma, a purchase agreement between Triton and EMB Energy, and the battery’s contract value.
The indictment states that EMB Energy, Triton, and Livermore never built a working electromechanical battery and that when Triton defaulted on the loan in December 2012, it owed more than $3 million to First Pryority and the U.S. Department of Agriculture.
Web Keogh is charged by himself with making a false statement in a matter within the jurisdiction of the U.S. Department of Agriculture when he stated in loan closing documents that funds would be used to purchase machinery and equipment, rather than research and development.
Count 11 concerns a $2 million line of credit Triton had secured at First Pryority. The indictment alleges that Danielle Keogh made a false statement to First Pryority in May 2012, when she sought to renew this credit line. According to the indictment, she provided a financial statement and tax return that listed the battery as a fixed asset worth $4,172,979.64, when she knew Triton did not own a $4 million working battery and the battery concept was still in a pre-prototype stage of assembly.
Counts 12 through 23 concern the Keoghs’ dealings with Oklahoma State University—University Multispectral Laboratories, LLC (“OSU-UML”), a non-profit research center wholly owned by OSU that served the Department of Defense and other entities. In 2008, Triton became OSU-UML’s managing entity.
Web Keogh served as OSU-UML’s Laboratory Director until he resigned in November 2012. Danielle Keogh is alleged to have represented herself as OSU-UML’s Director of Finance. The indictment explains that from 2010 to late 2012, OSU-UML served as prime contractor for projects by the United States Special Operations Command (“SOCOM”), including work by Commuter Air Technology, Inc. (“CAT”) in war zones.
The federal government paid OSU-UML for CAT’s work, and, according to the indictment, OSU-UML was supposed to forward the bulk of these funds to CAT.
According to the indictment, Web Keogh failed to use a substantial portion of the government’s payments to satisfy CAT’s subcontractor invoices. In particular, he allegedly transferred $1.675 million of OSU-UML funds in September 2012 to bank accounts in New York and Ohio based on instructions from an attorney at a Washington, D.C., law firm. The attorney allegedly promised these deposits would generate millions of dollars of “donations” for OSU-UML. The indictment states neither the Executive Director nor the Board of OSU-UML approved these transfers and that OSU-UML never recovered the funds. According to the indictment, Web and Danielle Keogh also directed OSU-UML staff to use money that should have gone to CAT for payments unrelated to SOCOM’s work, including hundreds of thousands of dollars related to EMB Energy’s battery project and more than $100,000 to support Danielle Keogh’s boutique dress shop, Liberté, in Oklahoma City.
If convicted of the bank-fraud conspiracy or making a false statement to a bank, the defendants could be imprisoned for a maximum of 30 years on each count, to be followed by up to five years of supervised release. Web Keogh could be sentenced to up to five years in prison and three years of supervised release for making a false statement in a matter within the jurisdiction of the U.S. Department of Agriculture.
If convicted of the wire-fraud conspiracy relating to OSU-UML, the Keoghs could be imprisoned for a maximum of 20 years, to be followed by up to three years of supervised release. Web Keogh is charged with eight counts of wire fraud relating to OSU-UML; Danielle Keogh is also charged in three of these counts. Each count of wire fraud would carry the same penalty as the wire-fraud conspiracy.
Web Keogh is also charged separately with three counts of embezzling from OSU-UML as an organization receiving federal funds, which would carry a maximum penalty of 10 years in prison and three years of supervised release. Both defendants could be fined up to $1,000,000 on each of the banking crimes and up to $250,000 on each of the remaining counts. If convicted, they would also be required to pay restitution to victims.
The public is reminded these charges are merely accusations and that Web and Danielle Keogh are presumed innocent unless found guilty beyond a reasonable doubt by a unanimous jury.
This case is the result of an investigation by the Federal Bureau of Investigation, the Defense Criminal Investigative Service, and the U.S. Department of Agriculture—Office of Inspector General. Assistant U.S. Attorneys Chris M. Stephens and K. McKenzie Anderson are prosecuting the case. Reference is made to court filings for further information.