Did federal prosecutors mislead a grand jury in order to secure criminal indictments against Terry Diehl?

That’s the question Diehl and his attorneys want answered in a new motion filed in Salt Lake City’s U.S. District Court.

In addition, the ex-Utah Transit Authority board member and politically-connected developer wants a judge to order the U.S. attorney’s office in Utah to pay his legal bills for what court papers allege was a “frivolous, vexatious” prosecution.

Diehl was charged in April with 12 felony counts related to allegations that he lied about and concealed at least $1 million in assets in a 2012 bankruptcy case.

The original indictment was amended three times: Once to add two new tax charges and twice to reduce counts, leaving Diehl to face just one felony before prosecutors dropped the whole case on Nov. 1, the same day a trial was set to begin.

At each step, federal prosecutors needed the blessing of the grand jury.

That leaves Diehl’s legal team wondering if the panel was misled.

“In the investigation of Mr. Diehl, the grand jury reached erroneous conclusions … and made erroneous allegations on at least three specific occasions,” court papers say. That “leads to the natural question of how they reached those conclusions.”

Among Diehl’s other queries: Who testified before the grand jury that led to those conclusions? Or, if there were no witnesses, what evidence was provided to the panel by prosecutors?

“Under the circumstances here, the court should conduct a full review of the government’s conduct before the grand jury in determining whether the government has acted in bad faith in initiating and manifesting the frivolous and vexatious prosecution,” court papers say.

The U.S. attorney’s office declined comment Friday on the motion through its spokeswoman Melodie Rydalch.

Court papers also say that under a law known as the Hyde Amendment, Diehl is entitled to have the government pay his legal bills — likely hundreds of thousands of dollars.

The case brought against Diehl was tied to financial statements made in a 2012 bankruptcy filing and money the developer allegedly earned through the controversial sale of land adjacent to a UTA FrontRunner train station in Draper.

The transaction — with the property sold to eBay — was part of a UTA transit-oriented development plan that included a $10 million agency loan to Diehl and a business partner, who used the funds to acquire the land.

The sale later became the subject of two scathing legislative audits and two criminal investigations; first by the Utah attorney general’s office and later by the Utah FBI office.

The latter investigation is ongoing and federal prosecutors have cut an immunity deal with UTA in exchange for the agency’s cooperation.

Prosecutors cannot refile any of the charges they had brought against Diehl in the bankruptcy case because at the time of the dismissal, a jury had already been impaneled for the trial.