Filing for bankruptcy doesn't prevent the debtor from making money. And there is nothing in court papers that suggests these seven payments are illegal or inappropriate — beyond the accusation that Diehl hid them from the bankruptcy judge.
The payments, however, raise new questions about the embattled developer's relationships with Utah power brokers, particularly Hughes, whose name has been cited in two separate civil lawsuits related to the sale of land near the Draper FrontRunner station.
Twice examined by legislative auditors, the 12800 South site is one of several transit-oriented development projects now under scrutiny by federal prosecutors as part of an ongoing criminal probe into current and former UTA board members, employees and real-estate deals.
An April announcement of the criminal investigation and UTA's immunity deal came one day before Diehl, 61, was indicted on 12 criminal counts for allegedly lying about his income and concealing assets — including more than $1 million from the sale of land related to the Draper train station — both in his initial bankruptcy filing and the monthly operating reports required by the court.
Diehl, who declined to be interviewed for this story, has denied any wrongdoing in a text sent to The Salt Lake Tribune on the day he was charged.
"I obviously disagree with the government regarding the details involved with my bankruptcy," he wrote. "I look forward to proving my innocence and having my day in court."
Diehl is scheduled for an initial court appearance in June.
Checks cut • Seven of the indictment's charges — counts of concealment of assets — are tied to the payments Diehl received from companies tied to Hughes, Garn and others, which documents show began in May 2012 and continued through February 2013.
All but one were checks cut to Skyline Venture Associates (SVA), a company founded in November 2011, that lists Diehl's daughters, Bobbie Jo and Mercedes, as its owners.
Federal prosecutors say, however, that Diehl controlled SVA's business operations, using its bank accounts to conceal significant amounts of money.
The largest payment to Diehl was from Urban Chase, a property management firm in which Hughes is listed as a manager. The indictment shows the $277,304.79 check was cut on June 29, 2013, to Wasatch Pacific, Inc., a Diehl development company, while Hughes was serving as UTA chairman. (Hughes disclosed his ownership of Urban Chase on his UTA conflict-of-interest form, but made no mention of any business dealings with Wasatch Pacific.) The money later was transferred to SVA.
Diehl was appointed to the UTA board in 2001 and Hughes in 2006, about three years after Hughes was elected to represent Draper in the state Legislature. They were friends and came to have a close collaboration in 2008 and beyond over the location of the Draper FrontRunner station.
State investigative records obtained by The Tribune show Hughes was deeply involved in UTA and Draper's selection of the train station site. He also helped drive the agreements and city ordinances needed to ensure it was approved as a transit-oriented development with residential and office spaces located close to the station and with a huge potential for profit for developers.
Hughes' name was mentioned by more than two dozen individuals — including former UTA board members and an ex-member of the Draper City Council — who were interviewed by a Utah attorney general's office investigator in 2011-2013 when the agency was investigating UTA after a damning 2010 audit.
Interview summaries detail Hughes' alleged involvement in shaping the plans for the UTA's Draper site, and his close relationships with board members, including Diehl and former Utah House Speaker Greg Curtis.