The criminal case against a father-and-son team from small Fountain Green, who are accused of defrauding investors, is being rattled by allegations that the prosecution’s expert witness has a conflict of interest.
Attorneys for Wendell and Allen Jacobson have filed a motion to disqualify prominent forensic accountant Gil Miller from testifying at trial because he and his company, Rocky Mountain Advisory, had been hired previously to help respond to an investigation into the operations of Management Solutions Inc., the Jacobsons’ company that invested in apartment buildings around the country.
As the forensic accountant for the firm Ray Quinney & Nebeker, Miller was exposed to information, documents, analysis and legal theories, information that is normally private, according to the motion seeking to boot Miller from the state criminal case against the Jacobsons.
“The entirety of the state’s prosecution is ‘tainted’ with the misconduct involving Miller/RMA and their prior engagement on behalf of the Jacobsons and their legal counsel in matters related to this very case,” wrote attorneys Richard Van Wagoner (representing Wendell Jacobson) and Marcus Mumford (representing Allen Jacobson) in the motion.
Miller, in an interview, said his previous engagement was with Management Solutions, the company, and not the Jacobsons, the individuals who are facing criminal charges.
And he pointed to a preliminary hearing in December 2015 when he testified for hours with “no mention of any alleged conflict I might have. Not once. This has all come up in the 11th hour, a month or two before trial.”
The Jacobsons problems began in December 2011, when the U.S. Securities and Exchange Commission sued them and MSI in federal court. The SEC contended that the company that took in $200 million in investments was insolvent and the Jacobsons were running it as a Ponzi scheme — using new investor money to pay earlier investors.
But U.S. District Judge Bruce Jenkins ruled that MSI was not a Ponzi scheme and the Jacobsons settled the case without admitting wrongdoing. Investors are expected to recover most but not all of their funds.
When a first court-appointed receiver left to serve a Mormon mission, Miller was named as the new receiver with control over MSI and related companies. The Jacobsons attorneys contend that in testimony in federal court, Miller provided “patently false” information about his engagement work for the pair’s attorneys during the SEC investigation.
Miller and Rocky Mountain billed the receivership $3 million for their services and they allege that Miller shopped the criminal case to the Utah Attorney General’s Office after being turned down by federal prosecutors.
The Jacobsons were charged in state court with 16 felony fraud-related counts alleging they failed to tell investors information about how their monies were being handled. They have pleaded not guilty.
Miller’s attorney, George Hofmann, also denied any conflict of interest between Miller’s work for the Jacobson attorneys and his efforts for the receiver and as the receiver for MSI.
The defense motion contains “a lot of bombast and unfounded accusations,” Hofmann said. “They make it sound like Gil is switching sides, that he gave an expert opinion on one side and now he’s flipped and going the other way and that’s not the case at all. It’s just different subject matter.”
The Jacobsons are asking 3rd District Judge Paul B. Parker to disqualify Miller from testifying in the criminal case, to disqualify the prosecution team and to suppress any evidence that came from Miller or his company. The next court hearing is slated for Sept. 19.
Prosecutors said in a reply that the Jacobsons didn’t cite any specific legal reasons for disqualifying Miller and had waived any objections to his testimony by failing to object at the preliminary hearing.