After years in the spotlight for risky business deals and cozy relationships with Utah power brokers, developer Terry Diehl will stand trial on Monday for just one thing: allegedly lying in a bankruptcy filing in 2012.
Diehl is charged in Salt Lake City’s U.S. District Court with one felony count of making a false statement. It’s all that’s left in a case the once brought 14 felony charges against him.
Still, the remaining count is a serious allegation — and Diehl maintains his innocence — that could result in a five-year federal prison term if a jury finds him guilty.
But to some of Diehl’s detractors, the single count feels a bit like a minor offense, said Claire Geddes, an activist who fought the ex-Utah Transit Authority board member for years over big real-estate deals along the Wasatch Front.
Those projects shaped communities and helped build Utah’s award-winning, albeit scandal-plagued public transit system. But they also left Diehl embroiled in controversy in the form of civil lawsuits, rumors about politicians he held in his back pocket and two scathing legislative audits that, in part, challenged his role in more than one multimillion-dollar land deal surrounding UTA transit-station sites.
“It’s astounding. They should be looking at everything that went on with Diehl,” said Geddes. “It’s been very disheartening to see them keep dropping charges.”
Now Diehl’s fate rests in the hands of the 13 member jury who will hear the evidence prosecutors have gathered against him in a trial expected to last 10 days.
Federal prosecutors declined to comment on the case before the trial, and Diehl’s Salt Lake City attorney, Loren Washburn, did not immediately respond to a request for comment.
Diehl himself has repeatedly declined comment on the case. In a text message sent when he was first charged months ago, however, he told The Salt Lake Tribune the government had it wrong.
“I look forward to proving my innocence and having my day in court.”
Originally indicted by a federal grand jury in April, the case has progressed like an amusement park roller coaster ride.
Prosecutors first filed 12 felonies, alleging Diehl lied about his assets and concealed a $1 million payday from the bankruptcy court through a company owned by his daughters. Two tax-related charges were added in early October.
Then things began to fall apart.
Twice in the past month, government attorneys went back to a grand jury to cull counts from the case; first 11 of the original charges were dropped; and then the tax counts were withdrawn in succession.
All that remains is the single count of making a false declaration, which stems from information included on the first financial report filed in Diehl’s 2012 bankruptcy.
Diehl pleaded not guilty to the remaining allegation on Nov. 1 — one day after he was charged.
Diehl’s attorney has bemoaned the government’s ever-changing case in court papers, saying prosecutors engaged in misconduct by filing charges they couldn’t prove, costing the defense team countless lost hours searching for imaginary evidence.
“In the parlance of summer camp, this was a snipe hunt,” Washburn wrote in court papers filed last week. “A long, expensive, wasteful, distracting search for something that did not exist. The government’s allegations had been a lie.”
In the case that remains, prosecutors contend Diehl broke the law when he failed to disclose an association with Skyline Ventures Associates (SVA) on an April 13, 2012, statement of financial affairs for his Chapter 11 bankruptcy.
The company was set up by Diehl in late 2011, with his two daughters listed as owners. But prosecutors say it was Diehl who controlled the day-to-day operations of SVA, including directing money in and out of company bank accounts.
“Some of those funds were disclosed to creditors, others were not,” charging documents say, adding that Diehl spent some of the money on personal expenses. “The price of bankruptcy is full disclosure.”
And while it’s true that SVA is not listed on the report, the company, and money that flowed from it to Diehl, repeatedly appears in other financial statements and reports.
A review of bankruptcy filings by The Salt Lake Tribune found SVA first listed on Diehl’s May 2013 financial report to the court — about one month after the first disclosure was filed.
The document is an accounting of Diehl’s earnings for the previous month and shows SVA paid Diehl $10,000 in consulting fees on April 18.
“He never failed to talk about SVA. He disclosed that it was his only employer,” Washburn said during an October court hearing. “It was the vehicle through which he was going to earn money to pay back the debtors from the bankruptcy.”
Whether the post-April 13 documents will be heard by the jury is still a matter in dispute. U.S. District Judge Clark Waddoups is expected to decide the issue on Monday.
Among the witnesses prosecutor may call to prove their case are Diehl’s daughters, Mercedes and Bobbie Jo Diehl, and his former officer manager and bookkeeper Kim Monroe, who court papers say carried out Diehl’s directives related to SVA financial transactions.
Also on the list are Utah real-estate developer Kevin Garn, a former Utah House majority leader whose initials showed up in the first indictment, next to payments totaling $100,000 to Diehl in the months following the bankruptcy. At the time, Diehl was still on the UTA board and had a hand in selecting developers for planned transit-oriented development projects. UTA awarded one of Garn’s companies seven of 12 contracts between 2011 and 2013.
Gary Nordhoff of Urban Chase is also on the list. The property management company is jointly owned by Nordhoff and Utah House Speaker Greg Hughes, R-Draper, who is known to have a close friendship with Diehl. Urban Chase also paid Diehl a hefty sum of nearly $280,000 following the bankruptcy, money that court papers say ended up in SVA accounts.
Another key government witness may be developer Jeff Vitek, Diehl’s onetime business partner in the controversial 2010 Draper FrontRunner station development deal.
Diehl — then on the UTA board — and Vitek purchased the property around the planned train station in 2010 with a $10 million loan from the agency he helped oversee. They later sold it to eBay for tens of millions more.
The multimillion transaction was 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 project was also at the heart of the original indictment brought against Diehl in April, which claimed he had lied about and hidden $1 million in assets earned through sale of land near the FrontRunner station.
One day before Diehl was charged, the U.S. attorney’s office announced it had reached a nonprosecution agreement with UTA in exchange for its cooperation in an ongoing criminal probe of former UTA board members, executives and others involved with the agency and developments around its train stations.