Utah developer Terry Diehl, a former UTA board member, gets settlement from feds for failed prosecution

(Al Hartmann | Tribune file photo) Former UTA board member Terry Diehl leaves Federal Court in Salt Lake City Monday Nov. 6 after having his case dismissed.

The Office of U.S. Attorney for Utah has agreed to pay a “significant” amount to settle legal claims by developer and former Utah Transit Authority board member Terry Diehl, against whom the government’s bankruptcy fraud case fell apart last year.

Melodie Rydalch confirmed the settlement, saying the amount was “a fraction of what they asked for. Neither side won and neither side lost."

Diehl attorney Loren Washburn said the $150,000 settlement was 75 percent of what was sought under strict limitations in the law. While it doesn’t cover all of his client’s considerable expenses, it is remarkable as one of the rare cases — perhaps unprecedented in Utah — where the government settled without a judge’s order to do so.

“Frankly, I think the symbolism is much more powerful than the actual cash, although none of us on this side are turning that down,” Washburn said, pointing to the unusual settlement under the Hyde Amendment, in which the defense had asserted bad-faith on the part of the prosecution.

The U.S. Attorney’s Office also confirmed, Washburn said, that it “does not have any open investigations in which Mr. Diehl is the purported target.” Moreover, Washburn said there is no agreement for Diehl to cooperate with prosecutors in any ongoing investigation of former UTA board members or officials.

Rydalch would not comment on either of those assertions.

Diehl, a high-living mover and shaker whose many political connections reached all the way to Utah House Speaker Greg Hughes, was indicted April 5, 2017, on a dozen criminal counts related to his 2012 $42 million bankruptcy. The indictment included allegations that he concealed or falsely reported $1 million in income from land sales near a Draper rail station development.

All save one charge were dismissed by the time the case was ready to go to trial last November — an allegation that he had lied on bankruptcy filings to the court. Prosecutors then dismissed the remaining count, saying the judge’s rulings limiting admissible evidence had gutted their case.

Diehl served on the board of the UTA for 10 years and was involved in many of the agency’s decisions on site selection for so-called transit-oriented developments near rail stations. State legislative auditors had flayed UTA for its “sweetheart deals” with developers, including a $10 million interest-free loan near the Draper Frontrunner train station. A 2010 audit had recommended referring allegations to the Utah attorney general of possibly illegal insider use of information by one board member — it was clear it was Diehl, though he wasn’t named in the report. Top state legislators decided against the referral at the time, though allegations swirling around UTA land deals eventually did end up in the hands of federal investigators.

The FBI as recently as January publicly confirmed an ongoing investigation into former UTA board members and officials. Last week, UTA approved the hiring of an outside monitor that was a condition of an immunity deal the agency signed with federal prosecutors just before charges were filed against Diehl in April of last year.

Washburn on Monday said as far as he knew there was no connection between the UTA monitor’s hiring and the settlement agreement with Diehl.

The settlement announced Monday has long been the topic of discussions, “and it was my understanding that it took some time for approval in Washington, D.C," Washburn said. “I don’t understand it in any way to be connected to the UTA monitor situation.”

Utah lawmakers in the most recent legislative session enacted massive reforms to the scandal-plagued transit agency, including scrapping its 16-member board for a three-member full-time commission to be appointed by the governor. Reforms have been adopted limiting agency executive salaries, bonuses, international travel and land deals near train stations.

Diehl, meanwhile, simply wants to get back to his development business “out of the public spotlight,” Washburn said.

“Maybe the tragedy of all the reporting that’s gone on about that Draper [transit-oriented development] project is I haven’t seen somebody yet write about what a magnificent project it’s been, bringing all the companies it has to the area, putting together a beautiful project that looks like it’s driven a lot of economics and a lot of tax increase revenue for schools and whatnot.”

“He’s hoping every project he has is as successful as that one, but doesn’t draw the maybe unwarranted notoriety that that one did,” Washburn said.