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Here’s how a Utah polygamous sect cashed in on federal coronavirus bailouts

A review by The Salt Lake Tribune found 10 businesses tied to Davis County Cooperative Society received loans.

(AP Photo | Wayne Partlow) Shown is a portion of a Small Business Administration Paycheck Protection Program Borrower Application Form, Tuesday, April 21, 2020, in Washington.

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A Utah polygamous sect — with members who bilked the government out of millions of dollars — has acquired $145,200 in federal coronavirus assistance through its church, with untold additional sums trickling into the group through a network of businesses.

The Latter Day Church of Christ, the religious wing of the Davis County Cooperative Society (DCCS), landed the funding last year through the federal Paycheck Protection Program, according to federal data. Dwarfing that amount is the total claimed by businesses with society ties — with a Salt Lake Tribune review showing that at least $1.7 million in potentially forgivable loans went to these companies.

But while the government is giving money to DCCS members with one hand, it’s trying to extract assets from some members with the other, points out Bryan Nelson, who has served as a federal informant against people in the society.

Several members of the society, also called the Kingston Group or “The Order,” have admitted to conspiring to pocket $1 billion by defrauding a federal biofuels program. As part of their guilty pleas, defendants in the Washakie Renewable Energy case agreed to pay more than $500 million in restitution and forfeit proceeds from their fraud.

The Kingston family members have yet to be sentenced, which means that they haven’t paid the restitution funds because the courts haven’t given them an official order to do so, said a spokesman for the U.S. attorney’s office in Utah.

Several of the Order businesses used to launder funds during the scam were also among those that would later cash in on the Paycheck Protection Program, court records and federal data show.

However, Nelson said he wouldn’t necessarily expect federal bureaucrats to connect the dots between the sect and the companies applying for small business bailouts during the COVID-19 crisis.

“I think it is difficult for the government to even understand what the Order is,” he said. “When you have random-seeming-on-paper individuals and businesses applying for the funding, the government is not going to know that this is all part of one, elaborate, coordinated scheme.”

A spokesman for the Kingston Group said that as far as he’s aware, member businesses have applied for and used PPP funds in compliance with the law and none are being investigated for wrongdoing in connection with the loans.

“Business owners in the DCCS employ a significant portion of the workforce in various communities along the Wasatch Front and elsewhere,” spokesman Kent Johnson said in a statement. “These government programs helped save the jobs of thousands of employees, the majority of which are not members or affiliates of the DCCS.”

Also in a prepared statement, the Latter Day Church of Christ said it was “hit hard like many of our friends and neighbors” because of the pandemic-induced closures of 2020.

“The Payroll Protection Program allowed us to keep a number of our valued staff employed when the economic impact of the pandemic was at its worst,” said representatives of the church, which told the government it provided 24 jobs. “Some of those employed by us are economically disadvantaged, and we feel very blessed to have had this program to directly benefit those in need.”

‘Against our beliefs and principles’

Kingston Group members are known for running business enterprises that run the gamut from coal trucking to garbage disposal, and it’s important to recognize the way they govern finances, Nelson said.

Personal incomes or business revenues are shared with church leaders or their designees, former sect members have said, and some have reported being paid not in cash but with a form of credit that’s only redeemable at other Order businesses.

Ex-members also have said that while individuals might own companies on paper, they often report up through a chain of command that ends with Paul Kingston, head of the cooperative.

The Davis County Cooperative Society says group leaders are not involved in the day-to-day management of member businesses and never encourage fraud or other illicit activity.

“The DCCS has been speaking out publicly against fraud and abuse for decades,” the group’s website states. “We re-affirm to our members that this type of behavior goes completely against our beliefs and principles and we cannot support anyone found to be engaged in this type of behavior.”

The group also maintains that Order businesses compensate employees and often pay wages by check or through direct deposit, although it acknowledges running a system of internal credit and exchange between members.

Nelson contends that unusual compensation methods used by members could disqualify their businesses from getting PPP money, which was chiefly meant to help small companies keep their workers on payroll through the turbulence of the pandemic.

Johnson, the Order’s spokesman, countered that Nelson likely misunderstands how cooperatives work.

“Many economic cooperatives exist and conduct business in compliance with all laws and regulations in the State of Utah and the United States, as does the DCCS,” he said.

One of the loan recipients, CTC Trucking, said in a response to The Tribune that it has never paid its employees with “credits” and met all eligibility requirements for PPP funds, which the business used to save employee jobs.

“We believe that we should be held to the same eligibility standards as every other citizen when participating in government programs,” continued the statement, which noted that The Tribune has also received PPP money. “To suggest otherwise is discriminatory and shameful.”

While The Tribune was able to connect 10 PPP recipients to the Order through court documents and state business records, Nelson said his list is longer.

Nelson and his wife, Mary, who grew up inside the sect, helped expose the fraud inside Washakie Renewable Energy, a company operated by two of her first cousins.

The Nelsons also sued leaders of the Davis County Cooperative Society over federal student loans, alleging that they harvested millions of extra dollars through falsified applications. Last year, the couple requested a dismissal of the case, although Nelson said it was because “educational financial fraud safeguards failed” rather than because the complaint was without merit.

Which businesses got loans?

When contacted about the PPP loan to the Davis County Cooperative Society, a Small Business Administration representative noted that lenders, including banks and credit unions, were the first line of review in determining an applicant’s eligibility for the funds.

Marla Trollan, who heads the administration’s Utah office, said small businesses engaged in illegal activity or whose major owners have legal issues were ineligible for the funding. So were companies that have “caused prior loss to the federal government,” she added.

Mountain America Credit Union facilitated the PPP loans for the Order’s church and several of the businesses identified by The Tribune. A statement from the credit union said the institution has helped thousands of small businesses access PPP funds and “reviews all applications to ensure they are complete per SBA guidelines” before forwarding the requests to the federal government.

PPP loan recipients with ties to the Kingston Group include:

  • World Enterprises, a Salt Lake City company with 112 reported employees, got $547,700.

  • Attco Trucking Co., a Salt Lake City-based business better known as CTC Trucking, hauls coal, dirt and construction materials. The company, which reported employing 40 people, received $367,500 in PPP loans last year.

  • Four Corners Precision MFG, a South Salt Lake company that does business as A-1 Disposal, told the federal government it had 35 employees. The waste management company got $201,000 in loans.

  • Standard Industries, a Salt Lake City company that does business as Standard Restaurant Equipment, reported 23 employees and got $186,800.

  • American Digital Systems, a Salt Lake City company with 35 reported employees, got $156,685.

  • A-FAB Engineering, a Salt Lake City firm with 19 reported employees, got $115,600.

  • Fidelity Funding, a Salt Lake City company with 20 reported employees, got $84,100.

  • AAA Security, a home security and fire alarm company based in Salt Lake City, got $38,000 after telling the federal government it provides 12 jobs.

  • CCP Enterprises, a St. George company with six employees, got $21,000.

  • World Enterprises doing business as Advanced Auto, a Murray business with two jobs, got $13,440.

Federal investigators in the Washakie Renewable Energy case said defendants cycled money through AAA Security, A-FAB Engineering, American Digital Systems, World Enterprises, Fidelity Funding, Standard Restaurant Equipment, Attco Trucking Co., and CCP Enterprises. The Tribune reached out to these companies for comment but did not hear back from most of them by deadline.

This story was completed with information from Reveal’s Reporting Networks. revealnews.org/network

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