Lawsuit accuses Brad Wilson of financial misconduct and forgiving a loan to another Utah politician

The lawsuit — filed by David Peterson, the former CFO of Destination Homes — comes shortly after Wilson started his run for U.S. Senate.

(Rick Egan | The Salt Lake Tribune) Brad Wilson launches his 2024 Senate campaign at The Studio in Draper, on Wednesday, Sept. 27, 2023. A former employee of Destination Homes is suing the company and co-founder Wilson, now a U.S. Senate candidate, over an alleged breach of contract and other financial misgivings.

A lawsuit filed in state court last month accuses soon-to-be-former Utah House speaker and U.S. Senate candidate Brad Wilson of breaching a contract and alleges other financial misconduct at Destination Homes, the homebuilding company Wilson co-founded.

Wilson, along with Destination Homes co-founder David Bailey, are being sued by David Peterson, the former chief financial officer of the company. The complaint was filed Sept. 28 in 3rd District Court in Salt Lake City. Wilson’s attorney calls the suit a political smear by a “disgruntled former employee.”

In the lawsuit, Peterson alleges that after he lent the company $430,000, Wilson refused to pay the agreed-upon interest on the loan and fractured a deal that guaranteed Peterson a share of the stock in the company. Meanwhile, the suit alleges Wilson, who wasn’t yet in the Utah Legislature, lent money to then-state Sen. Greg Bell, who later became lieutenant governor.

Peterson also alleges the money to Bell was later forgiven by Wilson, a move that was intended to help Wilson’s political aspirations.

Utah law prohibits gifts to public officials and loans to public officials at lower-than-market rates, although that is not an issue raised in the lawsuit. Bell declined via text message to comment on the allegation.

Wilson did not respond to a text message requesting comment, but his attorney, Chris Hogle, told The Salt Lake Tribune that Peterson’s lawsuit is baseless.

“David Peterson is a disgruntled former employee of a company that Brad Wilson co-founded,” Hogle said in a statement. “Peterson has sought to transform an unfounded, years-old dispute with his former employer into a groundless lawsuit against Brad Wilson with false allegations timed to smear Brad Wilson and hurt his political campaign. We intend to vigorously defend Mr. Wilson and pursue all available remedies.”

Hogle said in a phone call that the issues raised in the complaint are well over a decade old, and both he and his client believe the lawsuit is a shakedown by an old business associate with suspect timing.

Hogle pointed to statements Peterson made in his own exhibits in the lawsuit that he says support his thinking.

Included in the lawsuit’s attached exhibits are emails Peterson sent to Richard Flint, a colleague of Hogle, in August 2022. In one email, Peterson says, “in order to gain some satisfaction and showcase their lack of ethics or financial integrity I will take random actions at times and places I see fit, things such as a billboard on Beck Street in October or Whistleblowing for Greg Bell owing taxes for forgiveness of debt.”

Peterson says in the same email, “For now, trolling Brad with the right people is an amusing endeavor.”

Alan Mortensen, an attorney representing Peterson, told The Tribune that the timing of the lawsuit has nothing to do with Wilson’s Senate bid. “We had tried to keep it out of the public filings but finally they just forced our hand,” Mortensen said.

The allegations

After years of being neighbors in Bountiful, Wilson one day invited Peterson to ski with him at Snowbasin and offered Peterson the job as CFO of Destination Homes. The lawsuit alleges Wilson told Peterson that Destination Homes was in a poor financial situation and Peterson “made it clear” the only way he’d join the company was if there was the potential for him to be given a stock agreement that guaranteed he would own a stake in the company.

Peterson asked for the company’s financial statements, but those were, “never produced,” the lawsuit says. Ultimately, Peterson agreed to start working at the company without a stock agreement in place.

Once inside the company, Peterson alleges, “Destination Homes had no equity and Defendant Wilson and Defendant Bailey were also insolvent yet were spending large amounts of company money to make Brad Wilson appear successful by buying luxury cars, as he wanted to run for the Utah House of Representatives,” the lawsuit says.

Peterson lent $430,000 to Destination Homes to help the company purchase a neighborhood development in Layton, “in exchange for an agreement for repayment with interest and finalization” of Peterson’s deal to acquire stock in the company, according to the suit.

Around this time, Wilson allegedly lent $400,000 of Destination Homes’ money to Bell and another real estate developer. The lawsuit says this caused financial strain in the company, and “Because Defendant Wilson needed help in getting his foot in the political door, he didn’t want to pressure Bell to pay off the debt.”

Bell served as Utah’s lieutenant governor for four years under Gov. Gary Herbert until September 2013. Bell said at the time he was returning to the private sector and the recent recession had caused him financial strain. Bell is a former real estate attorney, and he’s listed as “inactive” with the Utah State Bar. He currently serves as the executive director of the Utah Hospital Association.

The lawsuit says Destination Homes made interest payments and paid Peterson’s loan down to $280,000, but that Wilson, “announced unilaterally that he would not be paying interest anymore on the company’s debt to Mr. Peterson.”

By that point, Peterson demanded the stock agreement be put in place to ensure he had a stake in the company and the contract was signed, the suit says.

However, Destination Homes later claimed it was unable to repay Peterson for his loan, but “Destination Homes, on instructions from Brad Wilson, forgave the loan to Greg Bell,” and told Peterson as CFO not to report the loan forgiveness to the IRS, the lawsuit alleges.

Peterson later resigned from his job at the company, after “it became apparent that Mr. Peterson may need to line up in bankruptcy court to collect his debts from Destination Homes,” the lawsuit reads.

A contract attached to the complaint says Peterson would receive payment for his stock ownership within 30 days of a “sales event.” Peterson argues Larry H. Miller Group of Company’s purchase of Destination Homes in 2022 qualifies as a “sales event” that would require the company to pay Peterson. He demanded payment following the sale, but the lawsuit says the defendants, “have failed to provide payment.”

A Larry H. Miller Group spokesperson did not respond to messages from The Tribune.

In a footnote, Peterson’s attorneys anticipate that Wilson, “will claim that the only reason suit was filed was because Speaker Wilson has announced he intends to replace Senator Romney,” but Peterson demanded payment well before he announced his Senate bid.

“Regardless of whether Speaker Wilson’s actions towards his friend and neighbor should give voters pause of electing him to any office, this was a matter that could have been resolved privately and confidentially, without a public filing, back when Speaker Wilson was only a member of the Utah House of Representatives, had none of Larry H. Miller’s money and was not in a position of House Leadership or wanting to take his brand to a national level as a United States Senator,” the lawsuit says.

Peterson did not state an exact dollar amount he’d like to receive in damages, but he asked the court to award him 4.75% of what the Millers paid for Destination Homes — the share he said he was promised — plus damages and attorneys fees.

After months of speculation, Wilson formally launched his bid for U.S. Senate on Sept. 27, just a day before Peterson’s lawsuit was filed. He announced earlier in the month he would step down from his position as Utah House Speaker effective Nov. 15.