C&J appeals UPUAA conviction arising out of alleged theft by check scheme

dt.common.streams.StreamServerChristensen & Jensen (“C&J”) appellate attorney Karra Porter has appealed her client’s conviction of 12 counts of theft and one count of engaging in a pattern of unlawful activity arising out of an alleged theft by check scheme.  The State alleged that C&J’s client, a manager in a limited liability company, in connection with his co-defendant wrote 28 bad checks from the LLC’s bank account to the alleged victims.

Jury Finds Defendants Guilty of 12 Counts of Theft and One Count of a Pattern f Unlawful Activity

In the charging documents, the State charged C&J’s client and his codefendant with 28 counts of theft in connection with the 28 bad checks he and his co-defendant allegedly wrote from their LLC’s account, and one count of engaging in a pattern of unlawful activity.

During the trial, the defendants moved to dismiss the State’s case at the end of the State’s evidence, but that motion was denied.  However, the State voluntarily dismissed two counts against defendants on its own during the trial.  Of the remaining counts, the jury found the defendants guilty on 12 counts of theft, and a single count of engaging in a pattern of unlawful activity.

The trial court sentenced C&J’s client to prison, but suspended the sentence in favor of probation.  As part of that probation, the court ordered C&J’s client to serve one-year in the Salt Lake County Jail.  Additionally, the trial court also ordered C&J’s client to pay restitution to the alleged victims in the amount of approximately $190,000.  C&J’s client appealed both his convictions and the restitution award separately, which the Utah Court of Appeals consolidated into a single appeal.

C&J Asserts that Court Erred in Jury Instructions

As it relates to the UPUAA conviction, C&J’s client argues that the UPUAA count should be dismissed, and/or his conviction reversed, based on the trial court’s failure to instruct the jury on all the required elements of the Utah Pattern of Unlawful Activity Act (“UPUAA”), and because “wrongful appropriation” is not a predicate offense for purposes of the UPUAA.

Under the UPUAA, the State must allege and prove, among other things, that the defendant engaged in a “pattern of unlawful activity.”  In this case, the State submitted a proposed jury instruction on that element, to which C&J’s client’s trial counsel did not object.  The instruction read in pertinent part:

“Pattern of Unlawful Activity” means engaging in conduct which constitutes the commission of at least three episodes of unlawful activity, which episodes are not isolated, but have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics. Taken together, the episodes shall demonstrate continuing unlawful conduct and be related either to each other or to the enterprise. The most recent act constituting part of a pattern of unlawful activity as defined shall have occurred within 5 years of the commission of the next preceeding [sic] act alleged as part of the pattern.

Pattern of Unlawful Activity Must be Over a “Substantial Period of Time”

In her appeal brief, Karra argues that “[w]hile the instruction is a quote from part of the Act … it fails to require the jury to find a required element of a pattern under UPUAA, i.e., that the required predicate acts occurred over a ‘substantial period of time.’”  The reference to “substantial period of time” refers to what is known as the “continuity” element under the UPUAA, which was added to the statutory definition of a pattern of unlawful activity by the Utah Supreme Court following the U.S. Supreme Court’s decision in Sedima, S.P.R.L. v. Imrex.

In H.J. Inc. v. Northwestern Bell Telephone Co., the U.S. Supreme Court clarified that continuity must be shown in order to sustain a conviction under federal RICO.  There the Court said, “[c]ontinuity may be demonstrated over a closed period by proving a series of related predicates extending over a substantial period of time[.]”

Similarly, in Hill v. Estate of Allred, the Utah Supreme Court adopted a similar interpretation of the UPUAA’s pattern requirement.  The Supreme Court in Hill held that “[t]he proper test for determining whether there was a pattern of unlawful activity, is whether there was a ‘series of related predicates extending over a substantial period of time’ or a demonstrated threat of continuing unlawful activity and not whether there were multiple schemes.”

Karra argues that in light of the holding in Hill, “[t]he State’s instruction given by the trial court omitted the key requirement that the related predicates extend over a ‘substantial period of time.’” Karra says while the Utah Supreme Court has not had occasion to determine what constitutes a “substantial period of time” under Hill, the court has consistently looked to federal law in interpreting Utah’s UPUAA.  Under federal law, courts have “overwhelmingly” held “that a period of less than one year is insufficient – as a matter of law – to constitute a ‘substantial period of time’ under RICO,” Karra’s brief sets forth.

In the present case, Karra states that “11 of the 12 checks were written in a single three-and-one-half month period, plainly not a ‘substantial period of time.’”  Furthermore, even if the outlying check was added to the alleged pattern, it would still only constitute nine months, again insufficient for purposes of establishing continuity for purposes of the UPUAA, Karra argues.

“Wrongful Appropriation” is Not a Predicate Offense for Purposes of the UPUAA

Aside from the “continuity” issue, Karra asserts that the State’s alleged predicate act of “wrongful appropriation” is not one of the recognized predicates acts under the UPUAA.  The UPUAA lists approximately 64 predicate acts which qualify as “unlawful activity,” but wrongful appropriation is not among those.  Therefore, Karra has argued that if her client’s “convictions are reversed in order to address wrongful appropriation,” then “the UPUAA conviction must also be reversed.”

The instant appeal highlights the importance of jury instructions, and how one essential missing element in an instruction can lead to a conviction.  It also shows how the UPUAA is intertwined with federal RICO, and as a result, how the Utah Supreme Court interprets the UPUAA within the broader federal RICO context.  Furthermore, it underscores the importance of ensuring that the charging documents include a proper predicate offense for purposes of a UPUAA charge.

Karra will argue her client’s case to the Utah Court of Appeals on May 26, 2016.  If you or someone you know has been charged with engaging in a pattern of unlawful activity, please call C&J’s UPUAA attorneys at (801) 323-5000, or email Karra directly at Karra.Porter@chrisjen.com.

* Photo Cred.: avvo.com

Ex-Utah County Commissioner charged with communications fraud and engaging in a pattern of unlawful activity after he allegedly posed as LDS Church leader

1661897Former Utah County Commissioner Gary Jay Anderson and businessman Alan McKee have been charged with three counts of communications fraud and one count of engaging in a pattern of unlawful activity for allegedly posing as LDS Church leaders in an attempt to defraud a construction company out of $1.2 million.

All four charges filed against Mr. Anderson and Mr. McKee in 3rd District Court by the Utah Attorney General’s Office are second-degree felonies, which carry the potential penalties of one to 15 years in prison.

Anderson and McKee Posed as LDS Church Officials From 2011 to 2015

According to an article from the Salt Lake Tribune, investigators wrote in the charging documents that Mr. Anderson and Mr. McKee impersonated LDS Church officials from 2011 to 2015 in order to attract investors to what the pair said was a plan to establish a rail line and an industrial park on LDS Church land in Elberta, Utah.

Apparently, employees of the LDS Church’s land management corporation have acknowledged that they discussed a potential rail service with Mr. McKee, but that the proposal stalled in 2013 after Mr. McKee failed to follow through.  Mr. McKee had been introduced to the Church’s officials by several Utah County commissioners, including Mr. Anderson.

McKee and Anderson Defraud Ames Construction

During the same time Mr. McKee was in talks with the LDS Church, he was also corresponding with Ames Construction.  According to investigators, Mr. McKee sent Ames letters on LDS Church letterhead, which purported to be from people connected to the Church and its land management corporation.  The letters allegedly discussed the industrial park and showed support for Mr. McKee’s involvement in the project, even going so far as to praise Mr. McKee’s earlier work on the project.

As part of the correspondence with Ames was a 2013 email from a Yahoo account that Mr. McKee claimed belonged to “Eric Peling,” who supposedly worked for the Church’s land management company.  The email apologized that the substance of the communication was not on official letterhead, but that the LDS Church was “making financial payouts” in connection to the rail line and set meetings to finalize a $4 million payout from the Church to Ames Construction and Mr. McKee.

Ames’ regional vice president, Mark Brennan, met with Mr. McKee and someone who identified himself as “Mr. Peling,” but LDS Church officials later said there is no church employee by that name, investigators claimed.

While Mr. McKee was trying to garner Ames participation in the rail line and industrial park, Mr. McKee was also speaking with Mr. Brennan about a personal business deal to purchase the LDS Church’s surplus farm equipment at a discount.  Mr. McKee claimed to be a “preferred buyer” for the Church’s equipment and said he could act as a go-between for Mr. Brennan and the Church.  Mr. Brennan paid Mr. McKee $110,000 for the equipment, but it was never delivered.

Throughout the negotiations with Mr. McKee, Mr. Brennan received numerous phone calls from a man identifying himself as “Stevenson,” which continually reassured Mr. Brennan that the Church was committed to the pending rail line project and the equipment deal.  However, after listening to two of the recorded conversations between Mr. Brennan and “Stevenson,” investigators determined that the voice of the caller was actually Mr. Anderson.

Anderson and McKee Defraud McKee’s Friend and Fellow Churchgoer

In addition to defrauding Ames, investigators claim that Mr. McKee also defrauded a fellow churchgoer out of $750,000 after Mr. McKee claimed to be a “preferred buyer” of foreclosed farm and construction equipment.  However, the business that Mr. McKee said he could buy the equipment from never existed.  Even still, someone claiming to be the president of the company called Mr. McKee’s friend and sent him numerous text messages regarding the purchase of the equipment.  Again, investigators determined that the purported president was in fact Mr. Anderson.

Investigators seized the cellphones of Mr. McKee and Mr. Anderson and found text messages between them, coordinating communications with the alleged victims.  Mr. Anderson at times told the victims he was Mr. McKee’s attorney; he later told investigators he was not Mr. McKee’s attorney, but received $10,000 per month from Mr. McKee for “consulting” services.

Investigators reviewed Mr. McKee and Mr. Anderson’s finances and found several transactions between them.  They found that Mr. McKee was shifting money around his accounts and accounts to his business, Ophir Minerals and Aggregate, LLC.  The company was named by the Utah County Commission as “business of the year” in 2011, while Mr.  Anderson was serving on the Utah County Commission.

LDS Church Releases Statement on Charges

LDS Church spokesman Eric Hawkins released a prepared statement Monday regarding the charges.

“Two individuals have been charged with fraud for claiming to be or represent (former) Bishop Gary E. Stevenson during their business dealings.  Elder Stevenson was serving as the presiding bishop of the church at that time.  He does not know these individuals, has never spoken with them, and was completely unaware of their activities,” Hawkins said in the statement.  “The church alerted authorities as soon as it learned of the matter, and Elder Stevenson has provided a statement to prosecutors confirming he was not involved in this brazen scheme, which attempted to misuse the good name of the church and the office of the presiding bishop,” Hawkins said.

* Photo cred.: deseretnews.com

Apple stock scheme lands Utah man in prison

wall-street-HPursuant to the Utah Pattern of Unlawful Activity Act (“UPUAA”), the state must prove that an individual engaged in a “pattern of unlawful activity.”  As defined by the statute, a “‘[p]attern of unlawful activity’ means engaging in conduct which constitutes the commission of at least three episodes of unlawful activity.”  The UPUAA lists approximately 64 violations of Utah law that constitute unlawful activity for purposes of the UPUAA.  A Violation of the Utah Uniform Securities Act is included within the offenses that constitute “unlawful activity” under the UPUAA.

In a case that has involved an investigation and lawsuit by the Securities and Exchange Commission (“SEC”), a federal prosecution for obstruction of justice and providing false information, and state charges for securities fraud and engaging in a pattern of unlawful activity, Third District Judge Elizabeth Hruby-Mills recently sentenced Roger S. Bliss to a minimum of four years in the Utah State Prison.  Mr. Bliss’ sentence follows his guilty plea to four counts of communications fraud and one count of engaging in a pattern of unlawful activity.  Judge Hruby-Mills said that Mr. Bliss’ four year sentence will run consecutively with his one-year prison term imposed from federal court as it relates to the charges of obstruction of justice and providing false information.

SEC Files Suit

In February 2015, the SEC sued Mr. Bliss in Utah federal court.  In its complaint, the SEC alleged Mr. Bliss solicited investors by offering them a membership in purported investment club.  Mr. Bliss communicated to potential investors that he could day trade (speculation in securities) Apple stock for annual returns of 100 to 300 percent and that he had not lost money on a day trade in the last six years, the SEC said.

In order to further entice investors, Mr. Bliss told them that he was trading more than $300 million in assets.  However, the SEC has said that Mr. Bliss’ brokerage account actually showed losses of at least $3 million over a three year period, with an ending balance of only $32,000.

According to court papers filed by the SEC, Mr. Bliss allegedly structured the scheme as an investment club following a meeting with attorneys, whereby the attorneys told him that structuring the scheme as an investment club would keep him from having to register as an investment adviser or a broker-dealer.

SEC Obtains TRO and Asset Freeze

On the same day the SEC lawsuit was filed, a Utah federal court also entered a temporary restraining order and asset freeze against Mr. Bliss.  In July 2015, the SEC filed a motion for an order to show cause, claiming that Mr. Bliss had violated the court’s asset freeze when he failed to disclose ownership of a catamaran and had the boat removed from his property five days after the asset freeze was entered.  In response to the SEC’s motion, Mr. Bliss said in a sworn declaration that his brother-in-law, Kevin Fortney, who had not been named in the SEC’s lawsuit, owned the boat but stored it at his house in Bear Lake during the off-season.

Mr. Bliss Held in Contempt

Following the statements in Mr. Bliss’ sworn declaration, U.S. District Judge Robert J. Shelby held Mr. Bliss in civil contempt.  Judge Shelby stayed any sanctions against Mr. Bliss, and, instead, referred the matter to the U.S. Attorney’s Office for the District of Utah for a consideration of whether criminal charges should be brought against Mr. Shelby for criminal contempt.

Mr. Bliss and Mr. Fortney Indicted in Utah Federal Court

In August 2015, Mr. Bliss and Mr. Fortney were indicted by a federal grand jury for allegedly lying about the ownership of the catamaran during the SEC’s investigation.  Mr. Bliss ultimately pled guilty to the federal charges, and was sentenced to a one-year prison term.

As previously noted, State charges were also filed against Mr. Bliss in connection with his alleged Apple investment scheme, including four counts of securities fraud and one count of engaging in a pattern of unlawful activity.  The State was able to include a charge for engaging in a pattern of unlawful because they had alleged four “episodes” of securities fraud attributable to Mr. Bliss.  A charge under the UPUAA is a second degree felony, but also carries the potential penalties of cost of suit, restitution, disgorgement, or other reasonable restrictions that may be placed on the future activities or investments of the individual, including ordering the dissolution or reorganization of any enterprise as defined by the UPUAA.

Mr. Bliss Ordered to Pay Restitution in Addition to Prison Time

Mr. Bliss ultimately pled guilty to the State charges, which led to the court imposing a four-year sentence against him.  In addition to sentencing Mr. Bliss to prison, the court also ordered him to pay approximately $21 million in restitution to the victims of his securities scheme.

Utah Supreme Court holds that UPUAA allows “prevailing” plaintiff to recover “reasonable attorney’s fee” in Westgate v. Consumer Protection Group

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The Utah Pattern of Unlawful Activity Act (“UPUAA”) provides a private right of action for persons “injured by a pattern of unlawful activity.”  As part of this private right of action, the statute entitles a “prevailing party” to “recover … a reasonable attorney’s fee.”

In a recent appeal to the Utah Supreme Court handled by Christensen & Jensen (“C&J”) attorney Karra Porter, the Supreme Court held that while the Utah Uniform Arbitration Act (“UUAA”) does not authorize an arbitration panel to award attorney fees for court proceedings confirming the panel’s decision, the UPUAA allows prevailing plaintiffs to recover a reasonable attorney fee.  Accordingly, the Supreme Court confirmed the panel’s award of attorney fees expended during the arbitration, as well as granting the appellee’s request for attorney fees associated with the appeal.

On appeal, Westgate argued that the arbitration panel had no authority to award attorney fees for the court proceedings confirming the panel’s decision, and that the arbitration panel manifestly disregarded the law by awarding attorney’s fees in excess of the amount Consumer Protection Group (“CPG”) agreed to pay their lawyer.

C&J has been pursuing this case for more than a decade now.  In 2002, Westgate sued CPG for various alleged torts and breaches of contract.  Then, in 2005, CPG raised counterclaims under the UPUAA.  Under the UPUAA, a party may force arbitration of fraud claims, which Westgate took advantage of in 2008.

In 2010, an arbitration panel resolved the UPUAA claims in CPG’s favor.  However, before the arbitration panel ruled on CPG’s request for attorney fees, Westgate discovered that one of the arbitrators was a first cousin of a shareholder at the law firm representing CPG.  As a result, Westgate moved the district court to vacate the panel’s decision.  The district court granted Westgate’s motion, CPG appealed, and the Supreme Court reversed, but without ruling on CPG’s request for attorney fees.

The case then went back to the arbitration panel, which declined to award fees for pre-award arbitration litigation, but ordered approximately $558,810.30 for work performed during the arbitration and approximately $88,829.50 for work in what the panel called “post-arbitration proceedings.”  Westgate thereafter again moved the district court to vacate the panel’s decision, challenging the fee awards.  The district court denied Westgate’s motion, and Westgate appealed to the Utah Supreme Court.

As to whether the arbitration panel exceeded the scope of its authority by awarding attorney fees for post-arbitration proceedings, the Supreme Court held that the section 122 of the UUAA does not authorize an arbitration panel to award post-arbitration fees.  According to the Supreme Court:

The decision-makers most familiar with CPG’s attorneys’ work during the confirmation proceedings and resulting appeal were the courts that presided over those confirmation proceedings and resulting appeal. We think it best to assign those courts sole responsibility for granting attorney fees in those proceedings, and we therefore conclude that the panel exceeded its authority when it ordered Westgate to pay post- arbitration attorney fees.

In relation to the second issue raised on appeal, namely whether the arbitration panel acted in manifest disregard of the law by allowing CPG to collect attorney fees in excess of the contracted amount, the Supreme Court held that the arbitration panel did not manifestly disregard the law in awarding attorney fees to CPG as the prevailing party.  In fact, the Supreme Court said that not only was the panel allowed to make such an award, but also that such an award was compelled under the UPUAA.

Instead of challenging the panel’s authority to award fees for arbitration, Westgate challenged the method the panel used to calculate the fees it awarded to CPG.  The panel determined that the reasonable fee award to CPG was approximately $558,810.30, which it arrived at by multiplying reasonable hours by a reasonable market rate.  Westgate asserted that the panel’s calculations were in error, and that Utah law required the panel to cap the attorney fees at the amount that CPG contracted to pay.  The Supreme Court disagreed, holding:

Ultimately, because the UPUAA does not expressly limit a plaintiff’s attorney fees to those actually incurred and there is no controlling Utah case law interpreting this specific question, the arbitration panel did not commit an obvious error in its calculation of reasonable attorney fees. The district court’s order confirming the panel’s award of $558,810.30 is affirmed.

Finally, the Supreme Court addressed CPG’s request for attorney fees as it related to the instant appeal.  There, the Supreme Court granted CPG’s request for attorney fees as it related to the appeal, finding that the UPUAA authorized attorney fees related to an appeal.

What does it mean to “devise” a scheme to defraud under the Utah communications fraud statute? Utah Court of Appeals affirms communications fraud conviction in State v. Hawkins.

2016-01-CourtofAppealsIn order to sustain a charge under the Utah Pattern of Unlawful Activity Act (“UPUAA”), the State must prove that a defendant engaged in “at least three episodes of unlawful activity.”  The UPUAA includes “communications fraud” within its definition of “unlawful activity” for purposes of the statute.

In a recent case before the Utah Court of Appeals, the appellate court affirmed the conviction of Clair Rulon Hawkins for communications fraud arising out of a fraud scheme related to real property near Park City, Utah.  Mr. Hawkins was initially charged with three counts of communications fraud and one count of engaging in a pattern of unlawful activity, but only the two counts of communications fraud went forward to trial.  As a result, the State could not sustain its UPUAA charge against Mr. Hawkins.

A jury acquitted Mr. Hawkins on the first count of communications fraud, but convicted him on the second.  The second count alleged that the victim owned a business in Colorado, which was ultimately sold, realizing approximately $1 million in profit.  The victim spoke with Ms. Chapple, VP and a Director of Empire Homes, over the phone and arranged a time where he could come to Utah to meet with Empire.

When he met with the victim, Mr. Hawkins provided certain assurances regarding the victim’s potential investment in the development.  Upon these assurances, the victim decided to purchase two lots in the development, putting approximately $423,000 down on each lot.  However, nothing went as promised, and the victim lost his investment.

Following the trial, Mr. Hawkins appealed his conviction.  On appeal, Mr. Hawkins, among other things, argued that the trial court erred in its determination that sufficient evidence established that he “devised” the alleged fraudulent scheme, because, as he put it, the district court equated “participation” in a scheme to having “devised” the scheme.

In its opinion, the Court of Appeals explained that “the trial evidence showed that Hawkins devised a scheme to entice the victim to buy property based on a promise that Empire Homes would take care of everything.”  “In furtherance of that scheme,” Mr. Hawkins made a number of representations to the victim that were simply not true, including that utilities were not a problem, funding was not a problem, and Empire Homes had an insurance policy that would cover any loss should the home they built sell for less than promised.

To further persuade the victim, the court found that Mr. Hawkins represented to the victim that the developer would treat the victim and his family to a cruise when in fact the victim’s money was used to pay for the cruise.  Lastly, after the victim had purchased one of the lots, Mr. Hawkins created and had the victim sign a risk disclosure statement, which effectively revoked every promise Mr. Hawkins made to the victim.

Upon the foregoing evidence, the Court of Appeals concluded:

From the evidence, the jury could reasonably conclude that Hawkins knew that no private trust existed to fund the Deer Canyon Development but that he nevertheless affirmatively represented the existence of such a trust; that Hawkins knew that utilities presented a problem, but affirmatively represented they did not; that Hawkins knew that the developer would not pay for a Disney cruise, but represented that it would; that Hawkins knew that no insurance policy guaranteed the sale price of the homes; and that Hawkins knew the falsity of everything he promised, but promised it all anyway and then conceived a risk disclosure statement repudiating his promises in an effort to shield himself from liability. Moreover, from evidence of Hawkins’s role in every stage of the scheme, the jury could reasonably conclude that he not only acted to execute someone else’s scheme, but that he also had a hand in devising it.

SECURE Strike Task Force Arrests Man for Selling Counterfeit Merchandise

Recently, the Utah County Attorney General’s Office SECURE Strike Force arrested 28-year-old Marcelo Christian Veizaga for selling counterfeit items to unsuspecting individual throughout Salt Lake County over a period of several months.

Marcelo Christian Veizaga ArrestIts likely that you’ve seen someone selling marked down items on the Internet or out of the trunk of their car in a parking lot. You also probably wondered whether those sales were legal or if these products were even what the seller said they were. Recently, the Utah County Attorney General’s Office SECURE Strike Force arrested 28-year-old Marcelo Christian Veizaga for selling counterfeit items to unsuspecting individual throughout Salt Lake County over a period of several months. Some of the counterfeit items that Mr. Veizaga was purportedly selling included Beats by Dre headphones, Instyler hair styling devices, and Beachbody workout DVDs. He is also alleged to have been selling a prescription drug that is only available through a licensed pharmacist.

According to the news report, SECURE had been investigating Mr. Veizaga for several weeks before they made the arrest. Sgt. Kevin Pepper, a member of the SECURE Strike Force, said, “Some of the products like the beat headphones they aren`t going to be the same quality as the actual product itself so these people even though they are paying half price they`re getting ripped off, and that he suspected it’s coming from Asia, an Asian country according to some of the boxes, I suspect it`s coming from China.”

As part of their investigation, SECURE filed for three separate search warrants, one for Mr. Veizaga’s apartment, one for his storage unit, and the other for his car. Execution of the search warrants revealed boxes of counterfeit merchandise and thousands of dollars in cash in all three locations. In conjunction with his illegal activity, Mr. Veizaga has been charged with engaging in a pattern of unlawful activity, failure to disclose the origin of recording, criminal simulation, communications fraud and distributing prescription drugs without a license, all of which are felonies.

Salt Lake Valley Protective Agency Owner Pleads Guilty, to Pay Back Over $300k

Michael Anthony Vigil, the owner of Salt Lake Valley Protective Agency pled guilty to a number of charges involving the withholding of money from the State or his own employees.

Michael Anthony Vigil GuiltyMichael Anthony Vigil, the owner of Salt Lake Valley Protective Agency pled guilty to a number of charges involving the withholding of money from the State or his own employees.   Mr. Vigil’s guilty plea comes even after he had fiercely defended his company’s track record. In response to a warning issued against his company in 2009, Mr. Vigil wrote:

Our employees are our true strenghts (sic) … (The claim that) people are jumping ship left and right … is absolutely not true. We have maintained most of our current staff for well over one year (remarkable for the security industry), and the key players have been the same since our conception … If anyone … wants to know the truth about Salt Lake Valley Protective Agency, and our operations, please come on by our office,” he wrote. “We have nothing to hide, and would love to show you what we mean when we say ‘Redefining Professionalism’ (the company motto).

According to a recent news report, Mr. Vigil as part of his guilty plea, has agreed to pay back his former employees $101,847 in unpaid wages and the State over $215,000 in tax withholdings he never paid.

The Attorney General’s Office alleged that Mr. Vigil’s company, Salt Lake Valley Protective Agency, engaged in a pattern or unlawful conduct whereby the company would issue paychecks to employees without properly funding that account from which the checks were to be cashed. In most instances the employees simply quit because he or she wasn’t receiving a paycheck, and in response Mr. Vigil would just hire new employees and start the scheme all over again.

At trial, the State presented evidence that over 70 of Mr. Vigil’s employees of former employees had received partial or no pay at all during the time they worked for Mr. Vigil. According to the State, Mr. Vigil also failed to timely pay tax returns and didn’t accurately account for tax returns for employee wages from 2006 through 2010. Upon this evidence, Mr. Vigil accepted the State’s plea deal, and was subsequently sentenced for ailing to render a proper tax return, a third-degree felony; tax evasion — intent to evade; unlawful deal of property by a fiduciary; theft of services; and engaging in a pattern of unlawful activity, the last four all second-degree felonies. However, in order to get Mr. Vigil to accept the plea, the State agreed to dismiss four counts of failing to render a proper tax return against Mr. Vigil.

Update: Utah Supreme Court Reverses Court of Appeals’ Decision in Grace Kelson Case

In the fall of 2014, the Utah Supreme Court ruled to reverse a 2012 Utah Court of Appeals decision in the Grace Kelson case.

Grace Kelson Verdict Overturned

In the fall of 2014, the Utah Supreme Court ruled to reverse a 2012 Utah Court of Appeals decision in the Grace Kelson case, which had vacated Ms. Kelson’s conviction for pattern of unlawful activity and reversed and remanded for a new trial on all other charges. The Utah Supreme Court’s decision remanded the case back to the court of appeals for further consideration of any remaining issues in the case, namely to consider an alternative ground for reversal of Ms. Kelson’s convictions that the court of appeals did not consider.

As background, in or around October 2001, Ms. Kelson and the owners of a mortgage company attempted to purchase a $15 million letter of credit to fund the two development projects. In order to secure the letter of credit, Ms. Kelson and the owners had to raise $125,000. As a result, they set about persuading friends, colleagues, and the families of their friends and colleagues, to provide funds for the letter of credit. In exchange for funding the letter of credit, the investors received promissory notes signed by Ms. Kelson for amounts several times larger than the amounts they provided. The promissory notes stated a financial services company that Ms. Kelson was the registered agent of would pay the investors within thirty days. However, Ms. Kelson failed to secure the line of credit and the investors were never paid. Ms. Kelson was subsequently charged and convicted on three counts of securities fraud, one count of offering or selling unregistered securities; one count of sales by an unlicensed broker-dealer, agent, or investment advisor; and one count of engaging in a pattern of unlawful activity. Ms. Kelson appealed her convictions.

On appeal, Ms. Kelson argued that her convictions should be overturned on the basis of ineffective assistance of counsel, and that the trial court erred in denying her motion for directed verdict because the court misapplied the UPUAA. The Utah Court of Appeals agreed, overturning Ms. Kelson’s UPUAA conviction and remanding for a new trial on all other charges. Specifically as it related to the pattern of unlawful activity conviction, Ms. Kelson argued that her activity in this case didn’t constitute a pattern of unlawful activity as a matter of Utah law. The court of appeals agreed. According, to the holding in Hill v. Estate of Allred, “[t]he proper test for determining whether there was a pattern of unlawful activity is whether there was `a series of related predicates extending over a substantial period of time’ or a demonstrated threat of continuing unlawful activity and not whether there were multiple schemes.” In the eyes of the court of appeals, the State had failed to satisfy the Hill test because:

Although Kelson’s actions involved multiple alleged crimes committed for the common purpose of obtaining cash, Kelson’s alleged crimes took place over a matter of days. Kelson first alerted Employee about the opportunity shortly before October 11, 2001, and all checks exchanged for promissory notes were deposited by October 15, 2001. Thus, Kelson’s alleged unlawful activity took place over a “closed period,” and the State was required to show “‘a series of related predicates extending over a substantial period of time.'” The State does not contend that it has done so, nor could it have made such a showing. As the Supreme Court noted in H.J., “[p]redicate acts extending over a few weeks or months,” which do not threaten “future criminal conduct,” do not constitute a substantial period of time sufficient to show continuity. Accordingly, Kelson’s acts over the course of only a few days are insufficient as a matter of law to satisfy Hill’s requirement that a pattern of unlawful activity must occur over a substantial period of time.

 

The State thereafter filed a petition of certiorari to the Utah Supreme Court, but did not challenge the court of appeals ruling on the pattern of unlawful activity conviction. The Utah Supreme Court disagreed with the court of appeals ruling on the securities conviction, and overturned the decision. The Utah Supreme Court reasoned “the jury instruction in question was an accurate statement of the underlying criminal law and not a burden-shifting evidentiary presumption.” As a result, the Utah Supreme Court “reject[ed] Kelson’s claims of ineffective assistance of counsel and plain error, and reverse[d] and remand[ed] to the court of appeals,” for further consideration of any remaining issues in the case.

While Ms. Kelson’s vacated convictions for securities fraud were ultimately overturned by the Utah Supreme Court, the court of appeals decision regarding the UPUAA has stood. The court of appeals decision is important because it further solidifies the Hill test, which recognizes that in order to constitute a pattern of unlawful activity under Utah law, the criminal activity must extend over a “substantial period of time.” If it does not, then a UPUAA charge may not be sustained as a matter of law. It remains to be seen what will happen to the rest of Ms. Kelson’s appeal, but at least her case has produced one favorable result, even if her convictions are ultimately upheld by the court of appeals.

Update: All Charges Dismissed Against Former Provo Councilman Steven Turley

In February of this year, the last of ten felony charges against former Provo council member Steven Turley was dismissed.

Steve Turley Charges DroppedIn February of this year, the last of ten felony charges against former Provo council member Steven Turley was dismissed. Previously, we wrote about the dismissal of three counts of communications fraud in Mr. Turley’s case in 2013. Through the entire judicial process Mr. Turley has always maintained his innocence, claiming, “I did nothing wrong. I went about regular business.” According to Turley, the charges against him were motivated by “political enemies,” and an overzealous Utah County Attorney’s Office.   “They tried to create victims,” he said. “As we go through this list of alleged victims, they have voluntarily provided statements, such as, ‘We were never defrauded.'”

In 2011, around the same time Turley was charged criminally, Provo city mayor released a separate civil ethics investigation report, which found that Turley had violated the Municipal Officers’ and Employees’ Ethics Act, and as a result he should be dismissed from the council. The report’s author, retired 4th District Judge Anthony Schofield, admitted in his report that he was under time constraints and that he could only find five instances where he found Turley violated the ethics code. Even still, Schofield’s investigation found that Turley failed to disclose ownership in property that the council was taking action on. Schofield also reported that Turley also failed to disclose his interest in swapping U.S. Forest Service land for property in Rock Canyon. Turley was “disappointed” by Schofield’s report and said that he believed Schofield was not given enough time to look into the accusations or Turley’s response.

Even in light of Schofield’s report and the laundry list of charges against him, Turley pressed on, eventually winning dismissal of all charges against him. However, he has paid a heavy price in his fight to vindicate his himself. Provo mayor John Curtis, who once spearheaded the movement calling for Turley’s resignation, has said that the former councilman has paid a heavy price and deserves a fresh start. “For a lot of people, they’re happy to have this over. I’m very pleased for Steve. I’m very pleased for his family.” When asked if he might ever return to politics, Turley said he would continue “to serve the community,” but it might be by taking his kids for a walk, and not through politics. “Quite frankly, it has devastated our family,” and “it’s a shame that we had to go through that.”

Mr. Turley’s case provides a cautionary tale for politicians engaging in real estate transactions or other business dealings. Ultimately Mr. Turley’s conduct even if not illegal or unethical drew the ire of his fellow politicians and result in the demise of his political career. It was only after approximately four years in the judicial system that Mr. Turley has been able to vindicate himself, even though the time has taken its toll on Mr. Turley and his family.

Ex-Attorney General Mark Shurtleff Eagerly Awaits Preliminary Hearing

n July 2014, both Swallow and Shurtleff were arrested on various charges including bribery, accepting gifts, tampering with witnesses and evidence, and engaging in a pattern of unlawful conduct.

John Swallow and Mark Shurtleff TrialsUnless you’ve been living on the moon for the year or so you have undoubtedly heard about the arrests of John Swallow and Mark Shurtleff. In July 2014, both Swallow and Shurtleff were arrested on various charges including bribery, accepting gifts, tampering with witnesses and evidence, and engaging in a pattern of unlawful conduct. In all, Swallow, who was forced from office less than a year into his first term as Attorney General, was charged with eleven felonies and two misdemeanors, including multiple counts of receiving or soliciting bribes, accepting gifts, tampering with evidence, obstructing justice and participating in a pattern of unlawful conduct. As for his compatriot Shurtleff, who served as Attorney General for twelve years before Swallow took office, he was charged with ten felonies, including receiving or soliciting bribes, accepting gifts, tampering with witnesses and evidence, and participating in a pattern of unlawful conduct.

Swallow’s preliminary hearing has been set for June 8, 2015, and Shurtleff’s is set for one week later on June 15th. According to a recent news report, Shurtleff is anxious for his day in court. “It’s time to get this evidence before a judge and we’re very excited it’s going to happen in June. I look forward to telling the rest of the story that y’all haven’t heard yet,” Shurtleff told reporters after appearing in 3rd District Court recently. According to Shurtleff’s lawyer, “It will be a year in June. His name has been vilified in the press and he wants the opportunity to hear what the state claims it has, what it thinks it can prove and really start the process now of clearing his name.”

To date, no plea offers have been made to either Swallow or Shurtleff, and that’s just fine by Shurtleff and his lawyer. “And I think that with my client that would probably be a waste of time,” Shurtleff’s lawyer said. “You can say that again,” said Shurtleff, as he stood next to his lawyer.

A pre-trial hearing is scheduled for May 22. As for the looming preliminary hearing, Shurtleff’s lawyer says, “I really don’t know what the state is planning to do .. I don’t know what the criminal information will look like. I don’t know what evidence they think they have. … I really don’t know what the case will look like at that point.” Following the preliminary hearings we will know more about the potential fates of Swallow and Shurtleff, but for now we will have to wait until June. Stay tuned.