Former getaway driver arrested on charges of human trafficking

dt.common.streams.StreamServerA formerly convicted getaway driver in a deadly 1996 Utah motel robbery was recently arrested on felony charges of human trafficking, participating in a pattern of unlawful activity, obstruction of justice, and witness tampering.

Rettenberger Charged With Engaging in a Pattern of Unlawful Activity

Todd Jeremy Rettenberger, 37, was charged in Farmington’s 2nd District Court with two counts each of second-degree felony human trafficking for forced sexual exploitation and aggravated exploitation of prostitution; another second-degree felony count of participating in a pattern of unlawful activity; and third-degree felony counts of obstructing justice and tampering with a witness.

Rettenberger Threatened and Assaulted Two Women, Prosecutors Say

A probable cause statement sets forth that Rettenberger had taken two women from Utah to Oregon and back, forcing each woman into prostitution.  The two women told investigators that Rettenberger was their “pimp.”  One of the women admitted to investigators that while she had become involved in prostitution to keep up with her heroin addiction, during her time with Rettenberger, he threatened her and assaulted her on several occasions in order to keep her from leaving.

The other woman told investigators that she feared Rettenberger, who she described as a man with “a scary background,” and that he “did not like to be told ‘no.’”  Specifically, the woman told investigators that Rettenberger would refer to the 1996 motel slaying in which he was convicted, and that the women “understood the defendant to mean that if she crossed him, she would be killed like the [motel] clerk.  The other woman also said that when she tried to quit prostitution, Rettenberger would “take it out” on her with “violent sex acts” that included choking.  Prosecutors say that when the two women were arrested, Rettenberger told them to delete everything from their cellphones and not to mention his name.

Rettenberger’s Involvement in 1996 Death of Motel 6 Clerk

As mentioned, in 1996, Rettenberger, then 18, acted as a lookout and getaway driver in the slaying death of a Woods Cross Motel 6 clerk during a bungled robbery attempt.  In 2002, Rettenberger agreed to plead guilty to manslaughter charges arising out of the motel clerk’s death upon the promise that he would testify against his other two co-defendants, David Valken-Leduc and Elliott Rashad Harper.  Both Valken-Leduc and Harper were convicted, but Valken-Leduc’s conviction was subsequently overturned.  Rettenberger, who at the time had already spent five years in the Davis County jail, was sentenced to probation as part of his plea.

Following his conviction for the motel clerk’s death, Valken-Leduc was sentenced to five years to life in prison.  However, in 2009, Valke-Deluc’s conviction was vacated.  Valken-Deluc entered into what is known as an Alford plea, whereby he agreed to plead to a lesser charge of second-degree felony manslaughter with three years of probation.  The Alford plea meant that Valken-Deluc could maintain his innocence while conceding that prosecutors probably had enough evidence to convict him.

Rettenberger Arrested in 2011 on Charges of Exploiting Prostitutes and Drugs

In 2011, Rettenberger was again arrested, this time on charges of exploiting prostitutes, as well as drug possession in a separate case.  In July 2012, Rettenberger was sentenced to prison for up to five years on both cases.  Rettenberger was paroled in November, 2015, and wasted no time returning to a life of crime.

Prosecutors allege that Rettenberger’s prostitution ring began in early January 2016 and extended through mid-February.  The Board of Pardons and Parole issued a warrant for Rettenberger for absconding in early February.  Rettenberger was eventually arrested in Idaho on February 26th and booked into the Ada County Jail.  On March 4th, Rettenberger’s parole was revoked and he was transported back to the Utah State Prison.

Criminal Charges Under the UPUAA

In order to charge an individual with engaging in a pattern of unlawful activity under the Utah Pattern of Unlawful Activity Act (“UPUAA”), the state must show that the individual engaged “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 interrelated by distinguishing characteristics.”  When taken together, “the episodes shall demonstrated continuing unlawful conduct and be related to each other or to the enterprise.”

Under the UPUAA, approximately 64 predicate offenses are listed, which amount to “unlawful activity” under the statute.  Included in those offenses are the charges for which Rettenberger was arrested.  If the State is able to have at least three episodes of Rettenberger’s unlawful activity bound over for trial, then the State will be allowed to pursue its pattern of unlawful activity charge against Rettenberger.

A UPUAA charge is a second-degree felony, which carries a potential penalty of one to 15 years in prison and up to a $5,000 fine.  In addition to the aforementioned punishments, a person convicted under the UPUAA may be ordered to pay the state, if the case was brought by the attorney general, or to the county, if the county attorney or district attorney brought case, “the costs of investigating and prosecuting the offense and the costs of securing the forfeitures provided for” by the statute.  In lieu of any fine otherwise authorized by law, a defendant may not be fined more than twice the amount of the net proceeds the defendant received from his or her unlawful activity.  A court may also: 1) order restitution; 2) order the person to divest him or herself of any interest or control in any enterprise (as defined by the statute); 3) impose reasonable restrictions on the future activities of the person; and 4) order dissolution or reorganization of any enterprise.

UPUAA Provides Civil Remedies for Victims of a Pattern of Unlawful Activity

Beyond the criminal penalties for violating the UPUAA, the statute also provides a civil remedy for persons injured by a pattern of unlawful activity.  Such a claim allows a victim to recover double damages against a UPUAA defendant, and must be brought within three years.  The civil portion of the UPUAA also allows a prevailing party to recover “the cost of suit, including reasonable attorney fees.”  However, a victim must set forth their claims with particularity, and prove those claims by clear and convincing evidence.

Contact Our UPUAA Team Today

If you or someone you know has been charged under the UPUAA, please contact our Utah Rico attorneys for a consultation.  Your potential criminal, as well as civil exposure, under the UPUAA is serious, and requires the assistance of attorneys well-versed in criminal and civil law.  Our UPUAA attorneys can be reached by telephone at (801) 323-5000 or by email at or

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Copyright 2016

Davis County businessman pleads guilty to securities fraud, theft, and engaging in a pattern of unlawful activity

Shane Baldwin1On April 1, 2016, Davis County resident, Dwight Shane Baldwin, who previously ran a string of Salt Lake City venture-capital, private-equity and real estate companies, pleaded guilty to four counts of securities fraud, one count of theft, and one count of engaging in a pattern of unlawful activity.  Each of the counts is a second-degree felony, punishable by one to 15 years in prison.  As part of the plea bargain with Baldwin, the State agreed to drop other charges in light of his guilty plea.

Baldwin Bilked Investors Money and Used it for Unrelated/Personal Expenses

According to the charging documents filed against Baldwin, from 2010 to 2013, Baldwin solicited funds from persons for purported real estate-based ventures for Baldwin’s company.  Specifically, the charging documents allege that Baldwin swindled investors by promising huge returns and making other bogus statements that persuaded them to pour $200,000 into a California toy company.  However, instead, more than half of that $200,000 was used for unrelated expenses that went to other Baldwin companies and for personal expenses.

Keith Woodwell, director of the Utah Division of Securities said of Baldwin, “I think this case boils down to not being honest with investors.  If you tell investors that their money is going to be used for one purpose and you use it for something else, you’ve committed securities fraud.”

The Utah Attorney General’s Office described Baldwin’s scheme this way:

Typically, Baldwin promised investors large returns within short periods of time with little to no risk.  In connection with the offer and sale of these investments, Baldwin made numerous material misrepresentations and omissions including the risks associated with the investment, how the investment funds would be spent, and Baldwin’s ability to close the promised real estate transactions.

Baldwin Takes Investors for a Ride

More specifically, during a three month period in December 2007, the State said Baldwin urged Nicole Lindley and Matthew Lee to put money in Silver Leaf Capital Partners 1, or SLCP1, (a company owned by Baldwin).  Court documents said the Lindleys wanted to invest in toy maker GarageCo, which SLCP1 was to won 80 percent of.

As part of the investment pitch, Baldwin proposed to invest $1 million into SLCP1, a California-based company.  According to court documents, if Lindley and Lee each invested $100,000, each would own 10 percent of SLCP1, a shell company, and Silver Leaf would fund the remaining $800,000.

Baldwin told Lindley her money would be invested for three to five months, at most.  Afterward, she would receive her investment, plus about $300,000 in profit, according to the documents.

Lee claims he was told his $100,000 would be repaid in four months and that he and Lindley each would be allowed to own about 17 percent of SLCP1.

Lindley became worried when Baldwin and an employee failed to provide her with weekly updates.  She said Lee told her he had been to the company’s office to look at its books and found that half of their investments had been used to pay expenses incurred by some of Baldwin’s other Silver Leaf companies.

Court documents show money was spent for personal expenses, restaurants, advertising and insurance for Silver Leaf Development.  About $37,500 paid for a party in Park City during the 2008 Sundance Film Festival. Another $6,600 was taken out in cash.

Baldwin, Long the Subject of Investigation

Baldwin has long been a subject of investigation by regulators. At the same time he was soliciting Lindley and Lee, Baldwin was also trying to persuade the securities division to approve his company’s application for an investment adviser license.

The application was denied. Securities division investigators determined the request contained false and misleading information. Baldwin incorrectly represented himself and the company as being licensed before and during the application process, division officials said.

Lindley and Lee Were Not Baldwin’s Only Victims

Lindley and Lee were just some of Baldwin’s victims.  Other victims of Baldwin include:

  • Multiple civil lawsuits Baldwin is facing as a result of the “chaos” he created with his alleged frauds.
  • A criminal case filed in early April alleging he offered “essentially worthless” notes as collateral for a $500,000 loan he solicited in March. That came after he had entered into a plea in abeyance in 2010 and promised to make restitution of $200,000 to investors.
  • He provided a $10,000 check to 1st Out Bail Bonds to cover his fee on a $100,000 bail from an account he allegedly knew did not have sufficient funds.
  • A second case in late April charged him with two other counts of communications fraud and theft stemming from the bounced bail check.
  • Upheaval in his personal life, which was followed by his seeking mental-health treatment, according to charging documents.

Baldwin will be sentenced on May 26, 2016, but what Baldwin owes the bilked investors in terms of restitution will be determined after sentencing.

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The unauthorized practice of law: woman posing as lawyer sentenced to jail and banned from legal profession

lawyer2n-2-webIn late December 2014, a woman was arrested in Summit County on allegations that she had been impersonating a Utah attorney and handling cases in court, representing actual clients under another attorney’s name.  The woman, identified as Karla Carbo, then 29 and residing in South Jordan, was arrested and booked into the Summit County Jail on suspicion of felony fraud, forgery and identity theft.

Carbo Held Self Out as an Attorney, Using Real Attorney’s Bar Information

Investigators said that Carbo had held herself out as an attorney in several jurisdictions, including impersonating an attorney at least times in the six months before her arrest.  Carbo was arrested within a week negotiating felony counts down to misdemeanors on behalf of her client in Summit County.  In fact it was that exact plea deal that garnered the attention of the Utah Bar Association.  The Bar told police that Carbo had been using a legitimate attorney’s name and bar number to represent clients without a license.

Police said that Carbo had represented to the courts that her name was Karla Stirling Fierro, but that the bar number Carbo gave as her own actually belonged to Utah attorney Karla Stirling.  In an interview, Stirling said, “It’s been shocking to hear that there’s been somebody else whose doing this with my name and my bar number.  I mean, who would take it that far to full-on impersonate someone and use a legitimate bar number?”

Stirling Was Completely Unaware Carbo Was Posing as Her

Stirling said that she found out about Carbo’s impersonation of her when she was contacted by the Draper City Justice Court about a pending hearing.  Stirling told the court she had no idea what they were talking about, and that she did not even practice criminal law.  “I said, ‘I don’t know what this is. There must be some mistake.’ And they went back and checked and said, ‘Oh no, this is no mistake,'” Stirling said.

“I don’t do any criminal work. I’ve never done any criminal work or immigration or personal injury. I’ve done business contracts, real estate,” Stirling said.  “I have not done any litigation matters in Utah.  There shouldn’t be any court files with my name or my bar number in Utah whatsoever.”

Soon after the court contacted Stirling, the Summit County Attorney’s Office got a call from the Utah State Bar telling them “that Fierro was not an attorney.”

Utah AG’s Office Takes Over Prosecution

In April 2015, the Utah Attorney General’s Office took over the prosecution of Carbo’s case.  That meant that Summit County prosecutor’s agreed to dismiss the charges pending against Carbo there, while new charges would be filed by the State in 3rd District Court.  The State charged Carbo with 12 felony counts, including one count each of second-degree felony engaging in a pattern of unlawful activity and identity fraud, along with five counts of second-degree felony communications fraud.  The charges also include five counts of third-degree felony forgery, court records show.

Carbo Pleads Guilty to Felony Counts, Including UPUAA Count

In July 2015, Carbo accepted a plea deal from State prosecutors, which required her to plead guilty to second-degree felony counts of pattern of unlawful activity, identity fraud, communication fraud, and one third-degree felony count of forgery.  In exchange for Carbo’s pleas, prosecutors dismissed eight other counts.  As part of the plea deal, Carbo agreed to pay more than $7,000 in restitution – money she earned as legal fees for her misrepresented services.  As it related to sentencing, prosecutors told Judge Keith Kelly at the plea hearing that they would be asking the court to impose a 90-day jail sentence with probation to follow that.

Carbo Sentenced to 62 Days in Jail, Ordered to Pay Restitution, and Banished From Legal Profession

At the sentencing hearing in September 2015, Judge Kelly sentenced Carbo to 62 days in jail.  Judge Kelly suspended potential prison terms of up to 15 years and, per a plea agreement negotiated by attorneys, ordered her to serve 90 days in jail, but gave her credit for 28 days already served.  Judge Kelly also imposed 36 months of probation, which required Carbo to complete 75 hours of community service, as well as obtain treatment to address theft issues.  Carbo was also ordered to pay approximately $7,274 in restitution to five clients wo paid for her fraudulent legal services.  Finally, Judge Kelly ordered that Carbo not engage in any legal-related employment.

Carbo’s attorney said of the sentence, “She understands she has harmed these people. She understands she has harmed the legal system.”  “She’s a hardworking mother and she just wants to put this behind her,” her attorney added.

Carbo Victims Offered “Do-Over”

As it relates to the plea deal Carbo negotiated just prior to her arrest, Summit County attorney Matthew Bates said, “This is a very serious matter because we know of at least one person out there now who has pled guilty to a crime without having a competent attorney.”  Further, Bates said that the judge in that case had sent a notice to the defendant telling him what had happened and scheduled a new court date, at which time the defendant will be allowed to be appointed a real attorney as well as withdraw his guilty plea if he wants to, and that Bates’ office would not object to a “do-over.”

“Legally, he has pretty solid grounds to withdraw his plea if he wanted to because the plea was essentially uncounseled and an uncounseled plea is a violation of the Constitution,” Bates said.

While, Carbo’s criminal matter may have been resolved, the Utah Pattern of Unlawful Activity Act (“UPUAA”) allows persons harmed by a pattern of unlawful activity to file a civil suit against the wrongdoer.  That portion of the UPUAA allows a person injured through a pattern of unlawful activity to recover “twice the damages” he or she “sustains,” as well as “the costs of suit, including reasonable attorney fees” if they prevail.  A civil action under the UPUAA must be commenced “within three years after the conduct prohibited by Section 76-10-1603 terminates or the cause of action accrues, whichever is later.”

Contact Our UPUAA Team Today

To date it does not appear that any of Carbo’s victims have filed suit against her under the civil prong of the UPUAA, but they still have time.  If you or someone you know has been a victim of a pattern of unlawful activity, do not hesitate to call our UPUAA attorney team for a consultation.  Conversely, if you have been arrested and charged with a violation of the UPUAA, which is a second-degree felony, please contact our UPUAA attorneys for a consultation as well.  Our UPUAA attorneys can be reached by telephone at (801) 323-5000 or by email at

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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

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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.

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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


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.