In early May, a Saratoga Springs man was charged with hacking into the United Airlines website and stealing travel vouchers that he then sold to other people. Ammon Cunningham was charged in 3rd District Court with various computer crimes, theft, communications fraud, and engaging in a pattern of unlawful activity, all second-degree felonies.
Cunningham Hacked United Airlines Website to Obtain Travel Vouchers
According to the charging documents, from approximately July 2012 through September 2012, Cunningham (who went by the alias Jacob Colvin) “unlawfully accessed (hacked) the United Airlines website and obtained Personal Identification (PIN) codes for Electronic Travel Certificates that had been assigned to United customers but had not yet been redeemed by those customers.”
Cunningham Used Vouchers for Himself or Sold Them to Others at Below Market Value
Prosecutors said that, once Cunningham obtained the travel vouchers, “He either used the ETCs for personal travel, or he sold them through various classified ad sites, including Craigslist and KSL.com.” Cunningham was alleged to have used 13 certificates for himself, valued at more than $7,800. Prosecutors also alleged that Cunningham sold some 120 vouchers to others, which were valued at more than $58,000. Prosecutors said Cunningham sold the vouchers at discounted prices, and that one couple purchased two vouchers valued at approximately $2,400 for less than $2,000, and booked a roundtrip vacation from New Jersey to Munich with the vouchers.
Cunningham Contacted United Airlines About “Massive Hole” He Found in Website Using Alias
Interestingly, in September 2012, prosecutors said that Cunningham contacted United Airlines through email using an alias, explaining to United that he had “found a massive hole in the United.com website.” Cunningham told United that he was willing to disclose to them this alleged “massive hole” he had found, but only if United would pay him $10,000 and supply him with first-class airfare to any place in the world for himself, his wife and, his child, the charges set forth.
Cunningham Pleads Guilty, Charge May be Reduced
Now, more than three months after he was charged, Cunningham has pleaded guilty to one count of engaging in a pattern of unlawful activity as part of a plea bargain. As part of the plea deal, the other second-degree felonies of computer crimes, theft, and communications fraud were dismissed. Additionally, prosecutors have agreed to hold Cunningham’s plea in abeyance, meaning that any potential prison sentence will be stayed and the charge could be reduced to a Class A misdemeanor in one year if Cunningham is able to complete 80 hours of community service, he pays restitution, and commits no additional crimes.
After waiving his right to a preliminary hearing, Timothy Lawson, dubbed as former Utah Attorney General Mark Shurtleff’s “fixer,” will stand trial in April 2017 on six felony charges in Salt Lake City’s Third District Court. Johnson stands accused of tax evasion, witness tampering, obstruction of justice, and engaging in a pattern of unlawful activity in connection with allegations of bribery and misconduct inside the attorney general’s office by Shurtleff and his successor, John Swallow.
Lawson Charged in December 2013
Lawson was originally charged in December 2013 following a months-long investigation into the alleged misconduct of Swallow and Shurtleff. Charging documents set forth that Lawson attempted to intimidate several victims of Marc Sessions Jenson, a businessman that was acquitted of defrauding investors as part of the $3.5 billion Mount Holly ski and golf resort planned near Beaver, Utah. Lawson has also been accused of threatening Utah businessman Darl McBride. McBride has said that Lawson threatened to have him beat up if he did not take down a website that painted Mark Robbins, a business associate of Marc Sessions Jenson. Shurtleff himself purportedly later met with McBride and offered to pay McBride $2 million if McBride would agree to take the sight down.
Lawson’s Close Relationship With Shurtleff and Swallow
The charging documents against Lawson also revealed the close relationship between Lawson, Shurtleff, and Swallow. According to prosecutors, Lawson, Shurtleff, and Swallow visited Jenson at his Southern California villa in 2009. Swallow and Lawson also allegedly engaged in more than 680 text messages and phone calls between the two from April 2009 and March 2013, conversing about everything from holiday plans to Swallow’s 2012 election to the FBI’s investigation into Swallow.
Lawson was a Prolific Campaign Fundraiser for Shurtleff
Prosecutors say the evidence against Lawson shows that he was a prodigious campaign fundraiser for Shurtleff, and emails from 2007 and 2008 show that Lawson and Shurtleff discussed fundraisers and meetings where Shurtleff would receive significant campaign contributions. Lawson also allegedly connected Shurtleff to several large donors, including Pre-Paid Legal Services, Mentoring of America, and St. George businessman Jeremy Johnson, who, along with his associates, gave some $200,000 to Shurtleff’s various campaigns.
AG Personnel Questioned Shurtleff and Swallow’s Involvement with Lawson
Shurtleff and Swallow’s involvement with Lawson, which has been alleged to go far beyond campaign fundraising, raised eyebrows at the Attorney General’s office, including from Swallow’s co-deputy, Kirk Torgensen. According to Torgensen, he wrote to Swallow asking, “Why are we dealing with this guy [Lawson]? We cannot ethically deal with this guy outside of Jenson’s counsel. This is inappropriate for Lawson to be doing this.” However, it appears from the charging documents that Swallow did not heed Torgensen’s advice as it related to Lawson.
UPUAA Charge Against Lawson Forewarned of Charges Against Shurtleff and Swallow
The charges against Lawson were the result of months of hard work by Salt Lake County District Attorney Sim Gill, Davis County District Attorney Troy Rawlings, and investigators from the FBI and the Utah Department of Public Safety. At the time of Lawson’s arrest, Troy Rawlings said, “The very nature of the [racketeering] charge means Mr. Lawson wasn’t acting alone or in a vacuum. However, nobody else has been charged to date and all inferences beyond that point would be unfair to comment on.” While Rawlings would not make any further comment about Lawson’s alleged accomplices, we know now that both Shurtleff and Swallow were subsequently charged with similar crimes, including engaging in a pattern of unlawful activity. Shurtleff’s case was recently dismissed, while the case against Swallow marches on.
Lawson Waives Preliminary Hearing
In April, Lawson appeared in Third District Court for what was supposed to be a three-day preliminary hearing. However, at the outset of the hearing, Lawson waived his right to a preliminary hearing, instead opting to go to trial. The court thereafter set an arraignment for June 20th. Lawson pleaded guilty to all of the charges against him at the June 20th hearing. A status hearing was set for August 15th to discuss further issues in the case.
Lawson’s Trial Set for April 2017
As noted, at the August 15th hearing, the court set a trial date for Lawson’s case in April 2017. The trial is scheduled for six-day period, beginning April 13, 2017. Both Shurtleff and Swallow may be called as witnesses in Lawson’s trial.
Preliminary Hearing Set in Social Security Case Against Lawson
Also on August 15th, the court set a November 23rd date for a preliminary hearing in a Social Security fraud case against Lawson that was filed earlier in 2016. In that case, prosecutors have charged Lawson with communications fraud, theft, and making false or inconsistent statements for allegedly lying to the Social Security Administration. Prosecutors say that between April 2012 and September 2013, Lawson twice told administrative judges from the Social Security Office of Disability Adjudication and Review that he had been unemployed or worked fewer than five hours a week. The claims resulted in a January 2014 award of $86,810 to him and his family, court papers say. Prosecutors contend that state workforce services records show that in 2009 and 2010, Lawson reported owning a share in a Marshall Islands-based hovercraft business and operated a gluten-free bakery.
In early 2015, fifteen felonies were charged against former Utah Valley Chamber of Commerce office manager Jeanie Kay Johnson, who stood accused of embezzling more than $200,000. Johnson was charged with one count of engaging in a pattern of unlawful activity, one count of theft, 12 counts of communications fraud, and one count of obstructing justice, all second degree felonies with the exception of the obstruction of justice charge, which is a third-degree felony.
Johnson Falsified Financial Information to Hide Missing Money
According to prosecutors, Johnson was hired by as an office manager, receptionist, and finance manager by the Utah Valley Chamber of Commerce in 2005. Prosecutors said that Johnson thereafter embezzled more than $200,000 from the Chamber between February 2011 and December 2013 and “was able to hide the missing money for years by providing false financial information in the monthly financial reports for the Board of Directors.”
When Discrepancies Were Revealed, Johnson Deleted Financial Information to Hide Her Fraud
State prosecutors further alleged that, when any discrepancies were discovered in the Chamber’s financial reports, Johnson went into the Chamber’s computer system on December 10, 2013 and “deleted the financial information in an effort to hide her actions.” Prosecutors said Johnson illegally obtained the large sum of money through fraudulent reimbursements, unauthorized checks, and false vacation payouts.
Johnson Fired Following Internal Investigation
The Utah Valley Chamber of Commerce fired Johnson in 2014 after an internal investigation purportedly revealed discrepancies in the Chamber’s financial records. In a written statement, the Chamber said:
During the past year, much has been done to update the Chamber’s financial processes. With the additional help of outside experts, the Chamber implemented many new controls and processes to secure the Chamber’s financial accounts, information, communications and records. The Chamber is confident its financial situation is sound and secure with the new controls in place to ensure the proper care and handling of funds contributed by its members and sponsors. While this situation is unfortunate, the Chamber believes it is now stronger and better positioned to succeed as a result.
Johnson Pleads Guilty to Three Felonies
Now, more than 18 months after she was charged, Johnson has pleaded guilty. As part of her guilty plea, Johnson agreed to plead guilty to one count of communications fraud, one count of theft, and one count of obstruction of justice. The remaining 11 counts for communications fraud, as well as the charge for engaging in a pattern of unlawful activity, were dismissed as part of Johnson’s plea deal.
Johnson’s Charges May be Reduced
Furthermore, the court has said Johnson’s charges may be reduced at sentencing on September 20th if Johnson makes a $15,000 restitution payment before sentencing. Johnson’s charges may further be reduced in three years’ time if she complies with all of the terms of her probation.
The Weber County Attorney’s Office announced in late June that it will prosecute six high profile members of the street gang the Titanic Crip Society. The six men were charged with engaging in a pattern of unlawful activity under the Utah Pattern of Unlawful Activity Act (“UPUAA”), as well as other charges ranging from assault, aggravated assault, and aggravated robbery. The UPUAA charges are similar to charges under the UPUAA’s federal counterpart, the Racketeer Influenced and Corrupt Organizations Act, better known as RICO.
Prosecutors Hope UPUAA Charges Will Stymie Gang Violence
According to a recent article in the Salt Lake Tribune, the Titanic Crip Society has had a presence in northern Utah since the 1990s, and that their membership has fluctuated between 10 and 20 members. Weber County prosecutors have said that they hope the new UPUAA charges will help to stymie the activities of the gang, the Tribune article said.
Deputy Weber County Attorney Branden Miles has said of the new charges against six members of the Titanic Crip Society: “We believe a targeted prosecution of their leadership has the potential to disrupt their activities and terminate their existence as a criminal street gang.” Miles also said that the new UPUAA charges represent “a new approach” for Weber County prosecutors in response to gang crime.
New UPUAA Charges Represent First State Racketeering Case Against Gang Leaders in Utah
The charges against the six men – Tamer Ahmed Hebeishy, 32, Sharif Ahmed Hebeishy, 35, Sadat Ahmed Hebeishy, 34, Daniel Ray Lopez, 25, Brock Adam Pickett, 28, and Jaron Michael Sadler, 21 – represent the first such charges targeted at a street gang as a whole since the Utah Supreme Court dissolved a Ogden city-wide gang injunction against the main rivals of the Titanic Crip Society, the Ogden Trece, in 2013.
According to the charging documents, the six men charged were Titanic Crip Society leaders, which the gang refers to as “Big Homies.” As “Big Homies,” the gang’s leaders are removed from the day-to-day criminal activity of the gang that is carried out by younger members (“Little Homies”) on the directions of the leaders. Prosecutors have said that the three Hebeishy brothers charged under the UPUAA are most likely the longest-standing members of the Titanic Crip Society, and that, because of the way the gang is structured, the leaders “are able to observe/portray a ‘gangster’ lifestyle while not fully exposing themselves to the risks of criminal charges.” However, that has all changed with the new charges filed by the Weber County District Attorney’s Office.
Currently, all six of the men charged under the UPUAA are behind bars, most serving time at the Utah State Prison for other crimes. The Tribune’s article reports that “Sharif and Tamer Hebeishy are in prison for drug crimes, while Sadler is serving a prison sentence for obstructing justice, unlawful sexual activity with a minor and attempted assault of a police officer. Lopez is in prison for discharging a firearm, and Pickett is serving a sentence for attempted assault of a prisoner and aggravated assault. Sadat Hebeishy is the only named defendant who is currently being held at the Weber County Jail.”
UPUAA Charges are Result of Joint Investigation Initiated in 2015
The UPUAA charges are the result of an investigation initiated in 2015 by the Ogden-Metro Gang Unit and Weber-Morgan Narcotics Strike Force, with help from the local FBI Violent Crimes Task Force. The investigation began after law enforcement noticed a “troubling increase” in crimes being committed by the members of the Titanic Crip Society. The investigation involved the use of confidential informants, wiretapped telephones and otherwise, to sustain the charges under the UPUAA.
FBI Salt Lake City Supervisory Special Agent John Barrett has said of the investigation: “Those involved in this case spent countless investigative hours, assets and expertise in an effort to combat a problem that poses a significant threat to our communities. Violent gangs plague our streets with drugs, violence and other criminal activity and the FBI remains dedicated to disrupt and dismantle such groups.”
A “New Approach” to Gang Violence, Prosecutors Say
As noted, the new UPUAA charges against the six men represent what Weber County prosecutors call a new approach to curb gang violence. While prosecutors have said they would not rule out bringing back the gang injunction abrogated by the Utah Supreme Court in 2013, prosecutors have said for now that they intend to focus on the Titanic Crip Society leaders under the new UPUAA charges. “With the Supreme Court’s guidance, we know how to properly serve a gang,” Deputy Weber County Attorney Branden Miles said. “We have just been focused on the gang that has recently given us the most significant criminal activity.”
Miles also noted that the new UPUAA charges against the six men are the first such charges targeting gang leaders for racketeering, although Miles did say that there had been several federal RICO cases filed against local gang leaders. The most recent of those federal RICO cases targeted the Tongan Crip Gang in 2010, which sent many of them to federal prison, and left one Tongan Crip Member dead after he was shot by a federal marshal at the federal courthouse in Salt Lake City. The other three previous cases, one in 2006, one in 2003, and one in 2002, saw 15 members of the Tiny Oriental Posse, as well members of the Soldiers of Aryan Culture and members of the King Mafia Disciples all charged under RICO.
Penalties Under the UPUAA
Under the UPUAA, “any person who violates any provision of [the UPUAA] is guilty of 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 Charges or a Gang Injunction?
Aside from the punishments the six men will face, the change in tactics by the Weber County Attorney’s Office is what is most noteworthy about this case. Stymied by the Utah Supreme Court’s decision to overturn the Ogden Trece gang injunction, Weber County prosecutors have turned to the state version of RICO for the first time to do their bidding. If successful, other gangs and/or their leaders may be targeted through state UPUAA prosecutions, adding to the strong authority already wielded by federal prosecutors under RICO. However, if unsuccessful, prosecutors have already intimated that they may try to renew the formerly overruled gang injunction, which may accomplish the same objective as the UPUAA prosecutions, but with an injunction comes the threat that a Utah court will again find the injunction unconstitutional. Until then, prosecutors will watch intently over the proceedings in the Titanic Crip Society case.
Previously, utahricolaw.com reported on the guilty plea of Dwight Shane Baldwin, a Layton businessman accused of bilking money from investors for purported real-estate based ventures for Baldwin’s company and to fund a reality TV show. Now, Baldwin faces up to 60 years in prison after being sentenced in Utah state court.
Judge Blanch Sentences Baldwin to up to 60 Years in Prison
Third District Court Judge James T. Blanch sentenced Baldwin to six terms of one to 15 years at the Utah State Prison. Four of those six terms imposed by Judge Blanch are to run consecutively, meaning Baldwin could be in prison for four to 60 years. Those four terms relate to the securities fraud charges that Baldwin agreed to plead guilty to in exchange for the State dropping eight other charges. The other two sentences, one for theft and one for engaging in a pattern of unlawful activity, will run consecutively with the others.
Baldwin Also Sentenced for Assaulting Jailer
In addition to imposing the six one to 15 year prison terms on Baldwin, Judge Blanch also sentenced Baldwin to jail time served for attacking a Salt Lake County jailer in November 2015. A probable cause affidavit had alleged that Baldwin became angry and shoved, punched, and scratched and tried to gouge the eye of the jailer.
FBI Investigation Leads to Charges Against Baldwin
The FBI began investigating Baldwin in 2013 after receiving reports that the founder of Salt Lake City-based Silverleaf Financial may have been committing investment fraud since 2010 against several investors in a series of loan and property investment deals. In a probable cause affidavit, the FBI said it gathered evidence at one point by sending in an undercover agent to participate in one of the investment negotiations.
The original charging documents filed by the State alleged Baldwin, from 2010 to 2013, solicited investments from individuals for so-called real estate ventures to be undertaken by Baldwin’s company. One such investment scheme hatched by Baldwin persuaded investors to pour $200,000 into a California toy company, the State said. However, according to the State, more than half of that $200,000 was used for unrelated expenses that to other Baldwin companies and/or for personal expenses. The State alleged that another of Baldwin’s schemes involved solicitation of approximately $500,000 from investors to help fund a $1.7 million ABC reality TV series.
Baldwin Previously Pleaded Guilty to Similar Conduct in 2008
What’s more is that Baldwin had actually run into trouble with state securities regulators and law enforcement officials previously in 2007 for similar types of investment activities. However, at that time, Baldwin avoided jail time by entering into a plea bargain. In 2008, Baldwin entered into pleas in abeyance on two felonies and was ordered to pay approximately $200,000 in restitution to victims of his investment activities. Baldwin fulfilled those terms and the charges were subsequently dismissed in 2011, according to court records.
Statements from Utah’s Attorney General
Following the charges in 2015, the Utah Attorney General’s Office released a statement on the investigation and charging of Baldwin. In the statement, Attorney General Sean Reyes was quoted as saying:
This is precisely the type of case that our office will prosecute aggressively and if the allegations are proven, it is a clear example why we will soon launch a White Collar Crime Registry. Every time I see innocent people, no matter their age or financial situation, who hand over their hard-earned money to alleged fraudsters, my commitment to protect Utah citizens deepens. It is why we emphasize that people should verify the legitimacy of a deal or offering, before ever trusting anyone, even close friends and family, with money to invest. We appreciate the fine investigative work on this case performed by our partners, the Utah Division of Securities and the Federal Bureau of Investigation. We also thank the United States Attorney’s Office for inviting us to lead the prosecution of this case. Of course, we presume all defendants are innocent unless we can prove our case and we will continue to pursue this matter in a professional and responsible manner.
Now, following Baldwin’s sentencing, the Attorney General’s Office has released another statement. This time, Sean Reyes was quoted as saying:
It continues to be important that people verify the legitimacy of any deal or offering before ever trusting anyone, even close friends and family, with money to invest. This case is an excellent example of the damage that can be wrought upon innocent victims when trust is violated. We hope citizens will take great precautions, including checking the White Collar Fraud Offender Registry, when making investments of any sort. I cannot emphasize this enough. Fraud destroys lives. Fraud decimates families and businesses. Utahans must do everything in their power to protect themselves while we continue to aggressively investigate and prosecute fraudsters. We appreciate the fine work and cooperation of our partners, the Utah Division of Securities and the Federal Bureau of Investigation. We also thank the United States Attorney’s Office for inviting us to lead the prosecution of this case.
Baldwin’s Potential 60 Year Sentence Serves as a Cautionary Tale
Baldwin’s case serves a cautionary tale for those engaged in the practice of soliciting investors for business ventures, including that those solicitations may result in serious felony charges, which when numerous enough can lead to a charge for engaging in a pattern of unlawful activity. A charge for engaging in a pattern of unlawful activity under the Utah Pattern of Unlawful Activity Act (“UPUAA”) is a second degree felony, which is punishable by one to 15 years in prison, and up to a $10,000 fine. In addition to the penalties prescribed by law, a court may impose other additional penalties on a defendant, including: ordering restitution, ordering the defendant to divest him or herself of any interest in the enterprise for which the defendant was charged, or order the dissolution or reorganization of that enterprise.
Contact our UPUAA Attorneys Today
If you or someone you know has been charged with engaging in a pattern of unlawful activity, or have been charged with a white collar crime or other non-white collar crime, please contact our white collar and criminal defense attorneys today. Our UPUAA attorneys have experience defending claims in state district courts, as well as state appellate courts. Our UPUAA attorneys may be reached confidentially by email at email@example.com, by phone at (801) 323-5000, or through our contact form.
A 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 Karra.Porter@chisjen.com or Mary.Corporon@chrisjen.com.
On 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.
In 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 Karra.Porter@chisjen.com.
Christensen & 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.
Former 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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