Grand Jury Returns 12-Count Indictment Charging Diehl In Bankruptcy Fraud Case
Indictment alleges failure to include $1 million in gross income from business involvement related to UTA Front Runner development in Draper
SALT LAKE CITY -- A federal grand jury returned a 12-count indictment late Wednesday afternoon charging Terry Charles Diehl, age 61, of Salt Lake City, with filing false declarations and concealing assets in connection with his Chapter 11 bankruptcy reorganization. Diehl is a Utah real estate developer and former board member of the Utah Transit Authority.
U.S. Attorney for Utah John W. Huber and Special Agent-in-Charge Eric K. Barnhart of the FBI’s Salt Lake Division announced today’s indictment.
“We seek to protect the integrity of the bankruptcy court from those who would exploit its protections because of selfish motivation,” Huber said Wednesday. “The defendant is a former UTA board member. Among other conduct, the indictment alleges that the defendant received more than $1 million in gross income related to a UTA Front Runner real estate development. It further alleges that he knowingly and fraudulently misrepresented that income to the bankruptcy court,” Huber said.
The indictment alleges that several months prior to filing for bankruptcy on March 30, 2012, Diehl set up a company, Skyline Ventures Associates, Inc. (SVA), owned by his two daughters, but managed and controlled by him, to conduct his daily business and financial affairs. Additionally, Diehl caused a SVA business bank account to be opened. The indictment further alleges that although the authorized signatories on the SVA account were his daughters and office manager, Diehl controlled and directed all funds in and out of the account.
The indictment further alleges that despite Diehl's primary obligation to provide for full financial disclosure imposed by federal bankruptcy law, he filed false declarations with the bankruptcy court, knowingly and fraudulently omitting or misrepresenting facts about SVA and the funds he controlled in and out of the SVA account. For example, on Diehl's Statement of Financial Affairs, a bankruptcy filing requiring full disclosure of his current financial status, he omitted SVA, a corporation Diehl clearly managed and controlled in his daily business affairs. In this filing, the indictment alleges Diehl also omitted more than $1 million in gross business income stemming from a UTA Front Runner transit oriented development in Draper, Utah.
The indictment further alleges that on numerous Monthly Operating Reports, filings requiring Diehl to fully disclose all cash receipts, he failed to report all funds he directed in and out of the SVA account. Rather, Diehl reported only a fraction of his monthly cash receipts on his monthly filings. During the period from April 2012 (when he filed his bankruptcy petition) to May 2013 (when Diehl's plan of reorganization was confirmed), Diehl filed 11 Monthly Operating Reports underreporting cash receipts in and out of the SVA account he directed and controlled.
Finally, the indictment alleges that each directive by Diehl to move funds into the SVA account, much of which was not reported on Monthly Operating Reports, was a knowing and fraudulent act to conceal assets of Diehl's bankruptcy estate.
The first five counts of the indictment allege false declarations. The indictment also alleges seven counts of concealment of assets. The potential penalty for each count in the indictment is five years in prison and a fine of $250,000. A summons will be issued for Diehl to appear in federal court on the charges alleged in the indictment.
Indictments are not findings of guilt. Individuals charged in an indictment are presumed innocent unless or until proven guilty in court.
Federal prosecutors in the U.S. Attorney’s Office are prosecuting the case. The case is being investigated by special agents of the FBI and the U.S. Department of Transportation Office of Inspector General.