Polygamous towns' water utility diverted $1.7 million in proceeds, review finds

The Salt Lake Tribune/March 16, 2015

By Nate Carlisle

The water utility serving the polygamous towns on the Utah-Arizona border diverted $1.7 million to the Fundamentalist Church of Jesus Christ of Latter Day Saints and its members over a decade, according to an accountant working for the U.S. Department of Justice.

That was about one-third of the revenues the utility collected during that time. Most of that money went toward the personal expenses of Joseph Allred, who is the former administrator of Twin City Water Works and the current mayor of Colorado City, Ariz., according to the accountant.

Another $148,003 went to the FLDS Storehouse — the central financing and supply center for the church and its members. The account found that another $181,877 went to a company called Blue Ox Transportation that was helping supply and serve the Yearning For Zion (YFZ) Ranch in Eldorado, Texas.

The findings from Pennsylvania accountant Mark LoManto were included in filings in a Justice Department federal lawsuit against Colorado City and adjoining Hildale, Utah.

LoManto's report also was filed Wednesday in state court in West Jordan in a new motion seeking to force Twin City Water to pay for the water it has pumped and for the 3rd District Court to appoint a receiver to oversee the utility.

Twin City Water Works pumps much of its water from wells belonging to the United Effort Plan (UEP), the polygamous trust the state of Utah seized in 2005.

Jeff Shields, a lawyer for the UEP, contends the utility has pumped for free, charged the towns for the water and created a "slush fund" for the FLDS.

"Our goal is not to shut the water off," Shields said Friday. "Our goal is to distribute the proceeds fairly."

In court papers, lawyers for the utility have said it is financially sound, and a clerk for Twin City Water Works submitted an affidavit saying no money is being diverted to the church. Any decision on whether Twin City Water has to pay for the water or will be put into receivership looks to be months away.

The Justice Department lawsuit in federal court in Phoenix seeks to prevent Hildale and Arizona from discriminating against people who do not follow FLDS President Warren Jeffs.

LoManto analyzed financial records subpoenaed by the Justice Department, though his report says Twin City Water failed to give the Justice Department the underlying receipts and invoices comprising the financial data in the utility's ledgers. LoManto looked at the years 2004 through 2013.

LoManto's report says the $1.7 million the utility diverted hurt its bottom line. Twin City Water finished the decade with a cumulative loss of $52,382.

Previous court filings have included letters to Jeffs from Allred asking permission to use Twin City Water money to pay for Allred's personal expenses, including expenses at his home and for the care of women for whom he was responsible.

In 2006, Allred told Jeffs that "... income from Twin City Water Works ... has been in Mother Bonnie's name."

LoManto found Allred diverted $105,896.87 to Bonnie A. Zitting, though there's no evidence she did any work for the utility.

Allred used $508,517 to pay home utilities and $415,996 on vehicle expenses, LoManto found.

Allred also spent another $208,912 on home furnishings and improvements and about another $100,000 in other various home and vehicle expenses, according to the report. There also was $29,750 spent on what LoManto labeled as "Mothers Cell Phones."

In the federal lawsuit, both sides are waiting for rulings from the judge to determine if the lawsuit will proceed.

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