In the latest legal action involving the polygamous Fundamentalist Church of Jesus Christ of Latter-Day Saints, a district judge ordered Monday to have a water company accused of being a “slush fund” for church leaders turn over its financial records.
After a short hearing held in St. George, 5th District Court Judge Michael Westfall said managers with Twin City Water Works, Inc., have 10 business days to hand over contracts, bank statements and other financial paperwork covering the last two years or risk having the corporate nonprofit operation handed over to a court-appointed receiver.
The water company provides water to the towns of Hildale, Utah and Colorado City, Arizona, but officials say imprisoned polygamist leader Warren Jeffs and others have siphoned some $2 million out of the company and funneled it to the church.
“I want to give Twin City Water Works a chance to control their own destiny,” Westfall said of his decision not to hand the company over to a receiver immediately, citing concerns about whether leaders in the largely polygamous border communities would be cooperative with a court-appointed outsider.
“Everyone is friendly until I throw a receiver into the mix,” he said. “The reason this has worked the way it has is because everybody is friendly.”
The Utah Attorney General’s office requested the court appoint a receiver to prevent the utility from funneling more proceeds to FLDS leaders.
During subpoenaed testimony from the water utility’s management at a St. George hotel in December, TCWW President Sylmar Barlow said he has little or no knowledge about the utility’s financial record and business operations.
When an attorney asked Barlow what qualifications he has to be president, Barlow replied, “I don’t know of any” and when asked if he was responsible for TCWW’s financial reports he said, “I assume that I am.”
Barlow acknowledged he hadn’t seen any financial reports or convened board meetings in the two years since his appointment.
Arizona attorney Rodney Ott, representing the water company, argued that most of the actual evidence against the company was dated, referring to unexplained purchases and other items from between 2002 and 2009.
Barlow has since argued that he was not prepared for the testimony and he would testify differently today, and the clerk for the water company, Sarah Olds, testified in an affidavit filed earlier this year that the utility is paying its bills and is not sending money to the FLDS.
Assistant Attorney General Joni Jones said during Monday’s hearing that such arguments were “too little, too late,” indicating that she had not seen any documentation showing that the company was keeping up with its books.
Westfall stopped short of appointing a receiver immediately, but indicated he wasn’t optimistic that the Twin Cities Water Works would come through with the documentation. He said if they fail to meet the 10-day deadline, he would order a temporary receivership and schedule an evidentiary hearing to determine whether one would be needed longer-term.
The embattled water company has already been the subject of multiple lawsuits, with various entities scrutinizing the company’s financial practicing and alleging ties to the FLDS Church.
Attorneys for the utility pleaded guilty in June to evading taxes in Arizona, agreeing to pay back $390,683 in back taxes and penalties.
The U.S. Department of Justice filed a civil suit alleging that $1.7 million of the company’s proceeds were diverted to the FLDS and its members from 2004 through 2013.
The United Effort Plan, the court-appointed trust operated by the state of Utah that holds most of the land in the two communities, is suing the company as well, and a fiduciary for the trust had asked previously for a judge to place the utility into a receivership.
The UEP filed a suit against the water company in January, claiming it had for years pumped water from the trust’s lands without compensation, and that the water company’s financial support for the FLDS Church results in unfairly high rates for residents.
Willie Jessop, a former FLDS security representative and Hildale businessman, filed his own suit against the water company earlier this year, seeking its assets as a way to pay off debt owed to him by FLDS Church leadership. Jessop won a default judgement against church representatives in 2012 and is owned millions for alleged damages to his businesses and property.
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