Bruce Wisan, Fraudulent Fiduciary

2008-09-20 06:26:53

By Donald Richter

Bruce Wisan, the court-appointed special fiduciary for the United Effort Plan Trust, not only is stealing assets of the trust he is supposed to be protecting but also has defrauded the court to obtain an $8.8 million default judgment against the former trustees.

On August 29, 2008, the FLDS Church filed a lawsuit in 3^rd District Court in Utah asking the court to set aside the $8.8 million judgment because it was based on false, misleading, and incomplete information.

Prior to May 28, 2005, when Wisan was appointed fiduciary for the UEP, an agreement was in place for Aspen Management Investments to sell 436 acres of land that had been conveyed to them in Apple Valley, Utah, to Advantum, Inc., for $2,000,000. Wisan and his attorneys made a careful study of land values in the area and concluded that the proposed sale was “the best deal available to the trust at this time.” The $4,587 per acre offered by Advantum was higher than appraisals of between $2,500 and $3,000 per acre that Wisan had access to and consistent with a comparable sale of land contiguous to part of the 436 acres for $4,580 per acre.

Settlement Agreement

At a hearing on September 20, 2005, Wisan recommended that the Court approve a Settlement Agreement, which authorized the sale of the 436 acres to Advantum and resolved all other claims that Wisan asserted on UEP land in Apple Valley, involving the following acreage:

715 acres deeded to the Trust by Aspen Management Investments

436 acres sold to Advantum, Inc., for $2,000,000

160 acres sold to Team Stewart Limited Partnership for approximately $800,000, which was used to pay taxes and other expenses related to the UEP

70 acres conveyed to Washington County School District in exchange for a school building and land in Hildale, Utah, a transaction made under the discretion of the previous trustees, which was well within Trust guidelines and which blessed and built up the community

All parties to this settlement agreed to “forever discharge each other… from any and all liability… [and] controversies of every kind and description based on the claims and defenses relating to the Apple Valley Property.”

Wisan was anxious for this sale to be finalized to obtain funds to pay himself for managing the trust. On November 22, 2005, he requested and obtained court approval of $45,900.57 in Special Fiduciary fees and $84,874.73 in attorney fees for researching and negotiating the sale of the land in Apple Valley to Advantum. These fees were paid from the proceeds of the sale.

He then continued to make exorbitant billings for his own services and those of his attorneys until he had consumed the entire proceeds of the sale in litigation designed to dissipate the assets of the Trust for his own personal gain.

Fraud in the May 25, 2006, Complaint

Following the Settlement Agreement, land values increased in Apple Valley. On May 25, 2006, Wisan filed a complaint in Third District Court against the former UEP trustees, accusing them of transferring property in Apple Valley for less than its actual value to entities purportedly controlled by Warren Jeffs and/or other trustees. The property referred to in this complaint was the identical property Wisan himself had urged the sale of and concerning which all liabilities and claims had been settled in the Agreement of September 20, 2005.

Wisan represented to the Court that 1,311 acres of the Apple Valley property had been transferred to Aspen Management for a promissory note in the amount of $4 million, which was later transferred to Lyle Jeffs, brother of Warren S. Jeffs and one of the FLDS leaders. He claimed that the Trust apparently received nothing in return for this transfer. Wisan alleged that the value of the property was in excess of $4 million.

Wisan failed to disclose to the Court that the 1,311 acres in dispute was involved in several additional transactions, all of which were the subject of the Settlement Agreement of September 20, 2005. All of the property was accounted for and was acknowledged in the Settlement Agreement and the related court proceedings either to have been sold at fair market value and the proceeds used for the benefit of the trust or to have been deeded to the trust.

Wisan, therefore, had no basis for alleging that the former trustees were guilty of misappropriating Trust property. Any sales of land by the prior administration he considers dissipating the assets of the Trust. Any sales he makes to fatten his own pocketbook are just good management.

When the former trustees did not respond to Wisan’s complaint, the Court entered their defaults.

Fraud Concerning Land Transactions at the March 1, 2007, Hearing

At the evidentiary hearing held to determine the amount of damages, Wisan practiced fraud on the Court by asserting that the same 436 acres he had represented in 2005 as having been sold at fair market value for $2,000,000 was actually worth $6,467,200, basing his claim on 2007 land values and ignoring the fact that at least 106 acres were unusable because of highly expansive blue clay. Wisan also failed to remind the Court that the sale of this property was approved by the Court in 2005 on his own recommendation.

More importantly, Wisan failed to disclose the fact that this very property was the subject of prior releases in the Settlement Agreement of 2005.

In addition Wisan asserted that the 70 acres transferred to Washington County in exchange for community ownership of a school building and land in Hildale had been transferred without consideration. In reality, the community benefited by receiving a school building and land.

Fraud Concerning Personal Property at the March 1, 2007, Hearing

Prior to the hearing, Wisan had reported to the court that the Trust “is comprised solely of real estate, and that the Trust has no personal property, no income, and no source of income other than donation.” In spite of this fact, he alleged that several items of personal property belonging to the Trust and having a total value of $2,202,459 had been misappropriated, even though he still retained physical possession of many of those items. Furthermore, he proceeded to inflate the alleged value of the property, often using a figure many times greater than its real value. The following are the items of personal property in dispute and their alleged values:

►$539,421 for a Cozy Log building

This portable building is the personal property of Kelly Fischer, who acquired it for $8,000 and holds the bill of sale for the same. Kelly moved the building prior to Wisan’s takeover of the Trust when he relocated his log-home business. Remaining on the land are the office and the utility connections.

The value claimed for this building was determined from a tax assessment that included other property. Wisan’s alleged value is 67 times the price paid for the building by Kelly Fischer.

►$140,000 for a “set up and operating” modular motel unit

This unit is the personal property of Merril Jessop and was purchased from Richard Holm for $20,000 plus shipping expenses. The building was not set up and operating nor even assembled and was removed from the land prior to Wisan’s assuming control of the Trust.

►$60,000 for two modular housing units

These units were the personal property of others and were in such dilapidated condition that the county tax assessors did not include them on the tax roles because they were not considered to be worth salvage value.

One unit was hauled off and burned to clear the land. The other was removed by its owner.

►$87,833 for an irrigation pivot

The pivot is the personal property of Jessop Farms and was never removed from the land. The equipment was non-functional at the time Wisan took over the Trust and was not worth the alleged value, which apparently was determined by taking the value of a new working pivot in Apple Valley.

►$114,905 for a grain elevator

The grain elevator is the personal property of Four Square Milling, which was making payments for the equipment on a loan from FDIC. Even though the elevator is personal business property, it was returned to the land when Wisan objected to its removal and was present at the time of the evidentiary hearing.

►$471,300 for potato processing equipment

This equipment is personal business property of JHD Farms. It was moved because the company found that the climate in Colorado City is too warm for the effective storage of potatoes.

Fraud Involving Fiduciary and Attorney Fees

At the evidentiary hearing, Wisan claimed $277,836.15 in fiduciary fees and $1,452,967.67 in attorney fees. These fees included all expenses from the time Wisan assumed control of the Trust and were only partly related to the breach of fiduciary claims on which the $8.8 million in damages was awarded.

Bleeding the UEP Trust

As a result of the $8.8 million default judgment, Wisan has been seizing and liquidating assets of the Trust, most notably Harker Farms in Beryl Valley, where he took control of 400 acres of land as well as cash and equipment. He then purchased in his own name half of the farm at a sheriff’s auction for $2.3 million on June 11, 2007, and the other half at auction for $2 million on September 18, 2007. According to the Salt Lake Tribune of June 12, 2007, the farm is valued at between $7.3 and $9.5 million.

More recently Wisan has been trying to negotiate sale of a large tract of UEP farmland in Arizona known as Berry Knoll. The Salt Lake Tribune of August 25, 2008, reports that the land is worth as much as $9 million. Wisan says he has a buyer willing to pay about $3 million. As justification for this sale, he claims that neither he nor his law firm have been paid in over a year and are owed $1.25 million. The Salt Lake Tribune of August 5, 2005, reported that Wisan is charging $205 per hour for his “services.”

Harker Farms and other UEP property represent the lifetime consecrations of faithful FLDS members.

Just who is guilty of misappropriating the assets of the UEP Trust?

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