Thousands of acres, multiple homes tied to RaPower-3 owner could go on auction block starting with iconic parcel on July 18

Written by Matthew Ward Category: Featured News Published: 18 June 2019

Thousands of acres of Millard County land and as much as $1.2 million in local residential property may soon come up for auction—the next chapter in a $50 million solar energy fraud saga that culminated last year in a federal court judgment against RaPower-3 and its owner, Delta man Neldon Johnson, who allegedly bilked investors and the U.S. Treasury out of millions of dollars starting in 2005.

The first public notice announcing an auction of real property is in the Chronicle Progress now.

Fitting the arc of Johnson’s alleged fraud and eventual downfall, the first sale will be of parcel number HD-4658-1.

According to property records available online from the Millard County Recorder, the 75-acre parcel has an assessed value of close to $150,000.

A snapshot attached to the online records shows the skeletal remains of towers, hoisted toward the sky, carrying what Johnson and his associates claimed to duped investors were “thermal lenses,” capable of capturing sunlight with the eventual creation of renewable energy in the form of electricity.

The federal court judge in the civil case brought against Johnson in 2015, USA v. RaPower-3 et al, ordered a court-appointed receiver disgorge the ill-gotten proceeds of Johnson’s years-long folly, finding that far from a failed solar energy venture, RaPower-3 was nothing more than a good, old American tax avoidance scheme.

A 144-page document titled “Findings of Fact and Conclusions of Law,” compiled and signed by U.S. District Judge David Nuffer and filed by the court in October last year, finally ended permanently Johnson’s long run and the civil case against him.

The judge laid bare a scheme designed to allow “investors” who purchased “thermal lenses” to use the purchase as a way to deduct the costs from their income taxes.

A graphic produced by RaPower-3 as a way to market the scheme showed customers how purchasing from “one to a thousand” lenses could be used to zero out their federal income tax burden. In an example found in the company’s marketing materials, RaPower-3 reported how someone who purchased 10 lenses could essentially leverage the purchase—paying a $1,050 down payment per lens—to earn a $10,500 tax credit. The lenses were sold for $30,000 each—with RaPower-3 providing 70 percent financing at zero percent interest and allowing customers to pay the balance with annual payments over 30 years.

Bonus contracts were also awarded customers who referred their friends and family. The court showed how those payments were essentially to be utilized as a means for customers to record depreciation on their lenses—thereby reducing their tax liabilities in the future.

The judge’s findings of fact showed how Johnson and two cohorts referred customers to select accountants and tax preparers—usually only after the customers complained they were being audited by the IRS over their dubious tax deductions.

Johnson’s shenanigans even ensnared local lawyer Todd Anderson, Delta City’s contract attorney, in the court drama that unfolded between 2015 and 2018.

According to court documents in the case, Anderson prepared a 2012 letter on Anderson Law Center letterhead, essentially providing a veneer of legitimacy to Johnson’s tax scheme.

The letter opens with the line, “To help you, as a taxpayer, understand the possible tax saving benefits of purchasing energy equipment through RaPower-3, we have assembled the following information so that you can consult with your own tax professional about the potential tax advantages of entering the energy market by owning RaPower-3 energy equipment.”

The letter then outlines four methods whereby RaPower customers could reduce their tax liability. A disclaimer at the bottom of the letter specifies its purpose as purely informational and “does not represent personal tax advice.”

Curiously, the court records show that Jessica Anderson, Todd Anderson’s wife and an attorney herself, first worked with Johnson on the supposed tax benefits of his scheme in 2010—the records also indicate she eventually came to realize what RaPower-3 was attempting to do and withdrew as its attorney.

Eventually Anderson and his wife were deposed in the case against Johnson. Todd Anderson was even compelled to turn over documents in the case he withheld despite a subpoena. He and his attorneys attempted to thwart that effort, but were unsuccessful, according to court records.

Anderson declined to comment when reached Monday.

The court forced Johnson to remove all items from his company’s websites that served to legitimize his tax scheme and replace them with this statement: “THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH in U.S. v. RaPower-3, LLC., et al., Case No., 2:15 cv 828, has determined that the solar energy technology of RaPower-3 in place from 2005 to 2018 is without scientific validation or substance and ineligible for tax credits or depreciation by individual purchasers of lenses. The tax information provided by Neldon Johnson, RaPower-3, International Automated Systems (IAUS), XSun Solar, SOLCO I LLC, Greg Shepard, and others associated with them is misleading. Tax information related to solar energy systems or components must not appear on this site until further order of the court.”

Shepherd, named throughout the proceedings against Johnson, was shown to have earned at least $702,000 from his work as Johnson’s marketing and sales manager.

Shepherd is the author of a 1970s exercise program targeting student athletes called “Bigger, Faster, Stronger.” Shepherd is suspected of selling numerous lenses to clients he met in his previous life as an exercise guru, including to high school and middle school coaches throughout the U.S., according to Judge Nuffer’s findings.

According to an analysis of some 30,000 bank records obtained by the court, Johnson earned $50,025,480 in gross proceeds from his scheme. A company he formed called International Automated Systems, Inc. earned at least $5,438,089. RaPower-3, LLC is reported to have earned $25,874,066.

Numerous other entities have been added to the list of those whose assets are now in federal receivership.

In January, the court-appointed receiver accused Johnson of being in civil contempt for “widespread stonewalling” in hindering the receiver’s work identifying assets and entities related to the tax scheme. By May, Judge Nuffer wrote a notice warning Johnson, his immediate family members and others, that continuing to obstruct the receiver’s work or otherwise hide assets would be met with severe penalties.

“Defendants need to recognize that failure to protect material information—including data, processing data, and equipment, such as the computer—is spoliation and punishable by various sanctions, including adverse inferences, striking defenses, and barring claims,” the judge wrote.

A proposed order to show cause in the case filed just last week by an agent with the U.S. Department of Justice’s Tax Division points out numerous examples of Johnson and his family members displaying acts of defiance, including not turning over records, avoiding depositions and more. The agent asked the court to find Johnson, his wife and several others in civil contempt if they do not produce required documents and information in a matter of weeks.

Meanwhile, the skeletal remains of the defunct fraud scheme—starting with the 75-acre patch of dirt near Abraham, with its rusting, spindly would-be solar towers—is for sale to the highest bidder, with more to come.

The original article is here