New Scrutiny in Tax Fraud Case?
December 09, 2020
Court filing hints at renewed interest in scheme from "other" agencies
The federal court-appointed receiver in the $50 million solar tax fraud case with ties to Millard County hinted in a recent court filing that “other government agencies” have requested information concerning his work in the case.
The brief mention is buried at the end of the receiver’s eighth quarterly report, filed with the Utah U.S. District Court in Salt Lake City on Oct. 29.
When contacted for more information on which government agencies had requested more information, the receiver, Wayne Klein, said he could not provide further details.
“I don’t blame you for asking. I walk a fi ne line trying to report to the Court on how I spend my time but without ‘outing’ any agencies that might also be conducting investigations,” he wrote in response to an email query. “I am unwilling to answer your question about who has requested information from me.”
Klein was appointed by the court when Neldon Johnson, his business associates and multiple related shell enterprises, including a company that traded stock on over-the-counter exchanges, lost a civil case in 2018 brought by the U.S. Treasury Department and prosecuted by Justice Department attorneys.
At the center of the civil case was a years-long scheme in which Johnson and companies sold fake solar lenses to customers across the country who then used the purchases to reduce personal income tax liability through the use of federal solar energy tax credits. The scheme eventually unspooled when revenue agents traced widespread abuse of the tax credits directly to Johnson and his companies.
Klein has been on a now two-year campaign to recoup as much money lost by the federal treasury to the scheme as possible, including taking possession of real property, vehicles, bank accounts as well as filing multiple related lawsuits against others involved in the scheme, including Johnson’s wife, and multiple lens purchasers who gained “bonuses” from the scheme.
In fact, two legal notices in the Chronicle Progress today communicate pending public auctions for two parcels of land once owned by Johnson in Millard County, a 40-acre piece and another measuring 67.5 acres.
Johnson and his family members at one point owned hundreds of acres of real estate, including multiple houses, in Millard County. All of it will eventually be sold to the highest bidder.
A number of details in Klein’s latest report make for interesting reading.
For example, Johnson’s wife Glenda was ordered by the court in September to turn over 13 Utah properties and one in California—11 of these properties are in Millard County and were previously titled in Glenda Johnson’s name. Apparently, she violated the court’s instructions by first canceling insurance coverage on three of the properties and then later failing to list in detail items she removed from some of the properties.
Among other minor infractions, Klein noted that Glenda Johnson wired the receivership account $1,406,621.39 in funds the court demanded in September, but failed to pay the interest owed on those funds, amounting to $11,515.83.
“The Receiver sent demands to Glenda Johnson and her counsel for payment of the interest. In response, Nelson Snuffer (a law firm representing the Johnsons) asserted that Glenda Johnson was not required to pay over interest earned on those funds because Glenda Johnson had expended more than that amount in paying property taxes and utilities on real properties she was turning over to the Receiver,” the receiver’s report states. “The Receiver emphasized his belief that the Turnover Order requires turnover of all interest earned on the accounts—without deduction for any claimed expenses incurred by Glenda Johnson during her possession and enjoyment of the properties. Glenda Johnson remains in violation of the Turnover Order.”
The Johnsons have already been held in civil contempt twice and Glenda Johnson was previously threatened with jail over attempts to place liens on properties in her name that were ordered by the court to be handed over to Klein. It’s unclear how the court will view any new attempts to hinder the receiver’s work.
The quarterly report offered some interesting tidbits regarding Sandy law firm Nelson, Snuffer, Dahle & Poulsen, P.C., as well.
Previous court filings in the tax fraud case as well as a separate lawsuit filed by Klein against the law firm in 2019 revealed an extensive business relationship between Neldon Johnson, his solar entities and the law firm.
Patent applications, a divorce, real estate work, insurance claims, estate planning, financial reports for the company that traded over-the-counter stock, and other legal work for the Johnsons was done by the law firm over the years. Klein sued the law firm last year seeking more than $2.2 million the Johnsons had paid the firm.
In July, the firm was forced to turn over $735,202 that had been deposited in the firm’s trust account by a Johnson business entity called XSun Energy; the court ruled the funds were receivership property and the law firm handed it over.
But, there’s apparently more to this story.
According to the receiver’s latest report, he claims he has uncovered a pattern of ethically and legally questionable actions by the law firm on behalf of Johnson’s scheme, including insider stock trading, serious conflicts of interest and various breaches of fiduciary duty.
Apparently, the law firm accepted stock in one of Johnson’s companies, IAS, in lieu of payment for legal services and then sold it despite being aware of “adverse information about IAS (the company traded on the OTC) and Neldon Johnson and when Nelson Snuffer was assisting in the diversion of funds from IAS to members of the Johnson family.”
Serious allegations levied against lawyers and law firms in Utah are typically investigated by the state Supreme Court’s Office of Professional Conduct (OPC).
A representative from the OPC was contacted and asked specifically whether that agency is investigating allegations of ethical, possibly legal, violations by Nelson Snuffer.
The office responded that “pursuant to Utah Supreme Court Rules, the Office of Professional Conduct’s investigations are confidential and actions against any attorney are also confidential unless there are public attorney discipline proceedings and/or public discipline or the attorney has given an express waiver of confidentiality.”
“We do not have any public information related to your inquiry,” the person responded.
Klein anticipates, in light of his findings, of recovering possibly more than the $2.2 million from Nelson Snuffer than his lawsuit against the firm originally sought, according to the receiver’s latest report to the court.
The receiver reported recovering more than $6 million total from his work to Sept. 30, with more funds expected from various ongoing lawsuits, real estate auctions, as well as the sale of some 30 vehicles. Klein also anticipates clawing back some $400,000 transferred to bank and retirement accounts owned by relatives of the Johnsons.
The original article is here.