DOJ lawyer asks judge to jail tax fraudster

Written by Matthew Ward Published: 28 August 2019

Solar energy tax scheme case says principal, family members continue to be in contempt

A U.S. Department of Justice trial attorney is urging a federal judge to jail a local man and three of his family members over their failure to turn over financial records and other documents related to a $50 million solar energy tax fraud scheme.

Erin Hines, a lawyer with the DOJ’s tax division, filed a motion Aug. 21 urging the judge overseeing the case to jail Neldon Johnson, his wife Glenda Johnson, and sons LaGrand Johnson and Randale Johnson for contempt and noncompliance with the court’s receivership order, which seeks to liquidate all proceeds of the years-long fraud scheme in order to compensate the federal treasury for unpaid taxes.

U.S. District Judge David Nuffer issued a contempt order against the Johnsons in late June, hoping the family members would face reality, comply with the court’s orders and turn over all financial and property records required by the receiver to recoup the government’s lost revenues. The contempt order saddled the Johnsons with additional court costs and attorneys fees as a result of their noncompliance. But they were spared jail at the time.

The receiver in the case, R. Wayne Klein, has already received court approval to sell a number of properties previously owned by Neldon Johnson, his various companies or a family trust, including some in Millard County.

One 75-acre parcel, site of an array of “solar” towers, scenery meant to dupe “investors” at the heart of the massive scheme, was sold inside the 4th District Court in Fillmore last month for $21,000.

Klein has only one year from the October 2018 court receivership order in which to file litigation to recover any assets purchased with the fraud’s ill-gotten proceeds, otherwise the statute of limitations for fraudulent transfers prevents him from recovering assets transferred more than fours years ago. The DOJ motion makes it clear the U.S. government believes the Johnsons are attempting to run out the clock on the receiver’s efforts.

Despite the minimal progress in the case so far, Hines wrote in her most recent motion that the Johnsons continue to flout the court’s orders in the case.

“But even after the order holding them in civil contempt, and this Court’s painstaking efforts to compel their compliance with remedies short of coercive incarceration, they are still in defiance of the CRO and the Contempt Order,” the lawyer wrote, emphasis added by the author. “To enforce this Court’s orders and to effect the remedy this Court ordered in response to Neldon Johnson’s outright fraud on the United States, we seek additional coercive and remedial sanctions for their failure to comply.”

After reviewing a litany of examples showing the Johnsons’ failure to comply—despite 10 months of efforts by the court and the receiver as well as being held in civil contempt—the DOJ attorney urged the court to jail the quartet.

“Therefore, coercive incarceration appears to be the last option to focus the Johnsons’ minds on fully complying with the lawful orders of this Court,” the attorney wrote. “The Court should order the Johnsons incarcerated until they submit declarations that comply with their obligations under the CRO and the Contempt Order.”

Hines went on to suggest that by jailing the family members, the court would basically be giving them the best reason for compliance—namely preserving their own freedom.

“The Johnsons would ‘hold the proverbial keys to the prison doors’ because each of them could ‘choose to end his [or her] incarceration [and purge his or her contempt] at any point in time, by simply complying’ with the Court’s orders,” the motion reads.

Still, even if the judge does decide to jail the family members, thereby forcing their compliance, their contempt in the case has already irreparably harmed the government’s efforts, Hines wrote.

The motion states that because of this fact additional sanctions beyond incarceration are also necessary.

The motion urges the court to close off “the universe of documents” available to the Johnsons for use in any future claims against the receiver or the DOJ. If the records were not submitted by Aug. 2, then the motion asks the judge to not allow such records to be used in any future civil court proceedings.

“[T]he Johnsons should not be allowed to resist CRO disclosure requirements for the vast majority of the Receiver’s one-year tolling period, and then use undisclosed documents or information to defend against the Receiver’s claims (either already filed or forthcoming),” the motion reads.

The DOJ attorney also asks the judge to give the Johnsons a 10-day window to comply with a few other noteworthy government demands, including providing a list of any and all assets Neldon Johnson has ever owned and what happened to them as well as requiring Johnson to submit a bank log “of who accessed his purportedly empty safety deposit box, and when, from November 23, 2015 to the present date and deliver that log to the Receiver and the United States.”

By press time Monday, Nuffer had not made a ruling on the motion. If the Johnsons are jailed, it is unclear whether they would be housed locally or in a federal facility.

The original article is here