Feds still seeing antics in fraud case
Written by Matt Ward Published: 22 January 2020
Sanction hearings scheduled this week; family at center of scheme in contempt
A reckoning is on the horizon for a local man and his family who are accused of bilking the U.S. government out of millions of dollars.
After more than a year of legal wrangling, a flurry of contempt citations, and a driven court-appointed receiver, Neldon Johnson, his wife Glenda, and two sons LaGrand and Randale face the threat of new sanctions, including possible jail time, at hearings in Utah’s federal court scheduled this week.
Johnson was the center of a massive, multi-year tax-avoidance scheme that offered solar energy accoutrements for sale to unwitting, and not-so-much, “investors” who wished to offset their federal income tax burdens by taking advantage of solar energy tax credits.
The scheme fell apart after tax authorities started auditing “investors,” discovering a large number of people all over the country who bought solar “lenses” from Johnson’s RaPower3.
Johnson used proceeds of the scheme to amass land, houses, vehicles and to fund a spendy lifestyle that went poof once Department of Justice attorneys got wise and sued.
The government’s legal effort was successful and a Salt Lake federal judge appointed a receiver to identify, track down, and sell any assets related to the scheme.
However, the receiver’s work has supposedly been thwarted time again by the Johnsons’ reluctance to come totally clean with documents and records that would help the government recoup the family’s allegedly ill-gotten gains, according to numerous motions filed in the case over the last few months.
One motion filed in August by receiver R. Wayne Klein and still being deliberated at the end of last month showcased how Glenda Johnson, on the very day in June 2018 when closing arguments were made in the bench trial against RaPower3, transferred almost $2 million from bank accounts associated with the fraud scheme into her personal bank account. Those funds have since been somewhat depleted, according to the receiver, and not handed over to the receiver estate.
Multiple properties also continue to remain in Glenda Johnson’s name despite proof Klein has uncovered showing the property, including numerous acres of land and homes purchased in Millard County, came from funds ostensibly gained through the fraud scheme.
A litany of similar examples will be offered up in court this week by a federal prosecutor to prove continuing contempt by the Johnsons.
According to a status report filed Jan. 15 by Erin Gallagher, a trial attorney with the DOJ’s tax division, the government plans to show the Johnsons variously utilized assets that should be in the receiver’s possession for personal gain; absconded with a piece of solar energy equipment built using fraudulent funds— its whereabouts presently unknown; attempted to receive money from selling an easement on a Texas property that is an asset assigned to the receiver estate; and, helped a Nevis-based company acquire mechanic’s liens against property in Glenda Johnson’s name, possibly an attempt by the family to hold onto property they realize could soon be lost to auction.
All this was done after the DOJ prosecutor filed a motion in August for new civil sanctions against the family over similar behavior earlier in the case.
“At the hearing, the United States and the Receiver will offer proof of the Johnsons’ actions and inactions since these contempt proceedings began in January 2019—indeed, since we filed the motion for additional contempt sanctions in August 2019—that shows their ongoing disregard for this Court and its lawful orders,” Gallagher wrote in the Jan. 15 motion.
As if the hearings weren’t set to be contentious enough, Neldon Johnson, through attorney Edwin Wall, filed a request for continuance of the hearings this week. He made the request on the same day the status report was filed by Gallagher. He requested the delay because he is scheduled to be a witness at a tax court trial for a man named Preston Olsen, who bought RaPower3 “lenses.”
Gallagher, who responded to the request for delay on behalf of the DOJ, urged the court to deny the request.
The prosecutor recalled that Johnson isn’t even allowed by court order to discuss in any kind of favorable terms about the fraud scheme he perpetrated.
“If Johnson wishes to obey the injunction in this case, it is likely that his testimony at Tax Court will be short,” Gallagher wrote. “This Court enjoined him from making false statements in the context of continuing to organize or promote the solar energy scheme.”
The prosecutor further argued that Johnson would be violating the court’s orders again should he attempt to testify to any tax benefits or legitimate deductions related to Olsen’s lens purchases.
In a further twist, Gallagher revealed that Olsen is being represented by a lawyer named Paul Jones, who apparently also represented a number of RaPower3 customers when the DOJ swooped in for Johnson and family— the case has ensnared a number of Utah attorneys over the last two years, including one Provo law firm which recently agreed to hand over a $700,000 retainer the receiver argued was paid with fraudulent monies.
Klein sued a number of former RaPower3 “investors” who received commissions from the company. He also plans to sue, if necessary, a number of professional entities that performed services for the company, including numerous law firms, private attorneys, accountants, and others.
Gallagher in her request for denial of the delay requested by Johnson reiterated the continued contempt of the court’s orders as another reason to hold the hearings as previously scheduled.
“The United States’ status report shows that Neldon Johnson (along with Glenda, LaGrand, and Randale Johnson) continues to defy this Court’s orders. It also lists instances of material contempt that occurred after the United States filed its motion for additional sanctions,” the prosecutor wrote. “Continuing the hearings beyond January 23 and 24 would deny the United States and the Receiver the ability to halt and remedy new and ongoing instances of contempt.”
The original article is here