A federal grand jury on Wednesday handed up a new indictment charging politically-connected developer and ex-Utah Transit Authority board member Terry Diehl with tax evasion and filing a false return, so he could avoid paying a tax bill of more than $300,000.
Prosecutors say Diehl falsely recorded income of $1 million earned by his Wasatch Pacific company for work related to the 2011 sale of land near 12800 South in Draper to eBay.
The charges are on top of 12 felony charges already lodged against Diehl in Salt Lake City’s U.S. District Court in April for allegedly lying about or concealing assets in a 2012 bankruptcy proceeding.
His trial is set for November.
Each of the original 12 charges carries a possible penalty of five years in federal prison and a $250,000 fine.
The new tax evasion charge also is punishable by up to five years in prison; the false tax return count carries a punishment of up to three years. Both have potential fines of $100,000, plus the cost of prosecution, Melodie Rydalch, spokeswoman for the U.S. Attorney’s Office for Utah said in an email.
Diehl pleaded not guilty to the original charges, but has declined to comment publicly on the case.
An arraignment on the new charges is expected to be held next week, Rydalch said.
Federal prosecutors say Diehl was paid $1 million for consulting services on the sale of the eBay property in November of 2011. That money went to his Wasatch Pacific accounts and was classified as “proceeds from the sale of assets,” court papers say.
But Diehl allegedly later directed a staff accountant to move the funds to an account for a separate company, Skyline Ventures Group (SVG). On paper, SVG was owned by his daughters, the indictment states. In that account, the funds were reclassified as “management fees,” prosecutors say.
In 2012, as an accountant worked to finalized SVG’s tax returns, Diehl said the money was unrelated to SVG and was neither a management fee nor income, but rather a “capital contribution” from Diehl to SVG, the indictment states.
The false information was used on both Wasatch Pacific’s and Diehl’s personal tax returns for 2011, court papers say.
Had the $1 million been properly reported, prosecutors contend, 94 percent of the income would have gone from Wasatch Pacific to Diehl’s personal benefit and been reported as income on his individual tax return.
“This income would have eliminated defendant Diehl’s net operating loss deduction for 2011 and resulted in a tax due and owing,” through 2015, court papers say.
Prosecutors contend that Diehl owes more than $300,000 in unpaid taxes.
The land purchased by eBay in 2011 was part of a parcel purchased by Diehl and his then-business partner, developer Jeff Vitek, with money “borrowed” from UTA in 2010.
The property is adjacent to the UTA FrontRunner train station, which was in the development stages at the time that Vitek and Diehl, then on the UTA board, secured the loan.
The loan was later the subject of two scathing state legislative audits and is being scrutinized as part of an ongoing federal criminal investigation of UTA and former officials.
Diehl’s original indictment was handed up in April, one day after federal prosecutors announced an immunity deal with UTA in exchange for the agency’s cooperation in the criminal investigation.
That probe is focused on current and former UTA board members, executives and others involved with the developments around its rail stations.