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Federal prosecutors may be widening their probe beyond indicted ex-Utah Transit Authority board member Terry Diehl by digging into an ongoing civil dispute between the real estate developer and a former business partner.
Subpoenas served on attorneys for Michael Bodell on March 3 and April 5 seek documents and all "non-attorney client privileged information" from the 2015 lawsuit brought against Diehl.
The government also has demanded information about other lawsuits, including any involving Diehl, Bodell, Jeff Vitek, Mark Robbins and their respective companies, all of whom had ties to UTA development projects in South Jordan and Draper that came under scrutiny.
The demand indicates federal prosecutors might be expanding their investigation into the developments around train stations that were the subject of two critical legislative audits, which raised questions about conflicts of interest and self-dealing. Diehl, who is charged with 12 counts related to alleged concealment of assets and false statements in a bankruptcy, was a member of the UTA board when plans were made for the developments.
On April 4, the day before a federal grand jury handed up the Diehl indictment and the second subpoena was served on Bodell's attorneys, U.S. Attorney for Utah John Huber announced a nonprosecution agreement with UTA in return for its full cooperation in a criminal probe.
Information about the subpoenas is detailed in a 3rd District Court motion to stay the Bodell lawsuit that was filed by Diehl's attorney April 14, about a week after Diehl was charged.
The issues in the civil lawsuit "overlap significantly" with the criminal charges and raise such significant concerns that a stay is warranted, court papers say.
"Forcing Mr. Diehl to defend against the same allegations on two different fronts will impair Mr. Diehl's ability to put forth a full and effective defense in either case," attorney Peter Stirba wrote. "Further, the overlap between the cases severely prejudices Mr. Diehl because it raises serious concerns regarding the Fifth Amendment and self-incrimination."
Diehl and Bodell were partners in Vista Station Holdings, which held an interest in property in Draper adjacent to a planned UTA FrontRunner station.
According to the civil lawsuit, when the land was sold in 2014, $8.3 million was supposed to go to Vista. Instead, Bodell contends, Diehl directed a title company to deposit the funds in Zions Bank and then moved the money to a company called Skyline Ventures, which is owned on paper by Diehl's daughters but which the lawsuit alleges was in fact controlled by the developer.
That parallels allegations in the federal indictment, which contends that Diehl "managed and controlled the day-to-day business affairs" of Skyline Ventures, including moving funds in and out of its bank accounts.
The indictment asserts the developer had a duty to report such activities as part of the periodic financial statements he was required to file with the bankruptcy trustee.
The U.S. attorney's office declined to comment Tuesday, while Stirba said the court documents speak for themselves.
Bodell's attorney, James Magleby on Tuesday confirmed receipt of the subpoenas and said his office has not yet complied with the government's requests, because Stirba had filed a March 16 motion to block the turnover of any documents.
Stirba mentions filing a motion to quash the first of the subpoenas, arguing that the government had abused the powers associated with a federal grand jury to try to obtain documents from the civil case that it would not be able to access in Diehl's criminal case.
"A stay would prevent additional information from entering civil litigation that would cause the federal government to impermissibly seek evidence from [Bodell]," Stirba wrote.
A footnote in the document also suggests Stirba believes Bodell has essentially "collaborated" with the government in bringing criminal charges against Diehl by providing them with evidence and information.
"That's not true," Magleby said, adding that Bodell had not been the "impetus" for any criminal investigation, nor had he testified before the grand jury that indicted Diehl.
Magleby also said he plans to oppose the motion to temporarily halt the civil case.
Also Tuesday, at a hearing in the civil case, Magleby asked 3rd District Judge Todd M. Shaughnessy to set a date for trial. A telephone conference is set for May 1.
In court papers, Stirba argued that trial testimony in the civil case also could unfairly damage Diehl, because it would expose any potential defenses he might assert in a pending criminal case.