Polygamous sect seeks to stop sale of farm

FLDS » Fiduciary presses on despite legal battles.
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It sounded simple last summer when a Utah judge ruled a historic farm that is part of a polygamous sect's property trust would be sold to the highest bidder.

Third District Judge Denise Lindberg said the Berry Knoll Farm sale would be a needed fix for the cash-strapped United Effort Plan Trust, which has an estimated debt of at least $3 million.

Four months and numerous court filings later, attorneys are just beginning to battle over the bid process -- even as the sale itself, which has proved a flashpoint in the UEP Trust saga, is fought on multiple legal fronts.

Those legal hurdles aside, a proposed bid process shows the sale is not likely to bring a quick infusion of cash or clear the trust's financial obligations, let alone meet any ongoing administrative needs. And that raises the possibility of more property sales.

Fiduciary Bruce R. Wisan has asked Lindberg to approve a "stalking horse" purchase offer for Berry Knoll Farm to use as a starting offer for soliciting bids on the property.

In a court filing, Wisan says bidders would compete against an "advance bid" from Kenneth Knudson, a businessman who belongs to the Centennial Park polygamous community, located directly south of the farm.

Knudson has offered to buy 440 acres of the farm at $5,500 per acre -- down from a previous offer of $7,000 per acre because of market conditions. The contract includes all water rights and equipment located on the property and an option on an additional 272 acres.

At that price, the sale eventually would bring the trust $2.4 million -- and an additional $1.5 million if the options are exercised. Knudson's deal requires him to pay $1 million by closing and the rest in quarterly payments over five years.

Wisan would determine whether any bid provided a "better overall benefit" to the trust than Knudson's offer. If so, Wisan will hold a live auction between Knudson and the bidder. If no bids are better, Wisan will sell the property to Knudson.

"Simply put, the bidder who submits the best bid will be permitted to purchase the property from the trust," Wisan states in a court filing.

In August, Wisan said he did not expect there to be much interest in the property and that it would likely end up being sold to Knudson.

FLDS attorneys argue Wisan's plan rigs the bidding process to favor Knudson and violates the judge's order for bids that make a "best and final offer." In a court document, they say there has been no attempt to determine a fair market value for the farm or provide information that would help potential bidders evaluate its worth or potential use.

"The sales process makes it clear that the Centennial Park polygamous group can lock up the property, and the funds ostensibly to be paid for the property, for years and eventually walk away with only the most valuable parcels for a fraction of the purported price," the FLDS court filing states.

Lindberg, they say, refused to consider settlement proposals made earlier this year that would have resolve the trust's debts and kept its holdings intact. The judge also refused to return land to the FLDS church because it supports the practice of plural marriage, but now plans to allow the land to be sold to another group that also practices polygamy.

If plural marriage is a barrier to receiving trust property, "that same logic likewise precludes the court from approving the sale to these buyers whom also practice plural marriage," the FLDS filing states.

The Utah Attorney General's Office urged a takeover of the trust in 2005 to protect its assets. The AG's office accused former FLDS trustees of mismanaging and not protecting trust assets after they failed to defend several lawsuits and sold property. The FLDS said the property was being sold to pay taxes and other debts.

The trust, valued then at $110 million, holds virtually all property in the twin towns of Hildale, Utah, and Colorado City, Ariz. A majority of residents belong to the FLDS church.

After years of largely ignoring the court-approved action, FLDS members stepped forward last summer to protest the loss of the farm, which they say has historic, economic and, based on a prophecy about a future temple site, spiritual significance. They also oppose Wisan's plan to subdivide the community.

Lindberg blames the FLDS for the looming loss of the trust property.

Their refusal to deal with Wisan, a barrage of legal filings and failure to consistently pay $100 occupancy fees ordered by the court two years ago created the financial dilemma, the judge said in August.

With 700 households in the community, the fee should bring $70,000 a month, or $840,000 a year, into the trust.

In a recent ruling, Lindberg rejected FLDS efforts to disqualify Wisan or dispute his sale last summer of heifers on another trust farm. She has asked Wisan and the attorney generals of Utah and Arizona to recommend ways to "solidify the precarious financial condition of the trust" and find ways to stop the "continuing and proliferating litigation" over its management.

Those filings involve attempts by the FLDS church, its leaders or members to join the trust lawsuit or stop Wisan from selling property or evicting members from their homes for failing to pay the occupancy fee.

The Arizona Attorney General's Office has suggested that, given the trust's financial predicament, the best solution may be to distribute homes and sell off other trust holdings.

Fiduciary strikes back

A fiduciary who oversees a polygamous sect's property trust is asking a Utah judge to hold sect leader Warren S. Jeffs, a dozen sect members, FLDS firms and the community's local governments in contempt for trying to intervene in the 4-year-old court case.

Bruce R. Wisan also wants the Fundamentalist Church of Jesus Christ of Latter Day Saints, its representatives and members barred from its "continued blitzkrieg" of legal filings "without the Court's permission."

In a court filing, Wisan's attorney describe the attempts to join the case "a watershed event." But those FLDS leaders and others failed to comply with court orders to turn over financial records related to the United Effort Plan Trust, the document says. By filing to intervene in the case and stop such trust actions as the sale of a historic farm, they also violated a stand down in litigation ordered by 3rd District Judge Denise Lindberg in November 2008, it says.

The filing names the church's corporate business entity and states that Jeffs heads the entity. However, Jeffs resigned from that position in 2007.

Wisan said the FLDS' refusal to work with him, by Jeffs' orders, has added to his expense and been "crippling" to the trust's management. The fiduciary asks Lindberg to order the former trustees who now want to join the case to turn over documents, accountings and records he maintains will "conclusively establish a record of the former trustees abandonment of the trust and subsequent efforts to completely frustrate the fiduciary in his court-appointed duties."

-- Brooke Adams