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A new lawsuit alleges that the mayor of Saratoga Springs, while he was a bank loan officer, conspired with others to create false paperwork that led to a sale of a subdivision lot that had no water and was not eligible for building permits.

The couple who bought the lot, Brian and Suzanne Peterson, were foreclosed on and lost about $60,000 they had paid, thinking they were going to build their "dream home" in the Fox Hollow development, according to the lawsuit filed in state court in Provo.

Mayor Jim Miller, a former loan officer for the Bank of American Fork, denied the allegations in the lawsuit filed in 4th District Court.

"I was not involved in any wrong doing in this transaction," Miller said in an email Friday. "At the current time this matter is in litigation and I will not discuss it any further until the matter has been resolved."

A spokesman for the bank, Vice President Christopher Liechty, said it had not been served with the complaint and could not comment until its attorneys had a chance to review the allegations. Miller hasn't worked for the bank for some time, he said.

The Petersons were only one of a number of buyers of lots in Neighborhoods 3 and 6 of the Fox Hollow development who were foreclosed on or lost their investments as a result of being unable to get building permits for their lots because of a lack of water.

The lawsuit involves a lot in Neighborhood 3 of Fox Hollow where a company that was majority owned by developer Richard Wolper failed to complete a water system. As a result, in about August of 2007 the city started to deny building permits to lot owners and in October, Wolper ceased all efforts to finish required improvements, according to the suit.

Still, Wolper's company, Coldwell Banker Residential Brokerage, and agent Terri Pappas continued to sell lots at the instigation of Wolper in order to fund completion of the improvements, the suit says. C. Jeramy King agreed to buy one of those lots, the same one that was eventually sold to the Petersons, and those deals are at issue in the lawsuit.

The improvements were never finished as the housing bubble burst, developers and lenders went broke and the nation fell into the Great Recession. The city refused to issue building permits without water available at the lots, though it had allowed Wolper to sell the lots without completing water facilities as he was obligated to do under a contract. The city eventually called the bond to fund the improvements, but by that time a number of purchasers had lost their lots because they couldn't get permits and some lots to this day don't have water available.

In a phone call, Pappas said she had nothing to do with the sale to the Petersons, though she did participate in the King deal.

An attorney for Wolper, Jeremy Reutzel, said his client "didn't create false paperwork. He didn't defraud these people."

The Peterson's attorney, Marcus Mumford, disputed the denials.

"One of the reasons we filed this lawsuit was to get to the bottom of this because we've now got false documents being exchanged," Mumford said. "We've got an illegal double closing that these companies and individuals participated in."

He said the lawsuit related to events in 2007 and 2008 was not barred by legal deadlines because some of the documents at issue were only recently obtained and because he believes some relevant documents are being "concealed."

In November of 2007, King entered into a contract to buy a lot from Wolper's Fox Hollow Saratoga LLC for $120,000. The lawsuit contains a disclosure document in which Wolper wrote that water was "stubbed" at the property and in which he indicated there was nothing about the lot that could affect its "value or desirability."

But before completing the transaction, King entered into an agreement with the Petersons to sell them the same lot for $135,000.

"At the time, Coldwell Banker and Pappas knew but did not disclose to [the Petersons] the property lacked adequate provisions for culinary and secondary water and was therefore unable to obtain a building permit from the city," says the complaint.

Miller, who served as the Petersons' loan officer when they applied for a "lot loan" at the Bank of American Fork, also failed to disclose that building permits were not available for the lot, the lawsuit says.

Pappas, Miller, and Debbie Hemingway of Equity Title Insurance Co., knew that the King transaction had not been completed and that the Petersons were actually buying their lot from Wolper's Fox Hollow Saratoga LLC, a fact that the Petersons were unaware of, the lawsuit claims.

But then the bank's underwriter demanded more paperwork because the documents provided for the King deal did not match the purchase contract provided by the Petersons, the suit says. It alleges that Miller, Hemingway, Pappas and Wolper "conspired to create false documents that were given to the Bank of American Fork in order to satisfy the underwriter's conditions."

Hemingway, who no longer works at Equity Title, did not return an email seeking comment on the allegations.

Equity Title Insurance merged with First American Title in 2012, and First American did not return emails seeking comment.

The false documents showed a sale of the property to King, a deal that never went through, before the sale to the Petersons, the lawsuit says.

Two days after the Peterson loan closed, on Jan. 4, 2008, the Kings assigned their purchase contracts to the Petersons for $15,957, the lawsuit says.

The Petersons were unable to obtain a building permit and they were foreclosed on, allegedly without providing notice to the couple, the suit claims.

The Petersons are asking for unspecified monetary damages for misrepresentation, fraud, illegal concealment and infliction of emotional distress.

One person is still facing criminal charges related to the water issue at Fox Hollow. Kimberly Bowen, a former agent for Re/Max Advantage, faces 10 criminal charges mostly related to her alleged failure to inform buyers of lots that water was not available.

Bowen, 50, has pleaded not guilty but her trial, scheduled for this month, has been postponed and no new court date has been set.

A review of records and interviews with some participants for a Tribune story published in October shows that Saratoga Springs officials cooperated with Wolper to record the plats for the neighborhoods before water was available, which violated a contract and city regulations.