This is an archived article that was published on in 2006, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

WASHINGTON - Some members of a Utah foundation board were and remain troubled about a deal with the politically powerful Leavitt family that resulted in hundreds of thousands of dollars in tax-deductible donations flowing back to the Leavitts in the form of student rent.

"I'm concerned when we're asked to do things that fall beyond what our bylaws dictate we can do," said Robert Adams, a real estate agent in Beaver and one of the 12 Southern Utah Foundation board members. "I tell you, I've got concerns about that. And I voiced them."

Nearly $500,000 in charitable contributions from the Dixie and Anne Leavitt Foundation - named for the parents of U.S. Health and Human Services Secretary Mike Leavitt - went to the Southern Utah Foundation, flowed through Southern Utah University as housing scholarships and, eventually, was recycled to the Leavitts as student rent in family-owned apartments.

The circular cash flow provided the family with tax deductions and income.

Despite reservations by some Southern Utah Foundation board members, the foundation eventually agreed to the terms outlined by the Leavitts after lawyers reviewed them.

But details of the Leavitt charity arrangement appear to remain a mystery to some board members, who were given a packet of information Tuesday night and told a meeting will be scheduled soon to discuss it.

Nina Barnes, a Cedar City councilwoman and Southern Utah Foundation board member, says the idea that the contributions were strictly for housing subsidies in Leavitt-owned apartments "is not my understanding.

"That's not the understanding that foundation members have," says Barnes. "It's not just being channeled to Leavitt-owned properties."

In fact, it was, according to records from the foundation and interviews with board members and Dane Leavitt, a family spokesman and head of the Cedar Development Co., which owned the apartments.

Student housing: The donations were used to award about 50 housing scholarships to students each semester to rent apartments owned by the Cedar Development Co., said Dane Leavitt, brother of Mike Leavitt, a former three-term Utah governor. Additionally, Leavitt Land and Investment, another family-owned company, donated $135,000 to SUU for the housing scholarship program, which chose students and placed them in Leavitt company-owned homes for about $260 a month per person.

"I can't remember a meeting we had where it didn't come up," Adams said. "I don't want to pick a fight with the Leavitts but I want to conduct my life in a way that I feel good about the decisions that were made."

The Dixie and Anne Leavitt Foundation has garnered scrutiny of late after The Washington Post reported family members had enjoyed tax write-offs through the foundation but that it had paid little to charity until recently.

From 2001 through 2004, the foundation paid out only $209,000. But it boosted its giving in 2005 and so far in 2006 to $1.2 million.

Looking deeper, National Public Radio revealed Friday that the donations to SUU were returned in rent to a Leavitt business.

Some board members still approve of the deal.

"It would be nicer to have it without strings, but it goes to a good cause, so I was OK with it," said Joseph Gubler, a certified public accountant in Cedar City, who said the obvious reason for someone to have this type of arrangement was to seek a tax deduction.

"I don't know whether that was the Leavitts' reasoning or not," he added, but noted that the Leavitts recommended the arrangement and the board agreed.

Scott Truman, president of the Southern Utah Foundation, said the Leavitts approached the foundation and offered to give the money to the foundation if it went to SUU to provide apartments for needy students. He said the deal was reviewed by lawyers and found to be legal.

"Did they give it to us for scholarships, let us know as to where they'd like it to go? Yes, for housing scholarships specifically," Truman said. "But did they ever say that we had to? They don't have that prerogative."

Mutual benefit: Dane Leavitt said SUU approached the family - large donors to the school that includes the Dixie Leavitt Business Building and the Michael O. Leavitt Center for Politics and Public Policy - and asked for a sizable contribution to help with scholarships.

The family had a large number of charitable "activities we were engaged in" and the family declined the request, Dane Leavitt said.

After more discussions, the foundation and the school made the current arrangement, which included the Southern Utah Foundation as a middleman because the Leavitt family foundation by its bylaws must give a significant portion of the income generated by the foundation's stock holdings to the Southern Utah Foundation.

At the time, Steven Bennion was president of the university and also a board member of the Southern Utah Foundation.

"We feel grateful as a family that we've been able to assist in the education of students who were motivated and students who were needy and students who otherwise wouldn't be able to afford it," said Dane Leavitt, who is also a member of the SUU board of trustees.

Mike Leavitt said in a statement released by his office that he and his family are happy to have the resources to give back to the community, and that "we find satisfaction that many people will benefit from our giving."

Leavitt spokeswoman Christina Pearson said the family's foundation activities are "legal and appropriate" and were reviewed by the Senate Finance Committee during the secretary's confirmation last year.

Dane Leavitt, who provided a litany of documents at The Salt Lake Tribune's request, said the principal assets of the foundation are stock in an irrigation company the family acquired. It was appraised at $8.1 million at the time it was donated and sold a few years later to the Las Vegas Water Authority for $11.9 million.

Leavitt said if the family had kept the stock, it would have received more money, even after taxes, than it did through the tax break.

Dane Leavitt said Mike Leavitt received about $500,000 in tax breaks when he donated his share of the stock. If he had kept the stock and sold it, he would have pocketed about $1.7 million after taxes, Dane Leavitt said.

"He hasn't seen a penny of it nor will he because he's given it to use for future generations," Dane Leavitt said.

The tax filings for the Southern Utah Foundation indicate that the organization funneled money straight back to the Leavitt family foundation, though Truman said the filings are wrong and will be corrected. The Southern Utah Foundation's accountant, Rhea Tuft, who has since resigned her position, told NPR she filled out the form showing the money was going back to the Leavitt foundation, since it was clear it would end up there anyway.

Tuft did not return repeated messages at her home or office and did not answer the door at her home.


Tribune reporter Mark Havnes contributed to this story.