This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Two real estate companies have filed a lawsuit against former Utah Transit Authority board member Terry Diehl, alleging he took more than $2 million from them and put the money in a retirement fund in California.
South Mountain L.C. and GEM/Group Estates Management Inc., both owned and controlled by Japanese businessman Yoshimitsu Mugishima, filed the lawsuit Thursday against Diehl, a Utah developer, and his company, Wasatch Pacific, in 3rd District Court.
In 1997, Mugishima purchased South Mountain from Diehl.
In 2007, Diehl was named president, but without equity interest, to each of Mugishima's U.S. businesses.
The lawsuit states that sometime between September and December of 2009, Diehl took $1.2 million belonging to South Mountain and $525,000 belonging to GEM and put it in his account. The money was from a 2009 property deal between the two companies and Draper City, the lawsuit says. At the time of the closing of the transaction, Diehl told Mugishima that Draper would pay off $1 million still owed in the deal by June 2010. The city, however, paid off and transferred the funds to South Mountain before the end of 2009, the lawsuit says.
"Without the knowledge or approval of Mugishima or any of the Japan Staff, and in an apparent attempt to cover his tracks, Diehl then quietly placed two demand promissory notes ... in the corporate files at South Mountain and GEM," the lawsuit states.
The plaintiffs say Diehl put the money back into the two companies' accounts on Dec. 30, 2009, but took it out again five days later and returned it to his own account.
When Diehl was asked about requested 2009 tax documents by Mugishima and his son, he admitted to taking the proceeds from the Draper transaction and said he put them in a retirement account to earn a better interest rate than those in the two companies' accounts, the lawsuit states.
During a second in-person meeting in 2010, Mugishima told Diehl he needed to return the money to the companies' accounts by a certain date and any other decisions related to operations needed to be approved by his son. According to the lawsuit, Diehl didn't return the money.
The lawsuit says that again without anyone's knowledge or consent, Diehl transferred $235,000 and another $20,521 in a form of a check as a "management fee" from South Mountain and put it in his account.
Diehl told an accountant hired by Mugishima that he intended to pay back the money owed to the Mugishima entities from his share of the sale of property sold to eBay Inc., the lawsuit states.
Diehl is the subject of a state investigation into conflict-of-interest issues raised in a legislative audit regarding the misuse of official information to enrich himself in land dealings while on the UTA board.