As the Meadeau View Institute and a nearby sister community of alternative-lifestyle conservatives drifted deeper into debt in 1993, investors fidgeted on the sidelines.
At stake was more than a million dollars in donations and loans, money that seemed to have disappeared.Contributors and lenders - most of them middle-income households - confronted, to no avail, the movement's founder and money manager, Bill Doughty.
"To this day, he doesn't think he's done anything wrong," said Kelly Christensen, who said he lost $40,000 to an effort that has yet to deliver on its promises.
Doughty, who said he contributed $1 million of his own money to the cause, encouraged Christensen and others to hang on until he could arrange refinancing.
Worried about their investments, some took legal, civil action. In addition to two Kane County lawsuits, four investors filed notices of interest with the Garfield County recorder to protect their stakes in Doughty's proposed developments.
Finally, some followers turned to W. Cleon Skousen, the well-known conservative Salt Lake author and activist associated with the Duck Creek-Mammoth Valley group of constitutionalists until he resigned last year, citing "irregularities" in management.
"Please help us if you can," Bonnie Cheney wrote to Skousen in a June 1993 letter, one of scores of private papers obtained by the Deseret News in an investigation of Doughty's land deals. Cheney and her husband, Art, were out nearly a quarter-million dollars to Doughty.
Skousen, who served largely as a figurehead and whose own family ponied up more than $100,000 to Doughty's efforts, could offer little comfort, he said, because he was outside the financial loop.
"I and my family decided to sorrowfully accept our losses and get out," Skousen reported. "We encouraged others to do the same."
Investors also discussed it with growing concern among themselves.
"I started wondering about it the day I got two phone calls from widows wanting to know where their money was," said Phillip Gleason, who served briefly as a Doughty adviser.
In fact, worried followers complained to just about everybody - except the authorities.
Going to the police was anathema to most Doughty backers because at the core of their political instincts was a fundamental distrust of government.
"This country is going to hell in a handbasket," said Marsha Nelson, who sank $78,000 in Mammoth Valley and Duck Creek. "We have the government we deserve, and it's going down."
Nonetheless, a trio of disgruntled Doughty followers quietly approached Iron County Attorney Scott Burns late last year.
Their move triggered an investigation by the state Division of Real Estate, which issued a cease-and-desist order in January barring Doughty from selling any more shares in the so-called Liberty Village at Duck Creek or his nearby 400-acre back-to-the-land colony at Mammoth Valley.
In the process of peddling his dream of a conservative southern Utah community that would exist beyond the pale of a larger society in decline, Doughty violated the Utah Land Sales Practices Act, according to the Division of Real Estate.
But nobody has pressed criminal charges.
That may be in part because of a jurisdictional question. Mammoth Valley is in Garfield County, Duck Creek is across the line in Kane County, and some of the land transactions probably occurred at Cedar City, in Iron County.
Doughty's selection of the area also was ideal if his intent was to avoid regulation; county attorneys in the rural region are understaffed and generally not up to speed on such cases. Garfield County Attorney Wallace Lee noted that he has no deputies to help him with a jurisdiction that covers 5,000 square miles.
"The problem is nobody down here has a whole lot of expertise in real-estate and white-collar crime," said Lee, who has not investigated Doughty.
If criminal investigation is warranted, it traditionally would be handled locally. But the Utah attorney general could investigate Doughty if, according to common practice, county attorneys asked the state to get involved.
David Jones, an investigator for the Division of Real Estate, said his office has had ongoing contact about Doughty in recent months with authorities in Garfield and Iron counties, but he declined to say whether prosecution is imminent.
Jones said victims have been reluctant to come forward.
"Frankly, I am surprised that given the situation we haven't had people banging down the door," he said. "That's a big part of it."
Statutes exist with which to prosecute.
The Utah Land Sales Practice Act requires developers like Doughty to provide investors with a prospectus. Under the law, Doughty's Duck Creek and Mammoth Valley offerings should have been registered with the state and should have been accompanied by written information noting that the Mammoth Valley project was not approved by Garfield County and that it lacked basic infrastructure.
"They did not do those things," said Jones, who noted that violations of the statute carry penalties of up to $50,000 and two years in prison. A federal law with stiffer punishment could come into play if some of the transactions were done out of state, where many investors still live.
Doughty says his failings have hurt his hopes for the future, but he still thinks there's a way out.
"Yes, I'm tainted, but so were the Founding Fathers," he said in an interview three weeks ago in which he asked that the story of his failed venture not be told.
Doughty said publication of the toll borne by investors would hurt his current efforts to arrange a bailout by out-of-state financiers.
"If we can just refinance some of these projects we can get it done," he said.
Doughty for months has told investors that his ultimate backup is a $1.2 million insurance settlement from the death in 1992 of his 17-year-old son, Jeffrey, who was brain damaged in a near-drowning when the boy was a toddler.
That money, which the insurance company for unknown reasons has said it will not pay Doughty and his wife, Carolyn, until the year 2004, was protected, however, in a Kane County probate action by Doughty last year that put it off limits to creditors who didn't file claims by August 1993. None of the Duck Creek or Mammoth Valley investors did so.
Doughty insists he will do his best to make good on the dozens of loans he has taken from followers.
"I've never bilked anybody in my life," he said. "I don't have a record of having been in scams.
"I haven't declared bankruptcy, and I could."
"Everything I've got people can have," he said, including the $1.2 million insurance trust.
"I'm willing to give it all up."
Doubters abound, however, and chief among them is Skousen, whose association with Doughty's Mammoth Valley project was the spark that gave the cause legitimacy in the eyes of many supporters.
"A lot of people lost much of their life's savings and have little prospect of ever getting any of it back," Skousen wrote in a July 9 letter to the Deseret News in which he explained his role at Duck Creek, and his subsequent disassociation from Doughty.
Skousen-schooled constitutionalists elsewhere hope the travesty won't affect the larger movement, and they are quick to distance themselves from the southern Utah faction.
"I regard Bill Doughty as a friend," said Andy Allison, director of the National Center for Constitutional Studies, based in Salt Lake City. "But I think he's made mistakes."
Allison said he worries that supporters will confuse his organization with the ones Doughty operates.
He conceded that NCCS has had financial problems, suffering through the 1980s with its books in the red. But Allison said that since he took over the helm in 1991 he has managed to reduce its debt from $300,000 to $100,000.
Doughty supporters, he said, possessed a vision to which they will probably cling.
"They love America, and they want to do something for America."
"These are highly motivated people," added Skousen. "The dream behind all this will survive."
Typical among the believers is Coleen Gleason, who, with her husband, gave Doughty $20,000.
"I'd give it all again," she said, "if it was spent how I thought it would be spent."
Sequence of events
Summer 1986: Bill Doughty, well-schooled in constitutionalist thought, drives through Duck Creek, Utah, where a vacant lodge grabs his attention. He sees it as a possible headquarters for his organization to further constitutionalist education.
- December 1986: Doughty and his wife buy the log lodge at Duck Creek, named Meadeau View, from Harry and Gabrielle Moyer for $151,500. The Moyers carry the loan; Doughty begins laying plans to move International Constitutional Education, an arm that has split from the National Center for Constitutional Studies, from Cedar City to the lodge.
- Spring 1987: Doughty accompanies W. Cleon Skousen to California and elsewhere for "The Making of America" conferences, solicits loans and donations from attendees, introduces plans for the Skousen Center and Liberty Village at Duck Creek, as well as intentions for building a prototype constitutionalist community on 400 acres at nearby Mammoth Valley.
- March 1988: Doughty buys 400-acre parcel in Mammoth for $224,000 from Carol Hatch Englestead, who carries note; begins active marketing.
- June 1990: Englestead files notice of default on the note, the first step toward foreclosure. Notice says Doughty failed to make first annual payment of $90,000.
- September 1990: Doughty makes first payment, Englestead cancels notice of default.
- April 1991: Dixie State Bank in St. George now owns the Doughty note, files notice of default for Doughty's failure to make final $90,000 payment on the Mammoth land.
- August 1991: Doughty makes final payment, bank releases notice of default.
- Spring 1991 through winter 1993: Doughty borrows thousands from followers, some in double-principal notes, promising to complete Skousen Center at Duck Creek. He also solicits and accepts $2,000 to $14,000 "donations" from at least 72 families and individuals promising them land at Mammoth. Most are middle-income households.
- April 1993: Doughty's 17-year-old son, handicapped from a swimming accident as a toddler, dies at Duck Creek. Doughty believes a $1.2 million insurance settlement established following the accident will be released. He says he will use the money to pay back investors but later learns the insurance company will not release the money until 2004.
- Jan. 25, 1994: The Utah Division of Real Estate sends cease-and-desist order to Doughty, ordering him to stop marketing the Mammoth land and timeshares at Liberty Village, because the offerings aren't registered with the division.
- April 2, 1994: The Moyers, who carry the Meadeau View Lodge loan for Doughty, file a lawsuit in 6th District Court alleging Doughty has failed to make the prior three months' payments on the lodge, which total $4,400; they call the note due in full ($50,260), foreclose on lots at Movie Ranch Subdivision in Kane County that Doughty offered as security for the lodge note.Comment on this story
- May 24, 1994: Art and Bonnie Cheney file $225,000 lawsuit in 6th District Court against Doughty, saying he hasn't paid them for three luxury cabins they built on property adjacent to the lodge in Duck Creek. "The Doughtys have been unfair in their business dealings, making false representations or concealing material facts," the lawsuit says.
- June 25, 1994: The Lillis J. Foote Trust, the trust Doughty's mother established for her grandchildren, forecloses on $175,000 loan Doughty withdrew from the trust for unknown reasons; issues a notice of public auction for the Mammoth land, which Doughty used to secure the $175,000 loan.
- Aug. 1, 1994: Public auction of Mammoth land scheduled to take place at the Garfield County Courthouse in Panguitch.