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Fraud charges filed against 2 Duchesne developers

Published: Thursday, Nov. 12 2009 3:16 p.m. MST

Two Duchesne County real estate developers already awaiting trial on state tax-evasion charges have now been accused of defrauding customers.

Frank Joseph Steed Sr., 63, and Joan A. Steed, 60, were each charged this week in 8th District Court with five counts of engaging in a pattern of unlawful activity and five counts of communications fraud, all second-degree felonies.

The case arises out of a probe by the Utah Division of Consumer Protection into the Steeds' sales practices. The division's chief investigator, Kent Nelson, said in a seven-page administrative citation that the couple sold as many as 140 lots in unapproved phases of their Duchesne Mini Ranches development.

Under state law, developers can sign "reservation agreements" with customers and take money for lots that have not been officially platted, based on guidelines published by the Utah Division of Real Estate.

"The Steeds failed to follow those guidelines and made no reference to buyers about their payments being reservations," Nelson wrote.

The citation lists five specific instances where the Steeds allegedly accepted payment for property and promised that "deeding and construction would begin within a few months of the date of sale." Neither promise was kept, according to Nelson.

"The Steeds were fully aware that no subdivision could be submitted and approved and no deeding and construction could begin until they and their entities provided funding" for needed water-system improvements, he wrote.

When the customers requested a deed for their land or sought to sell it, Nelson said, they learned no deed had been filed with the Duchesne County Recorder's Office. At least two customers sought refunds but hadn't received them when the citation was issued, the investigator said.

A hearing on the citation has been rescheduled several times at the request of the Steeds, according to Utah Department of Commerce executive director Francine A. Giani. The couple faces a possible fine of $355,000, but that could be reduced if they make restitution to their alleged victims, Giani said.

An assistant for Mary Anne Q. Wood, an attorney for the Steeds, said Wood had not seen the charges and therefore would not comment on them.

The Steeds already stand accused of failing to pay more than $3.1 million in state taxes over a three-year period.

In October 2008, the Utah Attorney General's Office charged the couple in 3rd District Court with one count each of engaging in a pattern of unlawful activity, four counts each of tax evasion and four counts each of failing to file a timely or proper tax return.

The couple is accused of failing to submit returns for the 2003, 2004 and 2005 tax years. The state also alleges the Steeds used 21 bank accounts to transfer funds to nonexistent businesses to prevent an accurate assessment of their actual income and tax liability, believed to exceed $20.5 million during the three-year period.

Frank Steed is also facing misdemeanor charges of sexual battery, unlawful detention and simple assault in 8th District Court for allegedly grabbing an employee's "private parts" while searching the man, apparently for a hidden recording device.

The charges were filed in June after an employee said Steed had threatened to kill him, according to a Duchesne County sheriff's report. A witness told a deputy that Steed had searched the man "because of all the state stuff."

Even before criminal charges were filed against them, the Steeds are well-known figures in Duchesne County. They moved to the area in the late 1990s and established Highland Development Inc. and Duchesne Land LLC. The companies work in tandem, selling land and cabin packages for the two Steed-owned subdivisions — Utah Mini Ranches and Duchesne Mini Ranches — that cater to individuals seeking weekend or retirement cabins.

In 2003, the couple sued Duchesne County in federal court for $9.4 million, claiming five county officials had violated their constitutional rights to equal protection under the law and due process. Although the federal case was dismissed, the county settled the lawsuit in October 2007 for $250,000 to avoid a protracted legal fight over the Steeds' state claims, which included allegations of negligence, slander and interference with business relationships.

The Steeds are scheduled to make their first court appearances on the new charges Dec. 3. A four-day jury trial in their tax-evasion case is set to begin Jan. 4 in Salt Lake. A jury trial in Frank Steed's sexual-battery case is scheduled for Feb. 23.

e-mail: gliesik@desnews.com

Twitter: GeoffLiesik

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