State audit finds prominent developer had a conflict of interest, made money from UTA land deal

SALT LAKE CITY — A state audit found a member of the Utah Transit Authority board did have a conflict of interest and made an "undisclosed amount" of money involving a land deal on a controversial rail stop.

The report stated UTA trustee Terry Diehl properly disclosed that he had a financial interest in the deal as the law requires and that despite the conflict it did not influence the selection of a FrontRunner rail stop in Draper.

"This sends a clear message that this volunteer board wants to do right by the taxpayers, its riders and the public at large," said Rep. Greg Hughes, R-Draper, who is also chairman of the board of trustees for UTA. He said that prior to the audit, provisions to UTA's conflict of interest policy were strengthened to avoid any potential conflict.

Still, the Legislative Auditor General is asking lawmakers to consider referring the matter, which could be a class B misdemeanor, to the attorney general for further review.

The Legislative Audit Subcommittee voted instead to send it to a pair of legislative committees.

"I'm extremely unhappy this wasn't sent to the Attorney General's Office because the audit indicated it should have been," said Rep. Janice Fisher, D-West Valley, who requested the audit.

Diehl did not respond to a call and an e-mail seeking comment.

Controversy has been swirling for more than two years over the selection of a FrontRunner rail stop in Draper at 12800 South, near where archaeologists have found the site of a 3,000-year-old Native American village.

The audit substantiated a number of news reports that Diehl, a prominent developer, consulted for and later became an owner in a company called Whitewater Seven, which wanted to develop land next to the proposed FrontRunner stop.

The audit found that in December of last year, Diehl sold the development rights for the property to a company called Draper Holdings for "an undisclosed amount."

Both UTA and Diehl told auditors they acknowledged that the conflict existed, but say it was properly disclosed to the board, verbally and in writing, and Diehl had also recused himself from any action on the issue.

"The trustee in question made every attempt to comply," said Bruce Jones, UTA's general counsel. He said Diehl didn't want to step down from the board and therefore disposed of any interest in the property in question.