Quantcast

Former UTA board member made 'millions' on land deal near Draper rail stop

Published: Tuesday, Sept. 20 2011 12:16 a.m. MDT

UTA show their new TRAX cars as the are tested between Midvale and Sandy stations Monday, Feb. 7, 2011.

Scott G. Winterton, Deseret News

Enlarge photo»

SALT LAKE CITY — One question went unanswered in the still simmering conflict-of-interest finding against a former Utah Transit Authority board member involved in a land deal near a controversial rail stop: How much did he make?

Documents obtained by the Deseret News and KSL-TV show developer Terry Diehl made "in the millions and less than $24 million."

The figures were in Office of the Legislative Auditor notes obtained through Utah's Government Records Access and Management Act. Legislative auditors last year found in a "limited review" that Diehl had a conflict of interest when he profited from the sale of land chosen for a FrontRunner stop.

The Utah Attorney General's Office confirmed Monday that it is "actively" investigating the matter.

Legislative auditors are scheduled Wednesday to present their report to the Transportation Interim Committee, which has yet to be briefed on the issue. Auditors first released the report to the audit subcommittee last December.

According to the audit, Diehl in 2008 consulted for and later held ownership in a company called Whitewater Seven, which wanted to develop land next to the proposed Frontrunner stop at 12800 South in Draper. In November 2009, UTA selected that site for the station. A month later, Diehl sold the development rights for the property to a company called Draper Holdings, the audit said, "for an undisclosed amount."

Although the review identified a conflict, auditors determined Diehl did not interfere in the selection of the site for the FrontRunner stop.

But Sen. Pat Jones, D-Salt Lake, in a Legislative Audit Committee meeting called the undisclosed money made off the deal the "elephant in the room" and the underlying question that initiated the audit.

The newly revealed figures came in answers to questions auditors posed to Diehl and his attorney, Thomas Karrenberg, in an interview for the audit.

"Terry's attorney would not provide us the agreement between Diehl and Vitek, but the amount Terry was compensated was in the millions and less than 24 million," the auditors wrote. Jeff Vitek heads Draper Holdings.

Diehl was reimbursed for his planning, surveying and engineering costs to develop the property as well as attorney's fees and a consultant fee, according to the auditors' notes.

Karrenberg told auditors that because proprietary information wasn't used in the transaction, Diehl only needed to disclose the conflict of interest, which he acknowledged did exist.

"(Karrenberg) stresses that a conflict did exist and Terry was trying to profit from the land deal," according to the notes.

On Monday, Karrenberg said how much Diehl made isn't anyone's business. "I'm personally insulted by that question," he said.

Diehl, he said, followed state law and UTA rules in disclosing the conflict. Diehl resigned in May after 10 years on the UTA board to pursue transit-oriented developments.

Although Diehl made UTA aware that he had a financial stake in the land deal, auditors concluded in the review that he may have violated the Public Transit District Act's misuse of official information provision, a class B misdemeanor. The report recommended the Legislature refer the matter to the attorney general's office for further investigation.

The audit subcommittee, composed of Senate President Michael Waddoups, R-West Jordan, then-House Speaker Dave Clark, R-Santa Clara, Rep. David Litvack, D-Salt Lake, and Jones chose not to do that.

But Attorney General Mark Shurtleff said he asked his staff to take a look at the issue, though not as a criminal or formal investigation. Allegations of malfeasance, he said, go to the office's civil review committee.

"It's very early right now, but we're doing our due diligence," he said.

UTA spokesman Gerry Carpenter said the transit agency wasn't involved in the land deal, and that no UTA funds or property were part of it. He referred questions about Diehl's purported income to UTA board Chairman Greg Hughes.

At the audit subcommittee last December, Jones pressed Hughes, a Republican state representative from Draper, on how much Diehl made in the transaction.

Hughes said he didn't know and that it didn't matter as long as the conflict was disclosed. He reiterated that Monday, saying he was not aware of the financial terms and that he doesn't believe it's within the UTA board's purview to know that.

Jones said Monday $24 million was a "tremendous" amount of money, but that she didn't know if that was out of line with what anyone else would make in such a transaction.

Email: romboy@desnews.com; jdaley@desnews.com, Twitter: dennisromboy

Get The Deseret News Everywhere

Subscribe

Mobile

RSS