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A.G. must pay $5.7M to FLDS trust managers, high court rules

Published: Friday, Aug. 3 2012 5:07 p.m. MDT

SALT LAKE CITY — The Utah Supreme Court ruled Friday that the Utah Attorney General's Office must pay the $5.7 million owed those managing a Utah-based polygamist sect's trust.

A special session of the Utah Legislature may have to be called in order to secure the funds.

In a unanimous decision written by Justice Christine Durham, the state's high court upheld an earlier ruling requiring the state pay the fees for those overseeing the Fundamental LDS Church's United Effort Plan trust until the trust's assets can be freed to pay for itself.

The United Effort Plan was created by the FLDS Church in 1942 on the concept of a "united order," allowing followers to share in its assets. Utah's state courts seized control of the FLDS trust in 2005, amid allegations of mismanagement by church leaders.

Valued at more than $110 million, the trust holds most of the property and homes in the twin border towns of Hildale, Utah, and Colorado City, Ariz. The church also holds property in Bountiful, British Columbia, and Eldorado, Texas.

Members consider sharing its assets a religious principle and see state intervention in the trust as a violation of their religious rights. They have long been challenging the state takeover of the trust in both state and federal courts, where there have been different, conflicting rulings, leading the 10th Circuit Court of Appeals to take the case and issue an injunction to freeze all assets until the matter is resolved.

Meantime, the court-appointed special fiduciary, Bruce Wisan, and those working for and with him to manage the trust have gone unpaid, accruing bills totaling $5.7 million for the period of May 2008 to September 2011 alone. In February 2012, 3rd District Judge Denise Lindberg ordered the attorney general's office to pay the fees and the high court's justices agreed, finding that Lindberg did not abuse her discretion when it came to awarding the fees or in the amount of fees required.

"As the state's interim payment in this case is for the benefit of a charitable trust for which it retains ultimate responsibility, we do not see any obvious error in the probate court's decision to award fees," Durham wrote.

When the state took control of the trust, Wisan and other managers were to be paid from funds generated by the trust itself, but that option has stalled due to the ongoing litigation. Assistant attorney general Bridget Romano argued before the court that "the financial crisis is not a liquidity crisis as much as a litigation crisis."

Attorney Jeff Shields, who represented Wisan and those aiding him in management of the trust, countered that the state started the process of seizing the trust and recruited Wisan to work as fiduciary and should, therefore, pay them for their work.

Durham quoted the probate court, stating "the court 'did not disagree, however, with the Utah AG's argument that the fees incurred in administering the trust should ultimately be paid from the trust assets if at all possible.'" In theory, the Utah Attorney General's Office payment would be provide interim payment until the trust itself can repay the fees.

But Attorney General Mark Shurtleff pointed out that the 10th Circuit could side with U.S. District Judge Dee Benson, who found that the state's takeover of the trust was unconstitutional, which would further complicate the payment issue.  

Still, he thinks the decision to take control of the trust's management was a good decision. He simply wishes the FLDS members had been more involved from the outset.

"It was never intended that the state or the court would forever run this trust," Shurtleff said. "The desire was to stop the bleeding, stop the problem, account for the property, secure and protect the property, have those people all get involved and participate equally and get everybody their property. That's still what we're shooting for."

As it stands, Shurtleff said his office will have to go to the Utah Legislature and ask for an appropriation of funds to pay what is owed. Shurtleff said he's contacted the presidents of both the Utah House and Senate. But whether a special session will be needed is unclear.

"I'm disappointed, obviously," he said Friday. "Because we obviously felt very strongly that taxpayers shouldn't have to pay this or loan this money temporarily when the fiduciary understood it was to be paid out of the trust itself. But we lost and I respect the process."

Shields said Wisan is "delighted" to have a unanimous decision on their side. He said those involved continued to work on the case out of a sense of duty to see the job through and echoed Shurtleff that the ultimate goal is to return the trust and its assets to the FLDS people.

"Our goal is to distribute the property to the people who built that property," Shields said. "It's going to be in the control of the people who built the property and they can do with it what they want."

He said they are "optimistic" payment will come quickly.

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