State planning to bow out of complex FLDS trust fund
Trent Nelson, Trent Nelson,
SALT LAKE CITY — Eight years after Utah took control of assets belonging to a Utah-based polygamous sect, it is now trying to figure out how to return them.
Friday, attorneys announced that they are preparing exit strategies for the complicated trust fund.
The United Effort Plan was created by the Fundamentalist LDS Church in 1942 on the concept of a "united order," allowing followers to share in its assets. Utah's courts seized control of the FLDS trust in 2005, amid allegations of mismanagement by church leaders, including Warren Jeffs, the head of the church who is currently in prison in Texas.
Since the state took over the trust in 2005, state-appointed fiduciary Bruce Wisan, his attorneys and others charged with managing the $110 million-plus trust have racked up $5.7 million in fees. In a unanimous decision handed down in August, the Utah Supreme Court upheld an earlier ruling requiring the state to pay the fees until the trust's assets can be freed to pay for itself.
The state board of examiners, which reviews claims made against the state, recommended that the Utah Legislature appropriate the funds to pay the $5.7 million that was ordered. But the board said since it is an "advance" that will ultimately be repaid with trust revenue, there should be an exit strategy in place to end the fiduciary's duties and the state's future liability for the trust's costs.
Friday, the parties charged with proposing that exit plan to 3rd District Judge Denise Lindberg met to discuss their progress.
Shields said he, Wisan and those involved in the administration of the trust have a simple, straightforward proposal with four parts. The first is an exit strategy that calls for the creation of a board of trustees and the termination of the state's oversight.
Further, those managing the trust will not seek payment in excess of $5.7 million and will assume risk of payment for their future costs while they help wrap up the state's involvement in the trust. Finally, they would provide the state with a lien on property worth $5.7 million.
Assistant attorney general David Wolf said he thinks the groups, which also include the Arizona Attorney General's Office, need more time to come up with something more specific and concrete than what Shields presented.
"These issues need a little bit more development," he told the judge.
That includes, for example, what terminating the state trust would look like. Both Shields and Wolf pointed to the appointment of an independent, qualified board of trustees. But Lindberg said they need to look at other avenues, including termination of the trust.
She questioned whether they could find individuals representing FLDS members who continue to follow imprisoned leader Warren Jeffs, FLDS members who no longer follow Jeffs, former FLDS members, and community members who may have never belonged to the church to serve on the board. She also pointed to the staunch resistance of the FLDS faithful to work with the state.
"We can't involve a community that doesn't want to be involved," she said. "Still an option, not the best option, but if we can't resolve it, the only option left is termination. I don't want to go there unless I have to."
While Lindberg noted that when it comes to an exit strategy "the devil is in the details," she said she thinks the more simple and straightforward the better. She set another hearing for March 5, at which time the parties should have an agreement for the judge's approval.
"I think probably everybody in this room would like this to be done, but it must be done appropriately," the judge said.
Shields said a court-approved exit strategy does not guarantee payment by the Legislature, but it does show that they followed the board of examiners' recommendation. He said the process of getting approval of the exit strategy will be much quicker than the exit itself.
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