FLDS leaders indicted in food stamps fraud, money laundering case

Published: Tuesday, Feb. 23 2016 2:30 p.m. MST

FILE - In this July 9, 2015, file photo, Seth Jeffs, right, the brother of Warren Jeffs, the imprisoned leader of a polygamist sect, participates in a state water board meeting in Pierre, S.D. South Dakota regulators approved Wednesday, Oct. 14, 2015, the secretive polygamist group's request to draw water more quickly at its Black Hills compound even though the sect declined to provide many details about how many people live there. (AP Photo/James Nord, File)

James Nord, AP

HILDALE — Fundamentalist LDS Church leader Lyle Steed Jeffs was among 11 people indicted on federal money laundering and food stamps fraud charges Tuesday as the FBI and local officials raided the twin polygamous border towns of Hildale and Colorado City.

"This is a multi-year investigation involving a community that has a large number of (food stamps) recipients who over the course of the year would, at the instruction and advice of (church leaders), donate or misuse those benefits," U.S. Attorney for Utah John Huber said Tuesday.

All 11 are leaders and members of the FLDS Church. About half had been taken into custody by late Tuesday afternoon.

Jeffs, 56; John Clifton Wayman, 56; Kimball Dee Barlow, 51; Winford Johnson Barlow, 50; Rulon Mormon Barlow, 45; Ruth Peine Barlow, 41; and Preston Yates Barlow, 41, all of Hildale; along with Seth Steed Jeffs, 42, of Custer, South Dakota; and Nephi Steed Allred; Hyrum Bygnal Dutson, 55; and Kristal Meldrum Dutson, 55, all of Colorado City, Arizona, were charged with conspiracy to commit Supplemental Nutrition Assistance Program (SNAP or food stamps) benefits fraud and conspiracy to commit money laundering in a two-count indictment unsealed Tuesday.

Lyle and Seth Jeffs are the brothers of Warren Jeffs, who leads the polygamous group even as he is serving a life sentence in a Texas prison for sexually assaulting one of his 24 underage brides. Investigators say he still rules the church through letters and phone calls from prison.

"The indictment alleges church leaders diverted SNAP (food stamps) proceeds from authorized beneficiaries to leaders of the FLDS Church for use by ineligible beneficiaries and for unapproved purposes … amounting to millions of dollars in benefits per year," according to a statement from U.S. Attorney's Office.

The U.S. Department of Agriculture’s Food and Nutrition Service operates SNAP to provide assistance to low-income individuals and families to purchase food products. SNAP cards act like limited ATM cards to purchase eligible items for those who qualify for the program.

Starting in 2011, "FLDS leaders, including Lyle Jeffs, instituted the United Order within the ranks of the church. … Devout FLDS members aspire to eligibility in the United Order. Adherents to the United Order must donate all of their material assets to the FLDS Storehouse, a communal clearinghouse charged with collecting and disbursing commodities to the community," according to the indictment.

Prosecutors say that between 2011 and 2013, FLDS leaders directed church members to divert their food stamps benefits to the storehouse. The leaders held meetings and distributed protocols and "instruction on how to avoid suspicion and detection by the government," the indictment states.

Two small convenience stores operated by the church in the border towns — Meadowayne Dairy Store and Vermillion Cliffs Produce — engaged in "abnormally large and frequent" food stamps transactions "which rival and even surpass those sales generated by much larger stores like Wal-Mart and Costco," court documents state.

The FLDS leaders are accused of instructing church members to purchase items at the two small stores and then to donate those food items to the storehouse — or to swipe their benefits cards but not take any food items. The managers at the two stores would transfer those food stamps funds "to companies acting as a front for the FLDS Storehouse" — Quality Home Distributors, Prime Wholesale Supply and Product Unlimited, according to the indictment.

Church members, including those who did not qualify for food stamps benefits, could purchase items at those businesses that were using diverted "SNAP fraud proceeds."

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