Provided by UTA
Terry Diehl.

SALT LAKE CITY — And then there was one.

Attorneys for a former Utah Transit Authority board member accused of financial crimes say federal prosecutors have led them on a "wild goose chase" to defend him against charges the government can't, and now won't, try to prove.

The U.S. Attorney's Office filed a fourth superseding indictment Wednesday against prominent Utah real estate developer Terry Diehl that reduces the charges to just one count of making a false declaration.

Prosecutors at one time had charged Diehl with 14 felonies, including tax evasion and filing a false tax return.

"The government’s conduct of this case in charging Mr. Diehl with bankruptcy and tax crimes he has not committed and that the government knew, or in the exercise of reasonable caution should have known, could not be proved constitutes prosecutorial misconduct," according to Diehl's lawyers, Loren Washburn and Steve Peters.

Meantime, prosecutors filed an emergency motion Wednesday to delay jury selection for Diehl's trial from Thursday to next Monday, saying that in "narrowing" the case to one charge, it would take them no more than four days to put on their evidence. The trial is scheduled for 10 days.

U.S. District Judge Clark Waddoups promptly denied the request and ordered jury selection to start Thursday.

Diehl's attorneys argue in court papers that the government "improperly manipulated the playing field so many times" that Diehl is "seriously prejudiced" by having been "misled about the charges.”

Diehl wants Waddoups to preclude the government from using any evidence it obtained for the first time or testimony it heard for the first time after the filing of the superseding indictment Oct 4. He also wants the judge to exclude several prosecution witnesses.

"Either the government could prove its bankruptcy case based on the evidence it had gathered before it began the parade of prejudicial unfounded charges and weekly changes in the indictments or it could not," Washburn and Peters wrote.

Prosecutors say in court documents that they "vehemently" oppose the defense motion.

Waddoups agreed Wednesday to exclude two witnesses, but reserved ruling on the exclusion of other witnesses and evidence until the trial.

The government initially charged Diehl with five counts of filing a false declaration and seven counts of concealing assets in connection with his Chapter 11 bankruptcy reorganization.

U.S. Attorney John Huber last month said prosecutors decided to "refine" the counts against Diehl after rulings made by the judge in a pretrial hearing.

The latest indictment alleges Diehl failed to list a company called Skyline Ventures Associates Inc. in his 2012 bankruptcy filing.

Diehl set up Skyline Ventures several months before he filed for bankruptcy in the names of his two daughters but "exclusively" managed and controlled its financial transactions, according to the indictment.

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"Some funds were disclosed to creditors, others were not. Undisclosed funds were used, in part, to pay defendant Diehl's personal expenses during his bankruptcy," the indictment says.

Previous indictments alleged Diehl omitted more than $1 million in income stemming from the sale of land to eBay adjacent to the UTA FrontRunner transit-oriented development in Draper from his bankruptcy filing. Prosecutors alleged that he transferred the money to another business he manages and lied to his accountant about how he got it.