Court rules Utah keeps control of religious cult’s property trust

Update: Appeals Court rules FLDS trust should stay with state.


Last Friday Utah’s Attorney General Mark Shurtleff had to explain in a state court why the accountant Utah courts put in charge of a polygamous sect’s seized property trust hasn’t yet been paid millions in past-due fees.

The property trust, known as the United Effort Plan (UEP), was created by the Fundamentalist Church of Jesus Christ of Latter-Day Saints (FLDS) in 1942.

The FLDS is one of many offshoots of the Mormon Church — the so-called Church of Jesus Christ of Latter-day Saints (LDS), itself theologically a cult of Christianity.

Mormon fundamentalists believe they are following the “true” Mormon faith as laid down by founder Joseph Smith, while the LDS Church is “out of order” because of its disavowal of plural marriage, the ‘United Order’ and other early doctrines.

The United Order established egalitarian communities designed to achieve income equality, eliminate poverty, and increase group self-sufficiency.

The FLDS’ United Effort Plan property trust, valued at more than $114 million, was established on that concept.

Theoretically it would allow FLDS members to share in its assets.

But in 2005 Utah state courts seized control of the trust over allegations by state attorneys that FLDS prophet and leader Warren Jeffs and other sect leaders had mismanaged its assets.

This is a scene from the documentary film, Sons of Perdition. The documentary deals with the so-called ‘Lost Boys’ — young men kicked out of the FLDS by cult leader Warren Jeffs. This segment talks about Warren Jeff’s control over the FLDS community via the United Effort Plan trust.

Ever since, the UEP has been the subject of ongoing legal battles.

FLDS followers maintain the court-ordered reorganization of their property trust violated their constitutional rights to religious freedom, and they have sued to reverse the changes or regain control of the trust.

In August 2010 the Utah Supreme Court ruled the sect waited too long to object to the state takeover.

Then, in February 2011 a federal judge ruled that Utah’s takeover of the sect’s property trust was unconstitutional.

But in April that year an appeals court decided to keep control of the UEP with the state.

The last word hasn’t been spoken yet in the case.

However, during all this legal wrangling Bruce Wisan, the state-appointed accountant, and his employees have not been paid because the trust’s assets remain tied up while the legal case is ongoing.

The UEP holds no cash, but instead holds the land and homes of FLDS members in Hildale, Utah; Colorado City, Ariz.; and Bountiful, British Columbia.

Wisan has been blocked from selling trust property since the sect began fighting the takeover in court as legal bills mounted.

Therefore in August 2011 a judge ordered the state of Utah to pay off $4.6 million in debt incurred by Wissan.

The Attorney General appealed that decision, arguing that Utah tax payers should not end up footing the bill.

But last April the Utah Supreme Court refused to block the judge’s order requiring the Attorney General’s Office to pay the bill — which has by now grown to more than $5.5 million.

And that’s why Attorney General Mark Shurtleff ended up on the witness stand last Friday, where Third District Judge Denise Lindberg questioned Shurtleff on what he’d done to comply with a court order to pay the accountant.

According to the Salt Lake Tribune, Shurtleff told the judge he had done everything he could to get the bills paid after the Utah Supreme Court denied his appeal:

But his office doesn’t have the money now, he said. The payment will have to be allocated by the Utah Legislature in January. The money wouldn’t be available until the next fiscal year, in July 2013.

But that’s too long for people like attorney Jeff Shields, who works for accountant Bruce Wisan, and said he hasn’t had a paycheck in nine months.

“I don’t want to get too personal, but I’m close to my limit,” Shields said. And there are still several lawsuits pending in the fight over control of the trust.

In the end, Lindberg appeared satisfied with Shurtleff’s approximately 30 minutes of testimony. She recommended that attorneys general in both Utah and Arizona take on some of the responsibilities for running the trust and fighting related litigation to reduce the burden and the bill. […]

Meanwhile, the question remains as to whether the Legislature will approve the funding request in January.

“I think it’s very unclear what the Legislature is going to do,” said Rep. Brian King, D-Salt Lake City. “The big question is how much, if anything, will be allocated by the Legislature.”

Update: The Associated Press later today reported:

A federal appeals court ruled Monday that a polygamist sect on the Utah-Arizona border waited too long to challenge a court-ordered takeover, clearing the way for state authorities to break up a church trust and sell assets including homes, businesses and farms in two small towns.

A three-judge panel of the 10th U.S. Circuit Court of Appeals overturned a federal judge in Salt Lake City, who ruled nearly two years ago that Utah’s takeover violated the Fundamentalist Church of Jesus Christ of Latter-Day Saints’ constitutional rights. U.S. District Judge Dee Benson’s decision froze the sale of church assets in Hildale, Utah, and Colorado City, Ariz., and put Utah’s takeover in limbo. […]

The appeals court panel didn’t rule on the constitutionality issue. Instead, it determined the FLDS waited too long — nearly three years — to take legal action. […]

The 10th Circuit panel said it was taking guidance from the Utah Supreme Court.

“We conclude that the FLDS Association is precluded from pursuing its claims in federal court,” said the decision by judges Mary Briscoe, Bobby Baldock and Timothy Tymkovich.

Salt Lake Tribune reporter Lindsay Whitehurt says the decisions marks a major turning point in the long-running case:

“We’re pleased. It allows us to get us to get busy, get the stay lifted, sell property to pay the debts,” said Utah Attorney General Mark Shurtleff, adding that he hopes to begin settlement talks with former and current members of the Fundamentalist Church of Jesus Christ of Latter-Day Saints. […]

FLDS attorney Rod Parker called Monday’s decision a setback for his side, but said he would also be interested in talking to the state. Thousands of sect members still live and work on property belonging to the communal trust, formally known as the United Effort Plan, which includes nearly all the land and homes in the twin towns of Hildale, Utah, and Colorado City, Ariz.

“We’ve got plenty of life left in us if we want to pursue it, that’s for sure,” Parker said, but “I don’t see it ever being resolved by litigation. … I think it needs to be resolved by settlement in some form.”

Mediation plans are complicated, though: During the past two years, sect leaders along with hundreds of other men and women have been expelled from the sect by Jeffs from his Texas prison cell. Combined with the group’s distrust of government, the splintering could complicate efforts to find trust beneficiaries and bring them to the table.

FLDS controversies

Of the various sects of the Mormon Church, the 10,000 member strong FLDS has been most visible in the news over the past few years, primarily for these reasons:

In August last year, Warren Jeffs was sentenced to life in prison plus 20 years for sexually assaulting two underage followers he took as brides in what the FLDS considers “spiritual marriages.”

Jailed in Texas, the cult leader continues to rule his followers — many of whom still believe him to be God’s prophet — with an iron fist.

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