Hildale water company accused of illegally funneling money to FLDS is shut down

Stock image | Photo by Morakot Kawinchan/iStock/Getty Images Plus, St. George News

ST. GEORGE — A nonprofit water company that took water from wells belonging to another entity and used its revenue to pay personal expenses for members of the FLDS church has been dissolved.

The Utah Attorney General’s Office in 2015 asked a judge to dissolve Twin City Water Works because it “exceeded or abused its authority,” according to court documents.

The complaint alleged that Twin City had illegally taken water from wells owned by the United Effort Plan Trust, used its revenues as a nonprofit improperly and that its officers were either unable or unwilling to manage it. The UEP is a government-appointed organization that oversees a former church trust that has properties in the sister cities of Hildale, and Colorado City, Arizona.

The state pursued legal action after it received information that Twin City was illegally funneling money to members of the Fundamentalist Church of Jesus Christ of Latter Day Saints. 

A key piece of evidence was a letter from Colorado City Mayor Joseph Allred to FLDS leader Warren Jeffs, who was a fugitive at the time but now imprisoned, that reads in part, “I had asked a question a few months ago regarding the fact that some funds from the company TCWW have been used to pay the utility bills, auto insurance costs, and some auto purchase costs for some of the home vehicles, and I was wondering if we should continue with that or not.” 

As a nonprofit, Twin City must spend any revenue on its own operations. The church was not officially associated with the corporation, despite some board members being affiliated with the church, court documents say.

According to a report prepared for a civil rights lawsuit against Hildale and Colorado City, the company diverted $1.7 million to outside interests not connected to the nonprofit’s business.

The state was also concerned that officers of Twin City had stated they didn’t know what was going on financially within the company during questioning for another case. The manager of the company testified he did not know the names of any employees.

The Attorney General’s Office asked the court to appoint a receiver who would operate the company until it could be dissolved and either a newly created nonprofit or the towns of Hildale and Colorado City could provide water services to the community.

The judge ordered Twin City to provide copies of its financial records and later appointed a receiver until litigation against the corporation could be resolved. The receiver oversaw all of the finances, paid invoices and sat on the company’s board.

The case sat stagnant for two years until both sides appeared in court Nov. 20, 2018, to illustrate why the case should not be dismissed. 

The state said it was waiting for the results of  a separate case between Twin City and UEP before moving forward. As that case was being resolved, the state continued to ensure the company was not disposing of its assets.

In a hearing Monday, lawyers for the two sides reported to 5th District Judge G. Michael Westfall that Twin City had been dissolved.

The UEP transferred water rights to Hildale and Colorado City as part of a settlement in its case against Twin City. The trust had alleged the company was illegally taking water from UEP-owned wells and selling it to residents of the cities. 

“Everybody wants the cities – Colorado City and Hildale – to have a good source of water and affordable water to supply the citizens and I think the UEP trust did the right thing when they agreed to resolve the lawsuit by agreeing to give the water rights to the cities,” said Joni Jones, litigation director for the Attorney General’s Office. “Ultimately, I think that this is the best possible outcome for the case,” she said. 

Jones said it is her understanding that the transfer of the rights to the wells and – if applicable – the land around the wells was completed Tuesday.

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Copyright St. George News, SaintGeorgeUtah.com LLC, 2019, all rights reserved.

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