Indictments Handed Up in Bonneville Pacific Case
Jun. 02, 1995
SALT LAKE CITY (AP) _ A federal grand jury on Thursday indicted four former executives of Bonneville Pacific Corp., charging that officials of the bankrupt alternative energy company defrauded investors of millions.
The indictments culminate a three-year probe that has also stained the administration of Salt Lake City's first woman mayor.
Mayor Deedee Corradini, a former officer of the company that became Bonneville Pacific, was not among those indicted and has admitted no wrongdoing.
``I've said for a long time that I didn't do anything wrong, and as far as I'm concerned it's over,'' she said.
Corradini and her husband, Yan Ross, earlier paid a bankruptcy court $458,000 to settle a court trustee's claims against them. In so doing, they avoiding being named in a related lawsuit, but officials said investigations involving the mayor were continuing.
The indictments were made against influential Utah businessmen who helped build the small Salt Lake company into a star of the 1980s alternative energy industry.
After the company collapsed in bankruptcy 1991, investigators began uncovering evidence of fraud and corporate mismanagement on a grand scale. During a court hearing nearly 18 months ago, a judge said fraud in the case could total more than $300 million.
The men are charged with various counts of criminal conspiracy, securities fraud, mail fraud, bank fraud, and tax violations.
Bonneville Pacific claimed to develop and operate plants that made electricity in small, innovative plants, mostly hydroelectric. The company was to be sold to regulated utilities. The company went public in 1986, and its stock price nearly doubled the first year.
Portland General Corp., a subsidiary of a major Oregon public utility, bought 47 percent of the company's stock in mid-1991, just months before Bonneville Pacific filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Portland General soon sued former officers and accountants, claiming fraud.
Roger Segal, a trustee responsible for administering the bankruptcy case, alleged in a July 1993 lawsuit that former insiders improperly took $42 million out of the company, and that many of the energy projects were empty facades designed to attract investors or evade taxes.
The threat of being named a defendant in that suit prompted Corradini and her husband to pay the court $458,000, including reimbursement of loans, and travel expenses.
A senior Justice Department official, who spoke on condition of anonymity, said a related continuing tax investigation involves Corradini and others. The official said the investigation is probing whether Corradini and others may have had a tax liability for expense-paid trips to meetings.
Corradini, who is seeking a second four-year term this year, helped found the company that became Bonneville Pacific.
``I was sure this would come out fine,'' the mayor said Thursday after the indictments were made public. ``There is no question these have been difficult years personally for me.''
Before Thursday's charges, only one insider, company co-founder John Dunlop, had been prosecuted.
Dunlop, the mastermind of many of Bonneville Pacific's schemes, pleaded guilty in 1993 to insider trading, making a false statement to the Securities and Exchange Commission and filing a false income-tax return. A federal judge sentenced him to 30 months in prison, which he began serving 18 months ago.
As part of the plea agreement, Dunlop gave hundreds of hours of help to investigators putting together the case against the other former insiders.
Those charged Thursday were Raymond L. Hixson, 68, former chairman and chief executive officer; L. Wynn Johnson, 51, former company president; Robert L. Wood, 42, the company's former financial officer and David P. Hirschi, 44, the company's former general counsel and vice president.
Ken Brown, the attorney for Hirschi, said he is confident a jury will acquit his client.
``David's position has always been that he didn't commit a crime while he was employed by Bonneville Pacific,'' Brown said.
The attorneys for Johnson and Wood said criminal charges shouldn't have been filed at all.
``Bonneville Pacific's former officers are honorable and dedicated businessmen who had a long-term commitment to the growth of their company and to the community,'' lawyers Jim Holbrook and Neil Kaplan said in a joint statement issued Thursday afternoon.
The U.S. Attorney's office said the crimes of conspiracy, securities fraud and giving false statements carry possible prison terms of five years each and fines ranging from $250,000 to $1 million.
Bank fraud carries a prison term of between five and 30 years, and a fine of up to $1 million and the alleged tax violations carry prison terms of up to three years and fines of up to $250,000.