Facebook Twitter

CORRADINI, BONNEVILLE KEPT SECRET FROM SEC

SHARE CORRADINI, BONNEVILLE KEPT SECRET FROM SEC

Deedee Corradini and Bonneville Pacific executives kept their ownership of offshore companies a secret from the Securities Exchange Commission and a local law firm that had an interest in knowing about it.

One company - the law firm where Corradini's husband works - withdrew Wednesday as counsel for Bonneville Pacific's creditors in the wake of revelations that Corradini partially owned an offshore company that skimmed profits from Bonneville Pacific.Court records also show that Bonneville Pacific chiefs may have violated federal law by failing to tell the SEC that they owned many of the companies Bonneville Pacific did business with.

Bonneville Pacific executives should have told the SEC about their ownership of other companies - including companies that guaranteed loans for Bonneville Pacific and its subsidiaries - in 1987 when they sought the SEC's blessing on their accounting practices, court records show.

The executives also made several other omissions in the firm's letter to the SEC, records say.

Bonneville Pacific executives also violated SEC rules by not telling shareholders about problems with earnings and cash flow on at least one project, according to court records.

The local office of LeBoeuf, Lamb, Leiby & MacCrae withdrew from the Bonneville Pacific bankruptcy after doing $115,000 in work because of recent disclosures about Corradini's involvement with Bonneville Pacific.

The firm did know the extent of that involvement when it signed on the legal counsel for the creditors.

Law firms that seek to represent creditors in a bankruptcy must first file an application with U.S. Bankruptcy Court. In that application, they are required to reveal any conflicts of interest that may prevent them from representing a creditor.

The LeBoeuf firm filed its application Jan. 6. In the application, firm lawyer Ralph Mabey said his firm intended "to assist in the investigation of Bonneville Pacific's acts, conduct . . . and operation of its businesses." The firm was qualified to do so and had no serious conflicts that would prevent it from doing the job, he said.

Mabey sent a memo to every lawyer - including Corradini's husband, Yan Ross - in the firm requiring them to disclose "any connection with any matter involving Bonneville Pacific or its affiliates," he said in the application.

No conflict had arisen preventing the firm from representing creditors, he concluded. However, in a footnote, Mabey noted that Ross once owned 10,593 shares of Bonneville Pacific but had sold the shares. Ross' wife, Corradini, owned less than 1 percent of the company and once sat on the board of Recomp Inc. - a Bonneville Pacific subsidiary, he said in the footnote.

"We told the court what we knew when we knew it," Mabey told the Deseret News.

U.S. Bankruptcy Judge John H. Allen authorized Mabey's firm to represent the creditors.

The firm has done approximately $115,000 worth of work for the creditors since its appointment, Mabey said.

But in early May, rumors began moving among Salt Lake law firms that a report being prepared by Bankruptcy Examiner Alan V. Funk implicated Corradini in questionable Bonneville Pacific dealings.

Mabey talked with Funk and learned that Corradini was more heavily involved with the company's business than he thought. He then conferred with Ross.

On May 7, Mabey filed a supplementary disclosure with the court revealing what he thought was the extent of Corradini's involvement with Sallah. Mabey reported that Corradini was not an officer or director of Sallah, did not have access to its books or records, had no control over its business "and was unaware of their dealings generally."

However, as a precaution, he assured the court that Ross would not participate in the firm's work on the bankruptcy or have any access to confidential records.

Mabey scheduled a hearing June 16 at 10 a.m. before Judge Allen to discuss any conflict Corradini may have created for the company.

But Wednesday - in the wake of revelations that Corradini was one of the most active owners of Sallah and took considerable sums out of the company - Mabey withdrew his firm as counsel for Bonneville Pacific's creditors.

Funk's report reveals that Corradini asked Sallah to pay for a family vacation estimated to cost $25,000 and other expense vouchers - each for several thousand dollars.

Until Corradini's election, Sallah held the $381,000 mortgage on Corradini and Ross' home, located in Federal Heights. The company also made a personal loan of $149,000 to Corradini and Ross and another loan of $50,000 to Corradini, records show.

Mabey acknowledged these loans in his May 7 disclosure. Corradini paid interest on the loans, but the principal is still outstanding, he said. However, after Corradini was elected mayor, she transferred the loans "to a corporation to which Ms. Corradini and Mr. Ross contributed unrelated assets and which they largely own," the disclosure said.

Perhaps most damaging, Funk's report also stated that money for Corradini's loans and expense vouchers came from profits that should have gone to Bonneville Pacific shareholders. Corradini and others used Sallah to personally profit from Bonneville Pacific deals, he reported. Corradini gleaned $500,000 on one deal alone, records show.

In light of these and other revelations, "It just made sense for us to get out," Mabey said.

The LeBeoeuf firm has been paid $64,000 for the work it has already done on the case. A hearing was scheduled before Allen to review LeBeoeuf's request for the remaining $51,000.

*****

(Additional information)

GRAPHIC

Money paid principals of Bonneville Pacific Corp.

1986

Cash Received from Salary & bonuses

Stock sales

Raymond Hixson $911,089 $250,000

L. Wynn Johnson $911,089 $250,000

Robert L. Wood $911,089 $250,000

Carl Peterson $911,080 $250,000

John T. Dunlop $700,830 --

Robert N. Pratt -- --

TOTAL $4,345,168 $1,000,000

____________________________________________________________

1987

Cash Received from Salary & bonuses

stock sales

Raymond Hixson $1,062,900 $182,900

L. Wynn Johnson $1,062,900 $174,555

Robert L. Wood $1,062,900 $169,562

Carl Peterson $1,062,900 $165,333

John T. Dunlop $1,062,900 --

Robert N. Pratt -- --

TOTAL $5,314,500 $692,350

_____________________________________________________________

1988

Salary & Bonuses

Raymond Hixson $214,000

L. Wynn Johnson $203,000

Robert L. Wood $201,294

Carl Peterson $199,287

John T. Dunlop --

Robert N. Pratt --

TOTAL $936,173

_____________________________________________________________

1989

Salary & Bonuses Employee stock option plan

Raymond Hixson $289,750 $750,005

L. Wynn Johnson $286,750 $750,005

Robert L. Wood $316,875 $750,005

Carl Peterson -- --

John T. Dunlop $286,875 $750,005

Robert N. Pratt $417,500 --

TOTAL $1,597,875 $3,000,020

__________________________________________________________________

1990*

Salary & Bonuses Gas & Oil leases**

Raymond Hixson -- --

L. Wynn Johnson $163,240 --

Robert L. Wood $171,720 --

Carl Peterson -- --

John T. Dunlop $163,240 $2,100,000

Robert N. Pratt $592,835 --

TOTAL $1,091,035 $2,100,000

___________________________________________________________________

TOTAL

Raymond Hixson $3,872,644

L. Wynn Johnson $4,102,664

Robert L. Wood $4,191,436

Carl Peterson $2,588,600

John T. Dunlop $5,414,850

Robert N. Pratt $1,429,972

TOTAL $21,600,121

*Eight months ending 12-90

**Company purchases