A task force comprised of the FBI, the Securities Exchange Commission, the Internal Revenue Service and the Utah attorney general's office is investigating bankrupt Bonneville Pacific.
The Securities and Commodities Fraud Task Force began poring over documents Friday at Coopers & Lybrand, the accounting firm that examined Bonneville Pacific for U.S. Bankruptcy Court. The task force is reviewing depositions that bankruptcy examiner Alan V. Funk used to prepare his report for the court.The task force was particularly interested in the deposition of David Tucker, a West Valley man who served as an accountant for Sallah International, an overseas corporation created by former Bonneville Pacific executives.
Sallah was used to divert assets from Bonneville Pacific that should have gone to shareholders, according to a report by Funk.
Salt Lake Mayor Deedee Corradini and former Bonneville Pacific executives Robert Wood, Raymond Hixson and Wynn Johnson owned Sallah. Former Bonneville Pacific executive John T. Dunlop maintained an "economic interest" in the company and managed its operations.
The 38-page deposition of Tucker reveals the use of a "peculiar" accounting system designed to cloak the company's finances in secrecy.
Tucker began preparing balance sheets for Sallah International in 1988. The accounting system he was told to use for the company was "unusual and unique," he said in his deposition.
"There were no income statements prepared; there was no related tax work with it," he said. The work sheets he prepared for the company did not indicate who owned the company, he said.
When Tucker took over Sallah's books, Sallah had $6.8 million in assets, which included the mortgages on the homes of Corradini, Dunlop, Wood and Hixson, Tucker said.
"Money from Sallah had been used to pay off mortgages on residences," Tucker said. Then the company kept the mortgages on the books as assets.
Asked again by Funk's attorneys if the mortgages on those homes had been paid off completely by Sallah, Tucker said, "Yes."
Tucker also recorded transactions between Sallah and Bonneville Pacific or its subsidiaries. He maintained a record of the flow of cash, bonds and stock in and out of the company's five principals' accounts: Corradini's, Dunlop's, Hixson's, Wood's and Johnson's. He also maintained balance sheets on accounts that belonged to others affiliated with Bonneville or Dunlop. But the names associated with those accounts changed during the years he did the books, Tucker said.
When Tucker prepared income statements, he never identified to whom the Sallah accounts belonged. Dunlop had told Tucker
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not to, Tucker said in his deposition.
He used the same practice when doing the accounting sheets for Lio Cam - another offshore company owned by the same people.
Both Sallah and Lio Cam maintained bank accounts in the Bahamas and Switzerland, Tucker said.
The unorthodox accounting procedures, Dunlop's instruction not to use names, and the nature of the company convinced Tucker that Sallah was meant to be shrouded in secrecy, according to his deposition.
"You know," Tucker said in his deposition, "there were tax games that, you know, with the mortgages and that kind of stuff, and being an offshore entity and not having responsibility for filing U.S. tax returns, yeah, I probably had that impression that there was some secrecy involved."
Tucker reported directly to Dunlop, regularly giving him and Dunlop's assistant, Chris Nelson, copies of Sallah accounting sheets.
The only other person Tucker may have given Sallah accounting sheets to is Corradini, Tucker said.
"Deedee had inquired of me a couple of times on the status of statements for Sallah. It's possible that I gave her statements. I can't recall for sure. Other than that, I don't recall giving the statements to anyone else."
Tucker said he had occasion to discuss Sallah with Corradini because he also did accounting work for her company, Bonneville Associates, for which Tucker prepared monthly income statements.
But Tucker said the other principals in Sallah - Johnson, Hixson and Wood - never asked him about the company.
Mortgage information contained in Tucker's sworn statement and in court records filed by Yan Ross' law firm clash with information Corradini and Ross, her husband, filed with the Salt Lake County assessor when they paid property tax on their Federal Heights home.
In a supplemental disclosure filed May 7 in U.S. Bankruptcy Court, the law firm of LeBoeuf, Lamb, Leiby & MacCrae also said that Sallah held the mortgage on Ross' and Corradini's home. The couple had paid interest on the mortgage but had not paid any of the principal, the disclosure said. Information in the disclosure was obtained through discussion with Ross and Corradini. Ross works for the LeBoeuf firm.
Sallah's 1988 records listed a mortgage of $249,000 for Corradini. In September 1989, the company loaned $149,000 to Ross and Corradini, but it is not clear what for. Thereafter, the value of Corradini's mortgage was listed on Sallah records at $381,000.
Shortly after Corradini was elected mayor last fall, she and her husband transferred the mortgage on their home out of Sallah to a "corporation to which Ms. Corradini and Mr. Ross contributed unrelated assets and which they largely own," according to the LeBoeuf disclosure.
On Dec. 27 - seven weeks after Corradini was elected mayor - she and Ross created a Utah corporation called Rossadini Inc. The name coincides with the name of the couple's home, which is emblazoned on the mailbox: Casa de Rossadini.
However, Corradini has refused to say who is currently holding the mortgage on her home.
According to the Salt Lake County assessor's records, the first mortgage holder on Corradini's home is CitiCorp Mortgage and a second mortage is held by Security Pacific National Trust Co. The home at 1600 E. Tomahawk Drive has a taxable value of $345,367. Property taxes of $6,373 were paid on Dec. 12, 1991.