Controversial Utah County sheriff candidate Richard Mack - a self-proclaimed opponent of the federal government - contends that the FBI, CIA and local politicians may be conspiring to help incumbent David Bateman defeat him at the polls in Tuesday's Republican primary.
But another scenario is that a search warrant served at American Institute for Research, the company where Mack has worked since August, was connected to a Securities and Exchange Commission lawsuit filed Thursday in federal court.The suit alleges three Utah bond dealers - Albert E. Carter of Provo, Eunice Polatis of South Jordan and her son, Kelly Polatis of St. George - reaped millions of dollars selling allegedly worthless bonds over the past several years. Carter operates American Institute for Research, which is also known as American Institute of Reboundology.
Mack, whose 1994 lawsuit challenged the background check requirements of the Brady gun law all the way to the Supreme Court, said a dozen FBI and CIA agents Thursday served a search warrant at his company. Mack has worked as a consultant, primarily selling mini-trampolines and asset-protecting trusts, at the company since he moved to Provo from Arizona in August.
"When you go around, as I have, slamming the federal government, you're going to offend some people in high places," Mack said Thursday night at a hastily called news conference.
Mack said the agents arrived at the Provo business Thursday at 10 a.m., while he was in Springville putting up campaign signs. They stayed for approximately six hours, including an hourlong interview with Mack, and confiscated files and computer hard drives, Mack said.
He alleged that the serving of the search warrant was motivated by a desire on the part of federal officials to see him lose to Bateman Tuesday. Mack also said that Utah County sheriff's detective Jeff Robinson and Utah County Attorney Kay Bryson somehow were involved in a conspiracy against him.
Bryson called the charge ridiculous.
"He apparently has a very active imagination," Bryson said. "It's not something we have done. We know nothing about it."
Sheriff's Lt. Doug Witney, a former candidate for Utah County sheriff who lost to Mack and Bateman at the Republican nominating convention several weeks ago, said that neither he nor Robinson - both of whom are assigned to the white-collar crime investigative division of the Utah County Attorney's Office - is involved in an investigation of Mack.
"Where does he get the idea that we've got the power to orchestrate this?" asked Witney. "The guy is delusional."
Mack did not offer details about his relationship with Carter, although both apparently were named on the search warrant. Mack said he has not been charged with any crimes in connection with his work at American Institute for Research.
Carter is a ardent tax protester. In the early 1990s, he ran a business called the American Institute for the Republic, a company that helped people research the IRS and the Federal Reserve to "protect your rights as sovereign citizen."
Carter compiled an 88-page resource book titled "The Internal Revenue Service Investigated," which urges people to declare themselves "nontaxpayers" and be prepared to defend their position.
Carter also ran an unsuccessful campaign for Provo mayor in 1993. Attempts to reach him Friday were unsuccessful.
Mack said federal agents questioned him about details of the company and about federal income tax evasion.
"I said, `How could that possibly involve me?' " Mack said.
Mack told the Deseret News several weeks ago that he pays his income taxes grudgingly and does it primarily to avoid going to jail. He said the federal agents then asked him about some "worthless" bonds that were connected to American Institute of Research.
When Mack told the agents he thought the raid was politically motivated and was orchestrated to thwart his bid for sheriff, they told him that was not correct. Given the fact that Carter was named in the SEC complaint filed the same day as the raid, Mack's claims of political persecution seem far-fetched.
"I just find it ludicrous that there could be a conspiracy involving all the people (Mack) has named," Bateman said. "I think all you have to do is think about it for a minute or two. It's ludicrous."
Bateman said Mack's conspiracy charges are consistent with a pattern of grandstanding the former Graham County, Ariz., sheriff has exhibited in the past. Mack typically tries to deflect responsibility and place blame on others to his own benefit, Bateman said.
Federal regulators said the bonds sold by Carter and two others were issued by a railroad that went belly up last century. They say bonds issued by the Chicago, Saginaw & Canada Railroad Co., which filed for bankruptcy 122 years ago, might be worth around $30 to those who collect old certificates but not the $150,000 that some people allegedly have been paying.
The same goes for notes issued in 1870 by the East Alabama & Cincinnati Railway Co. and in 1838 by Mississippi.
"These bonds were being sold all over the place, not just in Utah," said Ken Israel, who heads the SEC's Salt Lake office.
Carter allegedly told investors that each Saginaw bond was worth approximately $91 million, each Alabama bond was valued at about $400 million and each Mississippi bond $79 million.
According to the SEC, Carter told investors that the issuers remained obligated to pay on the bonds and the notes continued to accrue interest.
Deseret News staff writer Dennis Romboy and The Associated Press contributed to this story.