One of the plaintiffs in a federal lawsuit opposing the merger of Zions Bancorp and First Security Corp. has filed an affidavit with the board of governors of the Federal Reserve System charging that an "agent" of First Security Corp. attempted to intimidate his brother into staying out of the case.
Provo businessman Richard P. Valgardson and several others also have filed a petition with the Fed asking for an extension of time in which the public can make comments for or against the merger.The period for public comment expired at midnight Monday, but Valgardson is asking the Fed to require new notices be published and to extend the comment period for at least 30 days after publication.
At issue is a June 6 announcement that First Security Corp. and Zions Bancorp, the first and second largest bank holding companies based in Utah, would merge into a single entity with $40 billion in assets and what the plaintiffs say would be 70 percent of the banking business in Utah.
On Sept. 24, Valgardson and several other plaintiffs filed suit in U.S. District Court for Utah in an attempt to stop the merger, saying it would create a "virtual 100 percent (banking) monopoly in southern Utah and even in Utah County."
On Tuesday, the affidavit charging intimidation and the petition requesting more time for public comment was filed.
In his affidavit, Valgardson, president of Provo-based Irontown Housing, says that on Sept. 26 his younger brother, David Valgardson, said to be "in his 40s," underwent a temple recommend interview with the bishop of his Provo 13th LDS Ward, Craig Carlile, a Provo attorney with the law firm Ray, Quinney & Nebeker.
Richard Valgardson says that his "best understanding" is that Ray, Quinney & Nebeker is the "primary outside legal counsel" to First Security Corp. and that the daughter of Spencer F. Eccles, chairman and CEO of First Security, is also an attorney in the firm. He points out that Eccles is the largest shareholder in First Security.
Richard Valgardson says his brother, David, told him that Carlile asked him if he was involved in Valgardson Transport Co., one of the plaintiffs in the anti-trust lawsuit. David said he was not.
Carlile then allegedly told David Valgardson that the Zions/First Security merger was already approved by two of the three entities that must pass judgment and only needed approval of the federal court to take effect.
"Bishop Carlile specifically warned my brother, David, to 'stay out' of any activity related to protesting or objecting to the merger," Richard Valgardson writes in his affidavit.
Richard Valgardson, himself a former bishop of The Church of Jesus Christ of Latter-day Saints, says the conversation came at a time when the public comment period relating to the merger had eight days to run.
"As a direct consequence of Bishop Carlile's warning to David to stay out of the dispute relating to the proposed merger, David told my parents, who are 80 years of age, that he had been warned to stay out of the dispute," writes Richard Valgardson.
He said the warning by Carlile had a "chilling effect" in that he, Richard Valgardson, was required by his father to remove a "www.stopzions.com" banner from a prominent site on property belonging to the Valgardson family trust; David Valgardson and other family members have been "distinctly cold" with him regarding the dispute over the merger; and any efforts from other members of his family to take a leadership role in opposing the merger and exercising rights of free speech "have been significantly curtailed."
"Based on my prior services as a Mormon bishop, I believe that Bishop Carlile's warning to my brother to stay out of the dispute relating to the merger was contrary to long-established church policy that private business affairs may not be conducted on church property and was an act made by Bishop Carlile not as a Mormon bishop, but rather as an agent of his client, First Security Corp., to deliberately stifle opposition comments to this body."
Carlile could not be reached for comment by press deadlines Tuesday. An answering machine at his office said he would not be available until Tuesday afternoon. Messages left with his office were not returned by press deadlines.
A First Security spokesman said Monday that the bank would have no comment on the allegations.