Intellectual property of duvious value to be made free for all
Patents and other intellectual property at the center of a long-running solar tax fraud scheme that bilked taxpayers out of at least $50 million is being disposed of by a federal court-appointed receiver by being placed in the public domain.
The receiver, R. Wayne Klein, wrote in a May 4 court filing that he decided this was the best manner to dispose of the intellectual property held by entities now under the court’s control.
Klein was appointed in October 2018 to take control of more than a dozen entities at the heart of the long-running fraud, which essentially sold fake solar energy components to income tax filers who illicitly used the purchases as tax write-offs among other schemes.
Tax filers from across the country were ensnared in the fraud, many of whom eventually were audited. Some who were paid “commissions” as part of the fraud were taken to court by the receiver, who continues to claw back those funds.
Neldon and Glenda Johnson, other family members and their associates, have lost multiple court battles and seen their assets seized after losing a federal civil court case over the fraud three years ago.
The Johnsons held hundreds of acres of land holdings in Millard County, much of which has been seized and sold off in auctions.
In Klein’s latest quarterly report with the court— it covers receiver activities from Jan. 1 to March 31—the receiver said he distributed $7.5 million to the U.S. Treasury, proceeds of asset sales and court settlements with tax filers.
As for the intellectual property, he wrote his decision was made with four thoughts in mind. First, the patents in question were difficult if not impossible to value monetarily. Second, he wrote that paying renewal fees on patents that could be worthless made little sense. Third, there was a concern that if the patents were auctioned someone with connections to the Johnsons or their solar con might purchase them to resurrect the fraud in the future. And finally, Klein determined that “putting the claimed technology in the public domain is its best use.”
“To the extent the technology may have any value, that value will be available to all persons wanting to use it, which would benefit the economy as a whole,” Klein wrote in his report. “If the technology has no value, the Receivership will be spared the time and expense of attempting to value it and sell it.”
A number of other loose ends were highlighted in Klein’s latest report to the court.
He noted one land sale in particular, involving some 1,000 acres in Millard County. Klein wrote he was approached by a developer who wished to buy the property and install a photovoltaic solar farm. The parcels in question—HD-3511, HD-3511- 1, MA-2662-B in county records—were previously appraised for a combined $330,680. But the developer offered the receiver a purchase option contract that could net the U.S. Treasury $1.5 million for the raw land if the option to buy was exercised.
“After consultation with the United States, the Receiver signed an initial agreement for the purchase option and filed a motion seeking Court approval of the option agreement,” Klein reported. “After the Reporting Period, the Court approved the motion and the Receiver will hold a public auction to determine whether any other bidders are willing to pay a higher purchase price or better option terms. The Receiver has already received an inquiry from one other solar energy company about the property’s potential for a photovoltaic solar farm.”
Klein has already disposed of 652.49 acres of Millard County property seized by the federal court. The majority of that property was held by a Johnson Family trust or by a business entity called International Automated Systems, Inc.
The receivership took control over a further 2,276.54 acres of Millard County property, some of which was auctioned during the latest quarterly reporting period. Most of this property was titled in the name of Glenda Johnson but eventually turned over to the receiver.
Another four properties in Millard County are at the heart of a separate federal lawsuit against Glenda Johnson filed by Klein. Those properties amount to just more than 20 acres.
Glenda Johnson was recently slapped with her third civil contempt of court citation in the federal case against her husband and his business entities.
As part of the contempt citation, she is supposed to prove her purchase of the 20 acres was made with funds earned outside of the fraud scheme. If she can’t do so to the court’s satisfaction, she will forfeit ownership of the properties to the receiver, according to filings in the case.
“(D)ue to her contemptuous interference with the Receivership, Glenda Johnson bears the burden of demonstrating that the funds used for her acquisition of these four properties came from sources other than Receivership Entities and Affiliated Entities,” Klein wrote in his latest report.
Other loose ends noted by Klein include retitling some 15 vehicles seized by the court, plans for disposal of hazardous waste found inside a trailer on one of the seized properties in Millard County, and the successful auction of a Johnson family home in Sherwood Shores, which fetched an eye-popping sum. The lakefront property—it included a home and three parcels—was appraised at $377,000 ahead of a Jan. 26 public auction. Three bidders participated, driving the sales price to $507,000.
Another small line in Klein’s latest report— one with the potential for big implications for the Johnsons and their associates—is related to requests for assistance from “other government agencies.” This line has come up before in Klein’s reporting. When contacted previously about which government agencies he was assisting, the receiver declined to comment further.
Though more than two years into his work—the receiver has called the Johnson receivership among the most complex he’s ever handled—Klein sounded an optimistic tone in his report’s conclusion.
“Significant work remains, but the objectives of the Receivership are being steadily accomplished,” he wrote.
