Husband and wife duo arraigned on criminal contempt charges
The U.S. Tenth Circuit Court of Appeals handed another courtroom loss to the alleged conman at the heart of a long-running income tax scheme involving solar energy tax credits.
Neldon Johnson represented himself last year when he appealed a January 2021 U.S. District Court ruling denying his motion to set aside that court’s judgment in a long-running U.S. civil case. The judgment Johnson sought to be set aside forced he, his cohorts and multiple business entities to disgorge over $50 million in ill-gotten assets.
Johnson sought the reversal based on more than one issue.
First, a tax expert gave somewhat conflicting testimony in both the civil case against Johnson as well as in a January 2020 related tax case.
During Johnson’s civil case, the expert witness, Dr. Thomas Mancini, testified on behalf of the government that Johnson’s solar technology “will never be a commercial system or will ever produce electricity or any other usable form of energy.”
However, in the related tax case, Mancini conceded from the witness stand that “if you got the right team on it, and you really invested the money in it, you could probably make something that would generate electricity using the concept as it stands,” according to court records.
Johnson sought his reversal on the basis of that testimonial discrepancy.
The District Court ruled against him on the issue, however, and he filed an appeal of that ruling in the Tenth Circuit Court.
Johnson also relied on a 2020 Supreme Court case titled Liu v. Securities and Exchange Commission to ask for a reduction in the U.S. District Court’s disgorgement order.
That argument was not heard by the District Court, which simply said it was moot since Johnson had already lost his appeal of the District Court’s overall findings in the civil case brought against him by the government.
Johnson included the Liu case in his newest argument to the Appeals Court anyway.
The Liu case essentially was decided by an 8-1 margin in the Supreme Court and set a rule that lower court disgorgement orders were limited only to a wrongdoer’s profits after legitimate expenses.
The Appeals Court noted that the District Court set the $50 million disgorgement figure based on gross sales of plastic solar lenses by Johnson’s fraudulent endeavor.
The Tenth Circuit Court, however, affirmed the District Court’s actions on both the disgorgement figure as well as a refusal to set aside its judgment based on the testimony of the tax witness. Johnson attempted to argue that fraud was perpetrated on the court by the government’s attorneys, to no avail.
“At most, Dr. Mancini’s Tax Court testimony could serve as impeachment evidence at a new trial. But his testimony did not contradict his… testimony that Johnson’s technology did not qualify as solar energy property, which is material to tax-credit eligibility,” the Circuit Court ruled. “Johnson’s conclusory assertion ‘that the product in question is now known to be Solar Energy Property,’ misreads Dr. Mancini’s Tax Court testimony.”
As for the argument reducing the disgorgement figure, the Circuit Court ruled that Johnson failed to altogether even address the District Court’s ruling in his appeal, which means the Circuit Court wouldn’t give it even a glance.
“The failure to raise an issue in an opening brief waives that issue,” the court wrote, citing Tenth Circuit precedent.
The Tenth Circuit reaffirmed the lower court’s rulings, denying Johnson’s appeal—again—in December, with the appeal posted online by the lower court on Jan. 24.
Meanwhile, both Johnson and his wife Glenda appeared in District Court on Jan. 21 to be arraigned on felony criminal contempt of court counts. The pair were appointed public defenders at taxpayer expense during a virtual arraignment before Magistrate Judge Cecilia M. Romero.
Johnson pleaded not guilty to one count of criminal contempt. His wife pleaded not guilty to five counts she faces of criminal contempt. A preliminary date was set for a four-day jury trial beginning on March 28.
While the criminal case is just getting started, the civil case against Johnson that ended with the disgorgement order in 2018 is still reverberating as a court-appointed receiver continues to settle related civil cases and auction property once owned by the Johnsons.
In the his 13th quarterly report filed in District Court on Jan. 26, court-appointed receiver Wayne Klein reported on his progress, including that $9 million has so far been returned to the federal government.
A few tidbits from Klein’s latest report include new details about a storage container that had been sitting at the Delta Airport for some months that once belonged to Johnson.
Klein reported that in August he hired a hazardous waste disposal company to test chemicals found in the storage container.
“On October 15, 2021, the independent testing company issued its report confirming the contents as a highly concentrated toxic chemical. Due to the toxicity of the chemicals, the EPA (federal Environmental Protection Agency) will require incineration of the chemicals at a specially approved facility,” Klein reported.
On Oct. 26 the EPA granted a permit for Klein to have the items packaged and transported. They were slated for incineration last month. The effort cost the receiver more than $16,500.
“At their request, the Receiver has provided significant information regarding the chemicals to the EPA,” Klein cryptically included in his report.
Another interesting tidbit from the report is that 1,000 acres of property in Millard County previously owned by the Johnsons has been optioned to a photovoltaic solar development firm—irony included—called 8Minute Energy. The company agreed to make lease payments to the court receivership for the next four years with an option at the end to purchase the property outright. The company concluded an agreement with Klein on Dec. 15.
