Jacobsons claim violation of Constitutional right in motion to dismiss
By James Tilson
SALT LAKE CITY—The defendants in the case of a Fountain Green investment firm alleged to have run an illegal “Ponzi” scheme have filed a motion to dismiss the case based on a violation of the Fifth and Sixth Amendments.
The attorneys for Wendell Jacobson and Allen Jacobson, business owners of Management Solutions, Inc. (MSI) of Fountain Green, filed their motion to dismiss in the Salt Lake District Court on Jan. 22, 2019. The motion alleges the Attorney General’s office violated their clients’ Fifth and Sixth Amendment rights by hiring Gil Miller as an expert witness. Gil Miller was previously retained by the Jacobsons’ attorney prior to the criminal proceedings.
The case began in June 2011, when the Securities and Exchange Commission (SEC) began investigating MSI based on reports MSI had been commingling investors funds, and not carrying enough funds to meets
its obligations. In Sept. 2011, the attorneys for MSI and the Jacobsons hired Gil Miller’s
accounting firm to provide consulting services. The investigation resulted in a complaint filed in federal court by the SEC against MSI and the Jacobsons on Dec. 15, 2011.
Upon filing the complaint, Mr. Miller, who was called in court documents “the premier receivership expert in [Utah],” was appointed to be the receiver for MSI, and his relationship with MSI’s attorneys was terminated.
The federal case was resolved in Dec. 2012, and Miller continued on as receiver for MSI. As a result of the settlement, MSI’s assets were liquidated, and its investors were paid back at least a portion of their original investment. However, in May 2015, the SEC, FBI, IRS and the state of Utah agreed state criminal charges should be filed against the Jacobsons for their part in running MSI. The attorney general filed formal charge on June 22, 2015.
Since then, Miller’s status in the case has been an ongoing point of contention between the parties. On Nov. 14, 2017, the court granted a defense motion disqualifying Miller as the state’s forensic accounting expert, finding that Miller had had a confidential relationship with the defendants’ attorneys. However, the court also found Miller could be used as an ordinary fact-witness.
Soon after, the defendants filed a motion on Dec. 4, 2017 to disqualify the Attorney General’s Office based on their retention of Miller as an expert witness. That motion stayed pending until only last month. On Feb. 5, 2019, the court denied the defense motion, saying, “There is no specific evidence of what, if anything, was actually disclosed by Miller to the State.”
But even before that order had been filed, the defendants had filed a motion to dismiss on Jan. 22, based on Miller’s prior confidential relationship with the defense attorneys. They asserted the state’s case had become impossible to pursue without violating the defendants’ rights. “The information provided by Mr. Miller has been thoroughly baked into the prosecution, and it would be unfeasible (if not impossible) to disentangle, suppress, or otherwise eradicate Mr. Miller’s taint from this case.”
The state filed its response to the defense motion on March 5, saying the defendants have not shown “any evidence that would indicate …Miller actually possessed or shared any knowledge or information about any specific defense strategies that [defense attorneys] discussed with its client. Defendants rely instead on the assertion that some secret information from Miller has been ‘baked in’ to the State’s case.”
The court has not set a hearing in the case to hear arguments on the motion. At the soonest, a hearing might be set sometime later this spring, but previous litigation in this case indicates the decision may be a long time coming.