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Front Page » January 3, 2006 » Local News » Emery Telcom will not face charges
Published 3,129 days ago

Emery Telcom will not face charges


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By LYNNDA JOHNSON
Sun Advocate editor

After conducting an intensive criminal investigation into allegations aimed at Emery Telcom's senior management team, the Utah Attorney General's Office has declined to file formal charges against the company's general manager and chief executive officer.

Dated Oct. 19, the written notice informed Greg Killpack's legal counsel, Larry Weiss, that the attorney general's office has decided not to prosecute the lawyer's client regarding statements from four unidentified witnesses alleging Emery Telcom engaged in questionable or unlawful business practices.

"To further clarify our intentions, I inform you we also concluded, after comprehensive review and screening, that no criminal charges will be filed by this office against Mr. Greg Killpack with respect to any of the allegations of wrongdoing, which have been the subject of our investigation," stated the notice signed by chief deputy attorney general Kirk Torgensen.

After receiving the notice, the company's board of directors issued a written statement highlighting the results of an independent investigation conducted in connection with the criminal misconduct allegations.

Following the commencement of the attorney general's 20-month investigation into the matter, the board engaged Salt Lake City criminal defense lawyer Neil Kaplan to interview company employees, consultants, vendors and individuals with knowledge of facts pertinent to the allegations.

"The only directive given ... to Mr. Kaplan was to determine the truth of the allegations that were being made against the company's senior management team," explained the Emery Telcom board.

After evaluating the information collected during the independent investigation, Kaplan concluded in August 2004 that the evidence indicated no criminal misconduct on the part of the individuals targeted by the allegations.

"Unfortunately, the investigation has inflicted a great deal of damage upon Emery Telcom - both in financial terms as well as its reputation in the telecommunications community," pointed out the company's board of directors.

"Literally millions of dollars have been needlessly lost by the company as a result of the investigation, including those expenses associated with defending itself and its senior management, lost business opportunities, repayment of amounts which had previously been forgiven and refusal by regulatory agencies to implement revenue increases while the investigation was pending. Those losses could have been avoided had the allegations first come to the board," continued the written statement.

"Sadly, the chosen course of action circumvented the board and company protocol and, as a result, has harmed the Emery Telcom community, the company, its customers and its employees," noted the members of the directors panel.

In February 2004, attorney general's office investigators executed a search warrant at the Orangeville-based company's headquarters and reportedly seized documents related to Emery Telcom's business and accounting practices.

The probable cause affidavit supporting the issuance of the search warrant contained allegations of misbookings and miscodings of business expenses based on information provided by four current and former employees of the company.

After purportedly coming forward voluntarily, the four witnesses wished to remain anonymous throughout the investigative process.

The document supporting the issuance of the search warrant indicated that the alleged business expense misbookings and miscodings involved Emery Telcom's non-regulated subsidiary companies. The subsidiaries included Emery Telcom's long distance, Internet and communications companies. Emery Telcom manages and assumes the accounting responsibilities for all of the company's subsidiaries and regulated businesses.

As a regulated cooperative utility, the court document explained that Emery Telcom operates under rates set by the Utah Public Service Commission. The rate is fixed at 10 percent profit plus reimbursement for capital improvements.

The alleged misbooking of subsidiary company expenses to Emery Telcom allowed the utility to be reimbursed through rate increases, contended the affidavit supporting the issuance of the search warrant. In addition, the court document questioned Emery Telcom's accounting practices when contracting with outside companies for equipment upgrades.

"As part of the search warrant process, individuals provided information in secret which was relied on by the attorney general's office to prepare an affidavit supporting the search warrant," pointed out the Emery Telcom's board of directors in 2004. "The affidavit was filed under seal and was not available to public or the board until a few weeks ago. To this point, we have refrained from public comment in consideration of the attorney general's investigation and to protect all of the parties involved, including those few people who made the allegations as well as the people under investigation."


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