Dunn and other Bad Business Deals (part 2)

I finished the book, Lying for the Lord by Lynn Packer.  (Click here for part 1.) It seems to me that most Mormons are upset by his telling stories that weren’t true.  To be honest, I ‘m not all that fond of piling on Dunn for that, though after reading the book, it wasn’t so much him exaggerating some war and baseball stories, he flat out made them up.  The bigger issue to me is his bad business deals.  I talked about the ponzi scheme in my previous post, and for that he was demoted from the Quorum of Seventy (Lynn Packer thinks Dunn should have been excommunicated) and the church leaders implemented a new policy banning GAs from serving on boards of directors.  However, they essentially left Dunn intact to continue the shady business deals, and he did.

The Osmonds were advised financially by Paul H. Dunn

Dunn was also a prominent financial adviser to the Osmonds and their newly created studio in Orem, Utah.  Not all of their financial troubles were due to Dunn, but he didn’t help matters.  The Osmonds built a $6 million studio in hopes of turning Orem into an alternative version of Hollywood.  However, when their show on ABC was canceled in 1978, it put the project in serious jeopardy.  To make matters worse, Merrill Osmond was put in charge of running the family finances, and he didn’t do a good job.  “Just about every prominent Mormon flake had something going on with Merrill.  It was bizarre, likes flies to fly paper.  Anyone who had a business deal usually came through Merrill’s office in some way, shape, or form.  We had to try to help Merrill determine who were flakes and not flakes” said a company insider.

Paul Dunn and other LDS Church officials steered the Osmonds to Jose Arturo Riffo, a Chilean member, to help when a bank threatened to foreclose on a $1.5 million mortgage.  According to Lynn Packer, (pages 268-9)

Riffo formed a couple of phony, Utah corporations–the South American Energy Corporation and the Utah International Corporation–which were ostensibly set up to promote mineral development and Utah trade with Chile.

To establish contact and credibility with powerful Mormon businessmen, he began attending daily temple ceremonies on Temple Square in Salt Lake City, attending pre-dawn sessions that LDS businessmen could work into their schedules.

Riffo’s approach was unique.  Although he spoke English he would use a translator, pretending he spoke no English.  He would dupe people by telling them his family owned big chunks of the Chilean communications industry, television, and newspapers, even a titanium mine.  He told some he had been a Mormon bishop.

“This guy is charismatic,” said Utah developer Steve Smoot who gave Riffo office space for a few months.  Smoot said Riffo dropped names, President Kimball, William Bradford (in Dunn’s Quorum of Seventy).  Smoot worked with Riffo and believed in him.  “I really thought he should be the next General Authority.”

Other GA’s also got involved.  From page 269,

Russell M. Ballard

Russell Ballard, another member of the First Quorum of Seventy, had asked the California note-takers to hold off foreclosure while the Riffo deal was pending.  (In 1985 Ballard was elevated to apostle.)

Ballard has his own history of business failure.  In 1958 despite “the spirit whispering to me ‘Don’t do this’,” Ballard bought an Edsel franchise from Ford Motor Company.  “The result of that, not following the promptings of the spirit, was that my loss took our company very close to the brink of bankruptcy.”

But he went to the brink again.  In the sixties Ballard raised some $750,000 from 5,000 Utahns to build the Valley Music Hall, a theater-in-the-round, in North Salt Lake.  Much like the Osmond Studio, it was to bring stars and wholesome entertainment to Utah.  Hollywood stars did show up for the grand opening in July 1965, including actors Robert Taylor and Robert Cummings. Art Linkletter, a partner in the project, was there too.  As were a who’s who of top Mormon leaders:  Joseph Fielding Smith, Harold B. Lee, N. Eldon Tanner and Hugh B. Brown.

The Valley Music Hall foundered.  The church stepped in and bought the white elephant to use as a regional meeting center, bailing out Ballard and his investors.

I remember meeting there for stake conference when I lived in Davis County.  I had no idea that Elder Ballard once owned the building, and it was very interesting to me that the church bailed him out on the venture.  Packer continues discussing the ins and outs of the Riffo-Osmond bailout.  From page 270,

Riffo convinced church leaders and the Osmonds he had an interest in the Chilean titanium mine named Sociedad Minera Humboldt De Pichilemu, LTDA.  He talked Merrill Osmond into buying an interest in the mine and to sign over title to the Orem television studio in exchange for promissory notes of $5.7 million and $1.2 million.  Then Riffo took the notes to California and tried borrowing against them to get the money he needed to buy the studio.

In the midst of the financial meltdowns, Dunn and Merrill Osmond planned to build homes on adjacent lots in Highland, Utah, just north of Orem.  Osmond, desperate for money to keep the studio afloat, had given Dunn a lot in exchange for Dunn allowing Osmond to borrow about $300,000 using Dunn’s Holladay, Utah house as collateral.  Dunn had begun his half million [dollar] house in Highland, Merrill hadn’t. With the AFCO rug being pulled out from under him Dunn stood to lose both of his homes.

Dunn’s financial woes were part of the mess [new accountant] Gardner was hired–or, in church speak “called”–to sort out.  Gardner confirmed Merrill Osmond had given Dunn two lots at 10252 Hidden Oaks Drive in Highland.  Because of financial problems with the studio, Dunn then signed over title to his Salt Lake County Holladay home to Osmond, part of which, about $240,000, ended up in studio.  “I don’t think Paul knew it,” Gardner said.

Gardner, however, says Dunn was being paid for being an advisor.  “He got payments,” Gardner said.

It was at this point the AFCO business started getting the leased cars repossessed (I mentioned more about AFCO in my previous post), Merrill Osmond failed to make payments, and the church stepped in to help.  From page 271

Gardner said the church provided direct financial help to bail out the Osmonds just as it had purchased the Valley Music Hall.  He said the church bought the Osmonds’ Riviera Apartments near BYU as well as their condo near the Los Angeles Temple in Brentwood, California.

Riffo never did come up with sufficient cash to buy the Osmond Studios.  He had to be evicted from Merrill’s house.  After the FBI investigated, Riffo was charged, convicted of fraud and spent 14 months in federal prison.  (Authorities arrested Riffo while he was meeting with Robert E. Wells at the Church Office Building.  Years later–in 2010–a federal grand jury indicted Riffo again, this time for allegedly defrauding a wealthy Utah family in a scheme involving purported secret data storage technology.)

The story continues to get worse for the Osmonds.  Church leaders contacted Paul Jensen, a Utah transplant in Texas, to help bail out the Osmonds.  Jensen (page 272-3)

was under investigation for what would become the largest real estate fraud in Texas history.  He took out personal bankruptcy.  He was eventually tried and convicted of fraud in Texas federal court and sentenced to twenty years.”

Dunn advised the Osmonds to work with Gary Sheets, who then defrauded the Osmonds further. From page 273,

Merrill Osmond would later testify at a Sheets fraud trial, that he signed an investment agreement with Sheets while Osmond was at Utah Valley Hospital, suffering from stress.  “I remember being a little sedated, “Osmond testified.”  Jay Osmond sued Sheets civilly, accusing Sheets of bilking him out of $30,000 through lies, misrepresentations and fraud.

(Sheets was acquitted of the fraud charges.  He became widely known in Utah for another reason: his wife was the murder victim of infamous Mormon bomber Mark Hofmann, who himself, had been swindling top leaders of the church, having induced them to buy phony historical documents.  Sheets and his partner Steven Christensen had helped finance Hofmann’s document business.  When Christensen discovered Hofmann’s scam, Hofmann killed him with a pipe bomb and attempted to kill Sheets with a similar bomb that Sheet’s wife set off.)

I don’t think a soap opera could be written like this.  Dunn really had a knack for finding scam artists.  While Dunn was in many ways a victim of these men, one would think that if he were really an adviser, he ought to have had a better nose for this sort of stuff.  As the heat started getting hotter for Dunn, apostles James E. Faust and David B. Haight were assigned to look more closely into Dunn’s activities.  Why didn’t the church do more than release Dunn?  Boyd K. Packer (page 296)

likened Paul Dunn to the tares.  He said especially younger members might reason if Dunn were lying about his baseball and war stories then he must also not be truthful about his testimony and the truth of the church.

Dunn threatened Lynn Packer’s job at BYU (Packer was already terminated from KSL due to his researching Dunn’s activities.)  Packer was able to hang on for 2 years, but eventually his contract was not renewed.  Some of Dunn’s family hired private investigators to turn up dirt on Lynn Packer, and spread rumors that Lynn was excommunicated, or abusing his children.  Dunn’s business partner Clare Morse filed a lawsuit against Lynn Packer for (page 334)

defamation, invasion of privacy, interference with contractual relations and other statutory and common law complaints.

Lynn Packer noted that all of the mortgage documents were public record.  Lynn couldn’t afford to hire a lawyer and ended up defending himself in court.  He was not only exonerated of all charges in court, but successfully sued Morse’s lawyer Timothy Willardson for a frivolous lawsuit and got him disbarred by the Utah Bar Association.  Lynn’s cross examination of Morse is pretty interesting to read.

After Dunn was released from the Quorum of Seventy around 1990, Dunn continued in these sorts of activities.  His son in law, Jeremy Winget pled guilty in 2008 to a charge of income tax evasion and served a year in the Colorado State Penitentiary.  Dunn and Winget had started a real estate scheme.  Dunn also got involved with Wade Cook, a guy who claimed to use his learning as a taxi cab driver to double your money investing in 2-4 years in the stock market.  From page 356

when Dunn agreed to join Cook’s board, the company Dunn was joining was under state and federal investigation.  Cook had been cited, administratively for securities fraud.  And he escaped a criminal trial for racketeering and fraud based on a double-jeopardy defense….the week before he [Dunn] died–and the week it was announced he would join the Wade Cook Financial Board–Dunn told a friend that he was not delving into any more business to “protect the sanctity of being a General Authority and not making a profit off the church.”

I mean seriously it takes a lot of effort to find all these criminals.  The war and baseball stories are nothing compared to the shady business people he was associated with.  The funny thing is that Dallin Oaks just published a piece with LDS Living saying why Mormons so often get sucked into all these get-rich-quick schemes.  What are your thoughts about Dunn’s business activities? Were you aware the church bailed out Ballard and the Osmonds?


2 comments on “Dunn and other Bad Business Deals (part 2)

  1. Interesting read. One point I disagree with though.

    I was living at Riviera Apartments in Provo when the Osmond’s sold it. The church didn’t buy it — a group of private investors did. After the purchase a bunch of us who were living there were hired to help strip the carpet and renovate that place. But as the work got going it was clear something was going on. One of the construction bosses told me that one of the investors had had a hard time coming up with the cash for his part of the investment. As a result, the group didn’t have the money they expected to have and were cutting costs. The result was really cheap carpet was installed and cheap furniture was purchased. The carpet was so bottom-end that when you touched it, your finger would easily go all the way to the matting below. Within a few months the furniture and carpet were all falling apart. I moved out the next semester.



  2. You may be right, but I know the church has used front companies to conceal the true owner in the past. I know they’ve also used polygamist contractors to build LDS meetinghouses. (The polygamists use child labor, do excellent work, and are cheap!)

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