Posted on August 9, 2023
Lake Restoration Solutions CEO Ryan Benson paid his own consulting group tens of thousands of dollars before walking away from money owed to vendors, attorneys and an ecology professor when he declared the dredging company broke last month.
During a brief creditors hearing Wednesday, Benson acknowledged LRS had paid his Stag Consulting group $20,000 a month in 2021 and another $15,000 sometime between October and July. The defunct island-building company also paid $15,000 during the same period to Stoneworth Consulting, a firm run by CFO Jon Benson, Ryan Benson’s brother.
LRS filed for Chapter 7 bankruptcy last month. In those filings, Benson indicated no payments had gone to LRS “insiders” in the past year.
“I was surprised he admitted that, because it does show the [documents] are incorrect,” said Whitney Krogue, an attorney for LRS’s largest creditor, Brigham Young University assistant professor Ben Abbott.
The company unsuccessfully tried to sue Abbott for defamation last year. The professor had met with policymakers and kept a blog disputing LRS’s unproven claims that transforming Utah Lake into a city of around half a million people would fix its algal blooms, habitat issues and damaged wetlands.
LRS’s bankruptcy filings note it could owe Abbott $390,000 for his time and expenses lost during the lawsuit. It owes its own attorneys in the case, with Foley and Lardner, $328,000. But Benson claims the company only has $2,000 left in the bank.
“I think they really, really don’t want to have to pay Ben anything,” said Krogue, whose own firm is owed $175,000 by LRS. “They’d do about anything to avoid that outcome.”
Stag Consulting, Benson’s company, does not have a website. Its registered business address is the same as Benson’s home address.
The Utah Legislature paid Stag $7 million between 2014 and 2019 to lobby against a federal endangered species listing for sage grouse.
At Wednesday’s bankruptcy hearing, Benson called Stag Consulting his “law firm.”
Earlier this year, LRS also transferred $80,000 in capital and forgave $250,000 worth of debt to Big Game Forever, a nonprofit Benson founded to lobby against federal protections for wolves, bankruptcy documents show. The Legislature has given that group a combined $5.1 million since 2012.
Benson noted LRS had transferred some intellectual property to Big Game Forever in March as well but did not go into detail. In the bankruptcy filings, Benson listed LRS’s relationship to Big Game Forever as “nonprofit.”
Asked why he used that description during the hearing, Benson claimed he was “just one of four board members” for the Big Game Forever Foundation. After further questioning by Krogue, Benson admitted he was also “an officer” and CEO of the nonprofit.
“He tried to mask his control over that organization,” Krogue said in an interview.
Krogue also asked Benson whether transactions from LRS to Stag Consulting and Stoneworth Consulting amounted to “insider” payments, contrary to what’s indicated on bankruptcy filings. Benson declined to answer on the advice of his lawyer.
“I believe those payments were made in the regular course of business,” Roger Kraft, LRS’s bankruptcy attorney, told The Salt Lake Tribune in an interview, “during a period of time when the company was functioning under the auspices that they were going to be able to complete the project they were engaged in.”
Documents show a campaign to ‘manage’ LRS’s most vocal critic
LRS intended to deepen pollution-plagued Utah Lake by 7 feet, using the dredged-up sediment to build artificial islands the company would sell off to real estate developers. The plan received backing from the Legislature, which agreed to give the state-owned lakebed to LRS, along with a $10 million loan guarantee. Vineyard City Mayor Julie Fullmer pledged another $5 million to the project. The company also tried to get nearly $1 billion in financing from the Environmental Protection Agency.
Abbott, however, said LRS had little science backing claims that the project would benefit the lake’s native fish, water quality and wildlife.
Documents obtained from Abbott’s strategic lawsuit against public participation, or SLAPP, countersuit show Benson was aware the dredging plan was also likely unconstitutional as early as September 2021. The CEO received a “Lakebed Ownership Subcommittee Report” that raised questions about the legality of transferring the lakebed to a for-profit company, since the state is supposed to manage it for the benefit of all Utahns.
A few months later, in November, Abbott attempted to contact Benson and a public relations firm working for LRS to discuss the island proposal.
Internal emails show LRS and its agents began devising a “strategy to manage” the professor in response, floating the idea that Benson talk to a “BYU tenured professor” who might be “in the position to reign Ben in a little.”
Email correspondence between Lake Restoration Solutions employees and their public relations consultant about a “strategy to manage” a BYU professor requesting more information about their plans.
The correspondence further shows LRS asked its lobbyist, Jeff Hartley — who also represents Vineyard City — to hire an off-duty Capitol security officer “to be on hand if we have Ben Abbott or others” at LRS’s lobbying events.
The group then began documenting and cataloging Abbott’s statements about LRS’s plans for Utah Lake and tracking people who liked or interacted with his social media posts, emails show. In December, Hartley shared a text message “play-by-play” from an unnamed source as Abbott spoke during a public comment period at a Utah Lake Commission meeting.
“We need to act,” Hartley wrote.
In January 2022, LRS filed its $3 million suit against the professor.
But lawmakers had already begun raising doubts about the dredging project. During the 2022 session, they passed a bill directing the Department of Natural Resources to study whether the lakebed transfer to LRS was legal. In August, state regulators determined the proposal was, indeed, unconstitutional, effectively sinking LRS’s grandiose business plan.
A judge tossed out LRS’s defamation suit against Abbott earlier this year, but the professor and his attorneys are trying to make more of the company’s documents public through his anti-SLAPP countersuit.
Krogue, Abbott’s attorney, said it’s possible the Bensons dissolved LRS and declared bankruptcy to prevent that case from moving forward.
“They filed notice of dissolution for [LRS] right before they were supposed to sit for deposition,” she said. “… We had a sense, even then, they were trying to dissipate assets and were going to delay until there wasn’t any money left to pay Ben.”
LRS’s next bankruptcy hearing is scheduled for Sept. 12.
Cindy Gubler, the public relations consultant with Wilkinson Ferrari who helped the Bensons develop a “strategy to handle” Abbott, is among LRS’s creditors. Filings show her firm is owed $7,000.
In an email, Gubler said she hasn’t spoken with anyone from LRS in almost a year.
“In mid-July we received notification that LRS was dissolved and that they could not pay our invoices,” Gubler wrote. “We have no information beyond that.”
