United States District Court, D. Utah, Central Division
ORDER AND MEMORANDUM DECISION GRANTING PREJUDGMENT
WRIT OF ATTACHMENT
CAMPBELL, U.S. District Court Judge.
Plaintiffs are individual investors who collectively invested
$4.9 million to purchase what they thought was a safe and
secure property with guaranteed lease payments. They allege
they were victims of Defendants' fraudulent scheme which
caused them to lose the value of their investments and left
them with tax penalties and other financial problems. The
Defendants (a group of interrelated individuals and
companies) must now defend against Plaintiffs' causes of
action for fraud, securities fraud, sale of unregistered
securities, conversion, breach of contract, elder abuse, and
have filed an Expedited Emergency Motion for Ex Parte
Prejudgment Writ of Attachment (ECF No. 26) targeting a $2.4
million house built and owned by Defendant William
“Bil” Bowser. The Plaintiffs asked for expedited
consideration because the house-located in Park City, Utah,
and referred to as the Glenwild house-was under contract for
sale with an imminent closing date. They asserted that Mr.
Bowser, who allegedly misappropriated Plaintiffs' funds,
is apparently insolvent or about to become insolvent. They
further alleged that if the house (Mr. Bowser's only
substantial asset) were sold and converted to cash, they were
at risk of losing their remedy for their claim of unjust
enrichment (the only claim at issue in this particular
proceeding). For these reasons they requested that the court
issue a writ ex parte.
court denied the ex parte request and held an expedited
hearing on the motion, during which both sides addressed the
issues. Because key issues were not fully developed, the
court imposed temporary restrictions on Mr. Bowser's
disposition of the proceeds, ordered supplemental briefing,
and held an evidentiary hearing.
having reviewed the evidence and argument from the parties,
the court finds, for the reasons set forth below, that the
Plaintiffs are entitled to a prejudgment writ of attachment.
court, upon receiving the emergency motion, held an expedited
hearing on the Plaintiffs' request for a writ. At that
point, the court scheduled an evidentiary hearing. In the
interim, the court, with the parties' agreement, issued a
temporary order that accomplished the following: Mr. Bowser,
who said he was not planning on absconding with the sale
proceeds, was allowed to sell the Glenwild house and use a
portion of the proceeds to pay two secured liens on the house
and costs related to the sale. The remainder of the proceeds
were divided into a down payment on a townhome that Mr.
Bowser was in the process of purchasing (the
“Townhome”) (the court allowed that sale to go
through as well) and cash that was to be held in a bank
account and not spent in any way pending the court's
ruling. Mr. Bowser was not allowed to use the sale proceeds
to pay two unsecured financial obligations: $170, 000 to
J&J Construction and $57, 000 for three credit card
having received further briefing and evidence during the
court's June 17, 2019 hearing, the court issues its
findings of fact and conclusions of law in support of its
ruling granting the request for a writ.
Bowser is President of Defendant Noah's Corporation
(Noah), which holds itself out as a developer and operator of
events-center properties (e.g., venues that rent space for
weddings and receptions). He receives a salary of $180, 000.
Noah has approximately 500 shareholders and a board of
directors consisting of Mr. Bowser and two other individuals.
Mr. Bowser is a three-percent shareholder, but only one other
person holds more shares than Mr. Bowser. The difference in
the amount of shares each holds is slight.
Bowser also controls Defendant Gabriel Management Corporation
(Gabriel), a property management company that was in charge
of venue construction. Gabriel is wholly owned by Noah. Mr.
Bowser is the only officer of Gabriel and serves as its
Defendants worked together in various roles to sell and
manage investments in the events-center properties. The
investments consist of Tenant-in-Common (TIC) interests in
real property bundled with the lease of an events center (in
this case a structure yet to be built) to Noah that in turn
is supposed to operate the venue and, from that revenue, pay
guaranteed lease payments to the investors.
Rockwell TIC, Inc. and Rockwell Debt Free Properties
(collectively, Rockwell) were the first stop in the
investment transaction. According to Mr. Bowser, the
transaction occurred (or was supposed to occur) as follows:
Relative to Noah, generally, Rockwell (or an entity owned and
controlled by Rockwell) would acquire real property. It would
then enter into a lease agreement regarding that real
property with Noah or a subsidiary of Noah. Rockwell would
then sell TIC interests in the real property to purchasers.
Rockwell would assign its rights in the lease agreement to
the TIC purchasers, who would become the landlord of the Noah
subsidiary. Rockwell would then distribute remaining funds
for construction of event venues to Noah or a construction
entity related to Noah. Noah pays rent to a property manager,
which distributes those rent payments per each TIC
owner's respective interest.
(First Decl. of William Bowser ¶ 8, attached as Ex. A to
Bowser's Opp'n to Mot., ECF No. 35-1.)
to the Plaintiffs, they received Rockwell's sales package
(the “Executive Summary, a Property Description, and a
Lease Profile”) which described the series of
transactions and parties involved with the investment. (See
First Am. Compl. ¶ 99, ECF No. 4.) When Plaintiffs
invested, they expected that their money would be put toward
the land purchase and costs to construct the venue. In other
words, the money given initially to Rockwell was earmarked
for costs incurred by other parties-namely Gabriel and
Noah-after being deposited with Rockwell.
steps in the transaction (essentially, a chain of
transactions) were necessary to satisfy the terms of the
investment (i.e., the lease payments). Multiple entities, by
necessity, worked together to make the investment come to
here the Plaintiffs' investment did not come to fruition.
The $4.9 million they collectively invested was diverted by
Bil Bowser for other purposes. The property they
purchased-“Noah's Carmel”-was never
developed. It is a vacant piece of land.
each entity supposedly had a distinct role in carrying out
the investment, it appears that investor money flowed freely
among the entities. To begin, Rockwell received the
investors' money. The land was purchased. Plans were
(supposedly) put into action to construct the events center
on that land. To get construction going, Gabriel, the
development arm of this group, requested money
(“draws”) from Rockwell to pay construction
costs. In this case, Gabriel took draws from
Plaintiffs' money for exterior finishes, roof, doors,
windows, landscaping, flooring, sheetrock, insulation,
interior finishes, and other construction totaling over $4.9
million. (See Rough Tr. of June 10, 2019 Dep. of Bil Bowser
at 80:15-81:2, attached as Ex. 5 to Pls.' Supplemental
Brief, ECF No. 41-5; Table of Construction Draws, Evid.
Hr'g Ex. AD.) Clearly the draws did not go to Noah's
Carmel, which remains a vacant piece of land.
at Bil Bowser's direction, the money was diverted to pay
Gabriel's costs to construct other Noah properties. He
admitted as much to the Plaintiffs. During a May 11, 2019
conference call with over 100 owners of properties leased to
Noah, including Plaintiffs, Mr. Bowser stated that he had
used the money from one project to complete other projects.
Between March 18, 2019, and March 22, 2019, Mr. Bowser told
Ms. DiTucci and other Plaintiffs that he was “robbing
Peter to pay Paul” and that he had used 85-90% of the
Noah's Carmel funds to perform work on other buildings
under his management with the remaining 10% used for
operations and expenses. He said he did so because Gabriel (and
Noah, which is now in bankruptcy) had significant financial
problems at the time the Plaintiffs invested their money and
the money was needed elsewhere.
the decision unilaterally. When asked at the hearing why he
did not use the Carmel investors' money to develop the
Carmel project and keep that project on track, his only
answer was that he put the money where it was most needed to
keep those projects afloat. In essence, he said something to
the effect of, “you do what you have to do.”
during the hearing it became clear that Mr. Bowser's
family permeates the entities and transactions. Multiple
members of Mr. Bowser's family have a financial interest
in Noah and Gabriel.
family dominates roles in Gabriel. In addition to employing
Mr. Bowser, Gabriel employs his son-in-law (Scott Jensen) and
the brother of that son-in-law (Brandon Jensen), both of whom
are project managers. Employee Cory Lowder (superintendent)
is the exception. As for principals, Gabriel has three: Mr.
Bowser is the President, Scott Jenson is an Officer, and
Brandon Jensen is an Officer. (Registered Principal Filing
with the State of Utah for Gabriel Management Corporation,
Evid. Hr'g Ex. AC.) And on Gabriel's bank account,
all of the signatories are related to Mr. Bowser. The
signatories consist of Mr. Bowser, Kate Jensen (his
daughter), Hailey Gardiner (daughter), Scott Jensen, and
family connection blends into Noah as well. For instance, his
daughters and son have shares in Noah. And his wife receives
a salary ($6, 583.33 a month, for a total of $79, 000
annually) from Noah. (Uniform Residential Loan Application of
Mr. and Mrs. Bowser, Evid. Hr'g Ex. AB.) Noah has one
bank account which it uses to operate all of its forty-two
event venues. (Bowser Dep. at 45:16-21; 47:20-48:1.) There
are three signatories on Noah's bank account: Mr. Bowser,
Kate Jensen (Mr. Bowser's daughter), and Hailey Gardiner
(Mr. Bowser's daughter).
asked during his deposition how many other relatives are
employed by Noah or its subsidiaries, he responded: “I
have a niece [named] Samantha Kemp. I have a brother, Mike
Bowser. I have a brother Mark Bowser. I have a nephew, Andrew
Bowser and then my mom, Marilyn Bowser.” (Id.
on the evidence seen, it appears that financial controls are
loose. Gabriel and Noah share access to a system called Divvy
“that is credit card like” but is “not
really a credit line. … It's almost more like a
debit card if you will.” (Id. at 92:7-17.)
They use the same Divvy account. “[W]e would be - they
would submit a draw for the Divvy amount. So anything that
construction used on the Divvy account, we would be treated
just like a subcontractor and that amount would be reimbursed
to Noah's.” (Id. at 93:4-8.) A credit card
in the name of Mr. Bowser's wife was used to pay
Noah's utilities and funds were transferred directly from
the Noah operating account to that credit card. (Id.
was freely interchanged. For instance, in 2017, Rockwell put
$6 million into Noah in an attempt to keep it afloat. And
Rockwell, using the Plaintiffs' funds, paid the initial
rent payments to the Plaintiffs. “Per Noah's
construction agreement with Rockwell, Rockwell made the first
nine rent payments out of Noah's budgeted construction
draw [which came from the Plaintiffs' payment to
Rockwell] to the TIC owners from the date of the Lease
Agreement through February 2019, in the aggregate amount of
approximately $328, 500.00.” (SOF ¶ 17 of Bowser
Opp'n (citing Bowser First Decl. ¶ 21).) At one
point, Mr. Bowser borrowed money from Noah, and he put some
of his personal funds into Noah. Mr. Bowser divided his
salary up into two parts: one part allocated to the
percentage of work he spent on Gabriel business with the
remaining part allocated to Noah.
the record is filled with evidence of interchangeable roles
and intermingled money connected to ...