LRS, the dredging company at Utah Lake, files for bankruptcy

Lake Restoration Solutions, the defunct company that would have made Utah Lake a real estate developer’s dream, is now trying to pay off more than $1 million in debt.

The company filed for Chapter 7 bankruptcy on Monday. According to court filings, LRS currently has about $2,000 in the bank and a slew of debts to attorneys, environmentalists, lobbyists, and other advisors. But the biggest bill that may go unpaid goes to a local scientist whom LRS tried unsuccessfully to sue after he raised questions about the company’s dire finances and high standards.

Meanwhile, LRS CEO Ryan Benson appears to have transferred some of the company’s assets to his anti-wolf organization just a few months ago.

“It was just a sad situation that happened,” said Roger Kraft, the attorney representing LRS during the bankruptcy proceedings. “This started out as a legitimate business venture with two main goals, and those goals were to clean up the lake and develop land at the same time.”

LRS has been in a bind since last summer when the Department of Natural Resources shelved its $6 billion business plan. The company wanted to deepen Utah Lake and use the dredged lake bed to build artificial islands, which it would then sell to developers to pay for everything. Although the project received significant support from state legislatures, state resource managers determined that the plan was unconstitutional because it would privatize a lake property to be administered as “sovereign” land in public trust.

The company sued the state over the decision in January. In June it asked a judge to dismiss the case and announced the dissolution of the LRS limited company.

“[LRS] was met with great enthusiasm by both state and federal authorities and met with strong opposition from some,” Kraft said. “This resistance led to an extremely costly legal battle, to the point of exhausting the company’s resources.”

Big Game Forever gets big payouts

In March, LRS transferred $80,000 in capital and canceled $250,000 in debt to Big Game Forever, a Benson nonprofit founded to oppose federal protections for wolves, according to bankruptcy documents emerges.

“He was owed an enormous amount and $250,000 of that debt was forgiven in exchange for $80,000 in cash,” Kraft said when asked about the payment.

When asked what kind of work Big Game Forever did to put LRS in $250,000 in debt, Kraft said, “That’s not a question I can answer.”

Since 2012, lawmakers have donated a total of $5.1 million to Benson’s Big Game Forever, even after a 2013 audit found the group had mismanaged its taxpayer dollars. Three years ago, Big Game Forever sued Utah journalist Eric Peterson to prevent him from getting a public record of how the company spent all the money.

The 3rd Circuit Court has since ordered the Utah Department of Natural Resources to pay Peterson more than $146,000 for his role in helping Big Game Forever keep those records secret.

The state has not made any payments to Big Game Forever since 2020. In 2021, Benson became CEO of LRS. His brother Jon Benson became chief operating officer.

“Thank goodness it fell apart in the process”

Ben Abbott, an ecology professor at Brigham Young University, has long raised concerns about the environmental damage LRS’s dredging project could do to troubled Utah Lake.

While Benson claimed the artificial islands would improve the lake’s nutrient-rich water quality, Abbott contradicted that claim, saying LRS had no scientific evidence. In fact, all the unrest could make the situation worse, he said. And he raised concerns about where LRS gets all of its funds.

LRS filed a $3 million libel lawsuit against Abbott last year over some of these criticisms. A 3rd Circuit judge dismissed the lawsuit in January.

Still, Abbott continued to fear that if the LLC went ahead with its dredging plans, it would simply terminate the project mid-project with no consequences, and that the state would pay for all financial and environmental consequences.

“One of the things they sued me for was suggesting that the state could end up being liable for some of these things,” Abbott said. “Thank goodness it fell apart at the time, but we have to think about why that happened?”

Last month, the professor sought a default judgment of $396,500 to cover his expenses and lost time related to the LRS case. Although the court has not yet ruled on this request, the company has never filed an appeal.

LRS’ bankruptcy filings state that they owe Abbott $390,000, making him their largest creditor. The company also failed to pay Foley and Lardner — the law firm it hired to bring Abbott to court. It still owes those attorneys $328,149.

And they’re not the only legal teams who may not be awarded a refund — LRS owes Ray Quinney and Nebeker $175,000 for “attorney fees awarded in the case against Abbott.” The company also owes more than $10,000 in legal fees to Snell and Wilmer and more than $600 to Mayer Brown.

The company owes Utah-based Geosyntech Consultants more than $47,000 and Seattle-based Anchor QEA nearly $9,000, both for environmental studies.

Lobbying firm Grayling has unpaid bills totaling nearly $33,000. Wyoming-based 4TW LLC will lose nearly $20,000 worth of market research. Utah PR firm Wilkinson Ferrari could lose more than $7,000.

Kraft, LRS’ attorney, said the Bensons could have just dissolved the company and walked away without even filing for bankruptcy.

“They said they wanted neutrality and transparency,” Kraft said.

During an Aug. 2 hearing, they will face their creditors and a federal trustee.