Lake Restoration Solutions CEO Ryan Benson paid tens of thousands of dollars to his own consulting group before stepping out of debt to suppliers, lawyers and an ecology professor when he declared the dredging company bankrupt last month.
During a brief creditor hearing Wednesday, Benson admitted that LRS had paid his Stag Consulting group $20,000 a month in 2021 and an additional $15,000 sometime between October and July. The defunct island builder also paid $15,000 to Stoneworth Consulting, a firm led by CFO Jon Benson, Ryan Benson’s brother, during the same period.
LRS filed for Chapter 7 bankruptcy last month. In those filings, Benson stated that no payments were made to LRS “insiders” in the past year.
“I was surprised that he admitted that because it shows that [documents] are false,” said Whitney Krogue, attorney for LRS’s largest creditor, assistant professor Ben Abbott of Brigham Young University.
The company tried unsuccessfully to sue Abbott for defamation last year. The professor had met with policymakers and blogged in which he disputed LRS’s unsubstantiated claims that converting Utah Lake into a city of about half a million people would fix algal blooms, habitat problems and degraded wetlands.
LRS’ bankruptcy filings show that the company could owe Abbott $390,000 for its time and expenses lost during the litigation. It owes its own attorneys, Foley and Lardner, $328,000 in the case. However, Benson claims the company only has $2,000 left in the bank.
“I think they really, really don’t want to pay Ben anything,” said Krogue, whose own company owes $175,000 from LRS. “They would do anything to prevent this outcome.”
Stag Consulting, Benson’s company, does not have a website. His registered business address is the same as Benson’s home address.
Utah lawmakers paid Stag $7 million between 2014 and 2019 to lobby against a state endangered species list for sage grouse.
At Wednesday’s bankruptcy hearing, Benson referred to Stag Consulting as his “law firm.”
Earlier this year, LRS also transferred $80,000 in capital and canceled $250,000 in debt to Big Game Forever, a nonprofit organization Benson founded to oppose federal protections for wolves, bankruptcy documents show . Legislatures have given this group a total of $5.1 million since 2012.
Benson pointed out that LRS had also transferred intellectual property to Big Game Forever in March, but didn’t elaborate. In the bankruptcy filings, Benson cited LRS’s relationship with Big Game Forever as “nonprofit.”
When asked why he used that description during the hearing, Benson claimed he was “only one of four board members” of the Big Game Forever Foundation. After further questioning by Krogue, Benson admitted that he was also an “executive officer” and CEO of the nonprofit.
“He tried to hide his control over this organization,” Krogue said in an interview.
Krogue also asked Benson whether transactions by LRS to Stag Consulting and Stoneworth Consulting constituted “insider” payments, contrary to what was stated in the bankruptcy filings. On the advice of his attorney, Benson declined to answer.
“I believe these payments were made in the ordinary course of business,” said Roger Kraft, LRS’s bankruptcy attorney, in an interview with The Salt Lake Tribune, “during a period when the company was operating under the auspices it intended .” be able to complete the project they were involved in.”
Documents show a campaign to “manage” LRS’s most vocal critic
LRS intended to deepen pollution-plagued Utah Lake by 7 feet and use the dredged sediment to build artificial islands that the company would sell to real estate developers. The plan received support from lawmakers, who agreed to turn over the state-owned lakefront to LRS along with a $10 million loan guarantee. Vineyard City Mayor Julie Fullmer pledged an additional $5 million for the project. The company also sought nearly $1 billion in funding from the Environmental Protection Agency.
However, Abbott said LRS had little scientific evidence that the project would benefit the lake’s native fish, water quality and wildlife.
Documents from Abbott’s strategic lawsuit against public participation (SLAPP) show that Benson knew as early as September 2021 that the dredging plan was also likely unconstitutional. The CEO received a Lakebed Ownership Subcommittee Report that raised questions about the legitimacy of the transfer to make Lakebed a for-profit corporation as the state is supposed to administer it for the good 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 indicate that in response, LRS and its agents began developing a “strategy to manage” the professor, circulating the idea that Benson would speak to a “BYU professor for life.” , who “might be able to rule Ben a little”.
The correspondence further reveals that LRS has asked its lobbyist, Jeff Hartley — who also represents Vineyard City — to hire an off-duty Capitol security guard “to be on hand when we have Ben Abbott or anyone else” at the lobbying events by LRS.
The group then began documenting and cataloging Abbott’s statements about the LRS plans for Utah Lake and tracking people who liked or interacted with his social media posts, emails indicate. In December, Hartley shared a “play-by-play” text message from an unnamed source as Abbott was speaking during a public comment period at a Utah Lake Commission meeting.
“We must act,” Hartley wrote.
In January 2022, LRS filed a $3 million lawsuit against the professor.
But lawmakers had already begun to cast doubt on the dredging project. During the 2022 session, they passed a bill directing the Department of Natural Resources to review whether transferring the lake bottom to LRS was legal. In August, state regulators determined that the proposal was indeed unconstitutional, effectively nullifying LRS’ grandiose business plan.
A judge dismissed LRS’ defamation lawsuit 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 counterclaim.
Krogue, Abbott’s attorney, said it was possible the Bensons dissolved LRS and filed for bankruptcy to prevent the case from moving forward.
“You have requested dissolution [LRS] just before they were supposed to sit for testimony,” she said. “…We felt even then that they were trying to squander assets and would wait until there was no money left to pay Ben.”
LRS’s next bankruptcy hearing is scheduled for September 12.
Cindy Gubler, the Wilkinson Ferrari public relations consultant who helped the Bensons develop a “strategy for dealing with” Abbott, is among LRS’s creditors. The filing shows her company is owed $7,000.
In an email, Gubler said she hadn’t spoken to anyone at LRS in almost a year.
“In mid-July we received notification that LRS had been dissolved and they were unable to pay our bills,” Gubler wrote. “Other than that, we have no information.”