HILDALE — Fundamentalist LDS Church leader Lyle Steed Jeffs was among 11 people indicted on federal money laundering and food stamps fraud charges Tuesday as the FBI and local officials raided the twin polygamous border towns of Hildale and Colorado City.

"This is a multi-year investigation involving a community that has a large number of (food stamps) recipients who over the course of the year would, at the instruction and advice of (church leaders), donate or misuse those benefits," U.S. Attorney for Utah John Huber said Tuesday.

All 11 are leaders and members of the FLDS Church. About half had been taken into custody by late Tuesday afternoon.

Jeffs, 56; John Clifton Wayman, 56; Kimball Dee Barlow, 51; Winford Johnson Barlow, 50; Rulon Mormon Barlow, 45; Ruth Peine Barlow, 41; and Preston Yates Barlow, 41, all of Hildale; along with Seth Steed Jeffs, 42, of Custer, South Dakota; and Nephi Steed Allred; Hyrum Bygnal Dutson, 55; and Kristal Meldrum Dutson, 55, all of Colorado City, Arizona, were charged with conspiracy to commit Supplemental Nutrition Assistance Program (SNAP or food stamps) benefits fraud and conspiracy to commit money laundering in a two-count indictment unsealed Tuesday.

Lyle and Seth Jeffs are the brothers of Warren Jeffs, who leads the polygamous group even as he is serving a life sentence in a Texas prison for sexually assaulting one of his 24 underage brides. Investigators say he still rules the church through letters and phone calls from prison.

"The indictment alleges church leaders diverted SNAP (food stamps) proceeds from authorized beneficiaries to leaders of the FLDS Church for use by ineligible beneficiaries and for unapproved purposes … amounting to millions of dollars in benefits per year," according to a statement from U.S. Attorney's Office.

The U.S. Department of Agriculture’s Food and Nutrition Service operates SNAP to provide assistance to low-income individuals and families to purchase food products. SNAP cards act like limited ATM cards to purchase eligible items for those who qualify for the program.

Starting in 2011, "FLDS leaders, including Lyle Jeffs, instituted the United Order within the ranks of the church. … Devout FLDS members aspire to eligibility in the United Order. Adherents to the United Order must donate all of their material assets to the FLDS Storehouse, a communal clearinghouse charged with collecting and disbursing commodities to the community," according to the indictment.

Prosecutors say that between 2011 and 2013, FLDS leaders directed church members to divert their food stamps benefits to the storehouse. The leaders held meetings and distributed protocols and "instruction on how to avoid suspicion and detection by the government," the indictment states.

Two small convenience stores operated by the church in the border towns — Meadowayne Dairy Store and Vermillion Cliffs Produce — engaged in "abnormally large and frequent" food stamps transactions "which rival and even surpass those sales generated by much larger stores like Wal-Mart and Costco," court documents state.

The FLDS leaders are accused of instructing church members to purchase items at the two small stores and then to donate those food items to the storehouse — or to swipe their benefits cards but not take any food items. The managers at the two stores would transfer those food stamps funds "to companies acting as a front for the FLDS Storehouse" — Quality Home Distributors, Prime Wholesale Supply and Product Unlimited, according to the indictment.

Church members, including those who did not qualify for food stamps benefits, could purchase items at those businesses that were using diverted "SNAP fraud proceeds."

The storehouse was reportedly one of the buildings raided by FBI agents Tuesday. As part of the indictment, the government also filed a notice of intent to seek forfeiture of "all property, real and personal," used to facilitate the alleged fraud.

Federal prosecutors say SNAP fraud proceeds were also used to buy things not eligible for the program, including installment payments on a John Deere tractor and a Ford F-350 truck.

Amos Guiora, a University of Utah law professor who has studied the FLDS Church, said members refer to the practice as "bleeding the beast," taking money from a government they disdain and using it as they see fit.

“This indictment is not about religion. This indictment is about fraud,” said Huber. “This indictment charges a sophisticated group of individuals operating in the Hildale-Colorado City community who conspired to defraud a program intended to help low-income individuals and families purchase food.

"We make decisions here at the United States Attorney's Office based on evidence, not passion or bias," he said.

Lyle Jeffs and Wayman were arrested Tuesday in Salt Lake City. They are scheduled to make an initial appearance in federal court Wednesday. Seth Jeffs was arrested Tuesday in South Dakota.

The bust goes well beyond fraud — putting in doubt who will lead the FLDS Church and how members will respond to a decisive message from government officials they have historically despised, said Guiora.

"This is a clear drawing of that magical line in that sand that government will not tolerate crimes committed in the name of religion," he said.

The investigation began with the Washington County Sheriff's Office and quickly grew, said Sheriff Cory Pulsipher.

“The violations included in the indictment are especially egregious since they allege that leaders of the conspiracy directed others to commit crimes, for which only certain people benefited. This type of conduct represents nothing less than pure theft," said Eric Barnhart, special agent in charge of the FBI’s Salt Lake City Field Office.

According to the state Department of Workforce Services, which administers federal public assistance benefits in Utah, households in Hildale received more than $11.8 million in food stamp benefits from 2011 through 2015. Average monthly household benefits have ranged from $817 to $1,088 over the same period, according to DWS records.

The U.S. Department of Agriculture takes fraud in the food stamp program "very seriously," said Marti Woolford, nutrition initiative director for Utahns Against Hunger. Nationwide, the incidence of fraud in the federal food stamp program is very low.

"It’s less than 1 percent across the country, but these kind of cases, they’re just unfortunate and they’ll be prosecuted. They’re taken very seriously, and we support that because we want people who need to be on food stamps to be able to use the program, feel good about providing food for their family and not feel judged by the public,” she said.

By and large, program participants and retailers comply with federal regulations, she said.

"The vast majority of people on the program are using it exactly as it's intended. We don’t want people to forget that. Ninety-nine percent of people and vendors are utilizing the program as intended,” Woolford said.

Nic Dunn, spokesman for the Department of Workforce Services, said DWS considers proper allocation of public assistance benefits a priority.

"The Federal Office of the Inspector General has jurisdiction over retailer food stamp fraud, and we have a strong working relationship with our partners there. Ensuring that only eligible recipients are receiving food stamps, and that the funding is allocated appropriately, continues to be a priority of our department. We will continue collaborating with federal partners to ensure they have good information for their investigations," Dunn said.

Contributing: Marjorie Cortez, Associated Press

Email: preavy@deseretnews.com

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