Once hailed as philanthropist-entrepreneur, Foote spun a web of deceit
Salt Lake Tribune
August 12, 2008
By Brian Maffly
Warren Kyle Foote unburdened his conscience in the back of a Salt Lake City police car as officers hauled him to jail on a rash of bad check charges last November.
He felt terrible for writing checks against closed accounts, knowing they would bounce, he told the officers.
Utah securities regulators and prosecutors were dropping the hammer on the 28-year-old real estate developer, and Foote was fast approaching rock bottom that fall morning, only six months after Westminster College hailed him as a philanthropic and successful entrepreneur following his $3.4 million pledge to help launch the college's new Warren Kyle Foote Institute for New Enterprise.
During the six-month period when Westminster fundraisers were courting Foote, he was becoming increasingly mired in a complex web of financial deceit, according to court documents.
Criminal charges and lawsuits suggest Foote improperly shuffled money among his failing business ventures in a desperate ploy to keep them afloat and appease those who entrusted their money to him. He allegedly issued bad checks, some for thousands of dollars, involving others' money. And yet, in an interview with The Tribune, Foote claimed to have had every expectation he would meet his new seven-figure obligation.
"This was early summer. The economy was on the ups. I couldn't go wrong. I had more projects than I could handle. It
was just the beginning of the credit crunch," said Foote, who goes by his middle name Kyle and recently took a job in a Salt Lake City print shop.
He claimed his businesses were still healthy when he worked with Westminster officials, but it's clear from court records that investors, banks, employees and vendors were hounding him at the time. Within a few months of his pledge, he faced three felony cases alleging multiple counts of fraud and bad-check writing involving numerous victims.
But in early May 2007, Westminster issued a news release announcing that Foote had endowed the college with a $3.4 million gift and touting him as "a successful entrepreneur" who "owns and operates a number of successful enterprises." In truth, Foote was only two years out of a Chapter 7 bankruptcy and had no record of entrepreneurship nor success.
Westminster spokeswoman Laura Murphy, who wrote the release, said these accolades were based on information Foote provided, and the Salt Lake City college does not customarily perform background checks on donors.
"We don't grill people, [by asking] 'Where did you get your money and how are you going to pay us?' " she said.
Foote never followed through with the gift, but the college opted against publicly retracting its release. The college quietly terminated its agreement with Foote after his first $1 million payment did not arrive by Sept. 1.
Foote attended Westminster for a single semester in 1998 before dropping out to go on an LDS Church mission to Brazil. Upon his return, he served in the military and never returned to school, he said. After discharging his bankruptcy in March 2005, he began establishing businesses - WKF Associates, Red Outdoor and Development Partners - that prosecutors would later finger as fraudulent enterprises.
According to Murphy, Foote approached the college in the fall of 2006 expressing a desire to join the college's President's Innovation Network, an investment club in which members commit to annual donations of $10,000 to support the college's strategic development goals.
"As with so many development relationships, we got into a conversation and explored his interests," Murphy said. Over the course of six or seven visits, Jarrett introduced Foote to business professors and administrators and toured him around campus. Foote indicated an interest in organizational behavior and entrepreneurialism, and managed to convince officials he made a fortune lending high-interest, short-term loans tied to real estate transactions.
"They talked about what it would take to have the Institute for New Enterprise named for him. At that point the discussion becomes pretty frank. There's a negotiation," Murphy said. Foote agreed to $3.4 million in payments timed with his pending real estate development projects.
In his Tribune interview, Foote claimed he did not know Murphy was interviewing him for a news announcement, nor did he authorize its release. He did not want publicity nor the new institute named after him, he said.
Foote's business associate Jake Terry, however, told The Tribune that Foote touted the gift, claiming it was actually $4.5 million to be paid over five years, as a way to build credibility in the business community. Foote also boasted the gift lent him pull with Westminster's business school.
"He knew I wanted to get my MBA. He said he could get me into Westminster and they would waive tuition," said Terry, a University of Utah undergraduate who was a sales manager in Foote's billboard enterprise. Terry said Foote was excited about the new institute being named for him and sought his opinion on which of his names to attach to it.
The Institute for New Enterprise launched last year with money from the President's Innovation Network.
"We're still looking for someone who would like to endow the institute and have it named after them," said Lisa Actor, Westminster's assistant vice president for advancement. She described the Foote episode as "an unusual situation" that would not trigger changes in the way the school solicits funders.
"It was a disappointment. I don't remember any red flags. He was a person who wanted to give back," Actor said. "We always enter into dialogue with potential donors in good faith, and we assume they are working with us in good faith."