The 5,000-acre property known as Wohali, located five minutes west of Coalville and Echo Reservoir, is picturesque — the private valley remains largely undeveloped, and the 3,400-acre backcountry offers a plethora of outdoor hiking adventures. The Wohali Village, marketed as “the backbone of Wohali community life,” allows interested buyers to purchase semi-custom units of varying sizes, floor plans and architectural styles.
In short, Wohali is meant to be the pinnacle of luxury real estate.
Behind the scenes, however, is a story of in-fighting and financial mismanagement, according to a defamation lawsuit filed in Third District Court.
Thomas Cottone, a founding member of Wohali Builders and a key player in the property’s development, recently sued John Kaiser and Matthew Galioto, two executives and members of Wohali’s board of managers. Cottone claims the duo led a “defamatory campaign” against him “to interfere with and punish him for his efforts to re-establish financial controls, transparency and proper corporate governance.”
His complaint claims that Cottone “blew the whistle after developing serious concerns that the project’s developers may have improperly funneled millions of dollars to an entity they control and profited from those transactions.” He encouraged the developers to agree to an audit, improve financial controls and provide transparency regarding transactions.
“Then, to discredit and retaliate against Cottone — in a series of emails, meetings and calls with the project’s investors — defendants (Kaiser and Galioto) falsely accused Cottone of serious misconduct, self-dealing and breaches of fiduciary duty and integrity,” the lawsuit states.
Cottone’s reputation was “irreparably tarnished” as a result, and he was removed from his leadership position in the Wohali project.
Throughout the lawsuit, Cottone also alleges that Kaiser has a history of fraud connected to similar development projects across the country, including a civil case in Arizona in which Kaiser was ordered by a judge to pay defrauded investors $515,000 in 2015.
In 2013, Kaiser testified against his former business partner, who was ultimately convicted for defrauding investors in New York. The criminal case was Kaiser’s introduction to Galioto, an FBI investigator who worked the case and used Kaiser as a source and witness.
“On information and belief, it is highly irregular and against standard practice for a law enforcement officer and his former source — in a complex fraud action involving real estate developments — to enter into a substantial business relationship, also involving a development project, with a key witness,” the lawsuit said.
Cottone became involved with Wohali in 2017 after he hired Kaiser as a contractor for a home extension project.
Kaiser pitched the idea for “an exclusive, high-end residential and recreational community,” but said he needed help raising capital funds to finish purchasing 612 additional acres of land. Cottone offered to assist and subsequently arranged presentations to groups of potential investors from his own network.
Kaiser and his business partner, Dave Boyden, told investors they would work “at cost and not take any profit from construction transactions” as the project’s in-house builders, according to the suit.
“[They] would become the ‘preferred’ contractor for the construction of all residential homes and would only make a profit by building the residences on land lots sold by Wohali to individual purchasers of the lots,” the lawsuit states. “As part of this arrangement, Kaiser and Boyden would also receive a $250,000 annual salary, beginning from the inception of the project in 2018. This proposal — and later agreement — was a major incentive for investors, as it provided adequate compensation to Kaiser and Boyden but also ensured that profits were maximized for the project and that investors would see a real return on their investment.”
Cottone eventually grew the investor pool to 65 members and $25 million in contributions, as well as securing a $79 million loan in 2022.
By late 2022, Kaiser and Boyden allegedly began to complain about the checks and balances system Cottone had implemented across all companies involved in the Wohali project to provide financial oversight. The two then began drafting a new operating agreement without Cottone’s knowledge, according to court documents.
“If executed, it would have essentially given Kaiser and Boyden unfettered control over the project and eliminated the crucial financial checks, balances and controls that had been agreed to since the project’s inception — essentially what they have now since accomplished by orchestrating the ouster of Cottone,” the lawsuit says. “In other words, Kaiser and Boyden laid bare their scheme to usurp all powers for themselves over two years ago.”
Cottone says he discovered that Wohali Builders, the in-house contracting company employing Kaiser and Boyden, had “somehow realized a significant profit” that was “much greater than it should have been had the profits been realized by Wohali Builders on only the residential builds” in December 2022.
He then became concerned that Kaiser and Boyden were taking profits from other transactions and overcharging in an attempt to “‘shift’ profits improperly” from a company the pair had a minority interest in to Wohali Builders, “the entity in which they have a majority interest.”
Cottone “repeatedly tried to address these concerns,” along with other compliance issues, “to no avail” over the next few months.
The filed complaint alleges Kaiser then refused to communicate further with Cottone and tampered with his access to his Wohali email account.
“Cottone would later learn that months before Kaiser shut him out, he also tried to inhibit Cottone’s ability to maintain the required checks and balances — and justify his own obstruction — by initiating a smear campaign against Cottone amongst Wohali Builders employees, generally accusing Cottone of being a bad guy who was untrustworthy and committing nefarious and potentially ‘illegal’ acts,” the lawsuit says.
In August 2023, Cottone called a special board meeting to address financial compliance issues, including the lack of transparency, planning and approved budgets.
“Kaiser’s friend Galioto stood up and began falsely blaming Cottone for destroying the relationship with Kaiser and Boyden,” the lawsuit says. “Among other things, he echoed Kaiser and Boyden’s false accusation that Cottone drafted the [operating agreement] as part of a power grab.”
Galioto allegedly also claimed Cottone had given himself a salary without the proper approvals and that Cottone had forced Kaiser and Boyden to give him an ownership interest in three companies involved in the Wohali project, as well as discounting the lot price of one parcel to give “himself a free lot of land.”
Cottone attempted to push for more financial meetings, but Kaiser “refused and unilaterally canceled all future board meetings.”
Galioto “sent the first of a series of three increasingly bombastic and disparaging emails about Cottone” to one of the investor groups on Feb. 19, 2024, pushing the same claims he had espoused during the August 2023 board meeting. In a subsequent email, Galioto also asked Cottone to immediately step down.
The pattern of disparaging emails, comments in Wohali project Zoom meetings and lack of communication allegedly continued throughout last year, according to the lawsuit. Cottone was ultimately removed as a manager for the investor group on Oct. 2.
“In the last few months, Cottone has learned more about Kaiser’s motives for conspiring with Galioto to smear him and prevent his push for financial checks,” the complaint says. “Specifically, Cottone has learned of additional instances of self-dealing and mismanagement by Kaiser, demonstrating that Kaiser has been engaged in the exact sort of wrongdoing he has repeatedly (and falsely) accused Cottone of doing.”
Cottone, whose full-time job is in the anesthesiology industry, asserts the alleged defamation has ruined his reputation and business dealings in both the community at large and the medical community.
“Several of Cottone’s colleagues and leaders within the medical community were also targeted with these lies about Cottone. …The harm to Cottone’s reputation also impedes future business opportunities that he might have enjoyed. Former business contacts that have approached Cottone in the past with lucrative opportunities have been actively avoiding him in the wake of the defendants’ smear campaign,” according to the complaint.
The lawsuit asks for a total of $195,000,000 in damages — $65,000,000 for each claim of defamation, invasion of privacy and interference with Cottone’s economic relations — as well as attorneys’ fees.
Attorneys representing Kaiser and Galioto have not filed a response, and currently there are no scheduled court dates.