GOP Attempts to Derail Federal Investigation of Utah Attorney General

GOP Attempts to Derail Federal Investigation of Utah Attorney General

Also see: "GOP leaders skirt formal discussion about John Swallow scandal," Salt Lake Tribune, Feb 16, 2013 -- "I think it’s one of the most important issues facing our party right now," said Aaron Gabrielson, chairman of the Wasatch County Republican Party. "Everyone is looking at us … for our response, and by saying nothing we are also sending a message." Members of the GOP State Central Committee — the state party’s governing body — voted by a 2-1 margin not to hold a formal discussion about the Swallow matter during Saturday’s quarterly meeting. ...

Indicted businessman: Utah A.G. tied to alleged scheme

Jeremy Johnson says new A.G. brokered attempt to derail federal investigation.

By Tom Harvey and Robert Gehrke

The Salt Lake Tribune, January 11, 2013

Embattled St. George businessman Jeremy Johnson says new Utah Attorney General John Swallow helped broker a deal in 2010 in which Johnson believed he was to pay Senate Majority Leader Harry Reid $600,000 to make a federal investigation into Johnson’s company go away.

But when the federal government filed a lawsuit Johnson thought he had paid to quash, he demanded Swallow return some of the $250,000 initial payment. Then, just days before the Nov. 6 election, Johnson engaged in a frenetic but unsuccessful effort to get Swallow to drop out of the race, saying information about what Johnson called a "bribe" would come out and force the Republican’s resignation if he became attorney general.

John Swallow-Jeremy Johnson timeline

The relationship between Utah Attorney General John Swallow and businessman Jeremy Johnson goes back to at least 2009.


June » Swallow emails Johnson soliciting campaign funds for Attorney General Mark Shurtleff’s re-election campaign.

December » Shurtleff appoints Swallow chief deputy attorney general.


Feb. 13 » Swallow emails Johnson about a “Cash for Gold” business deal and says he’s “very close” to Richard Rawle, owner of Check City.

March 4 » A series of emails begins over whether Shurtleff and Swallow would sign off on the legality of Johnson processing payments for online poker companies.

July 5 » A Swallow email to Johnson says he was “not aware of any such law in Utah to prohibit what you are doing” in processing poker payments from players outside the state.

Aug. 25, Sept. 25 » Emails between Swallow, Johnson and Shurtleff discuss arranging meetings with top Utah officeholders about a Federal Trade Commission investigation of Johnson’s I Works company.

Late September » Johnson says Swallow contacts him about meeting with Rawle to arrange payments to Nevada Sen. Harry Reid in return for his help in stifling the FTC investigation.

Sept. 29 » Swallow emails Johnson about Rawle traveling to Las Vegas to meet with someone close to Reid to discuss the FTC investigation.

Oct. 7 » Johnson emails Rawle: “We will do whatever it take[s] to get Senator Reid on our side”

Oct. 9 » Rawle emails Johnson: “I am working on this matter right now … “

Oct. 12 » Rawle email sets up a meeting that day in Provo.

Oct. 14 » Rawle’s new company RMR Consulting LLC is registered with the Utah Department of Commerce.

Nov. 2 » A Rawle employee emails Johnson, saying he can deposit an “initial retainer” of $50,000 in an RMR Consulting account at Bonneville Bank; Johnson emails a friend/employee asking him to make the payment; an I Works ledger shows a $50,000 payment to RMR Consulting.

Dec. 12 » I Works ledger shows $200,015 sent to RMR Consulting account.

Dec. 21 » FTC sues Johnson, I Works, other officers and related companies.


Jan. 19 » Swallow announces he is a candidate for Utah attorney general.

June 11 » A felony criminal charge is filed against Johnson and he is arrested in Phoenix, beginning a stay of 96 days in jail before he is allowed out on $2.8 million bail.


April 30 » Swallow meets Johnson at a Krispy Kreme restaurant in Orem; Johnson has the meeting recorded and photographed.

Oct. 26 » With election just days away, Johnson sends Swallow a text message about getting the money back. Johnson decides he should try to get Swallow to drop out of the A.G. race.

Oct. 29 » Johnson meets Democratic attorney general candidate Dee Smith at Bambara restaurant in Salt Lake City as part of effort to get Swallow to drop out of race.

Oct. 31 » Johnson meets with Shurtleff, urges him to persuade Swallow to drop out before the election, saying information on their deal will be made public.

Nov. 6 » Swallow wins election for Utah attorney general.

Dec. 3 » Johnson says Swallow sends $75,000 to repay part of monies paid by I Works and an employee in the Reid deal.

Dec. 8 » Richard Rawle dies.


Jan. 7 » Swallow is sworn in as attorney general.

Jan. 11 » A plea deal falls apart in which Johnson was to plead guilty to two felony charges.

  Sources »   Documents and interviews provided by Johnson; court documents; other sources

Johnson’s allegations come less than a week after Swallow took the oath of office. Federal agents have interviewed several Utahns about Johnson’s relationship with Swallow, among other issues, according to those interviewed. The FBI would not comment.

Johnson said he does not know if any of the money he paid in the deal actually reached anyone connected to Reid.

Reid’s office declined to comment, spokeswoman Kristen Orthman said Friday.

To back his allegations, Johnson provided an email from Swallow that Johnson identified as key in supporting his claims. Johnson also granted access to at least several dozen other emails, two financial records, several photos and a transcript of about 60 pages of a secretly recorded April 2012 meeting Johnson had with Swallow, who was then Utah’s chief deputy attorney general.

The documents appear to support Johnson’s story that in 2010 Swallow brokered a deal between Johnson and Richard M. Rawle, owner of the Provo-based payday-loan company Check City, to enlist Rawle to use his influence to get Reid involved on behalf of Johnson and I Works, Johnson’s Internet marketing company that was under investigation by the Federal Trade Commission.

Swallow emphatically denies Johnson’s allegations and said he doesn’t understand why Johnson is spreading lies about him.

"Any suggestion by Mr. Johnson that I have been involved in illegal or inappropriate activity regarding his FTC case or any other matter is false and defamatory," Swallow said.

Swallow insists Johnson approached him in 2010 and sought help to hire a lobbyist to deal with his FTC issues. "I told Jeremy I could not and would not intervene with the FTC on his behalf, given my position with the state [attorney general]," Swallow said. Johnson later asked Swallow to approach the U.S. attorney on his behalf, but Swallow said he refused.

Political clout » Johnson sought help from Swallow in early 2010, when he felt the FTC was unjustly targeting him and I Works with an investigation into the company’s business practices.

At the time, Johnson was largely known in Utah as a wealthy philanthropist who spent hundreds of thousands of dollars to ferry supplies into Haiti after the devastating 2010 earthquake.

Johnson, his business partners and family members also were generous political donors, having given more than $200,000 in campaign contributions to then-Utah Attorney General Mark Shurtleff starting in 2008 while Swallow served as Shurtleff’s lead fundraiser. Johnson also supported charities and Attorney General’s Office initiatives in which Shurtleff was involved. Johnson flew Shurtleff on his private jet to a fundraiser in California. Photographs from the summer of 2009 show the two men sitting in Johnson’s yellow Lamborghini sports car.

Copies of emails show Swallow worked with Shurtleff to arrange meetings between Johnson and top Utah officeholders.

Then, with the FTC investigation continuing, Johnson said Swallow suggested Reid could make problems with regulators go away — for a price.

"I said, ‘OK, what do I need to do?’ He’s like, ‘OK, it costs money,’ " Johnson said, who claimed Swallow was adamant he make a deal.

"I think he told me, ‘Richard Rawle has a connection with Harry Reid,’ " Johnson said.

He said Swallow at first wanted $2 million to enlist Reid’s help. But I Works was no longer profitable and he did not have the money, Johnson said, so they eventually agreed on $300,000 upfront and $300,000 later.

Swallow put Johnson in contact with Rawle, whose company has operations in Nevada. Rawle had given generously to Swallow’s failed congressional bids and hired Swallow as Check City’s lobbyist and in-house legal counsel, a position Swallow held until he became chief deputy attorney general in December 2009.

Rawle, who died of cancer last month, had contributed to Reid’s 2010 re-election bid and later bragged to Johnson that the Nevada Democrat helped him delay new federal payday-loan regulations, Johnson said.

On Sept. 29, 2010, Swallow sent an email to Johnson with the subject line "Mtg. with Harry Reid’s contact."

"Richard [Rawle] is traveling to LV tomorrow and will be able to contact this person, who he has a very good relationship with. He needs a brief narrative of what is going on and what you want to happen. I don’t know the cost, but it probably won’t be cheap."

On Oct. 7, Johnson emailed Rawle, insisting there was "rock solid proof" the FTC allegations against I Works were false. "We will do whatever it take[s] to get Senator Reid on our side and hopefully you can help make it happen. Let me know."

They arranged an Oct. 9 meeting at Check City’s Provo headquarters. Johnson said he, Swallow and Rawle attended, along with at least two other people.

Five days later, on Oct. 14, Rawle registered a new company called RMR Consulting LLC with the state, Department of Commerce records show. On Nov. 2, an official with a Check City-related company called Softwise Inc. emailed Johnson, with a copy to Rawle: "We wanted to let you know that we have our people in Washington D.C. currently working with the FTC on your case. … Also, the initial retainer of $50,000 can now be wired to RMR Consulting, LLC."

The writer provided an account number at Bonneville Bank.

A copy of I Works’ general ledger that same day shows $50,000 was paid to RMR Consulting for "legal fees." Another $200,015 was paid Dec. 2.

FTC proceeds with suit » But less than three weeks later, on Dec. 21, 2010, the FTC filed a lawsuit against Johnson, I Works and others in federal court in Las Vegas.

The suit alleges illegal marketing and billing practices for online sales of kits and access to websites with information about such things as obtaining government grants for personal expenses and making money online. It also alleges Johnson created a number of shell companies whose connections to I Works were hidden so they could continue to bill customers after Visa and Mastercard threatened to cut him off because a large number of cardholders had reversed charges.

Johnson said he called Swallow and asked him why the lawsuit was filed after he had paid for it to go away. According to Johnson, Swallow told him it was because Johnson hadn’t paid the second $300,000 they had agreed on and that Reid believed he had the money.

Johnson said he had no documentation or direct knowledge that any of the money went to Reid or the senator’s associates.

Because the money he paid had done nothing for him and I Works, Johnson began a months-long effort to pressure Swallow and Rawle into returning at least some of the money, which Johnson had borrowed from a friend who also was an I Works executive.

In June 2011, Johnson was charged with a single criminal count of mail fraud and was arrested at the Phoenix airport while waiting to board a plane for Costa Rica, where he hoped to start a helicopter tourism business after I Works had been taken over by a court-appointed receiver and his assets were frozen.

Johnson spent 96 days in jail until federal prosecutors relented and a judge granted bail of $2.8 million.

While he was in jail, Johnson said, Swallow worried Johnson was cutting a deal with federal prosecutors. Just after Johnson’s release, and with Swallow a candidate for attorney general, Johnson said Swallow and his campaign consultant, Jason Powers, met him at a St. George hotel, where Johnson said he again pressured Swallow to come up with the money.

Powers said his memory about the meeting is hazy, but he recalls the atmosphere as being cordial and remembers discussion of a meeting with Rawle that Johnson claimed Swallow attended, but Swallow said he had not. According to Powers, Johnson agreed.

Secret recording » Swallow and Johnson then met on April 30 of last year at the Krispy Kreme doughnut shop in Orem, according to Johnson. Swallow said he believed the meeting’s purpose was to persuade him to encourage Rawle to return the money.

Without Swallow’s knowledge, Johnson had the meeting photographed and recorded. Photos show Johnson and Swallow seated at a table facing each other.

In a transcript of the recording prepared by Intermountain Court Reporters, Swallow at first denies having met with Rawle and Johnson at the October meeting at Check City’s offices and said all his interactions with Johnson focused on hiring lobbyists to influence the FTC.

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