Indicted Businessman Makes A Mess For Utah’s New Attorney General

After just a week on the job, Utah’s new attorney general, John Swallow (R), is facing questions about his interactions with an embattled Utah businessman who has embarked on a campaign against him.A thorough report published late Friday by The Salt Lake Tribune detailed the allegations made by the businessman, Jeremy Johnson, who ran I Works, an online marketing company. From the Tribune:

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.

According to the Tribune, federal agents have raised the topic of Johnson’s relationship with Swallow in interviews with several people.

This might be a good place to pause and point out, as the Associated Press does, that Johnson has been accused of running a fraudulent $350 million software scheme, and billing hundreds of thousands of consumers for products they never ordered. In June 2011, Johnson was arrested and charged with a single criminal count of mail fraud. And just this past Friday, Johnson was set to plead guilty to two felony charges (a second charge was added later). But the deal fell apart when federal prosecutors at a hearing balked at placing in the record a list of people who Johnson said they had promised not to prosecute in exchange for his plea. Among the people on the list were Johnson’s family members, business associates, and, perhaps oddly, Swallow.

In its article this weekend, the Tribune reported how in 2010, Swallow apparently brokered a deal between Johnson and Richard Rawle, owner of a Utah payday-loan company. The deal reportedly was “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.” In October 2010, Rawle formed a new company, RMR Consulting LLC, which later received $250,000 from I Works for “legal fees.”

To back up his claims, Johnson provided the Tribune with several dozen emails, two financial records, several photographs, and a transcript of a secretly recorded April 2012 meeting between Johnson and Swallow. In that meeting, Swallow acknowledged to Johnson that he had received $20,000 from one of Rawle’s companies around the time I Works made its payments to RMR Consulting. But Swallow said the payments were for consulting work he had done on a proposed cement plant in Nevada.

Swallow denied any wrongdoing in email responses to questions from the Tribune.

“I can say this emphatically: I have never had a financial arrangement with Mr. Johnson and no money has ever been offered or solicited,” Swallow said. “I would appreciate it if you would be very careful about this story.”

Swallow has also provided the Tribune with an affidavit from Rawle, signed three days before Rawle’s death in December, stating that Johnson paid Rawle $250,000, and that Rawle used $100,000 to hire unnamed lobbyists to avoid the FTC lawsuit, and that $50,000 was Rawle’s fee.

Reid’s office on Sunday issued a statement denying any connection between the Majority Leader and Johnson. (Johnson himself told the Tribune he had no proof or knowledge that any of the money went to Reid.)

“Senator Reid has no knowledge or involvement regarding Mr. Johnson’s case,” Reid spokesperson Kristen Orthman said in a statement to the Tribune. “These unsubstantiated allegations implying Senator Reid’s involvement are nothing more than innuendo and simply not true.”

Local Democrats have pounced on the story. On Saturday, Utah Democrats called on U.S. Attorney General Eric Holder to appoint a special prosecutor to investigate Johnson’s allegations.

“The people of Utah need to have confidence that the whole story is going to be told,” Utah Democratic Party Chairman Jim Dabakis said, according to the Tribune. “It’s only fair for John Swallow and for everyone else involved that an [investigator who is] independent, nonpartisan and not part of the Utah system come in and ask the hard questions and have an absolute, follow-the-facts-wherever-they-go, kind of investigation.”

The U.S. Attorney’s office in Utah issued a statement Sunday saying an investigation into Swallow has not been ruled out.

“It has been reported that federal prosecutors informally agreed not to prosecute John Swallow,” the U.S. Attorney’s office said in a statement to KUTV, a television station in Salt Lake City. “This assertion is completely untrue. This statement does not imply that there is or is not an investigation pending against Mr. Swallow.”

A separate statement obtained by KUTZ from the office of Utah Gov. Gary Herbert (R), meanwhile, suggests that the Governor himself is in wait-and-see mode.

“All the Governor knows is what he has read in the paper, and it would be irresponsible to arrive at conclusions based only on that alone,” the statement said. “The fact is there is a current investigation of Mr. Johnson and federal agencies are aware of the allegations. This is an instance when facts should not be politicized and process should be followed.”