HARRY REID ACCEPTED $600K BRIBE TO END FEDERAL INVESTIGATION OF UTAH COMPANY IN 2005

http://www.sltrib.com/sltrib/home3/55598812-200/johnson-swallow-raw...

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

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

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.

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.

2010

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.

2011

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.

2012

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.

2013

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 mensitting 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.

Johnson takes none of it, and points to Swallow’s Sept. 29, 2010, email in which Swallow mentions Reid and money. Johnson also tells him Rawle bragged about getting help from Reid to delay new payday-loan rules.

"I’d like to have it legally through lobbyists," Swallow tells Johnson, who replies, "I understand."

They discuss what the FBI might have, including emails from Swallow that were stored on I Works computers the federal government seized.

"Probably the only one they’d like to roast more than me would be a public official," Johnson at one point tells Swallow, whom Johnson described as being pale, nervous and visibly sweating during the meeting.

"I don’t feel like it’s a crime at all," Swallow says.

Johnson tells Swallow that others at I Works knew of their deal and could corroborate Swallow’s involvement and the purpose of the payments, according to the transcript.

Swallow insists the money was meant to hire a lobbying firm.

"There’s nothing wrong with that," Swallow says. "As long as I’m not interfering with a government agency as a government official, there’s nothing wrong with me being involved."

Swallow insists during the meeting he did nothing wrong "criminally," but "politically — politically, I go whoa."

Later, Swallow says, "Let’s assume that you paid me to put the deal together. … What’s wrong with that?"

Johnson reminds him, "The problem is that email you sent. ... You sent me an email about what this money was gonna do and how it was gonna go to Reed [original spelling in transcript]."

"No wonder they’re after me," Swallow replies.

Swallow eventually acknowledges he had received $20,000 from an unspecified Rawle company about the time when I Works made the payments to RMR Consulting, according to the transcript. But Swallow claims the payments were for consulting work on a proposed cement plant on Paiute tribal land in Nevada. He says he first billed Rawle in October 2010 and then billed him for $15,000 in March 2011.

"I’m really vulnerable," Swallow says later in the conversation, acknowledging after that, "I’m worried about RMR."

Swallow agrees to press Rawle to return some of the money.

Swallow responds » Swallow maintained he only helped put Johnson in contact with someone who could help hire lobbyists. He said he had no part in any deal and received no compensation.

"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.

He acknowledged doing consulting for Rawle on a Nevada limestone project, but said the payments did not violate Utah law.

Swallow said he has hired the law firm of Clyde Snow & Sessions, which is working on a defamation case against those who are spreading lies about him.

"[Johnson] is extremely intelligent," Swallow said, "and appears to have a well-conceived plan to divert attention from his problems and draw attention to someone else."

By October, Johnson had agreed to a deal in the criminal case in which he would admit guilt to two charges, which prosecutors added as part of the plea deal. In exchange, Johnson said, the U.S. Attorney’s Office said it would not prosecute his family, friends, associates or Swallow. Johnson said the cases brought against him ruined his life and he believed that, although Swallow had done wrong, he did not deserve to also have his life destroyed.

On Oct. 26, as the election approached, Johnson said he told Swallow in a text message that he needed to pay back some of the money. By that time, Rawle was suffering from cancer and the extensive treatments to combat it. He died Dec. 8.

Cort Walker, a spokesman for Check City who according to an email also arranged the payment to RMR, did not return phone messages Friday.

Election flurry » Just days before the Nov. 6 election, Johnson said he would try to make Swallow quit the race to save Swallow the pain and embarrassment of having to resign and be investigated after he won.

First, Johnson wanted to meet Democratic candidate Dee Smith to assess his character as a prosecutor, arranging a dinner meeting at Bambara restaurant in Salt Lake City.

"I went and met with him," Smith said. "He just indicated that he wanted to talk with me and wanted to make sure that, as he termed it, that I was a good guy because he told me he was going to be dropping what he called a bomb and it was going to end the attorney general’s race and, as a result of it, I was going to be the next attorney general."

Smith said Johnson didn’t give him any specifics and Smith didn’t ask for details.

Johnson said he immediately liked Smith and believed him to be an honest prosecutor.

After the meeting with Smith, on Oct. 30, Johnson said he left a voice mail and sent a text message to Shurtleff, saying he wanted to meet to discuss Swallow.

The two met the next day outside a Salt Lake City Gateway condo, where Johnson was staying, Johnson said. He told Shurtleff about Swallow’s deal and that the information would come out soon. He urged Shurtleff to press Swallow to drop out. Shurtleff said it was unlikely Swallow would quit at that late date, according to Johnson, but Shurtleff agreed to speak to Swallow about the allegations.

Swallow said Shurtleff didn’t talk to him about getting out of the race.

Shurtleff did not return requests for comment Friday.

On Nov. 6, Swallow collected about 65 percent of the vote to become Utah’s attorney general.

On Dec. 3, Johnson said Swallow paid $75,000, but sent it to his friend’s attorney and notified the FTC, which could have a claim to the funds. Swallow said the payment was made by Rawle as a partial refund on the lobbying agreement.

Swallow was sworn into office Monday.

On Friday, Johnson and federal prosecutors aborted a deal in which he was to plead guilty to bank fraud and money laundering, with an 11-year prison sentence recommended to the judge.

"The truth is the worst thing I think I’ve done was I paid money knowing it was going to influence Harry Reid," he said. "So I’ve felt all along that I’ve committed bribery of some sort there."

In another conversation, Johnson said, "I shouldn’t have done it. I regret it."

tharvey@sltrib.com,

gehrke@sltrib.com

Views: 1205

Tags: Harry, Reid, Swallow, bribery, federal, investigation

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Comment by robert e green on January 15, 2013 at 1:07am

Get elected get rich

Comment by D. on January 14, 2013 at 10:04am

Reid is a disgusting.

Comment by Lindar on January 13, 2013 at 10:31pm

Isn't it way past time.....to move from disussion to action? For ALL of them?

"It's Now or Never"

Comment by Bob Russell on January 13, 2013 at 9:18pm

Even if reid took ribe money both parties are so full of corruption and bribery that nothing will be done by anyone there. Theyalso own the courts so that avenue is out. If you don't believe me about the courts look at the Roberts vote on obamacare.

Comment by Grace Polaris on January 13, 2013 at 9:16pm

Reid is despicable.

Comment by Denise J. Goltz on January 13, 2013 at 4:38pm

I AM SICK AND TIRED OF THE ELITIST IN GOVERNMENT GETTING AWAY WITH SHADY DEALS, IF YOU OR I OWE THE IRS $1,000 THEY WILL COME AFTER YOU WITH A VENGENCE AND THIS IS WRONG.  SOMEONE NEEDS TO GROW A PAIR AND TAKE THIS ON.

Comment by Martha Cook on January 13, 2013 at 3:53pm

Obama nd att. gen Holder will get him off just like they always do. They're above the law

Comment by Duke-Jinx on January 13, 2013 at 1:53pm

Try this thought experiment.

 Imagine that someone grows up in poverty, works his way through law school by holding the night shift as a Capitol Hill policeman, and spends all but two years of his career as a public servant. Now imagine that this person’s current salary — and he’s at the top of his game — is $193,400. You probably wouldn’t expect him to have millions in stocks, bonds, and real estate.

 
But, surprise, he does, if he’s our Senate majority leader, whose net worth is between 3 and 10 million dollars, according to OpenSecrets.org. When Harry Reid entered the Nevada legislature in 1982, his net worth was listed as between $1 million and $1.5 million “or more,” according to the Las Vegas Review-Journal. So, since inquiring minds inquire, let’s try to figure out how Reid’s career in public service ended up being so lucrative. He hasn’t released his tax returns, which makes this an imperfect science, but looking at a few of his investments helps to show how he amassed his wealth.
 
In 2004, the senator made $700,000 off a land deal that was, to say the least, unorthodox. It started in 1998 when he bought a parcel of land with attorney Jay Brown, a close friend whose name has surfaced multiple times in organized-crime investigations and whom one retired FBI agent described as “always a person of interest.” Three years after the purchase, Reid transferred his portion of the property to Patrick Lane LLC, a holding company Brown controlled. But Reid kept putting the property on his financial disclosures, and when the company sold it in 2004, he profited from the deal — a deal on land that he didn’t technically own and that had nearly tripled in value in six years.
 
When his 2010 challenger Sharron Angle asked him in a debate how he had become so wealthy, he said, “I did a very good job investing.” Did he ever. On December 20, 2005, he invested $50,000 to $100,000 in the Dow Jones U.S. Energy Sector Fund (IYE), which closed that day at $29.15. The companies whose shares it held included ExxonMobil, ChevronTexaco, and ConocoPhillips. When he made a partial sale of his shares on August 19, 2008, during congressional recess, IYE closed at $41.82. Just a month later, on September 17, Reid was working to bring to the floor a bill that the Joint Committee on Taxation said would cost oil companies — including those in the fund — billions of dollars in taxes and regulatory fees. The bill passed a few days later, and by October 10, IYE’s shares had fallen by 42 percent, to $24.41, for a host of reasons. Savvy investing indeed.

 
Here’s another example: The Los Angeles Times reported in November 2006 that when Reid became Senate majority leader he committed to making earmark reform a priority, saying he’d work to keep congressmen from using federal dollars for pet projects in their districts. It was a good idea but an odd one for the senator to espouse. He had managed to get $18 million set aside to build a bridge across the Colorado River between Laughlin, Nev., and Bullhead City, Ariz., a project that wasn’t a priority for either state’s transportation agency. His ownership of 160 acres of land nearby that stood to appreciate considerably from the project had nothing to do with the decision, according to one of his aides. The property’s value has varied since then. On his financial-disclosure forms from 2006, it was valued at $250,000 to $500,000. Open Secrets now lists it as his most valuable asset, worth $1 million to $5 million as of 2010.
 
How Reid acquired that land is interesting, too. He put $10,000 into a pension fund his friend Clair Haycock controlled, to take over the 160-acre parcel at a price far below its assessed value. Six months later, Reid introduced legislation that would help Haycock’s industry, a move many observers said appeared to be a quid pro quo, though Reid and Haycock denied that the legislation was the result of a property deal.
 
We don’t know how much more money Reid has or how he made all of it. For that, we’d have to see his tax returns.
— Betsy Woodruff is a William F. Buckley Fellow at the National Review Institute.
http://www.nationalreview.com/articles/314025/how-did-harry-reid-ge...

Comment by Adolfo O. Perez on January 13, 2013 at 1:43pm

 So what are the chances of indicting Harry reid on this /

Comment by Richard Carlton on January 13, 2013 at 1:11pm

He needs to be indited and imprisoned.

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