A Utah business man, Jeremy Johnson, has alleged that Utah Attorney General John Swallow, helped him broker a deal with Senate Majority Leader Harry Reid to stave off federal investigation into his company.
Johnson's allegations come less than a week after Swallow took the oath of office.
According to The Salt Lake Tribune, Jeremy Johnson said he was told that the price for the service would be $600,000. The businessman claims he made an initial payment of $250,000. But he demanded to have his money back after the FTC filed the lawsuit he was supposed to have paid to make go away. The Salt Lake Tribune reports:
"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."
The Salt Lake Tribune notes, however, that Johnson could not confirm that Reid actually received the money, but he says he made the payment to an alleged Reid intermediary.
According to The Salt Lake Tribune:
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...
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.
Jeremy alleges that Swallow at first demanded $2 million to help enlist Ried's help but he could not afford the money, so they eventually agreed on $300,000 upfront and $300, 000 later.
Swallow allegedly put Johnson in contact with Richard M. Rawle, owner of a Provo-based payday-loan company Check City. Rawle died of cancer last month.
According to The Salt Lake Tribune:
On Sept. 29, 2010, Swallow sent an email to Johnson with the subject line "Mtg. with Harry Reid’s contact." [The email read]: "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."
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.
But less than three weeks after paying "legal fees" (Dec. 21, 2010), the FTC filed a lawsuit against Johnson, I Works and others in a federal court in Las Vegas.
Johnson called Swallow and demanded to know why the lawsuit was filed. Swallow allegedly said it was because Johnson had not paid the second $300,000 they had agreed on. Johnson demanded his money back. But on June 2011, Johnson was charged with a single criminal count of mail fraud and arrested at the Phoenix airport while waiting to board a plane to Costa Rica.
After Johnson was granted bail, he met with Swallow on April 30, 2012 at the Krispy Kreme doughnut shop in Orem, and secretly photographed and recorded the meeting. The meeting was intended to get Swallow return the money Johnson paid.
Part of the transcript of the meeting, according to The Salt Lake Tribune:
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.
According to The Salt Lake Tribune, Johnson, who spent 96 days in jail, has also released emails and statements that appear to support his allegations.
But Swallow insists that Johnson is making “false and defamatory accusations” and that his role had only been to hire lobbyists. Swallow said: “There’s nothing wrong with that. As long as I’m not interfering with a government agency as a government official, there’s nothing wrong with me being involved.”
According to Swallow: "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 claims that Johnson approached him in 2010 seeking help to hire a lobbyist to deal with his issues with the FTC. Swallow: "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 alleges Johnson later asked him to approach the U.S. attorney on his behalf, but Swallow said he refused.
But Johnson told a judge that from the start he felt guilty about the whole affair. He said: “The truth is the worst thing I think I’ve done was I paid money knowing it was going to influence Harry Reid…So I’ve felt all along that I’ve committed bribery of some sort there.”
However, it remains unverified that any part of the money got to Reid.