Utah attorney general in controversy after weeks in office

By Michelle L. Price, Associated Press

Thursday, Jan. 31, 2013 | 11:20 a.m.

SALT LAKE CITY — Utah's new attorney general was in office for only six days by the time people started calling for his resignation.

Republican John Swallow sailed in the position last November with almost 65 percent of the vote and vastly more campaign cash than his Democratic opponent.

The 50-year-old Swallow spent the past three years as a top official in the attorney general's office. He was sworn into the top law enforcement position in the state on Jan. 7.

But his high ride into office crumbled a week later, when a Utah businessman facing federal charges accused Swallow of orchestrating a plan to quash a federal investigation by bribing Senate Majority Leader Harry Reid, one of the most powerful politicians in the country.

The businessman, Jeremy Johnson, was once revered in Utah for using millions he made with his Internet companies to run mercy missions to Haiti, flying supplies in and orphans out after a devastating earthquake.

He's now facing federal fraud charges and the possibility of decades in prison, and he's directing the spotlight on Swallow, producing emails and a secret recording of a meeting last April between the two at a Krispy Kreme doughnut shop 40 miles south of Salt Lake City.

Swallow has strongly denied the allegations and maintains he only tried to connect Johnson with lobbyists who would persuade the Federal Trade Commission that his business was not scamming consumers out of millions through fraudulent credit card charges, as the FTC has alleged.

While the FBI and U.S. Attorney's Office in Utah are looking into the allegations against Swallow, the controversy has stained his first few weeks in office and it's unclear whether he will be able to shake the scrutiny.

State Democrats have asked U.S. Attorney General Eric Holder to investigate and a government watchdog group lodged a complaint with the Utah State Bar to see if Swallow violated ethical standards required of attorneys.

The editorial boards of three Utah newspapers are calling for his resignation, saying Swallow's version of events is bad enough.

"Even if it was as a lobbyist, such a meeting is totally inappropriate for a man who wants to be trusted to prosecute criminals, review proposed legislation and interpret state laws," The Spectrum of St. George wrote in a Jan. 14 editorial.

Swallow isn't catching a break from fellow Republicans either.

Gov. Gary Herbert and state GOP Chairman Thomas Wright said whether or not Swallow broke the law, it's clear Utah needs to retool its ethics rules. Meanwhile, leaders of the GOP-controlled state Legislature said they are reviewing the rules of impeachment proceedings, just in case.

The allegations are politically and professionally damaging, said Tim Chambless, a professor at the Hinckley Institute of Politics at the University of Utah.

"We expect the chief law enforcement officer in the state to be beyond reproach. We don't expect them to potentially be the chief law breaker," Chambless said.

Swallow, who unsuccessfully ran for Congress in 2002 and 2004, met with Johnson while serving as a chief deputy attorney general, overseeing prominent lawsuits challenging the new health care law and federal control of Utah lands.

Swallow says he introduced Johnson to Richard Rawle, who owned a chain of payday lending stores in Utah, Nevada and other states and employed Swallow as a lobbyist and legal counsel until 2009, when Swallow moved to the attorney general's office.

He introduced the two men so Rawle could hire lobbyists for Johnson to make his case to the FTC and head off any lawsuit. In late 2010, shortly after Johnson and an employee sent Rawle $250,000, the FTC sued Johnson, accusing him of scamming consumers out of millions of dollars through fraudulent credit card charges.

Johnson was arrested the next summer at a Phoenix airport carrying more than $26,000 in cash and a one-way plane ticket to Costa Rica.

Johnson tried to recoup some of his money from Rawle and claims it was a down payment on a $600,000 bribe for Reid to derail the FTC. Johnson said he doesn't know if his money reached anyone close to Reid.

Reid's office denies the allegations and said the Nevada senator had no knowledge or involvement in Johnson's case.

"The allegations of bribery by Mr. Johnson, a man with a background of fraud, deception and corruption, are absurd and utterly false," said Kristen Orthman, a spokeswoman for Reid. "Clearly, a desperate man is making things up."

Around the same time Johnson paid Rawle, Rawle paid Swallow $23,500 for his work as a consultant on a construction project in Nevada. Rawle died in December, but his family and partners on the Nevada project support Swallow's version of events and say Swallow served as consultant for months.

Swallow and former Attorney General Mark Shurtleff says Swallow's outside work in Nevada did not conflict with office policies.

Swallow called Johnson's bribery allegations "ludicrous" and has asked the U.S. Attorney's Office to investigate, saying it will show he did nothing wrong.

"These lies he's told have been fabricated for some end I cannot imagine," Swallow told The Associated Press. "I'm looking forward to clearing my name and show people that this didn't happen."

Johnson, who is free on a $2.8 million bond, says his story is supported by emails, financial records and other documents he shared with The Salt Lake Tribune, which first reported the accusations. He has since refused to share the same materials with the AP.

Johnson is no longer giving interviews but stands by his story, said a spokeswoman for his attorneys.

Prosecutors plan to file a new indictment in his case within weeks, but they won't comment on whether anyone beyond Johnson will be charged.

Swallow's relationship with Johnson has been dissected to the point that he's been forced to justify his use of Johnson's million-dollar Lake Powell houseboat during a family trip in 2010. Swallow told The Salt Lake Tribune that he did no harm by borrowing the boat from somebody he considered a friend. He says he paid for his own food, fuel and other necessities. But a Utah government watchdog group says Swallow may have violated state law by accepting the "gift."

Despite the pending federal investigation, questions about ethics and calls for resignation dogging him, Swallow is trying to move beyond it and focus on his new job.

"My intentions were good but I misjudged Mr. Johnson's character and regret meeting with him," Swallow said in a statement. "I will learn from this mistake and do everything possible to make sure my actions are transparent and make sure our office will be vigilant in going after anyone who defrauds the public."