Utah Allegations Against John Swallow, Mark Shurtleff: Jeremy Johnson and Online Poker Specifics
Yesterday’s arrest in Utah of former state attorney generals John Swallow and Mark Shurtleff returns a harsh spotlight to the activities surrounding failed online poker processor firm Elite Debit and the St. George, Utah SunFirst Bank, through which poker deposits and withdrawals for US customers of Full Tilt Poker and PokerStars were funneled in 2009 and 2010.
The SunFirst operation, the brainchild of payment processors Jeremy Johnson and Chad Elie, figured large in the “Black Friday” crackdown of April 2011 by US federal authorities against the largest US-facing sites. Unknown at that time, but emerging in the months and years that followed, were the lengths that Johnson and other online-poker representatives engaged in during that timeframe in an attempt to create a legal safe haven in Utah for the ongoing poker processing.
Swallow and Shurtleff now face a combined 23 charges of misconduct while in office, including accepting bribes and unreported gifts, tampering with evidence, and otherwise turning the Utah AG’s office into a “pay for protection” operation. It was Johnson himself who played a large role in outing the alleged criminal activities of Shurtleff and Swallow, while declaring himself that he committed bribery on multiple occasions, both in an attempt to make a federal investigation into his own business operations disappear, and an attempt to support the possible introduction of a federal online-poker bill to be sponsored by US Senate Majority Leader Harry Reid of Nevada.
While some circumstantial evidence supports Johnson’s bribery tale regarding Reid, other figures involved (including Reid) deny those allegations. However, Johnson’s ongoing relationship with Swallow and Shurtleff, the two former Utah attorneys general, played a major role in charges ultimately being filed against the pair.
What follows is a lengthy excerpt from the charges brought against John Swallow that details the allegations of misdeeds involving Johnson and online poker. It’s part of why the two Utah state-level investigators decided to file the corruption charges, which extend to other business relationships involving the pair and encompass matters unconnected to online poker. Nonetheless, Johnson’s and Chad Elie’s online poker dealings and Swallow’s and Shurtleff’s acceptance of unreported gifts from Johnson are important components of the Utah investigators’ findings.
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JEREMY JOHNSON, HOUSEBOAT, AND AIRPLANE
9. Through his involvement in Shurtleff’s 2008 re-election campaign, Defendant SWALLOW met St. George Utah businessman Jeremy Johnson. Johnson owned, among other businesses, I Works Inc. and Elite Debit Inc. I Works Inc. provided services and/or sold products through negative option continuity programs, while Elite Debit Inc. engaged in the business of processing [poker] payments online. A negative option continuity program is one in which a consumer purchases a product and is automatically enrolled in a membership program that results in recurring charges to the consumer’s credit card that continue until the consumer actively cancels the membership.
10. Johnson contributed approximately $50,000 to Shurtleff’s re-election campaign. Prior to Johnson’s contribution, the Utah Consumer Protection Bureau had cited I Works Inc. for numerous counts of consumer protection violations.
11. In or around September 2009, Johnson invested millions of dollars into the troubled SunFirst Bank, an FDIC-insured financial institution based in St. George, Utah. Beginning in December 2009, shortly after Defendant SWALLOW was appointed Chief Civil Deputy in the Utah Attorney General’s Office, SunFirst Bank started to process Elite Debit’s online poker transactions in violation of federal and Utah law.
12. On February 13, 2010, Defendant SWALLOW, while the Chief Civil Deputy in the Utah Attorney General’s Office, e-mailed Johnson, from his personal mail account, for the purpose of joining services provided by [Johnson marketing-business associate Richard] Rawle’s Check City payday loan processing with Johnson’s I Works’ online marketing capabilities. Defendant SWALLOW explained, in his e-mail exchange with Johnson, that I Works Inc. would get a “discount” with the online money processing because of SWALLOW’s relationship with Rawle.
13. On March 4, 2010, an attorney representing the online poker industry sent Johnson and his business partner, Chad Elie, an e-mail with a draft opinion regarding the issue of whether Texas Hold’Em was a game of chance or a game of skill. The attorney [not named here, but was determined to be A. Jeff Ifrah] asked Jeremy Johnson and Chad Elie to “deliver this to the Utah AG and request he meet next week … with me and the Executive Director of the Poker Players Alliance [John Pappas] who he already knows…” Johnson forwarded the e-mail to Swallow’s personal e-mail account, [email protected], and asked whether “we” could do this. Swallow responded, “I don’t know yet. I’m abt halfway through the doc. Mark get’s (sic) back tomorrow from DC and well (sic) discuss. I’m still new enough that I’ve got to see what we can and can’t do. I like the analysis so far.”
14. On March 8, 2010, Defendant SWALLOW e-mailed Johnson from his personal e-mail, informing Johnson that SWALLOW and Shurtleff had discussed the draft opinion. Defendant SWALLOW opined that Utah law was more restrictive than federal law on that issue, but that he had some ideas that should help.
15. On March 11, 2010, a representative of the online poker industry e-mailed Shurtleff’s assistant and Shurtleff, requesting a meeting about, among other things, “the laws in Utah and how they govern poker.”
16. On April 1, 2010, Shurtleff and Defendant SWALLOW met with online poker industry representatives [believed to be Ifrah and Pappas]. According to the subsequent e-mail exchange, Shurtleff and Defendant SWALLOW were not in a position to deem online poker gaming legal in Utah, but they were willing to submit an amicus brief if the industry were to engage in legal proceedings seeking a determination that online poker was legal in Utah.
17. On July 2, 2010, an online poker industry attorney e-mailed Johnson, informing him that the industry intended to file suit in Utah to obtain a favorable ruling for the online poker industry. The attorney asked Johnson to obtain the Utah Attorney General’s “view” of the industry prior to the filing of the legal proceedings. The attorney also wanted the Utah Attorney General’s Office to “weigh in with an Amicus brief” in support of the industry’s legal proceeding.
18. On July 4, 2010, Johnson forwarded the e-mail from an online poker industry’s [sic] attorney to Defemdant SWALLOW’s personal e-mail account, [email protected] Johnson stated, in the e-mail, was that the industry’s position was that while Utah law was unclear regarding the playing of online poker, the processing of online poker payments was legal. On July 5th, 2010, Defendant SWALLOW responded to Johnson’s e-mail, stating “Jeremy, I am not aware of any such law in Utah to prohibit what you are doing.” SWALLOW then wrote that he would have an attorney in the office review the issue.
19. In 2010, Johnson was under investigation by the Federal Trade Commission (FTC) in connection with the operations of I Works Inc. In or about August 2010, Johnson contacted Defendant SWALLOW, then Chief Civil Deputy in the Utah Attorney General’s Office, asking for assistance regarding the FTC investigation. On August 25, Defendant SWALLOW sent Shurtleff an e-mail from his personal e-mail account ([email protected]), relaying Johnson’s request to meet with United States Senator Orrin Hatch about the investigation.
20. On September 29, 2010, Defendant SWALLOW sent an e-mail to Johnson, informing him that he had spoken with Rawle, who had a connection, through a contact person, with United States Senator Harry Reid. Defendant SWALLOW stated that the price to obtain access to Reid’s contact person likely “won’t be cheap.”
21. On October 7, 2010, Johnson sent Rawle an e-mail with the subject line “Senator Reid.” Johnson began the e-mail with “I talked to John Swallow and he said you might have some connections to Reid that might be helpful to us.” Johnson’s e-mail also described the FTC’s pursuit of shutting down companies that use negative options such as those used by I Works, Inc.
22. Johnson wire $50,000 (on November 2, 2010) and $200,000 (on December 2, 2010) to RMR Consulting, LLC, a company which was owned and operated by Rawle. In or about November 2010, Rawle paid Defendant SWALLOW $8,500 fromthe funds wired by Johnson into the RMR Consulting bank account. The deposit of that payment occurred in Sandy, Salt Lake County. In April 2011, Defendant SWALLOW received an additional $15,000 via a check to P Solutions LLC also from  Rawle’s RMR Consulting bank account. P Solutions LLC was a company created and owned by Defendant SWALLOW.
23. On December 21, 2010, the Federal Trade Commission filed its civil Complaint against Johnson in US District Court for the District of Nevada (2:10-cv-02203-MMD-GWF), in connection with Johnson’s business practices at I Works, Inc. and Elite Debit. On June 15, 2012, Johnson was indicted in the US District Court in the District of Utah for Mail Fraud. The indictment alleged that I Works, Inc. marketed many products using negative option continuity programs and “forced up-sells” techniques while utilizing the US Mail for, among other things, the shipment of various products to consumers (2:22-cr-00501-DN-PMW).
24. Contemporaneous with the FTC’s investigation of Johnson’s business practices in 2010, and Johnson’s efforts to have online poker processing legalized in the state of Utah, Defendant SWALLOW utilized Johnson’s personal aircraft for travel to and from Salt Lake City and St. George, Utah. In or about September or October 2010, Defendant SWALLOW and his family, at Johnson’s expense, spent two nights on Johnson’s large (approximately 80 feet long) luxury houseboat on Lake Powell. The value of the benefit Defendant SWALLOW received, in connection with using the houseboat, exceeded $1,000.
25. In or around August 2010, Rawle asked Defendant SWALLOW to provide consulting services for the Chaparral Limestone and Cement Corporation, regarding a project located in Nevada. Defendant SWALLOW claims to have received compensation for his consulting work for that corporation, but the two payments ($8,500 and $15,000) SWALLOW received were from the RMR Consulting account and not from Chaparral.
TRAVIS MARKER AND THE SOLICITATION OF $120,000
In 2011, Johnson approached attorney Travis R. Marker, who specialized in mediation and dispute resolution, for the purpose of resolving Johnson’s legal matter with the FTC. In the summer of 2011, Marker met with Defendant SWALLOW on multiple occasions regarding Johnson’s criminal case. During a subsequent meeting at the Utah State Capitol building in Salt Lake County, Defendant SWALLOW told Marker that if Johnson could provide SWALLOW approximately $120,000, there might be more options available to Johnson for resolving that criminal case.
THE KRISPY KREME MEETING AND DISAPPEARING ELECTRONIC EVIDENCE
27. On April 30, 2012, Defendant SWALLOW met with Johnson at a Krispy Kreme shop in Orem, Utah. During the recorded meeting, Johnson and Defendant SWALLOW discussed, among other things, SWALLOW’s exposure to various potential criminal charges and potential evidence the government might garner against Defendant SWALLOW in connection with Defendant SWALLOW’s orchestration of assistance to Johnson regarding the FTC investigation and the $250,000 payment to Rawle for potential access to US Senator Harry Reid. Johnson informed Defendant SWALLOW that Rawle should return the money to Johnson and that Rawle should delete e-mails that Rawle did not want the government to obtain.
28. On or about May 1, 2012, defendant SWALLOW instructed one of his campaign staffers to obtain a “burenr” or prepaid cell phone. Defendant SWALLOW instructed his campaign staffer to pay cash for the cell phone so that it could not be traced to Defendant SWALLOW’s campaign.
29. On or about May 2, 2012, defendant SWALLOW retroactively created two invoices for services rendered to Rawle regarding the Chaparral cement project, purportedly justify the November 2010 and April 2011 (sic, s/b December 2010 — hh) payments of $8,500 and $15,000, respectively.
30. On May 2, 2012, Defendant SWALLOW wrote a letter to Rawle confirming a previous conversation between them in which Defendant SWALLOW stated to Rawle that he would return the $23,500 paid to him by Rawle for SWALLOW’s supposed services in connection with the Chaparral project. Defendant SWALLOW asked Rawle to find a new channel through which Rawle would repay $23,500 to Defendant SWALLOW.
31. On May 15, 2012, Defendant SWALLOW issued a check from P Solutions LLC to RMR Consulting in the amount of $23,500. Rawle repaid the $23,500 to Defendant SWALLOW from another account.
32. On or about July 19, 2012, Defendant SWALLOW instructed a member of the Utah Attorney General’s Office IT Department to wipe his state-issued laptop and his desktop computers.Prior to the wipe, Defendant SWALLOW claimed that he transferred the data onto an external hard drive. The information on the external hard drive was then loaded onto his personal computer.
33. On or about July 20, 2012, Defendant SWALLOW instructed the Utah Attorney General’s Office IT department to replace a broken glass screen on his home computer. That replacement was done at the expense of the state of Utah. The cost of the glass screen was $196.85.
34. In or about November 2012, during a flight from Phoenix to Salt Lake City, Defendant SWALLOW lost, according to him, the external hard drive.
35. In the fall of 2012, Defendant SWALLOW, according to him, returned his scell phone to his carrier, Verizon, and purchased a refurbished cell phone.
36. According to Defendant SWALLOW, in or around December 2012, while Rawle was dying of cancer, Defendant SWALLOW provided notes to Rawle’s attorney. That attorney drafted the “Declaration of Richard Rawle.” That declaration states that it was done for the purpose of preserving Rawle’s testimony for “anyone who would be interested at some point, including the court.” The declaration was executed by Rawle on December 5, 2012. On December 8, 2012, Rawle died.
37. In January 2013, according to Defendant SWALLOW, Defendant SWALLOW’s personal home computer crashed. In the same month, the Utah Attorney General’s Office issued Defendant SWALLOW a new iPad, iPhone, and MacBook Pro laptop computer. Defendant SWALLOW claimed that he lost a large volume of his work e-mail from the migration of the e-mail system to Google. In fact, and contrary to what Defendant SWALLOW claimed, Defendant SWALLOW personally deleted all the e-mail and no e-mail was lost due to Google email migration.
38. In February 2013, according to Defendant SWALLOW, Defendant SWALLOW lost his campaign iPad whilehe was at the National Association of Attorney Generals [conference] in Washington, D.C.
39. In October 2013, Defendant SWALLOW’s assistant attempted to retrieve Defendant SWALLOW’s electronic calendar. The assistant noticed that the appointments had been deleted from Defendant SWALLOW’s 2009, 2010, and 2011 calendars. The assistant did not make those deletions.
40. Further investigation revealed that in 2012, Defendant SWALLOW retroactively created his day planner entries for the calendar years 2010 and 2011, to reflect his supposed work on the Chaparral cement project.
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The above excerpt stands as just one part of the collected criminal allegations against Swallow. The complaint against prior Utah AG traces much of the same territory and references many of the same events, except instead of a houseboat excursion to Lake Powell, it includes details of Shurtleff using Johnson’s private jet. Both Swallow and Shurtleff face up to 30 years in prison if convicted on all counts.