Utah Stamp

Utah Corruption Investigation: Jeremy Johnson’s Two Separate Harry Reid Bribe Stories

utah-stampLast Wednesday’s release by a Utah House of Representatives-authorized investigation’s 206-page report into the alleged criminal activities of former Attorney General John Swallow contained, among its findings, considerable references to the activities of SunFirst bank payment processor Jeremy Johnson and the attempts of Johnson and others to secure legal protection within Utah for the poker operation.

The plan hatched between the poker sites’ executives and representatives, and Johnson and Chad Elie, the founder of processing entity Elite Debit, was to exploit Johnson’s exceptional political connections to then-AG Mark Shurtleff and Deputy AG Swallow (who succeeded Shurtleff to Utah’s top post) to create legal cover for SunFirst.  Among the investigation’s findings were information culled from a forensic recovery of hard drives belonging to Swallow that had been deleted or claimed as non-functional, while others of Swallow’s devices were claimed to be “lost”.  The forensic effort, summarized in the report, recovered numerous communications between Swallow and the online-poker interests.

We’ll examine some of those communications in our very next feature on the Utah events, but today’s focus is on Jeremy Johnson himself, and not one, but two separate bribery stories involving him, both allegedly linked to US Senate Majority Leader Harry Reid (D-NV).  Both bribery tales were mentioned in the Utah report.

The first of the stories is the bribery alleged by Johnson in which he claims to have directed a million dollars toward Reid associates in exchange for supporting an online-poker bill, but it’s oddly the second bribery story which is of increasing interest, both because of its prominent involvement of Swallow and its verification by Utah investigators.  That in turn means that at least some of Johnson’s bribery tales have now been independently confirmed by investigators, if not the Reid poker-bill one.

Johnson, for our newer readers, was mysteriously omitted from the “Black Friday” online-poker criminal charges levied against 11 other individual defendants, including three who remain at large and outside US jurisdiction.  Johnson wasn’t charged because he was already under civil indictment in a $275 million Federal Trade Commission action targeting Johnson’s massive iWorks online marketing empire, with a matching criminal case also being developed.  That separate criminal complaint was filed against Johnson in June of 2011, two months after Black Friday, and was expanded last year.

An excerpt from the infamous, secretly taped “Krispy Kreme” talk between Johnson and Swallow was reprinted in our first feature on the Utah investigation’s findings, published here at FlushDraw on Sunday.  However, we’ll examine the second Reid-connected bribery allegation this time out, to help flesh out the totality of Johnson’s cozy relationship with the Utah AG’s office, and allow readers a greater insight into how many of Johnson’s claims are true, and how many are examination.

This second bribery tale turns out to be true, even if money from that  attempt never reached Reid, as Johnson originally intended.

As recounted in the investigative committee’s findings, this second bribery attempt by Johnson aimed at Reid was part of an ongoing attempt by Johnson to obtain Congressional intervention into the FTC investigation into Johnson and his iWorks family of marketing companies.  That investigation was ongoing throughout 2010.  At some point early that year, Johnson learned of the investigation into iWorks’ alleged fraud (including massive unauthorized credit-card billings), and he and his attorneys spent month’s attempting to derail the FTC’s examination of his companies’ business practices.

The infamously taped Krispy Kreme meeting with AG Swallow looms large.  In that meeting, as the Utah report asserts, Johnson tried to scare and extort Swallow into contacting Richard M. Rawle, a payday-loan industry who was also Swallow’s largest, secret benefactor, to help refund $250,000 that Johnson and Johnson’s accountant, Scott Leavitt, sent to a new Rawle entity, RMR Consulting.  That money was intended to be redirected through several channels in an attempt to convince Reid to exert political influence to quell the FTC investigation, this after a separate attempt aiming to use Utah Sen. Orrin Hatch in the same manner also produced zero results.

Johnson asserted in the Krispy Kreme conversation that $20,000 of that money, per Rawle, went to the unnamed “Reid’s guy,” even though the attempt to secure Reid’s assistance failed; Johnson was indicted in the FTC lawsuit in December of 2010, only two months after the bribery attempt toward Reid was launched.

The Utah investigators were unable to determine the identity of the alleged Reid associate when they terminated their active investigation into Swallow last November, upon Swallow’s resignation, but as detailed in the report, they were able to conclude that some of the $250,000 put up by Johnson and Leavitt also went to Utah AG Swallow himself.

The Utah investigators constructed this timeline:

As noted, after the start of both projects, on October 14, 2010, Mr. Rawle established a new entity called RMR Consulting. Six days later, on October 20, 2010, Mr. Swallow established a new entity named P Solutions LLC. Mr. Johnson made his initial $50,000 payment to RMR Consulting on November 10. On November 24, 2010, an $8,500 check from RMR Consulting was deposited into the P Solutions bank account. Mr. Johnson made his second payment, of $200,000, to RMR Consulting in December 2010. Mr. Rawle issued a second check to P Solutions, for $15,000, on April 8, 2011. Together, Mr. Rawle’s two payments to P Solutions, and thus to Mr. Swallow, totaled $23,500.

From there, and in the wake of the scare tactics employed by Johnson against Swallow in their Krispy Kreme rendezvous, Swallow then tried to “unwind” the $23,500 paid to Swallow’s entity, P Solutions.  That consisted of Swallow returning the money to his pal Rawle (or at least creating a paper version thereof of said refund), then submitting faked invoices for consulting work Swallow had purportedly done for a business venture Rawle had planned in the same timeframe, a $100 million concrete-manufacturing facility to service the Las Vegas market.  The new paperwork trail showed Swallow being repaid through an apparently bogus consulting arrangement —  Swallow’s consulting billings were 94 hours at $250 per hour … the exact same $23,500 amount.

Swallow even went so far as to create fake calendar entries for when he was doing the consulting, but dropped them in otherwise blank days in the old history on his personal calendar.  Unfortunately, he didn’t go back and check that against the hours and days he also logged himself as doing state work, which created days when he supposedly worked as much as 24 hours of billable time between his state AG role and private consulting gig.

Of course it was all faked, designed to hide the real money flow.  The report summed it up as follows:

The Committee concludes that, taken together, these actions were intended to, and had the actual effect of, misleading the Committee, other investigators and the public, regarding the quantity and reliability of contemporaneous documentation purporting to corroborate Mr. Swallow’s contention that the $23,500 received by P Solutions from RMR Consulting had no connection to Jeremy Johnson or a purported plan to bribe Majority Leader Reid.

The infamous Krispy Kreme recording has Johnson and Swallow circling back to these various bribe attempts over and over again, with Swallow finally agreeing to attempt to get some of the money refunded by Richard Rawle (RMR) to Johnson and his accountant.  Interspersed with that were several other poker-related discussions, as the chat touched on various matters.  Some excerpts:

Johnson:  … I had talked to my attorney about this poker thing, and so he says the government thinks that this might be tied to the poker processing or something, you sending money to an official to get permission to process poker. Well, there’s no way that’s going to come out. No matter how hard they try, they’re not going to be able to make a case for that.

Swallow: For what? Poker processing?

Johnson: Right. That I paid you to send me an e-mail saying that it was okay.

Swallow: No.

Johnson: Because, number one, that payment was made a long time ago. Number two, the payment never went to you. You know what I’m saying?

Swallow: I do.

Johnson: It went to RMR. 

Swallow: Oh, yeah. Yeah, I know.

Johnson: It went to try and … Richard was going to get … Reid’s guy, was going to Reid to go in and …

Swallow: All … that was all designed to get a lobby group hired to take care, try to take care of your deal. So when … when I look at my involvement? Jeremy, when I look at my involvement, I go there’s … I could even be paid for something like that. 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 in it. The only thing I can’t do is to practice law.

Johnson: Why? You’re a lawyer, aren’t you?

Swallow: Yeah, but I …

Johnson: Oh. Because you work for the government.

Swallow: That’s what I’m saying. That’s all.  I don’t have anything to do with the federal government. I don’t … there’s nothing wrong with anything that I’ve done criminally. Now, politically, I go “Whoa.”

Later…:

Johnson: So there’s no way Richard’s going to give up?

Swallow: Well, 175? He has 20. I don’t know if 20 is true. He’s told me he’s given … he gave most of that money to the guy in Nevada and the guy back in Washington, two guys. So I go, “Okay, so other than the Richard issue, he’s in it for $175,000?” He goes, “Well, there’s not that much left, if there’s any left.” And then …

Johnson: I think Richard needs to go to those guys and say, “Look, this is going to end badly because there’s now an investigation about it.”

Swallow: Scott … does Scott [Johnson associate Scott Leavitt] really do anything less than 175? I mean (garble).

Johnson: I … let me tell you. Okay.

Swallow: I didn’t even know if I …

Johnson: He … he agreed to take 150. I put 25 in there because I’m broke as shit, too. So at the very worst case scenario I’m telling you 150, but it helps me a hell of a lot if it’s 175.

Swallow: All right.

Johnson: But I’m telling you I had, I had to …

Swallow: I would take anything.

Johnson: I know you would. I had to work very hard to even get him [to] take that.

A bit later:

Johnson: I’ll get those e-mails if you want.  Okay.  So what do I tell my fricking attorney now?

Swallow: What’s it going to do for you?

Johnson: Well, it’s not going to do anything for me. I mean, he says … [what] he’s telling me is, he says, “Dude, you got … you got an issue here where it’s like you’re … you’re bribing … you guys are trying to bribe a United States senator to help you get rid of charges,” he says. “So for you, Jeremy, what you need to be thinking about is getting immunity from that.”

Swallow: I don’t … I don’t know if that’s true. I think you may have a wrong idea. I don’t know what the arrangement is, but I think … I think that they have lobbyists that they pay on retainer.

Johnson: Well, if that’s where the money went, that will certainly help the case. But if didn’t, you know damn well it’s not going to come out good.

Swallow: Yeah. I’m not … but I’m not going to play with fire.

Johnson: Because I, I … I read … when I [gave] … I thought I gave all these to Powers [Swallow campaign manager Jason Powers].  I pulled off a couple of e-mails. I swear …

Swallow: Gave them to Powers?

Johnson: I thought I did.

Swallow: Okay.

Johnson: Call him if he has them.

Swallow: Yeah.

Johnson: If he has them, then I don’t want to give them to you again; but if he doesn’t, [I’ll] give you, I’ll print off what I can find and give you a copy, but I know there’s one in there from you to me saying about Senator Reid’s guy.

Swallow: Really?

Johnson: Yeah. Because I read it. I’m like, “Uhh, God.”

Later… :

Johnson: … And so what Richard is like, “Look, do you remember when Obama was running, he was saying he was gonna, you know, clamp down on the abusive payday lender practices?” I’m like, “Actually, I kind of do remember that.” He says, “Have you noticed nothing’s happened?”  He says, “You know why? Because [] the guy he listens to more than anyone is Reid. And so,” he says, “we have a connection with Reid and Reid got in Obama’s ear and got him to put that off for now,” and I …

Swallow: They have to do it legally through lobbyists.

Johnson: I understand. I’m not saying …

Swallow: Okay. I just want you to know …

Johnson: And … and he … he was telling me a situation where Reid asked for someone in the company to pay some guy 20 grand a month and the guy did … Well, what I didn’t tell you, and I didn’t tell Richard, is that I already knew Reid is on the take because I met him at the … with the poker companies. And so I don’t know how much of the details you know about this, but I’m going to tell you.  It’s good information to know.

[unrelated interruption]

Johnson: So after this meeting the poker guys had me write out … get a special check from a bank check so it doesn’t get traced from their account, and give it to some company that I’ve never heard of before, and we transferred half a billion dollars of their money. They never asked me to do anything like this except this one time. This is right after our meeting with Reid. So I transfer a million dollars to some weird company, one-time deal, that’s it.  And guess what happens the next week. Reid introduces a bill to make online poker legal. So to me everything Richard’s saying …

Swallow: Rings true?

Johnson: Makes sense. And you can go and verify that he actually did introduce that bill. …

It’s important to note that for all the realism of the above exchanges, Johnson himself has been caught in multiple lies of his own, and the attempt to manipulate Swallow is also obvious.  Johnson’s own extensive legal difficulties, along with extended legal and public-relations lobbying campaigns being conducted by his supporters, led for the committee to still deem him as an often unreliable witness despite being able to verify payments connected to the second bribery attempt.

The investigative committee, in the following footnote, also detailed how Johnson’s supporters conducted a “parallel effort” to manipulate the investigative effort against Swallow.  Johnson remains under a public gag order in his own case, and successfully delayed being forced to testify in the committee’s investigation into Swallow until that investigation was suspended last November.

Here’s how the report summarized Johnson’s non-participation and overall reliability:

The Committee also sought to interview Mr. Johnson about his allegations but his attorney said that Mr. Johnson’s ongoing legal entanglements presented an obstacle to such an interview. Despite the Committee’s efforts to assuage his counsel’s concerns, the Committee never obtained an interview of Mr. Johnson. At the same time, and apparently without the knowledge of Mr. Johnson’s attorney, Mr. Johnson’s supporters engaged in what the Committee believes was a parallel effort to manipulate the Committee’s investigation through selective and largely unfulfilled offers of cooperation.

One associate of Mr. Johnson approached the Committee and promised bombshell evidence, including audio tapes, mobile phone recordings, text messages, and emails involving Mr. Swallow. The Committee obtained certain materials from this Johnson associate but what was provided failed to live up to its billing by a wide margin.

The Committee came to believe that it was being intentionally manipulated by Johnson’s associates in an effort to create a narrative of events that would assist Mr. Johnson’s defense of criminal and civil charges that have been brought against him by the federal government. The Committee therefore limited its efforts to seek cooperation from Mr. Johnson and his associates, and concluded that these witnesses and their allegations could not be relied upon absent independent corroboration. As noted below, prior to the termination of its investigation, the Committee was unable to independently corroborate certain allegations made by the Johnson team and therefore does not rely on those allegations here.

Which leaves the matter of greater importance to the poker world, the alleged bribe paid to Harry Reid in 2010 to support an online-poker bill, essentially uninvestigated.  For now it’s a matter of who is likeliest to be telling more of the truth than the others, with none of the people involved having a clean record to that regard.  Johnson was willing to throw a state attorney general under the bus and essentially admit to bribery by releasing the taped conversation — and Swallow willingly conceded the truth of many of the details of what Johnson claimed.  That’s hard to ignore, no matter what other tale-twisting and exaggerations might be happening.

An objective read implies that the Johnson tales have an internal level of consistency that belies assertions by other parties connected to the affair that his claims have been conjured up out of thin air.  In fact, the recent Utah report also includes a retelling and expansion of the SunFirst poker-processing history that is somewhat different than the conventional version told to date, including the relevation that the SunFirst operation was in legal jeopardy much sooner than anyone anticipated.  FlushDraw will return with a feature on those revelations in our next Utah-related feature.

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