Utah Stamp

Utah Corruption Investigation Targets John Swallow, Looks at Reid, Lee Online Poker Links

utah-stampAn expanding corruption investigation into the activities of resigned former Utah Attorney General John Swallow has confirmed its investigators’ intent to dig into related alleged online poker links to US Senators Hary Reid (D-NV) and Mike Lee (R-Utah), despite refusals by the US Department of Justice to get involved in the matter.

Former AG Swallow was the subject of a 206-page special investigation report authorized by the Utah House of Representatives which was released on Tuesday.  According to the report, Swallow participated in eight different criminal activities (most on multiple occasions), and essentially hung a “For Sale” sign on the door of the Utah AG’s office.

The eight offenses listed in the report, for which Swallow may well face criminal charges, include:

  • Bribery
  • Obstruction of justice
  • Official misconduct
  • Theft of services
  • Evidence tampering
  • Witness tampering
  • Engaging in a pattern of unlawful activity
  • Violating the Utah Government Records Access and Management Act

The report has emanated from the sweeping accusations and secret taped recording of a clandestine meeting between Swallow and former “Black Friday” SunFirst Bank online poker processor Jeremy Johnson.  The Johnson / Swallow ties to online poker have been explored in numerous reports here at FlushDraw.  Important features here include but are not limited to the following:

Swallow Resignation, Data Destruction Allegations

Jeremy Johnson – Harry Reid Bribe Allegations

Salt Lake Tribune Examines Swallow / Online Poker Links

PPA Linked to Full Tilt / PokerStars / SunFirst Processing (Part 1 of 5-part series)

Banking Compliance Officer’s Tale re: Poker Processing

Chad Elie’s Deposition re: Jeremy Johnson Asset Hiding (Part 1 of 2)

The saga shows no sign of winding down.  The latest news centers on the allegations made by Johnson, including the secretly recorded hour-long conversation between he and Swallow made in 2012 at am Orem, UT donut shop.  Johnson enjoyed exceptional access to both Swallow and his predecessor, Mark Shurtleff, who were both, prior to assuming Utah’s top legal post, attorneys with strong connections to Utah’s often controversial online-marketing and payday-loan industries, in which Johnson was a major player.  Both Swallow and Shurtleff received personal largess from Johnson as well, including private jet rides and access (at least in Swallow’s case) to Johnson’s Lake Powell luxury houseboat.

Johnson’s related role in the SunFirst poker processing also figures in to the latest developments.  Johnson played a primary role in orchestrating the SunFirst Bank (St. George, UT) processing operation which was closed by FDIC order in late 2010.  Johnson and associates are alleged to have pocketed more than $100 million through the processing, which was orchestrated as an offshoot of Johnson’s massive iWorks e-marketing empire.

Johnson remains indicted on 86 felony counts in a major Federal Trade Commission crackdown, and escaped being the 12th Black Friday co-defendant only because of the ongoing FTC case into the same sphere of activities.  Johnson and his accountants are alleged to have freely commingled funds between the various online-marketing and poker-processing operations, which is why he was calved off from the separate DOJ Black Friday family of charges.

The ties to US Senators Reid and Lee and the failure of the US Department of Justice to formally join the expanding investigations are the second half of the latest developments.  Reid’s direct ties to online poker, as noted in the links shared above, date to 2010.

Major news features released on Friday by ABC News and the Washington Times rehash some of the allegations made by Johnson against Reid, who — in what has been stated as an unexpected “reversal” of previous opinion — agreed to support an online-poker measure in 2010.  That announcement was made at a 2010 Golden Nugget political funder at which several poker-related officials were present, including payment processors Johnson and Chad Elie, Full Tilt’s Howard Lederer and others.

Your author has completely transcribed the 12,000-word Johnson/Swallow conversation, from its original SLT-published audio file, but has not published it yet due to length.  (Author’s note: One other transcription available on the Web was done by someone unfamiliar with both poker lingo and the names of people involved, and contains a handful of prominent errors.)

The relevant passage from the transcript, which also includes mention of Full Tilt exec Ray Bitar and PPA executive director John Pappas:

Johnson: We had a [] meeting with Reid where he said … this is a private meeting. It was Reid, it was me, it was … remember John Pappas? Remember him, Poker Players Alliance guy? Remember him?

Swallow: Oh, yeah.

Johnson: John Pappas and Ray Bitar, the owner of Full Tilt Poker.

Swallow: What’s that?

Johnson: Owner of Full Tilt Poker.

Swallow: Yeah.

Johnson: [And], John, Senator Reid … this is when he … it was a tight election with this lady down there.

Swallow: Yeah.

Johnson: Real tight.

Swallow: Yeah. Sharron Angle.

Johnson: And he said, “Look, I’ve polled my constituents and they don’t like online poker, bottom line. It’s bad for …”

Swallow: Yeah.

Johnson: “It’s bad for jobs here in Las Vegas.  But I’m going to back what you guys are doing here, I’m going to introduce a bill for you.” And that was basically it, right? Well, I kid you not. A week later … oh, no, no. Right after that. So Reid leaves with his little entourage. Ray Bitar’s buddy that flew over here with him from Ireland, I said, “How in the hell did you guys get him to do that?” And he says, “Let’s just say he got a little something in his retirement fund.” And I was like, “Okay, that’s how it is.” Well, I’m not kidding you. A week later they have me, and they’re specific, “We want a bank check drawn on the bank’s general account.”

Swallow: Wow.

Johnson: For a million dollars to some company, some media thing or something. A cashier’s check. “This money had better not get traced back to our account under any circumstances.” So what do I do? Of course, go into the bank, tell them I need to pull this out of the bank’s general reserve which is held in their account. I don’t tell the bank what I’m doing. And I didn’t know what I was doing. I was like I don’t know, you know. I mean, I suspected obviously.  So I, I believe … this is my belief. I believe Reid genuinely is on the take. I believe he’s getting money for deals all over hell because he’s got so damn much influence, and I believe they’re onto him. And I think in the grand scheme of things you’re a little nugget or a little piece in the puzzle, but …

Swallow: I hope so. I hope so. I hope I’m not the big fish or anything.

Johnson: I mean, that’s the only thing I can think. Why would [] Washington, DC have some person to investigate you. It seems to me like it would be an internal thing for the State of Utah to do it. If there was really some concern.

Swallow: Yeah. Well, I’ll check with Richard and see.

Johnson: Check with Richard. Check on this RMR thing. I don’t want to go in there and say … I want to tell them … I don’t know. Do I say hey, I didn’t give him any idea if it’s RMR for this purpose.

Most of the poker figures cited by Johnson have vehemently denied Johnson’s version of events, with the notable exception of Chad Elie, who still had his on falling out with Johnson over other matters.  However, the conduct exhibited by Swallow as shown in the secret tape and as detailed elsewhere, as in this week’s extensive investigative report, indicates that at least some of Johnson’s claims have merit; Johnson figures prominently in the investigative report’s findings.

Two additional problems facing Johnson’s potential revelations also exist.  First, he has been unable to (or has deliberately chosen not to) remember the name of the corporate entity associated with Reid to whom he allegedly sent the million-dollar check.  Johnson also remains under a gag order with respect to his case.  Second, the “RMR” businessman mentioned in the transcript, Richard M. Rawle, died in December of 2012 and is unavailable for subpoena in the matter.

The matter of issuing subpoenas in the investigation is also curious.  This week’s mainstream reports center on the fact that the two Utah prosecutors leading the latest possible cases against Swallow, were rebuffed by the Justice Department, leaving the FBI in the odd position of being able to only allow individual FBI agents to assist in the case, but with no effort being made toward any federal prosecution.

The two Utah county-level prosecutors, Democrat Sim Gill and Republican Troy Rawlings, have openly questioned the DOJ’s refusal to explore the allegations.  As Sill stated,  “Could there be an innocent explanation for [the evidence]? Possibly. Could there be a more sinister explanation for it? That’s also possible.  So I think the — those are the things that we have to try to figure out.”

Though blown up a bit by the mainstream reports, the Utah efforts remain focused primarily on Swallow, with the alleged connections to Reid and Lee being a secondary concern.  In speaking to the Washington Times, Rawlings denied that he and Gill had launched a formal investigation into the two US Senators.

“We’re sweeping up that information and those items of evidence,” said Rawlings. “I think it would be unfair to say we are currently investigating Sens. Reid and Lee at this time. But we are not going to ignore the scraps of evidence coming in about them.  Do we plan on formally turning attention to all of the scraps picked up about them? We do plan on that.”

That refers both to the online poker links to Reid. whose original bill was soon dropped, but who then co-authored a second effort (the infamous Reid-Kyl measure, which also failed), and to Utah Sen. Lee, whose ties to the online-poker story are more tenuous.  Lee’s involvement stems from a curious real-estate sale made when he took office and move to Washington D.C., as well as his possible involvement with Reid.  Reid, a liberal Nevada pol, oddly helped pave the way for Utah Republican Dave Barlow to be appointed as the US federal prosecutor based in Salt Lake City.

That circle is completed by the fact that Barlow was formerly Sen. Lee’s chief legal counsel.  Of related note is that the entire federal prosecutor’s office in Utah was then forced to recuse itself from the investigation in to Swallow because of the obvious potential conflict of interest.

One other poker figure appears in the latest news updates, that being prominent gaming attorney A. Jeff Ifrah.  Ifrah also attended the 2010 Reid conference, and worked as an unofficial legal representative at various times of both Full Tilt’s and PokerStars’ US-based interests.  Ifrah was also copied in via e-mail to the separate efforts of both Jeremy Johnson and the PPA’s Pappas to discuss with former Utah AG Swallow (then the assistant AG to Shurtleff) the legalities of Utah-based online poker processing.

Ifrah scoffed at the latest allegations in the ABC News report.  Stated Ifrah, “Let me tell you something about gamblers, they don’t give their money to anybody and I highly doubt they would have given it to Reid. When they have cash to spend they gamble with it period.”

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