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Senator Harry Reid denies Jeremy Johnson's allegations

Published January 14, 2013 12:33 pm

Politics • U.S. Attorney's Office mum on whether it's investigating Swallow.
This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Senate Majority Leader Harry Reid was never involved in an alleged effort to help derail a federal investigation into Utahn Jeremy Johnson's businesses, his office said Sunday, dismissing Johnson's claims that he paid money he believed was meant to bribe the Nevada Democrat.

"Senator Reid has no knowledge or involvement regarding Mr. Johnson's case," his spokeswoman, Kristen Orthman, said in a statement. "These unsubstantiated allegations implying Senator Reid's involvement are nothing more than innuendo and simply not true."

Reid's denial marks the first time that his office has responded to Johnson's accusations since the St. George businessman alleged that Utah's new attorney general, John Swallow, helped set up a $600,000 payment, intended to enlist Reid to thwart a Federal Trade Commission investigation into Johnson's I Works company.

Swallow has adamantly denied playing a role in any such arrangement and said he merely put Johnson in contact with Richard Rawle, the late owner of the Provo-based Check City payday-loan chain. Rawle agreed to hire lobbyists to weigh in with the FTC, Rawle said in an affidavit before his death.

Swallow released the affidavit Saturday after news reports broke of Johnson's allegations.

Robert Kelner, a Washington, D.C., attorney who specializes in government ethics, said it is unusual for such serious accusations to be leveled against a state's top law enforcement officer. Even if Swallow's version of the events is true, Kelner added, the circumstances could draw scrutiny.

"It would be quite unusual for a sitting law enforcement officer to be referring private parties to lobbyists or consultants in connection with another agency's law enforcement investigation," Kelner said. "So while these charges may be groundless, it would not be surprising if the Justice Department felt like they had to investigate the allegations."

Rawle's affidavit said he also paid Swallow for separate consulting work on a cement project in Nevada. The money was paid to P-Solutions, a company that Swallow registered in October 2010, while he was Utah's chief deputy attorney general.

Swallow removed himself as manager of the company on March 15, 2012, the same day he filed his candidate financial disclosure forms in the attorney general's race. As a result, P-Solutions is not reflected on those papers. He also did not report any payments from Rawle on those disclosures.

Johnson had planned to plead guilty Friday to bank fraud and money-laundering charges regarding his business practices. In exchange, prosecutors would recommend a 135-month prison sentence and agree not to prosecute family members and business associates. But the deal unraveled when prosecutors would not agree to Johnson's demands that Swallow be included on that list of people who would not be indicted for their ties to I Works.

On Sunday, the U.S. Attorney's Office denied there was ever any agreement not to prosecute Swallow.

"It has been reported that federal prosecutors informally agreed not to prosecute John Swallow. This assertion is completely untrue," the statement said. "This statement does not imply that there is or is not an investigation pending against Mr. Swallow."

Swallow was included, however, on a list submitted by Johnson and his attorney to prosecutors three months ago, according to copies of emails Johnson provided before the court hearing, and it is unclear why the deal proceeded with Swallow remaining on the list Friday, when prosecutors balked at making it part of Johnson's plea bargain.

The U.S. Attorney's Office did not elaborate on the apparent inconsistency, and Johnson's attorney, Nathan Crane, declined to comment.

Swallow, a Republican who was sworn in as Utah attorney general a week ago, has said that he never asked to be included on Johnson's list, and his attorneys had told Johnson that Swallow did not want to be on it.

On Saturday, Democrats called on U.S. Attorney General Eric Holder to appoint a special prosecutor to investigate Johnson's claims, arguing that a thorough, independent review would be the only way to ferret out the facts and restore Utahns' faith in their elected officials.

Johnson said Sunday that he wants the facts out, but did not indicate support for a special probe.

"I support the truth coming out," Johnson said through a spokeswoman.

Gov. Gary Herbert's deputy chief of staff, Ally Isom, said the governor would not weigh in on whether an investigation is warranted.

"All the governor knows is what he has read in the paper, and it would be irresponsible to arrive at conclusions based only on that alone," Isom said. "The fact is there is a current investigation of Mr. Johnson and federal agencies are aware of the allegations. This is an instance when facts should not be politicized and process should be followed."

Matthew Harakal, spokesman for Sen. Orrin Hatch, also declined to weigh in.

"Our office doesn't speculate on allegations," Harakal said, "and Senator Hatch shouldn't be the arbiter of whether or not an investigation should or should not take place."

Hatch met with Johnson, Swallow and then-Utah Attorney General Mark Shurtleff in 2010 to discuss the FTC probe into Johnson's businesses, according to Swallow and a 2010 email from Swallow to Johnson.

Provo's Daily Herald called Sunday for Swallow to resign.

gehrke@sltrib.com