Swallow campaign filed fake tax papers, new warrants show
Seven new search warrants in the investigation of former Utah Attorneys General John Swallow and Mark Shurtleff allege their well-connected campaign consultant filed bogus tax documents to hide the activities of a shadowy political organization.
The warrants, unsealed Thursday, demand records from Internet providers, cellphone companies and a consulting firm that provided services to Swallow's and Shurtleff's campaigns.
Information in the affidavits supporting the warrants add new details to evidence of impropriety already generated by multiple probes, which ultimately drove Swallow from office last month.
Investigators cite information from a confidential source who worked for Swallow's campaign consultant, Jason Powers, and Powers' company, Guidant Strategies.
The source revealed how Powers set up a nonprofit group, the Proper Role of Government Education Association (PRGEA), which does not require donors to be reported. That allowed Powers and Swallow to conceal contributions, mainly from payday lenders, that might be politically damaging.
Later, the source said, Powers and the source fabricated tax documents to hide how much the organization had raised and spent. The actual figures would have shown the organization had violated Internal Revenue Service rules about how much such nonprofits can legally pump into political activities.
Powers used money given to PRGEA entities to fund attack ads against Swallow's Republican rival, Sean Reyes, who lost in last year's GOP primary but was sworn in as attorney general Monday.
Ads also targeted then-Rep. Brad Daw, who fell short in his GOP primary as well. The Orem lawmaker had sponsored legislation opposed by payday lenders. Utah House investigators reported recently that PRGEA amassed more than $450,000, most of it from payday lenders.
Powers' attorney, Wally Bugden, said his client followed campaign laws in running his organizations.
"Mr. Powers and his entities have legally complied with all state and federal reporting obligations," Bugden said Thursday.
The confidential source also told investigators that Shurtleff tapped campaign funds to pay off $30,000 worth of personal credit card debt. In several instances, Shurtleff asked for more money to be transferred into his campaign account so he could use the funds for personal expenses, the source said.
Another Swallow campaign staffer, Seth Crossley, told investigators that Tim Bell, who was a plaintiff in a foreclosure lawsuit against Bank of America one in which the state was also a party threw a fundraiser in August 2012 to thank Swallow and the Utah attorney general's office for putting businessman Marc Sessions Jenson behind bars.
Bell had been an investor in Jenson's plans for a $3.5 billion Mount Holly ski and golf resort near Beaver and had recruited others to pour money into the now-defunct project as well.
In the final days of his third and last term as attorney general, Shurtleff unilaterally decided to settle the lawsuit against Bank of America. In an email, Shurtleff explained to another lawyer in the attorney general's office that the suit had become a problem for Swallow because of the Bell fundraiser and Bell's involvement in the Mount Holly fraud case.
The Swallow campaign later persuaded Bell to report that the fundraiser cost $1,000, even though the actual price tag, according to House investigators, topped $28,000.
House investigators said the abandoned lawsuit could have benefited as many as 5,000 Utahns who had been foreclosed upon by Bank of America.
Investigators also note that, immediately after Swallow won his 2012 election, Powers sent an email to campaign staffers, directing them to erase sensitive information from all campaign computers.
An affidavit also tells of harassing phone calls and texts from a Swallow friend and supporter to St. George businessman Jeremy Johnson.
Johnson faces an 86-count federal indictment alleging his I Works company defrauded customers out of nearly $300 million. Johnson has said Swallow helped with an arrangement in 2010 before the businessman had been criminally charged intended to help him avoid a federal investigation of I Works.
Swallow also met with one of Johnson's friends, Jason Peterson, in New York City just before his November 2012 election and two months before the Swallow scandal broke. Peterson told the FBI that Swallow, then a chief deputy attorney general, had warned him that he could help Johnson with his legal troubles only if he was attorney general.
Swallow also told Peterson that he was a friend of Brent Ward, the assistant U.S. attorney who was prosecuting Johnson's criminal case.
During the meeting, Peterson said, Swallow quoted scripture and appeared nervous and agitated.
The seven warrants, all signed Dec. 11 by 3rd District Judge Vernice Trease, were served to various Internet and phone providers for accounts used by Swallow, Powers, campaign staffers and Tim Lawson, a Shurtleff confidant who remains behind bars on felony charges of tax evasion, obstruction of justice and witness intimidation.
The warrants were requested by Scott Nesbitt, an investigator with the Utah Department of Public Safety, who is working with FBI agents and Salt Lake County District Attorney Sim Gill and Davis County Attorney Troy Rawlings in a long-running investigation into whether Swallow, Shurtleff and others broke state laws.
The warrants seek evidence of numerous crimes, including obstruction of justice, witness tampering and retaliation, soliciting and accepting bribes, evidence tampering, harassment and tax evasion.
Under Utah law, warrants are sealed for 20 days after they are signed by a judge. An earlier warrant for phone records relating to Lawson, Shurtleff and others was released two weeks ago.
The affidavits supporting the warrants contain much of the information covered by investigators for a Utah House committee created to examine Swallow, pointing to a close collaboration between the two entities.
Swallow, who stepped down Dec. 3 after nearly 11 months as attorney general, has maintained his innocence throughout the ordeal. Emails and phone calls to attorneys for Swallow and Shurtleff were not returned Thursday.
Tom Harvey contributed to this story.
A frank email exchange showed John Swallow's campaign staff likening Republican state delegates to animals and disparagingly refers to a transgender delegate as "that thing."
The email part of an affidavit supporting a request for a search warrant in the criminal investigation of Swallow, his predecessor, Mark Shurtleff, and others bears the subject line "Feedings" and notes the campaign was buying meals for about 80 delegates a day in the weeks leading up to the Utah Republican Convention.
It is common for candidates to buy meals for delegates who have tremendous clout in picking the party's nominees.
"Feedings? Is this like delegates are deer and John is a salt lick kind of thing?" campaign staffer Greg Powers wrote.
"I was thinking more goats and a tin can," replied campaign staffer Seth Crossley. "Not sure if that analogy actually happens outside of cartoons, though."
Another staffer, Renae Cowley, said she was "still waiting for a picture of the tranny!" She was referring to a transgender delegate who identifies as a woman.
Crossley said he "offered [to take] a picture of that thing" but she declined. Cowley said she "just said not an 'up the skirt' shot."