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Names of Sen. Harry Reid, Sen. Mike Lee pop up in probe

Published March 14, 2014 11:31 am

Swallow investigation • Salt Lake and Davis county prosecutors find evidence of misconduct against the Senate majority leader, Utah senator.
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County prosecutors investigating former Attorneys General John Swallow and Mark Shurtleff say their probe has uncovered alleged misconduct by Senate Majority Leader Harry Reid and Sen. Mike Lee that they believe merits federal scrutiny.

Even as their own probe proceeds, Salt Lake County Attorney Sim Gill, a Democrat, and Davis County Attorney Troy Rawlings, a Republican, say possible wrongdoing by the powerful senators goes beyond their ability to investigate, much less prosecute.

"We cannot fully do justice to the things we're coming across," Gill said Thursday. "It clearly raises concerns that can only be addressed — either to confirm [the allegations] or to put them to rest — by other entities."

Allegations against Reid may center on his financial and political relationship with online poker companies.

As for Lee, a House Special Investigative Committee report released Wednesday tied him and his campaign fundraising efforts to Swallow, who, according to the report, helped create a network of political committees meant to launder and hide hundreds of thousands of dollars of campaign contributions from the payday loan industry in which Swallow once worked.

Neither Reid nor Lee responded to calls late Thursday.

The U.S. Department of Justice — the type of other entity Gill has suggested should examine the allegations — closed its investigation into alleged political corruption in Utah seven months ago without filing charges.

In so doing, it may have prematurely shut the door on numerous investigations that Utah officials and former federal prosecutors say deserve a second look.

Chief among them are the allegations against Lee and Reid, as well as the House investigative committee's conclusion that Swallow violated numerous federal laws in cultivating — and then attempting to cover up — a "pay to play" relationship with wealthy, well-connected friends and supporters.

On Thursday, Justice Department spokesman Peter Carr declined to comment on the government's decision to close its investigation or to say whether the department may re-examine allegations.

"I think there's a certain level of frustration," Gill said of federal investigators' decision not to pursue the case. "We wish we could do it all, but we can't."

Rawlings also criticized the decision to pull out, saying federal investigators didn't know enough at the time to understand the scope of corruption allegations.

"We're not even completely sure today why the DOJ ran away from it," Rawlings said. "Our investigative team does believe the Department of Justice walked out prematurely."

The team includes assistant county prosecutors, a state investigator and FBI agents from Utah and elsewhere. The FBI assisted the local prosecutors' investigation after the Department of Justice and U.S. Attorney's Office pulled out.

The senators • Embattled St. George businessman Jeremy Johnson went public in early 2013 with allegations that Swallow had helped broker a deal between Johnson and payday loan mogul Richard Rawle to involve Reid in an attempt to stall a federal investigation into I Works, Johnson's online marketing company.

Johnson alleged the intent was to use Rawle's connections to pass money to a Reid associate in order to enlist the Nevada Democrat's help, but Reid's office denied knowing anything about the deal and Swallow has said the attempt was merely to get lobbyists to work on Johnson's behalf.

Johnson said he had first encountered Reid at a 2010 fundraiser in Las Vegas sponsored by online poker interests at which Reid promised to introduce legislation to clarify laws on the legality of online poker. Johnson said he believed a $1 million check he drew from money that came from poker processing went to Reid, according to a transcript of a recording of the April 2012 meeting at the Krispy Kreme doughnut shop in Orem between Johnson and Swallow.

Johnson's I Works and a business associate paid Rawle $250,000 as part of their deal. Subsequent disclosures showed that $50,000 of that money went to a Las Vegas law firm with close ties to Reid.

Johnson also may have been involved in raising money for Lee's campaign, as facilitated by Swallow, according to the House report released this week.

In a February 2010 email recovered from Swallow's crashed hard drive, which the House investigative committee obtained this month, Swallow asked then-Attorney General Mark Shurtleff, "can i [sic] introduce Mike Lee to Jeremy Johnson?" Shurtleff responded, "Sure."

By June of that year, Johnson had apparently arranged for thousands of dollars of contributions to Lee's campaign. In an email that month, Swallow notified Johnson that checks to the Lee campaign from four of Johnson's associates — which the report said totaled $9,600 — had bounced. Swallow forwarded the exchange to the Lee campaign, a suggestion, the report said, that Swallow was coordinating his efforts with the candidate's campaign.

The report also revealed several new emails that showed Swallow's intimate involvement in helping to coordinate the raising of hundreds of thousands of so-called "dark money" — unreported funds, moved through a series of nonprofits to avoid having to report the donors, many of which were payday lenders.

Rawlings and Gill declined to comment about specific allegations involving Lee and Reid, but noted their offices will "not ignore" any alleged breaches of Utah law.

"We do not have sufficient evidence to convict any United States senator of any state crime and our focus to date has not been on that prong of allegations," Rawlings said. "The current voluminous investigation into various state officials, associates or surrogates is not yet complete. It is our hope that the DOJ will re-engage related to any potential federal aspects of this case."

Federal crimes • The House committee report also suggested federal prosecutors may have dropped the ball in deciding not to prosecute Swallow for violating several federal laws in performing favors for well-connected supporters, damaging the integrity of his office and compromising the judicial system.

Swallow then covered up his alleged misdeeds, investigators said, by fabricating, altering and destroying damning documents.

Former federal prosecutors add Swallow may have committed more federal crimes than those detailed in the report, including wire fraud, obstruction of justice, witness tampering, evidence tampering and document destruction.

Former Assistant U.S. Attorney Jim McConkie said Swallow may have committed acts that could amount to numerous federal charges of the same state crime.

"Every act of dishonesty or every time evidence was destroyed or deleted from a computer, that could be a charge," McConkie said. "The [federal government] really should open this case up again."

The same committee report alleged Swallow committed no fewer than eight state crimes — several of which he may have committed more than once.

"Typically if there's a state corruption violation, you can find a federal equivalent," said former federal prosecutor Brett Parkinson, who now works in private practice.

Ex-federal attorneys also asserted that a government-led investigation — and prosecution — would ultimately do more to restore the public trust than one spearheaded by state or county agencies.

"There's a different feeling to it in situations like this when it can be seen as a little incestuous in regards to the state doing an investigation headed by the Legislature then turning it over to a county prosecutor, all within the same system with similar ties and influence," Parkinson said. "When you have the federal government, there's a separation."

Gill and Rawlings have said they will pursue any violations of state law, but cannot hold individuals accountable for federal breaches.

Maintained innocence • Swallow has maintained his innocence of all wrongdoing throughout the course of the House committee's investigation and the county attorneys' investigation.

His lawyer, Rod Snow, has pointed to the Justice Department's refusal to prosecute the former top cop as proof his client committed no crimes.

In a letter to House investigators, Snow called their approach and allegations in the report "untrue" and "unfair."



Reporter Thomas Burr contributed to this report. —

The U.S. Justice Department investigation

This time line shows the involvement of the U.S. Attorney's Office for Utah and the Department of Justice in the investigation of former Utah Attorney General John Swallow, which began in earnest after St. George businessman Jeremy Johnson made allegations against Swallow in January 2013.


Jan. 25 • The U.S. Attorney's Office for Utah confirms it is investigating Swallow.

May 6 • The U.S. Attorney's Office announces it is recusing itself from the Swallow investigation, leaving the probe to the Public Integrity Section of the U.S. Justice Department.

Sept. 12 • The U.S. Justice Department says it won't prosecute Swallow.


March 13 • Two county prosecutors say they have uncovered evidence that may implicate U.S. Senate Majority Leader Harry Reid and Sen. Mike Lee of Utah in connection with the Swallow investigation. —

Possible federal legal violations

Wire fraud • Using a phone or electronic communication (email) to facilitate a scheme involving a conflict of interest, bribery, accepting kickbacks in exchange for favors

Obstruction of justice • Any effort to impede, delay or influence the "administration of justice" by the federal government

Witness tampering • Forbids any and all conduct intended to alter testimony, influence or intimidate witnesses, potential witnesses or "any person" involved in a case

Evidence tampering • Forbids any attempts to "illegitimately affect the presentation of evidence," including, but not limited to, altering documents, records and information

Document destruction • Knowingly changing, destroying, concealing or falsifying records, documents or any "tangible object" with the intent to block, alter or influence an investigation.