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New suit targets Shurtleff, Swallow and Bank of America

Published August 12, 2014 11:28 am

Courts • Accuser in scandal involving Shurtleff and Swallow says conspiracy harmed thousands of Utah homeowners in foreclosure dispute.
This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A key player in the scandal surrounding Mark Shurtleff and John Swallow is suing the former attorneys general, alleging they conspired with Bank of America to derail a major foreclosure lawsuit, harming thousands of Utahns who could have benefited from the case.

Darl McBride — who had previously been in the news because of a recorded meeting in which Shurtleff offered to get him $2 million if he would stop his online criticism of a developer — and his wife, Andrea, filed the lawsuit last week in 3rd District Court.

The McBrides' suit, drawing on criminal charges leveled last month against Shurtleff and Swallow, alleges Shurtleff dismissed a lawsuit challenging Bank of America's foreclosure practices in exchange for a job with a Washington, D.C., lobbying firm that had represented the financial giant.

In his final days as attorney general, Shurtleff overrode his office's own lawyers, agreeing to dismiss the federal suit filed against Bank of America by Timothy and Jennifer Bell.

"Shurtleff's employment arrangement," the McBrides allege, "was an illegal and fraudulent quid pro quo payment — a bribe — for Shurtleff's execution of the [lawsuit] dismissal and reversal of the Utah attorney general's official position against the foreclosure practices used by BofA throughout the state."

A Bank of America spokesman declined to comment Monday on the McBrides' lawsuit.

Attorneys for Shurtleff and Swallow did not respond to emailed requests for comment.

The Bells filed their lawsuit in 2011, challenging Bank of America's foreclosure practices. In July 2012, the attorney general's office joined the suit, arguing that the bank's method of foreclosure did, indeed, violate Utah law.

The next month, the Bells staged a fundraiser for Swallow's bid to succeed Shurtleff as attorney general. According to court documents filed last month — when Shurtleff and Swallow were arrested and charged with a combined 23 criminal counts — the Bell fundraiser cost more than $28,000, but Swallow's campaign directed the couple to report a donation of just $1,000.

Ten days after the fundraiser, Swallow, then Shurtleff's chief deputy, participated in settlement negotiations with Bank of America lobbyists. In late October, Shurtleff interviewed for a position with Troutman Sanders, a law firm that had represented the bank. The day of that interview, the Bells accepted a loan modification that reduced the amount they owed by more than $1 million and slashed their interest rate.

With the Bells' settlement, Shurtleff signed the motion dismissing the lawsuit Dec. 27, 2012. In doing so, Shurtleff scuttled what attorneys in his own office believed was the strongest case showing that the bank's ReconTrust had been illegally foreclosing on thousands of Utah homes. One estimate put the possible loss to homeowners at tens of millions of dollars.

Shurtleff subsequently landed a job with Troutman Sanders but resigned from the firm in May 2013, citing the grueling travel schedule and time away from his family.

The McBrides also were facing foreclosure by Bank of America. They defaulted on a loan at the bank's recommendation, according to the couple's lawsuit, so that they then could negotiate a modification, just as the Bells had done. But, the suit says, the bank refused to negotiate.

The McBrides' suit alleges that, by conspiring to dismiss the Bells' suit, Shurtleff, Swallow and Bank of America damaged homeowners, like himself, who could have benefited from that case.

The latest lawsuit seeks nearly $50 million in damages.

"Realistically, we're looking to Bank of America [for compensation]," said Kevin McBride, the attorney who filed the suit on behalf of his brother, Darl McBride. "Shurtleff and Swallow, whatever they deserve, they're going to get through the criminal system."

Kevin McBride said he would like to see up to 50 other Utah homeowners join the suit, but their cases have to be sufficiently similar.

Darl McBride had already been a part of another portion of the Shurtleff-Swallow scandal.

In 2009, McBride was trying to recoup money he believed he was owed by Mark Robbins, a Utah businessman and developer. A bench warrant had been issued for Robbins for failing to appear in a separate court hearing and had vanished, prompting McBride to create a website to try to find him.

Shortly after McBride launched the site, McBride said he began getting threatening phone calls and text messages from Tim Lawson, a Shurtleff confidant who now faces six felony counts.

In May 2009, McBride got a call from Shurtleff, arranging a meeting at Mimi's Cafe. During that encounter — which McBride recorded — Shurtleff offered to get McBride $2 million to cease his criticism of Robbins. The then-attorney general said he could get the money from another man, Marc Sessions Jenson.

Jenson, who had done business with Robbins, had been charged with securities violations. He was free at the time on a plea deal struck with the attorney general's office.

Shurtleff had a direct hand in negotiating that plea arrangement.

"I've kind of got a weird relationship [with Jenson] because he is still under a plea-in-abeyance program," Shurtleff said during the meeting. "We put him on a three-year plea-in-abeyance. He's got to pay the money back. If he does that, the charges will be dropped. He's got every motivation in the world."

The next month, Shurtleff flew to California and vacationed at Jenson's posh Newport Beach villa. Jenson says Shurtleff asked him for the money to pay McBride, but Jenson insisted he didn't have it.

McBride said he never heard from Shurtleff again.

The McBride and Jenson interactions with Shurtleff are included in the criminal charges against the former three-term attorney general.

Another lawsuit against Bank of America alleges its foreclosure practices violated Utah law. It is in federal court on appeal to the 10th U.S. Circuit Court of Appeals. The attorney in the case is Marcus Mumford, who is Jenson's lawyer.

Jenson, who alleges Shurtleff and Swallow shook him down for cash and favors, is now behind bars after failing to pay restitution in the securities case. He faces additional felony charges over a defunct plan to develop a ritzy resort near Beaver.

Shurtleff and Swallow, scheduled for an Aug. 18 hearing in 3rd District Court, have denied wrongdoing and vowed they would be cleared.

gehrke@sltrib.com

Twitter: @RobertGehrke