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Poker debate pops up in Johnson-Swallow meeting, emails
Scandal » Businessman wanted A.G. to sign off on legality of processing online game payments.
First Published Feb 14 2013 08:26 pm • Last Updated May 21 2013 11:32 pm

Indicted St. George businessman Jeremy Johnson is convinced it’s legal to process online-poker payments in gambling-averse Utah.

And he points to a 2010 email from John Swallow, the state’s future attorney general, as proof.

At a glance

The Swallow case

Indicted St. George businessman Jeremy Johnson has alleged that Utah’s new attorney general, John Swallow, helped broker payoffs to enlist the aid of Senate Majority Leader Harry Reid in derailing a Federal Trade Commission investigation of Johnson’s I Works business.

Swallow and Reid have vehemently denied the allegations. The U.S. Attorney’s Office is investigating.

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The issue arose at the pair’s now-famous — and secretly recorded — doughnut shop meeting in Orem last year during which Johnson is heard repeatedly asserting that Swallow had sent him an email signing off on the legality of such poker payments.

But Swallow, at the time Utah’s chief deputy attorney general, maintains he had done no such thing.

Swallow: I said it’s OK to process poker?

Johnson: Yeah.

Swallow: In Utah?

Johnson: Yes. And — and, John, it is — it is legal.

Swallow: No, it’s not.

The Krispy Kreme audio includes Johnson speculating that federal investigators may think that Johnson paid Swallow in return for a favorable opinion in 2010 on the legality of processing poker payments, a practice Johnson had begun months before the two exchanged a series of emails about the issue.

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Here’s what Swallow wrote July 5, 2010: "Jeremy, I am not aware of any such law in Utah to prohibit what you are doing. I’ll have one of our assistant attorneys general look into it tomorrow. Let’s talk tomorrow."

Attorney General’s Office spokesman Paul Murphy noted Thursday that Swallow "gave no definitive answer and believes that was the end of it."

The email was among those Johnson provided access to that highlight what happened in legal circles after his company started processing payments from online-poker players in late 2009.

That December, Johnson, through a company he formed with Las Vegas businessman Chad Elie, began processing those payments using SunFirst Bank of St. George.

Online-poker companies had sought a way to legally process payments after they were shut out of other banks and their funds seized by federal authorities for trying to hide the origin of the monies, a practice that violated federal laws.

So the companies tried a "transparent" approach, according to court documents, disclosing the origin of the payments and arguing that processing was legal for players who went online to compete against one another.

At the same time, the Poker Players Alliance launched an effort to persuade top legal officials — including Swallow’s boss, then-Utah Attorney General Mark Shurtleff — that poker is largely a game of skill, not chance, a distinction that would make online betting more likely to be legal, at least in certain states.

According to emails, prominent gaming attorney Jeff Ifrah wrote to Johnson on March 4, 2010, with a "draft opinion" attached.

"We would like you to deliver this to the Utah AG and request that he meet next week, T-W or Th, with me and the executive director of the Poker Players Alliance (John Pappas), who he already knows," says the email that was forwarded to Swallow.

About three weeks later, Shurtleff and Swallow met with Pappas and others.

"The purpose of the meeting, from the PPA’s perspective, was to get the attorney general to review the law and our analysis of the relevant case law and to consider issuing an opinion related to poker," Pappas wrote in an email.

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