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Payday lenders and the Harry Reid connection

Payday lenders donate $126K to Senate majority leader, who denies having links to Utah scandal.

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That contribution came amid Reid’s tough re-election campaign and just a month after Obama signed the Wall Street reform bill. It also coincided with Johnson’s attempts to escape unscathed from a federal probe into his company.

The FTC lawsuit accuses Johnson and I Works of collecting millions of dollars from tens of thousands of customers through unauthorized charges tied to online products. Johnson denies the accusations.

At a glance

The Swallow probe

Indicted St. George businessman Jeremy Johnson, who faces 86 criminal counts, has alleged that Utah 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 deny the allegations. The Justice Department is investigating.

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He turned to Swallow, then Shurtleff’s chief deputy, for help, and Swallow turned to Rawle. Before joining the attorney general’s office, Swallow was Provo-based Check City’s legal counsel and knew Rawle had federal connections.

Rawle was on the board of payday-loan trade group Community Financial Services Association of America and suggested he knew Reid associates who could help sway the FTC.

Swallow emailed Johnson on Sept. 29, 2010, saying Rawle was about to meet with his Reid contact. Swallow suggested Johnson ask for a meeting with Reid to see if they could get him to "encourage the FTC investigators to take a close look at I Works and … really understand their practices and try to resolve this matter equitably and in good faith, before litigation is started."

Deal them up » Johnson said he had heard Rawle brag about how Reid had helped him on payday-loan issues. Johnson also thought Reid might be receptive because of an interaction he said he had with Full Tilt Poker.

The online poker site had used Johnson to process its payments, an activity that resulted in a criminal probe. Full Tilt executives brought Johnson to a meeting with Reid seeking his support to make online poker legal in the U.S.

In a conversation Johnson secretly recorded with Swallow in an Orem doughnut shop last year, Johnson said those executives asked him to get a $1 million check for a company he never heard of with the intimation it would eventually get to Reid.

Johnson said the payoff led Reid to back online poker, which he suggested was not in Nevada casinos’ interest. Reid’s spokeswoman has called the claim "absurd," saying Johnson was clearly misinformed about the politics of poker.

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The Justice Department reinterpreted a law in 2011, saying it only prohibits online sports betting, which opened the possibility of full online casinos. The Nevada gaming industry wants Congress to block all games of chance online except poker, which it argues is a game of skill. Several online-poker companies have financial deals with casinos. Reid tried to legalize online poker in 2012, but not enough Republicans backed the effort.

Johnson eventually agreed to pay Rawle to get Reid’s support and, with the help of an associate, provided the first $250,000. The FTC sued Johnson several weeks after he made the initial payment.

Before Rawle died of cancer, he signed an affidavit saying the money was for lobbying and that he kept $50,000 as a fee — $23,500 of which he used to pay Swallow for his help on a proposed Nevada cement plant.

Rawle spent $100,000, split evenly between two lobbyists: Jay Brown, a close friend of Reid, and Tim Rupli, a longtime lobbyist for the payday-lending trade group.

The group gave Brown a similar contract worth $240,000 annually in 2011.

Reid spokeswoman Kristen Orthman has repeatedly stated that her boss was not involved: "The allegations of bribery by Mr. Johnson, a man with a background of fraud, deception and corruption, are absurd and utterly false."


Twitter: @mattcanham

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