Tuesday, July 22, 2014

Allegations of corruption land on Shurtleff, Swallow

By Dennis Romboy, Deseret News

Published: Tue, July 15 7:25 p.m. MDT

 Following his statement, former Utah Attorney General Mark Shurtleff rubs his head at the law offices of Snow, Christensen & Martineau in Salt Lake City Tuesday, July 15, 2014.

Following his statement, former Utah Attorney General Mark Shurtleff rubs his head at the law offices of Snow, Christensen & Martineau in Salt Lake City Tuesday, July 15, 2014.

(Scott G Winterton, Deseret News)

SALT LAKE CITY — Former Utah Attorneys General Mark Shurtleff and John Swallow apparently considered using a wealthy campaign donor's houseboat or airplane and jetting to a posh Southern California resort, on the dime of another rich businessman the office had prosecuted, part of doing business as public servants.

But criminal investigators say those activities and others were signs of public corruption that led Tuesday to 10 felony charges against Shurtleff and 11 felonies and two misdemeanors against Swallow.

The criminal charges stem from a nearly two-year investigation by Salt Lake County District Attorney Sim Gill and Davis County Attorney Troy Rawlings, along with the Utah Department of Public Safety and the FBI.

Gill called them "serious allegations," but he also described the 23 total counts as "minimal."

"We could have filed more, but we have chosen instead to file what we have," he said during a press conference at the FBI's Salt Lake headquarters.

Charges of that magnitude — Shurtleff and Swallow could spend as many as 15 years in prison on some counts if convicted — are unprecedented in Utah politics. Court documents describe a five-year trail of criminal behavior never before seen in the state's rather tame political scene.

"I think all of this is surprising to anyone you talk to," Gill said.

The two former attorneys general proclaimed their innocence and vowed to fight the charges rather than take plea deals. Gill would not speculate about the cases going to trial.

The charges

Utah's former top law enforcement officials, both Republicans, were charged in 3rd District Court with pattern of unlawful activity, a second-degree felony; and three counts of receiving or soliciting bribes by a public official, a third-degree felony.

In addition, Shurtleff was charged with two counts of illegally accepting gifts or loans, a second-degree felony; accepting employment that would impair judgment, a second-degree felony; witness tampering, a third-degree felony; evidence tampering, a third-degree felony and obstructing justice, a third-degree felony.

Swallow was also charged with accepting a gift or loan when prohibited, a second-degree felony; giving false or inconsistent statements, a second-degree felony; three counts of evidence tampering, a third-degree felony; misuse of public money, a third-degree felony; obstructing justice, a third-degree felony; falsifying or altering government records, a class B misdemeanor; and failing to disclose a conflict of interest, a class B misdemeanor.

Public safety and FBI agents arrested both men at their Sandy homes Tuesday morning and took them to the Salt Lake County Jail where they were booked, fingerprinted and had their mug shots taken. Bail was set at $250,000 each, but a judge ordered their releases on the condition they promise to appear in court.

At an afternoon news conference just hours after he left jail on crutches due to recent knee surgery, Shurtleff called the charges "completely false" and attributed them to "political sideshow antics" on the part of Gill, a Democrat.

Shurtleff berated Gill during most of the 20-minute meeting with reporters but declined to address the criminal charges, other than to say he didn't break any laws or do anything to misuse the public trust.

"I admit I'm not perfect. I never professed to be perfect. I, as all of us, made some mistakes in my time as attorney general. Probably, clearly errors in judgment," he said.

Swallow walked out of a jail shortly after noon. He told reporters gathered outside that it has been a very difficult time for him. But he looked forward to having his day in court.

"I absolutely maintain my innocence, and this is just a process. Thank goodness we have a Constitution. We are presumed innocent until we're proven guilty. And I look forward to my day in court to confront my accusers and to share my side of the story for really the first time," he said.

Attorney General Sean Reyes, a Republican whom Gov. Gary Herbert appointed to the post after Swallow resigned last December, called it a difficult day in the history of the office.

"Sadly, two men who served as leaders of our office have been charged with crimes alleged to have taken place during their administrations. I do not prejudge them and fully recognize that every defendant is entitled to the presumption of innocence. Neither do I defend or condone any of the alleged conduct," he said.

Reyes' Democratic opponent in the upcoming election, Charles Stormont, said the arrests disappointed and saddened him.

"A cloud continues to hang over the attorney general’s office. Fundamental structural reforms in the office are long overdue, yet nothing has been done to ensure these problems never happen again," said Stormont, who took leave as an assistant attorney general to run for the top job.

Building a case

Allegations of wrongdoing against Swallow surfaced in early January 2013, just a week into his term as attorney general. Shurtleff, who didn't seek re-election after 12 years in office, hired Swallow as his chief deputy in 2009 and groomed him as his heir apparent.

Indicted businessman Jeremy Johnson claimed Swallow helped arrange a $600,000 payment to enlist Senate Majority Leader Harry Reid in an effort to derail a Federal Trade Commission investigation into Johnson's Internet marketing enterprise, iWorks.

During the next 18 months, details of Swallow and Shurtleff's questionable activities trickled and sometimes cascaded out from various sources, including imprisoned businessman Marc Sessions Jenson.

The accusations spawned state and federal investigations and led the Utah House of Representatives to create a special investigative committee last summer.

The committee concluded after a four-month, $4 million investigation that Swallow "hung a veritable 'for sale' sign" on his office door. It also alleged that Swallow destroyed a voluminous amount of computer and cellphone data and falsified documents.

The lieutenant governor's office launched a probe that found Swallow violated financial disclosure laws in his 2012 campaign.

While the House probe focused on Swallow because he was the current officeholder, it also unearthed information about Shurtleff.

The U.S. Department of Justice Public Integrity Section also jumped in but last September declined to file criminal charges against Shurtleff or Swallow. Both men contend that decision should have been good enough for Gill and Rawlings.

Frustration with DOJ

Gill expressed frustration with what the Department of Justice "did or did not do" with the case, saying it delayed the investigation and failed to subpoena key witnesses.

"This case is not something we should be prosecuting as local prosecutors," he said.

Even though the DOJ ended its investigation, several local FBI agents stayed on the case, working with state and county investigators.

Mary Rook, FBI special agent-in-charge in Salt Lake City, said public corruption is one of the agency's top priorities. She said the FBI uses whatever avenues available in that pursuit, including cooperating with local law enforcement.

"Left unchecked, corruption can erode the public trust of the citizens in their government and undermine those institutions which exist to serve the public," she said.

Other players

The Utah Department of Public Safety became involved in May 2012 when members of the attorney general's office asked it to investigate Timothy Lawson, a Provo man who fancied himself Shurtleff's "fixer."

Lawson's activities appeared to point to a conflict of interest between Shurtleff and Jenson, whom the attorney general's office had prosecuted for selling unregistered securities. Jenson paid Lawson $120,000 for access to Shurtleff, according to court documents.

Lawson was the first person arrested in what Gill described as a pattern of unlawful activity involving Shurtleff and Swallow. Prosecutors charged Lawson in December with retaliating against witnesses, witness tampering, obstructing justice, bribery, falsifying tax information to hide income and failing to pay taxes.

Prosecutors allege Lawson used his friendship with Shurtleff to influence and intimidate with aggressive tactics, including in the Jenson case. He told one businessman that he was like "Porter Rockwell and that he took care of things" for Shurtleff, according to court documents. Porter Rockwell was known as LDS Church founder Joseph Smith's roughneck bodyguard.

Shurtleff personally arranged a plea deal for Jenson that was so lenient that a judge rejected it, the charges state. The judge accepted a second agreement that also allowed Jenson to avoid jail but imposed $4.1 million in restitution. Jenson failed to repay investors and is now serving a 10-year prison sentence.

Shurtleff and Swallow are accused of traveling to the lavish Pelican Hill Resort near Newport Beach, California, on Jenson's dime while he was on probation. Jenson claims they shook him down for money and favors.

Search warrants

To date, at least 15 search warrants have been unsealed in the 18-month probe, including three last month. The latest were served June 2 on the Sandy homes of Swallow and Shurtleff and the Salt Lake condominium of Renae Cowley, a former campaign staffer for the two Republicans who now works as a Salt Lake lobbyist.

The charges against Shurtleff and Swallow won't end the investigation. Gill said investigators will continue to follow leads, but he would not say if more arrests are coming.

"This has been a complex, nuanced, large investigation," he said.

Gill acknowledged the Utah House Special Investigative Committee for its role in the case. The chairman of that committee, Rep. Jim Dunnigan, R-Taylorsville, said lawmakers turned over everything they gathered to the criminal investigation.

"We did our part," he said.

Dunnigan praised the courage of House Speaker Becky Lockhart, R-Provo, who pushed for the investigation that focused on Swallow and could have led to an impeachment proceeding had he not resigned.

"We were taking a lot of spears and arrows from people saying we were on a witch hunt," Dunnigan said.

Jeremy Johnson

Swallow came to know Johnson while working as Shurtleff's lead fundraiser in 2008. Johnson gave more than $200,000 to the Shurtleff campaign.

In 2010, Johnson was pushing Swallow, then chief deputy attorney general, for a legal opinion from him and Shurtleff on the legality of banks processing online poker receipts. Johnson had an interest in SunFirst Bank in St. George.

At the same time, Swallow used Johnson's Lake Powell houseboat, flew on Johnson's private jet and stayed at properties he owned.

Shurtleff also is accused of using Johnson's private jet to fly to a fundraiser in California, and in another incident, using his plane to fly to New York to pick up actor Vincent D'Onofrio from the TV show "Law & Order," according to court documents. Pictures of Johnson and Shurtleff sitting together in Johnson's yellow Lamborghini are on the Internet, the affidavits state.

According to the charges, Swallow financially benefited from a fundraising effort with Timothy and Jennifer Bell, who were involved in a lawsuit with Bank of America. The Bells hosted a fundraiser for Swallow's 2012 attorney general campaign that cost $28,000 to put on but that he reported on campaign finance disclosures as a $15,000 in-kind donation and later a $1,000 donation, the charges state.

Johnson claims Swallow helped broker a deal to bribe Senate Majority Leader Harry Reid, D-Nev., as part of a plan to derail a federal investigation into Johnson's Internet marketing company.

Johnson and an associate paid Richard M. Rawle $250,000. He hired lobbyists, but the FTC filed a complaint against Johnson and his company before they could do much on Johnson's behalf.

Rawle also initially paid Swallow $23,500 for consulting work on a Nevada cement plant project in 2010 and 2011 out of that money. Swallow later sent the checks back and asked Rawle to pay him from a different account.

Paper trail

Investigators allege Swallow created invoices and day planner entries to reflect that work after meeting with Johnson. On Jan. 24, 2011, Swallow jotted down that he had done 12 hours of "cement work." On the same day, he put down 12 hours of work on his attorney general's office timecard, according to the House committee.

According to the charges, Shurtleff and Swallow told Internet marketer Jonathan Eborn that contributing to Shurtleff's election campaign would benefit him if he were investigated. Eborn, who owned Infusion Media, subsequently donated $30,000.

The charges also say Shurtleff benefited from the role he played in the state's litigation with Bank of America to obtain settlements for Utahns who had lost their homes in the mortgage crisis.

Shurtleff pulled the state out of the case as one of his last acts in office in December 2012 and then went to work for Troutman Sanders, an international law firm that holds Bank of America as a major client.

Gill said Shurtleff dropped the case while negotiating with Troutman Sanders for a job. Shurtleff quit the firm about six months later.

Contributing: Pat Reavy, Lisa Riley Roche

Email: romboy@deseretnews.com, Twitter: dennisromboy; DNewsPolitics

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1. let's roll
LEHI, UT,
July 15, 2014

I'm more than willing to give Mr. Shurtliff and Mr. Swallow the presumption of innocence until the legal process concludes.

By the same token, Mr. Shurtliff shouldn't expect me, or anyone else, to give any credence to his attempts to ascribe any political or untoward motivation to the charges until the legal process concludes.

2. BYUalum
South Jordan, UT,
July 15, 2014

I believe in the legal system. In the meantime, all those who live in glass houses should not throw stones!

3. patriot
Cedar Hills, UT,
July 15, 2014

I can't imagine facing 15 years in prison at their age and stage of life when they should be enjoying grandchildren and retirement. It is hard to know who is guilty or innocent and who is telling the truth when politics is involved. Where there is smoke there is at least some fire so I suspect these men will most likely be facing some sort of behind bar time.

4. marxist
Salt Lake City, UT,
July 16, 2014

Does anybody besides me see the humor in calling Utah "the best managed state" in the midst of this mess? Makes you wonder just how much filth there is, doesn't it?

Nothing is going to change until Utahns (especially LDS Utahns) decide that they will not face damnation if they vote for non-Republicans. Don't want to vote for a Democrat? There are other options.

5. JustGordon
Cottonwood Heights, UT,
July 16, 2014

I find it telling that the political corruption story in Utah of the 21st century has generated only two comments, neither of which express outrage that the chief law enforcement officers of this state are charged with numerous counts of breaking Utah law and ethics violations. By the way, the charges could end up resulting in sentences of up to 30 years, not 15.