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John Swallow got campaign funds from allegedly fraudulent telemarketer

Published: Thursday, Jan. 17 2013 6:10 p.m. MST

Utah Attorney General John Swallow

Jeffrey D. Allred, Jeffrey D. Allred, Deseret News

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SALT LAKE CITY — Utah Attorney General John Swallow received campaign funds from a telemarketing company founded in Utah that the Federal Trade Commission has charged with bilking more than $200 million from consumers.

Federal regulators allege The Tax Club deceived customers into believing its services would help their Internet or home-based businesses succeed. The company sold products and services such as tax return preparation, business plans and credit development services, most of which the FTC says were boilerplate documents.

"They typically charged thousands of dollars per service, usually with a large initial fee and smaller monthly payments," according to the FTC. "They often convinced buyers to finance the charges if they had sufficient credit or savings and falsely claimed consumers would recoup the cost from earnings and tax deductions."

The Tax Club began in Utah in 2008 and expanded to comprise at least 12 entities doing business under a dozen names. It operated out the 60th floor of the Empire State Building in New York.

The company and its affiliates were generous donors to former Utah Attorney General Mark Shurtleff, giving at least $104,000 to his campaign fund since 2008, state financial disclosure reports show. They contributed at least $5,000 to Swallow last year.

Attorneys general in two states — Ohio and Wisconsin, though not in Utah — joined the FTC in filing the complaint. The FTC did, however, acknowledged the assistance of the Better Business Bureau of Utah in its investigation.

Swallow has been embroiled in controversy this week related to a St. George Internet marketing company that came under FTC scrutiny.

Jeremy Johnson claims Swallow helped broker a deal to bribe Senate Majority Leader Harry Reid to quash a 2010 FTC investigation into Johnson's company, iWorks. Reid said he has no knowledge of Johnson's case.

The FTC shut down iWorks and seized Johnson's assets in 2011. Federal prosecutors also charged Johnson with fraud.

Swallow maintains Johnson's allegations are false and defamatory.

Johnson contributed more than $200,000 to Shurtleff's campaign. He did not contribute to Swallow.

E-mail: romboy@desnews.com

Twitter: dennisromboy

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