AG John Swallow made mistakes in dealings with businessman, Utah GOP says

Published: Wednesday, Jan. 23 2013 12:45 p.m. MST

SALT LAKE CITY — The Utah Republican Party says Attorney General John Swallow made mistakes in his dealings with indicted businessman Jeremy Johnson and called on the state Legislature to "get serious" about ethics reform.

"We need to find out the facts. We won't know the findings from the investigation immediately, but it's clear that while some actions might not have been against the law, some, at a minimum, were mistakes for a state employee and a candidate for attorney general," said state GOP Chairman Thomas Wright.

Wright had been silent about the accusations that surfaced against Swallow, a Republican, nearly two weeks ago. He commended Swallow for asking the U.S. Attorney's Office to look into the allegations against him, saying it was the right thing to do.

"I hope other elected officials will learn from John's experience and make changes to avoid this kind of situation in the future," Wright said.

Specifically, he said "common sense" ethics reform should be applied to the state executive offices of governor, attorney general, treasurer and auditor.

Also, a Democratic-leaning advocacy group asked the Utah State Bar on Wednesday to investigate whether Swallow violated professional conduct rules in his dealings with Johnson.

Meantime, federal regulators turned up the heat on Johnson by seeking to charge his wife and parents for allegedly receiving millions of dollars in "ill-gotten gains," including a mansion and silver bars, from his Internet marketing company.

Johnson claims Swallow, while chief deputy attorney general, helped broker a deal to bribe Senate Majority Leader Harry Reid in an effort to thwart a Federal Trade Commission investigation into Johnson's company, iWorks.

Swallow has adamantly denied the accusation, saying all he did was introduce Johnson to a friend who had connections to federal lobbyists who might be able to help for a hefty fee.

The Alliance for a Better Utah says while others have focused on investigations of Swallow's alleged criminal activity, his explanation of his dealings with Johnson raise questions about his ethics and judgment.

"It hasn't been clear from anything reported in the press that the investigation requested by Mr. Swallow would look beyond the question of whether what has occurred might be a violation of the law," said David Irvine, a Better Utah board member and former Republican state legislator.

Based on Swallow's statements surrounding his activities, the complaint filed with the state bar suggestions he might have violated five sections of the rules of professional conduct.

Irvine, an attorney for Utahns for Ethical Government, said Swallow's activities cast doubt over whether the attorney general is able to impartially fulfill his constitutional responsibilities.

Billy Walker of the Utah State Bar Office of Professional Conduct said the association does not comment on complaints.

A spokesman for the attorney general's office said the complaint is a Democratic organization's desperate attempt to keep the story going.

"People are trying to use this for political or other reasons that have nothing to do with truth or justice," Paul Murphy said.

Murphy said it's clear from the information the attorney general's office provided last week that Swallow followed state law, campaign finance laws, the code of ethics and state policy.

"The thing that he did wrong, and the thing that he's admitted doing wrong, was that he was friends with someone who turned out not who he claimed to be," Murphy said.

Wright said he hopes elected officials will learn from Swallow's experience and make changes to avoid his situation in the future.

"As a citizen and a Republican, I would like to see lawmakers get serious about ethics reform in Utah," he said, adding those changes should be aimed at the state's four top executive offices.

Wright suggested full disclosure on all meetings for elected officials and their staffs; no private meetings; limits on campaign contributions; no gifts; a one-year cooling-off period for organizations that make a campaign donation before signing any state contract; and creation of an independent ethics commission.

The FTC alleges Johnson bilked consumers out of more than $275 million with deceptive "trial" memberships to bogus government grants and money-making schemes. Federal authorities shut down iWorks and seized all of Johnson's assets in 2011.

Johnson has refused to sign a settlement agreement with the FTC.

On Wednesday, the FTC proposed to amend its complaint to include Johnson's wife, Sharla, and his parents, Kerry and Barbara Johnson, and five companies authorities say they control. Authorities say the individuals and the companies received at least $22 million from iWorks, including a 20,000-square-foot St. George mansion, cash, and silver bars and coins.

In addition to the FTC civil complaint, Johnson was charged with fraud in criminal court in connection with iWorks. A plea agreement crumbled earlier this month when prosecutors balked at listing by name people, including Johnson's wife, parents and Swallow, he wanted protected from prosecution should he plead guilty to bank fraud and money laundering.

"This is their punishment to me and my family for not telling the judge I'm guilty of something that we all know I'm not guilty of," Johnson said Wednesday. "My parents have nothing to do with any of this."

Johnson said he assumes his wife and parents will now be arrested and charged with crimes. The FTC has already seized all of the assets listed in the new complaint, he said.

"The government's strategy is to make sure I don't get access to any money so I can't hire an attorney and, therefore, none of the facts in our case will ever be presented to a jury," he said.

After the plea agreement fell apart in court, federal prosecutors said they intend to file additional charges against Johnson. Prosecutors would not say whether anyone else would be indicted. The judge set a Feb. 8 deadline for any new charges.

E-mail: romboy@desnews.com

Twitter: dennisromboy

Get The Deseret News Everywhere

Subscribe

Mobile

RSS