SALT LAKE CITY — As recently as October, John Swallow, then weeks away from being elected Utah’s attorney general, was willing to be deposed by Jeremy Johnson in the St. George businessman’s court battle involving his online marketing company, iWorks.
Two and a half years prior, Swallow, then chief deputy in the attorney general's office, appears to be pitching joint ventures involving himself, iWorks and others, including a payday loan marketing plan and a Cash for Gold project.
Emails supporting these claims are included in documents filed Thursday in the federal court in Nevada by Johnson and his fellow defendants, who are acting as their own attorneys in ongoing civil proceedings against iWorks.
Those emails flesh out a relationship between Johnson and Swallow, and are cited in making the case to the court that Utah’s attorney general is a relevant witness who believed in Johnson’s company and who has intimate knowledge of the very business practices at the center of the FTC lawsuit.
[Swallow] became exceptionally well-versed in the dealings and details of the iWorks’ operations and the company’s fervent efforts to not just be in compliance with the law, but be leaders in the online marketing industry,” the filing states.
If Johnson can make his case of a relevant relationship that compels a judge to allow Swallow to be deposed, it could have impact not only on the civil case, but also on the investigations into the Utah Attorney General’s Office and impact the criminal allegations against Johnson.
A February 2010 email from Swallow to Johnson praises his efforts in helping victims of the Haiti earthquake, then raises the subject of business dealings with iWorks and inquires about the status of what he refers to as the payday project.
The email attributed to Swallow states: “I have not heard much from Aaron on the payday project and I hear that the Cash for Gold opportunity is getting close. I have heard from the Check City people that they have been working with your team
. in case things are getting warped at all, have your guys call me.”
Rod Snow, attorney for Swallow, said Thursday Swallow was not seeking to profit from any deals with iWorks and maintains that in the case of both the payday project and the Cash for Gold opportunity he was simply connecting his former boss, Check City owner Richard Rawle with iWorks' online marketing operation.
“It never materialized. He did not intend to make money or be part of it,” Snow said of Swallow.
The relationship between Swallow and Johnson publicly imploded in January 2013, when it was revealed that Swallow may have played a role in helping Johnson try to solve his problems with an FTC probe by connecting him with people who might be able to enlist the big bat of Nevada Sen. Harry Reid for a price.
The FTC has since sued Johnson, his iWorks company and related entities in the Nevada Civil Court, and a criminal case against Johnson and four former iWorks employees is running concurrently in Utah.
As revealed in January, Johnson and an associate paid an initial $250,000 in October 2010 to Check City's Rawle, with the hope of enlisting Reid’s help. Johnson maintains Swallow negotiated the amount, the total of which was to be $600,000.
Swallow has denied any role in negotiating the finances of the deal, and maintains he simply helped connect Johnson to people he believed could help lobby the FTC on his behalf.
In the government’s civil court filing dated May 13, prosecutors take issue with Johnson’s subpoena of the attorney general, stating Swallow is “entirely irrelevant” to the civil case. The filing claims Johnson and his co-defendants are trying to gain advantage in the criminal defense by seeking to interview Swallow.
By law, the defense may depose, or cross-examine witnesses in civil litigation prior to trial. In criminal cases, however, defendants are entitled only to statements or interview transcripts provided by the government prior to a witness taking the stand.
Seeking a deposition
Thursday’s filing sets the stage for a Monday hearing in the Nevada Civil Court before Judge Miranda Du, who will hear arguments based on an emergency motion to stop discovery filed by the government April 15th. The government motion asks the court to halt depositions, except as it relates to ongoing seizure of defendants’ assets, until after the criminal proceedings in Utah have played out.
If Du decides to rule during the hearing and grant the government’s motion to stay discovery, Swallow, and all other witnesses Johnson and his co-defendants hope to depose, will be off limits and the civil case will effectively be indefinitely halted.
In the April 15th emergency motion, the government argues that allowing depositions to go forward “
would wreak havoc with the government’s criminal case. ... The public interest in protecting sensitive information gathered during the ongoing criminal investigation and prosecution outweighs any prejudice that a stay of discovery might impose on the civil parties.”
Utah attorney Karra Porter disagrees.
“It’s hard to shock a lawyer but this comes really close,” she says.
Porter has taken on the iWorks defense in the civil case. Her firm Christensen & Jensen, PC has defended several high-profile cases and is representing iWorks and its related entities on a partial contingency basis, as the company’s assets are frozen.
She does not represent Johnson individually, but her firm filed a separate response to the government’s motion on behalf of iWorks.
“How does merely questioning a witness with lawyers present and a court accessible by telephone interfere with anything?” Porter asks in a May 2nd filing.
From her Salt Lake office, she declined to discuss the criminal case but said halting the civil proceedings now would put her clients at a significant disadvantage. The government has already done the bulk of their discovery, she maintains, while the defendants were just getting started.
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“There was apparently no concern when it was the FTC taking depositions
it’s only when we start taking depositions, ‘Oh, now there’s a problem, now we need to shut it down’,” she said.
"Due process means a fair and timely day in court. ... We're anxious to show our guys are not bad guys. A lot of what people are hearing just isn't true," she said.
Neither the FTC nor the U.S. Attorney’s office of Nevada would comment on the specific case.