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Indicted St. George businessman Jeremy Johnson illegally funneled tens of thousands of dollars to Sens. Harry Reid and Mike Lee as well as then-Utah Attorney General Mark Shurtleff, according to a new federal lawsuit.
In a complaint filed Friday in Salt Lake City's U.S. District Court, the Federal Election Commission accused Johnson of giving about $50,000 to Lee's 2010 campaign after John Swallow, Shurtleff's top aide and handpicked successor, advised him that the Republican Senate hopeful, if elected, could influence the selection of Utah's next U.S. attorney, who then could protect Johnson's business interests.
"Johnson has reported that Swallow said to him: '[I]t is important that we raise this money and make Mike Lee our guy,' " according to the complaint. " '[H]e is going to be choosing the next U.S. attorney and you gotta have him in your corner and you gotta have the U.S. attorney in your corner, especially while you are processing poker [payments] in this district.' "
At the time, federal law limited campaign contributions to $2,400 per person, per election. The FEC alleges that Johnson gave tens of thousands of dollars to friends and associates to make so-called "straw donations" as a way to dodge those caps.
There is no indication in the complaint that Lee, Shurtleff or Reid knew Johnson was making illegal donations to their campaigns.
"At no time during the 2010 campaign, was Senator Lee or anyone associated with the Lee campaign aware of any unlawful contributions to the Lee campaign," Boyd Matheson, Lee's chief of staff, said Friday. "The documents obtained by investigators confirm that the scheme was known only to individuals who may have been involved as stated in the report."
Shurtleff's attorney, Richard Van Wagoner, said that his client "relied on his professional campaign finance staff to accept only legal contributions, and he had no knowledge of prohibited donations, if any, to his Senate campaign."
"We know nothing about Mr. Johnson's latest legal problems with the Federal Election Commission," said Reid spokeswoman Kristen Orthman.
Swallow's lawyer could not be reached Friday evening.
The FEC complaint says Johnson enlisted straw donors to kick in $20,000 to the 2010 re-election push of Nevada's Reid, the Senate's Democratic leader. The aim, again, was to shield Johnson businesses, which then included a southern Utah operation that processed online-poker payments.
Johnson said Friday that the FEC complaint stems from interviews he gave investigators pursuing multiple criminal charges against Swallow and Shurtleff.
"For my cooperation, I was guaranteed immunity. In other words, the information I shared in those confidential meetings with the FBI and state agents, I was told, would not be used to hurt me in any way. For reasons yet to be explained to me, that very information is now being used against me by the Federal Election Commission," he said in an emailed statement. "I am stunned. I can't imagine anybody who wouldn't be outraged if they were in my shoes."
Davis County Attorney Troy Rawlings, who along with Salt Lake County District Attorney Sim Gill investigated Swallow and is now prosecuting Shurtleff, backed, to some extent, Johnson's version of events.
"There is more truth than fiction to Jeremy Johnson's statement," Rawlings wrote in an email late Friday. "In exchange for his significant cooperation, he is getting screwed by the United States government. I have demanded to know why and exactly who is behind this."
Swallow acted as a chief fundraiser for Shurtleff, a former three-term attorney general, when the latter was exploring a run in 2009 against incumbent Sen. Bob Bennett, R-Utah.
Shurtleff dropped out of the race. By the time he did so, however, Johnson already had contributed about $100,000 to his campaign through straw donors, the FEC complaint alleges.
Swallow, who resigned amid a corruption scandal after less than a year as Utah's attorney general, helped raise funds for Lee after Shurtleff quit the Senate contest.
Swallow now faces 13 felony counts and one misdemeanor after a sweeping investigation of allegations of bribery and corruption in the attorney general's office. Shurtleff is starting at five felony charges and two misdemeanors.
Several of these charges relate to gifts the former GOP officeholders received from Johnson. But none stems from the alleged straw donations.
Both Swallow and Shurtleff have said they are innocent.
In November 2009, Johnson and his partners began processing online-poker payments through now-defunct SunFirst Bank in St. George.
By 2010, Johnson faced a Federal Trade Commission investigation of his I Works online-marketing company. He eventually was indicted.
The FEC complaint says Swallow told Johnson that "Lee could then play a key role in the appointment of a United States attorney in Utah, who could protect Johnson's business interests from prosecution by other United States attorneys."
That is an apparent reference to the U.S. attorney for the Southern District of New York, who filed charges against some of those involved in the SunFirst poker processing. Johnson was not charged in that case, though a business partner and a bank officer were.
Also in 2010, Johnson tapped others as donors to send about $20,000 to the Reid campaign, according to the FEC. Johnson discussed the contribution with officials in the online-poker industry, including Full Tilt Poker head Ray Bitar. Bitar was charged in the New York poker case, and Full Tilt was named in a civil lawsuit seeking forfeiture of its assets.
Lee won election to the Senate, and his staff lawyer, David Barlow, became U.S. attorney for Utah in late 2011.
Barlow vigorously pursued criminal charges against Johnson, adding four of his co-workers as defendants in an 86-count indictment in March 2013. Barlow left the office to return to private practice in summer 2014.
Johnson said he met with investigators after Swallow had stepped down.
"I only did so because I was told that the FBI and state agents were also investigating why the U.S. attorney's office had previously cleared Swallow of any wrongdoing," Johnson said, "and the relationship between Swallow and [assistant] U.S. attorney Brent Ward, the prosecutor who filed criminal charges against me in 2011."
The FEC is asking the court to bar Johnson from future violations of campaign-finance laws and to fine him in amounts that could stretch to tens of thousands of dollars for each alleged offense. A complaint over the straw donations was filed with the FEC in June 2014, after the allegations appeared in a search warrant in the criminal probe of Swallow.
The commissioners voted in April that they believed Johnson likely violated the law through his straw donations. They voted this week to take action against Johnson, leading to Friday's civil suit.
Last August, the Lee campaign sent letters to 10 to 15 donors, asking them to verify that contributions came from their own funds. At the time, a campaign spokesman said that, if it was determined they did not, the checks would be returned.