The mailer says Swallow, as chief deputy attorney general, intervened in a contract on behalf of a company in which he held a personal financial stake a charge Powers also denies was investigated by the feds last year and "could potentially be indicted at any time."
No source is cited for the allegation, but Dimitri Moumoulidis, a Democrat in charge of Ute PAC, which sent the mailer to 30,000 likely Republican voters Wednesday, said he has been told the information by reliable sources.
"John Swallow is a bad fit for this state," said Moumoulidis, "and I think there are things we haven't been discussing about John Swallow that probably need to be discussed before he's anointed as the Republican Party nominee."
The flier, coming two weeks before Swallow's June 26 GOP primary against attorney Sean Reyes, raises the issue of a contract dispute involving Salt Lake County and California-based Worldwide Environmental Products, which sought to provide emissions-testing equipment to garages in the county.
Awarding the three-year, $12 million contract turned into a bitter fight. Worldwide alleged the bid was rigged, and the attorney general's office and, eventually, the FBI and U.S. attorney's office became involved, according to interviews and records obtained by The Salt Lake Tribune.
A grand jury was convened to hear testimony relating to the contract. Swallow, Assistant Attorney General Alan Bachman and Bachman's paralegal were subpoenaed to testify. But the case was apparently scrapped at the last minute; the grand jury did not convene.
The target of the investigation is unclear. The FBI and U.S. attorney's office would not comment.
Paul Murphy, spokesman for the Utah attorney general's office, said the federal authorities were investigating the contracting process.
"[Swallow and Bachman] were told they were not a subject, that they were looking at [the contract dispute], and they were being asked to testify on behalf of the FBI on what their interactions were with Worldwide," Murphy said Wednesday. "Swallow did not receive a target letter. He has a peripheral role on this, so this flier is so outrageous. It's an absolute lie."
Murphy also said Swallow has no stake in Worldwide.
Nate Sechrest, an attorney who represented Worldwide in the contract dispute, said he never understood what the FBI was investigating.
"I just have no idea," said Sechrest, who was also subpoenaed to testify. " ... I don't know that we'll ever actually know what happened."
In 2010, Worldwide, based in Brea, Calif., lost a bid to provide emissions equipment to garages in Salt Lake County. The company protested, arguing it was the only bidder whose equipment met state standards and alleged that two county councilmen Randy Horiuchi and Joe Hatch, who was on the bid-review team conspired to steer the contract to another company.
Horiuchi and Hatch say that allegation is absurd and that they never even discussed the contract. They never met with the FBI and were not subpoenaed.
Worldwide's protest was rejected. The company, through lobbyist Nancy Sechrest, Nate Sechrest's mother, repeatedly pushed for an inquiry, according to emails from Nancy Sechrest to Swallow.
Bachman, who specializes in contracting, contacted the county's attorneys, T.J. Tsakalos and Craig Anderson. Both said Bachman threatened the county with a criminal probe if Worldwide didn't get another hearing on its protest.
Bachman told The Tribune that there was a misunderstanding and that he made no such threat, pointing to an email after his call in which he stressed that the state may investigate, not that it would.
Salt Lake County District Attorney Sim Gill said it was "bad pool" for the attorney general's office to insert itself into a county bid. And, if there was proof of a crime, it needed to be investigated, instead of just demanding another hearing for Worldwide, said Gill, so he called the FBI.
"If there's corruption, we want to find it. We want an objective, transparent look at this," Gill said. "If you call here and make such accusations, then you know what? Be prepared. We'll pick up the phone [to the FBI] and say, 'Investigate us, investigate them, investigate everyone else, whoever is involved in this process.' "
The FBI investigated and, in April 2011, issued a series of subpoenas, ordering several individuals involved to appear before a grand jury. But the grand jury was called off for reasons that are unclear. Carlie Christensen, who was the acting U.S. attorney at the time, would not discuss the case. An FBI spokeswoman said agency policy prohibits confirming or denying the existence of any investigation.
Excerpt from the flier:
"It has come to our attention that John Swallow was the subject of an FBI and grand jury investigation recently. It involved an incident in which John Swallow was using government resources to try and force a $4 million contract with Salt Lake County and a company named Worldwide Environmental Products. The investigation found that John had a financial stake in this company and was having the county threatened with lawsuits so he could profit from it. John Swallow could potentially be indicted at any time."