Recording shows Swallow aide tried to keep lid on scandal

Even in early 2012, a secret deal that John Swallow arranged to help embattled businessman Jeremy Johnson stay out of trouble with federal regulators posed such a threat to Swallow's campaign for attorney general that his top strategist visited Johnson in St. George in an attempt to keep the deal under wraps, a newly obtained recording of the meeting shows.

The ticking time bomb stemmed from $250,000 that Johnson and business partner Scott Leavitt had paid to Swallow's former employer, payday-lending magnate Richard Rawle, to help Johnson's I Works derail a federal investigation of the business.

But little was apparently done on Johnson's behalf. The investigation had rolled on. The Federal Trade Commission had sued. And Leavitt, who had lost his home, wanted all or some of his money back.

During the meeting in Johnson's spacious house — which he surreptitiously taped, as he frequently did — campaign consultant Jason Powers tries to persuade Johnson to get Leavitt to accept a $20,000 payment from Rawle and not sue Swallow or Rawle before the November election.

"If Scott sues me, John and Richard, it's just going to drag John into something . … It's going to drag him into something that — it's just a bad time," Johnson says during the meeting."

"It's a very bad time," Powers replies, "which is why I'm here to talk to you."

Johnson agrees to try to prod Leavitt to stand down, although he tells Powers that Leavitt had already been offered the money and turned it down. Powers goes on to say that he doubts Johnson and Leavitt will get all their money back.

"I guess my point is, I think Richard is friends with John, but he's not $300,000 friends to make sure John gets elected," Powers says, suggesting it could be harmful if "this hits the news in any way."

"You understand the situation," Powers says. "The quieter we keep things for a while … "

The audio is the latest of numerous Johnson recordings to become public. He has been barred from talking to the news media after a federal judge slapped a gag order on all the parties in the businessman's criminal case. Johnson, Leavitt and three other associates face multiple felony counts for their business dealings.

The St. George meeting in February 2012 apparently was not the first between Powers and Johnson and came more than two months before the now-infamous encounter between Johnson and Swallow in an Orem Krispy Kreme doughnut shop.

Swallow's campaign succeeded in keeping the Johnson deal out of the headlines until a week after his inauguration in January 2013, when news of the deal broke.

That revelation set in motion a chain reaction that ultimately drove Swallow from office less than a year into his term and has been a focal point for probes by the Utah House and criminal prosecutors.

During his meeting with Powers, Johnson reveals that Swallow had already met with U.S. Attorney for Utah David Barlow on Johnson's behalf to discuss the government's case against I Works. Johnson says he may be able to persuade Leavitt not to sue Swallow in hopes the soon-to-be attorney general could be more help in the future.

"When I tell Scott, 'Don't go stir up a hornet's nest right now, because John may be able to help keep a bunch of indictments from happening and help us reason with the U.S. attorney,' [John] has some kind of relationship, I know. I'll say that. That might be the most effective thing," Johnson says.

"You say what you think you need to say," Powers responds. "From my perspective, I don't want to say John would use that influence. I can't say that. But you know how John feels about that."

A spokeswoman for the U.S. attorney's office in Utah could not comment due to the gag order.

In the course of the meeting, Johnson also recounts how Swallow helped arrange the deal between Johnson and Rawle.

Johnson says Rawle, who died in December 2012, touted his influence with Senate Majority Leader Harry Reid, D-Nev., and the payday-lending industry's ability to use those connections to stave off regulations.

"You remember when [President Barack] Obama was running for office, he said was gonna change all the payday loans so it's not abusive, and change the rates or something. Nothing ever happened because they have this really powerful group that's tied to Reid," Johnson says.

"There's this one guy, this company pays one guy $20,000 a month because Reid said so. But Reid's the guy who has the power to get this done, so we bought into the whole deal.""

Johnson says he got Leavitt to go along and Leavitt took a loan on his home.

"That's why he's bent at John, because I said, 'Look, the guy in the attorney general's office is saying this is what it's going to take to get this done. Let's just do it and be done with this,'" Johnson says.

Johnson and Leavitt paid Rawle $250,000, part of which was given to a Nevada attorney and a Washington lobbyist, although it appears they did little on Johnson's behalf. Rawle kept part of the fee.

Some of the money — $23,500 — was paid to Swallow for consulting work he did for Rawle on a Nevada cement project. Swallow said he later returned that money when he learned it came from Johnson and was paid from another of Rawle's accounts.

gehrke@sltrib.com

Twitter: @RobertGehrke