- Chad Elie, Jeremy Johnson, John Swallow
Chad Elie, a former business partner of indicted businessman Jeremy Johnson, says that he saw Johnson give Utah Attorney General John Swallow a bag of money in early 2010.
Elie, currently a businessman in Las Vegas, previously was a partner of Johnson’s in Santa Monica, Calif.-based company Elite Debit, which processed online-poker payments. Elie says he mostly worked out of California during that time, but he recalls being in St. George in early 2010 when Swallow, then the newly appointed chief deputy attorney general, came to visit Johnson’s IWorks business, which, according to a Federal Trade Commission civil suit and indictment, was the main instrument Johnson used to defraud hundreds of thousands of consumers out of a combined $275 million.
Elie says he had no affiliation with IWorks and knew Johnson through the online-poker world. Elie was indicted by the Department of Justice in 2011 for processing online-poker payments and served five months in federal prison.
In early 2010, Elie says, he accompanied Johnson and Swallow to a shed outside one of Johnson’s properties. The shed, Elie says, was filled with safes. According to Elie, Johnson retrieved a bag from one of the safes and filled it with roughly $20,000 in cash, by Elie’s estimation, and then handed it to Swallow.
Johnson has said that in early 2010, Swallow was helping to facilitate a $600,000 bribe of Sen. Harry Reid, D-Nev., to derail an FTC investigation into Johnson and IWorks. Elie says that at the time he saw Johnson give Swallow the money, he did not know of a bribe or any lobbying efforts involving Swallow or Reid.
Swallow has long said that he sought to assist Johnson’s cause only through lobbying, and not bribery. While $250,000 passed from Johnson to the late Richard Rawle, an associate of Swallow’s and owner of the Check City payday-lender chain, the only money that went from Rawle to Swallow was $23,500, paid to an entity controlled by Swallow called P-Solutions. Swallow says the payment was for consulting on a possible Nevada-based cement-plant project.
Since the Johnson allegations became public in early 2013, no evidence has surfaced that money passed directly from Johnson to Swallow.
Attorney General’s Office spokesman Paul Murphy says Swallow denies any payments took place.
“John Swallow doesn’t know Chad Elie, and Jeremy Johnson never gave any money to him,” Murphy writes via e-mail. “The allegation is contradicted by Johnson’s secret tape where he said over and over again that he never gave any money to Swallow.”
Elie, however, stands by what he saw. He also says it wasn’t Johnson’s style to write checks to people.
“He was famous for paying people in cash, gold bullion, even poker chips,” Elie says.
Elie says he hasn’t been motivated to speak out on the Swallow issue because he’s tried to keep himself separated from the scandal that Johnson and Swallow have been wrapped up in. Elie has also been reluctant because he’s already had his own tangles with federal investigators. In 2011, Elie became something of a martyr in the online-poker world when he was named as a defendant in the Department of Justice’s criminal indictment against Elie and others for processing online-poker payments for companies Full Tilt and PokerStars.
Elie says that before the indictment, he’d been preparing for years to argue in civil court that Texas Hold ’Em poker is not gambling or a game of chance, but is instead a game of skill and therefore is not in violation of the federal Illegal Business Gambling Act. Elie says that while Elite Debit was ready to take its case to civil court, they were completely caught off guard by a criminal indictment. Facing years of federal prison time and with his attorneys warning that a guilty verdict would also hurt a future case for the legalization of online poker, Elie says, he opted to plead guilty and served five months in federal prison.
Since then, he’s opened up about his role in what the poker world has dubbed the Black Friday indictments, but has been reluctant to talk in detail about his observations of Johnson and Swallow, worried, he says, that he would be associated with Johnson’s IWorks company. Elie says his interactions with Johnson were solely with poker processing, a business venture that ended bitterly between the men, with Elie alleging that Johnson stole more than $20 million from Elite Debit right before the federal indictments came down.
Johnson declined to comment for this story, citing a gag order preventing him from speaking to the media while his federal case is underway.
Elie says that previous online-marketing work introduced him to online-poker companies that were looking for help processing payments for customers so that they could quickly and easily put money in and draw it out of their accounts. Elie says he partnered with Johnson because of Johnson’s heavy ownership interest in SunFirst Bank in St. George, which would agree to partner with Elite in processing the payments. Elie processed through a company he set up in California called Elite Debit, though, he says, Johnson and some associates eventually set up their own Elite Debit in Utah, which took over the business.
Elie says that during his interactions with Johnson between 2009 and 2011, Johnson bragged about owning the Utah Attorney General’s Office. Elie says that Johnson was shrewd in the ways he invested in the campaigns of, for example, former Attorney General Mark Shurtleff, who over the years received more than $200,000 from Johnson, his companies, family, friends and associates. Elie says Johnson told him that he would collect donations from his business associates for Shurtleff’s campaign and then simply pay them back with his own money.
He also says that when discretion was called for, Johnson always had cash and gold in his safes.
Since Johnson’s indictment, court-appointed receivers have confirmed the existence of Johnson’s precious-metals safe. According to the 2011 report of the Robb Evans receiver firm, Johnson owned a “detached garage” that held safes with guns, jewelry and precious metals. According to an e-mail Johnson sent to one of the receivers on Jan. 26, 2011, the inventory of one safe included two gold nuggets, 32,000 silver quarters, 20 gold coins and “160 lbs of miscellaneous rare coins.”
Elie says that when he was first introduced to Swallow in 2009, he knew him as a go-between.
“He was the middle man for Jeremy Johnson and Mark Shurtleff,” Elie says.
Elie also says that Johnson courted both Shurtleff and Swallow at his upscale beachside home in Santa Monica in 2009 and 2010. According to the receiver’s report, the beach home, at 127 Hollister Ave. in Santa Monica, was purchased by Johnson for roughly $2.8 million.
Attorney General’s Office spokesman Murphy says Swallow never stayed at the home.
Elie says he was never at the beach home at the same time that Shurtleff or Swallow were there, but says Johnson freely talked about hosting the attorney general and his deputy there.
“It was his thing, that he had the A.G. in his pocket,” Elie says.