New Allegations: Swallow’s alleged misuse of Attorney General power to prosecute his client’s foe

Editor’s Note: This article is part of a series of reports by award-winning investigative reporter Lynn Packer who covered, among other stories, the Mark Hofmann Bombings, the Bonneville Pacific Fraud, the Olympic Bribery Scandal, the Utah Highway Construction Bribery Scandal, and the Paul H. Dunn/Afco Fraud.

Part One. To be continued August 1.

A new influence-peddling allegation has erupted against Utah Republican Attorney General John Swallow, one stemming from a fugitive from justice.  A Canadian who fled Utah to escape prosecution is accusing John Swallow of helping trump up the criminal charges against him. Brian Arthur Kitts, who has an outstanding warrant for his arrest, claims Swallow and his friend George Evan Bybee extracted revenge for a lawsuit Kitts brought against Bybee in federal bankruptcy court. Kitts alleges it was a clear abuse of the power of the Utah Attorney General’s Office. “My sense is that Swallow is a dirty guy,” Kitts said speaking from Canada in a phone interview.

Brian Kitts

Brian Kitts

The controversy centers on a $1.35 million “hard money” loan Swallow’s friend and lobbyist client Bybee gave Kitts in December, 2004 via Bybee’s shadowy company Winterfox, LLC. Kitts was desperate to save his Park City, Utah home from foreclosure and needed a short-term loan while arranging long-term financing.

Kitts’s inability to repay the Winterfox loan forced him into bankruptcy. In Utah’s federal bankruptcy court, Kitt’s attorney filed a truth-in-lending lawsuit under the umbrella of the bankruptcy proceeding, alleging that Bybee failed to follow the law when he made the Winterfox loan. Before it was over, Kitts had also claimed Bybee falsified evidence, lied on the witness stand and behind the scenes got John Swallow to help bring criminal charges against Kitts. It ended with Kitts fleeing Utah, and Bybee foreclosing on Kitts’ Park City estate.

To raise eyebrows even higher, a man whose name has been in the news lately was in the middle of it all: so-called “fix-it man,” and Mark Shurtleff confidant, Tim Lawson. In addition, Zion’s First National Bank may have been stuck with some of the financial fallout of the Winterfox loan.

History

Winterfox LLC only popped briefly into the public’s view in 2007, after that company and another of George Bybee’s entities made illegal contributions to John Swallow’s congressional campaign. Winterfox had been formed eight years earlier, in 1998, as a vehicle for Bybee’s real estate ventures and, later, hard money (read high risk, high-interest, short-term) loans.

After Swallow worked as general counsel for Basic Research, LLC, Bybee’s nutritional weight loss/wrinkle cream company, he eventually became a registered lobbyist for Bybee personally, and several of Bybee’s entities like Winterfox, Xylexin and Florentine Artworks. Swallow’s lobbyist job began in 2007 and spilled over into 2010 when he was chief deputy attorney general for Utah.

The story of how Kitts and Bybee would do the Winterfox begins with Basic Research sponsoring a race car to promote one of its dietary supplements

The Winterfox Loan

Zantrex-3 and Armored Coatings Dragsters

Zantrex-3 and Armored Coatings Dragsters

Basic Research sponsored a drag racing team which ran under the name of one of its diet pills, Zantrex-3. After Bybee quit day-to-day work at Basic Research, one of his new companies, Armored Coatings, also sponsored  a dragster owned by Utah’s Aaron Olivarez. His supercharged, hemi-powered machine had “Armored Coatings” emblazoned on the side. Olivarez was arrested in 2009 on domestic violence and assault charges.

Olivarez did more for Bybee than promote the coating product, he also helped Winterfox do the short-term, high interest, $1.35 million loan for Brian Kitts.

In late 2004, Kitts, a Canadian penny stock and dietary supplement promoter living in Utah, needed a short-term loan to buy himself time while he attempted to refinance his home. He turned to a mortgage broker he knew, Michael Falk, for help.  Falk, he said, was not able to come through, but instead introduced him to Aaron Olivarez, Evan Bybee’s drag racing friend. Olivarez connected Kitts with Bybee and a loan was put together via Winterfox.

Kitts said he soon learned he was being charged $600 a day in interest, which was “nowhere near the rate I signed up for.” He also said that prior to signing the loan closing papers he had not been provided disclosure documents, as is required by law.


Kitt's Park City Home

Kitt’s Park City Home

Kitts says he was forced into bankruptcy to keep Winterfox from foreclosing on his home. He then sued Bybee and Winterfox in connection with the bankruptcy for failing to disclose what he thought were usurious loan terms.

At trial in federal court, Bybee and Oliveraz claimed they had mailed Kitts the closing documents. Kitts calls that testimony “absolute perjury.” “They committed fraud on a federal court.” But, according to Kitts, while the judge found Bybee and Oliveraz had lied, she did not punish them for the alleged perjury.

In the meantime, in July 2007, Utah’s Division of Securities undertook an administrative action charging Kitts with securities fraud. And the Utah Attorney General’s Office, based on a referral from the division, filed 17 criminal charges against Kitts in Utah’s Third District Court.

The Securities Division alleged Kitts took $87,500 from seven investors promising huge profits when his companies, NevWest and Brisam, went public. “When soliciting investors, the Division alleges that Kitts failed to disclose that he had an unpaid civil judgment against him of more than $100,000, that he had an outstanding tax lien, and that one of his former companies declared bankruptcy the prior year,” the complaint read. “In reality, Kitts used the money from investors for personal expenses and Brisam Corp. never engaged in any type of business.”

Tim Lawson

Tim Lawson

The criminal case dragged on for months, and after a first attempt at a plea bargain fell through, Kitts sought political help. In September 2009, he was introduced to Tim Lawson who purportedly had clout with the Attorney General’s office.

Kitts says Lawson claimed to be tight with John Swallow, who at the time was a fundraiser and confidant of Utah Attorney General Mark Shurtleff, and within two months would be named a chief deputy. “The guy [Swallow] came out of the woodwork as a, for lack of a better term, kind of a facilitator for Shurtleff and Swallow,” said a source familiar with the matter.

Kitts claims Lawson told him about a conversation he had with Swallow about Kitts’ criminal case.  “Kitts is a bad man,” Swallow purportedly told Lawson. “He hurt my friend and I am going to make him pay.” Lawson is recovering from knee and shoulder surgery and is unavailable for comment.

Tomorrow on Utah Political Capitol: How Kitts hurt George Bybee in bankruptcy, and how John Swallow purportedly made him pay for that offense. Plus, the Zions Bank loan to Winterfox no one will talk about.