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 two. Read part one here.
A new allegation against Utah’s top law enforcement officer erupted yesterday when Utah Political Capitol reported that a Canadian fugitive is accusing Swallow of influence-peddling on behalf of George Bybee. Brian Arthur Kitts, now ensconced across the border in Calgary, was engaged in a fierce legal fight with Bybee in bankruptcy court when, Kitts claims, Swallow entered the picture.
The facts, at least from Kitts’ perspective, are pretty straightforward: In late 2004 Kitts sought a short-term “hard money” loan from Bybee via Winterfox, LLC to save his Park City home from foreclosure. But Kitts, who was given no loan disclosure documents, soon discovered he owed a whopping 70 percent annual interest rate, defaulted on the loan, and filed for bankruptcy protection in an attempt to keep his house. That touched off a court battle that continued into 2013. At the heart of the fight was a lawsuit brought by Kitts within the bankruptcy process, accusing Bybee and Winterfox of failing to provide legally required loan disclosure documents and thereafter providing fake documents and lying about them in court.
Meanwhile, in the summer of 2007, the Utah Attorney General’s Office brought felony securities fraud charges against Kitts. While he believes those charges were politically motivated, he says at that point he didn’t even know who Swallow was.
After months of plea negotiations, Assistant Attorney General Neal Gunnerson offered Kitts a plea deal. If Kitts was willing to plead guilty on reduced charges with no fine or jail time, he would be required to make full restitution to his investors. Sentencing, however, was postponed for several months, and as the bankruptcy court fight between Kitts and Bybee continued to escalate—hundreds of thousands of dollars in legal fees were racking up—Gunnerson retired.
Kitts and his attorney claim that Assistant Attorney General Charlene Barlow—since appointed a third District Court judge—took over the case, and immediately threw out the wrist-slap plea bargain and substituted one that involved pleading guilty to felonies. Judge Barlow declined an interview and through her court clerk denied having anything to do with any Kitts plea bargain.
At this point, Kitts says he figured he needed to go over Barlow’s head and use some sort of political clout to restore his softer plea deal. “It was strange,” said a source familiar with Kitt’s actions. “He had heard through through the grapevine that [Tim] Lawson had access and influence with Attorney General Mark Shurtleff. The guy that came out of the woodwork as, for lack of a better term, kind of a facilitator for Shurtleff and Swallow.”
“Tim Lawson said, ‘Yes I will take on the case,’” Kitts told Utah Political Capitol via a phone interview from Canada. But he said Lawson told him “[Y]ou have some guys up there that really don’t like you. One of them is a pretty powerful guy. He is a lawyer and has something to do with your mortgage case.”
“Who?” Kitts asked.
“John Swallow,” Lawson purportedly replied. “I spoke to him on the phone about you and he says ‘What the hell are you doing business with that guy Kitts? He’s a bad person. He hurt my friend and he is going to pay.’”
“Who is the friend? “ Kitts asked.
“George Bybee,” Lawson allegedly replied.
Although Swallow himself has declined any comment on these new allegations, the story is remarkably similar to the stories coming from both Jeremy Johnson and Marc Sessions Jenson—the other two convicted or accused fraudsters who have claimed Swallow used his influence both before and after working in the Attorney General’s office to persecute them. Swallow’s press spokesman, Paul Murphy, said during a short phone interview with Utah Political Capitol today that “John [Swallow] categorically denies knowing anything about the Kitts case, and for that matter was not even in the criminal division during that time. This is just another criminal spouting crazy stories.”
However, a source close to Kitts says he was told about the Lawson conversation, when Swallow’s and Bybee’s names were mentioned, either the day it happened or the day after, in September 2009. “Lawson told Kitts that he had spoken with Swallow who had said he has really caused a good friend a lot of trouble and ‘we’re going to get him’,” the source recalls hearing from Kitts near the time of the conversation, which seems to negate any possibility that Kitts is just piggy-backing on Jeremy Johnson and Marc Jenson.
“It seemed strange to me so much zeal and so much venom was coming from the AG’s office on a seemingly minor case,” the source said. But, he says, it did make some sense “if Shurtleff and Swallow were pulling the strings, and they were after Kitts because he had a legitimate claim in federal court against Bybee. So they were going to punish him.”
He said any involvement on Shurtleff’s and Swallow’s part to retaliate against Kitts on Bybee’s behalf would be “absolute fraud and an abuse of the government’s power.”
But Kitts did not stick around to see if he could make that case to the federal bankruptcy court. On October 22, 2010, the day he was supposed to appear in Utah state court for sentencing on the tougher felony charges, he sent an email from Canada to Judge Deno Himonas.
Kitt’s email to the judge laid out a story of how Kitts, at Tim Lawson’s urging, hired Utah attorney Dana Facemyer to renegotiate his plea deal, that Lawson insisted all communications with Facemeyr be through him, and how Lawson kept some of the legal fees Kitts paid Facemyer through Lawson. After six more pages of explanation he wrote, “I will not be in court today. I had no choice but to go to Vancouver myself to resolve the issues…” He asked the judge that “rather than issue a warrant for my arrest, that you allow me the time to…return to Utah and retain the services of new counsel…”
Judge Himonas was not accommodating. He slapped Kitts with a bench warrant for his arrest—a warrant that remains outstanding today.
But that did not keep Kitt’s bankruptcy from proceeding. It went on with Kitts in abstentia. By now it was 2010, and the bitterness between Kitts and Bybee had reached a crescendo. Counsel for the bankruptcy trustee proved that Bybee’s Winterfox, LLC had failed to provide required truth-in lending documents in connection with the $1.35 million loan to Kitts, and that Bybee and Winterfox, LLC had then tried to deceive the court by providing fake documents and false testimony about the documents. A federal appeals judge found that the forms used to create the fake disclosures were not even on the market at the time the disclosures were dated.
The bankruptcy court approved a settlement of the Kitts/Bybee mortgage loan dispute earlier this year. Under the agreement, Winterfox, LLC is required to pay the trustee $500,000 for legal fees. That’s on top of the estimated $1 million+ Bybee paid his own counsel to fight Kitts. In addition, Winterfox, LLC had to forfeit any interest it would have made on the Kitts loan. But the court allowed Bybee to keep Kitts’ Park City residence that had served as collateral. It’s now up for sale.
The bankruptcy trustee would have referred the Bybee/Winterfox false documents and perjury to the US Attorney’s Office to review for prosecution, as rules require. But it’s rare that the US Attorney in Utah brings perjury charges.
Apart from his spokesperson’s comments today, Swallow remains silent as to any role he played or any knowledge he had of his two lobbyist clients–Winterfox and Bybee– faking documents and lying to the court. Bybee and Lawson also declined comment for this report.