Businessman in fraud case ties Harry Reid to scheme

Jan. 11, 2013: This undated file photo provided by the Davis County Jail, shows Jeremy Johnson, a Utah businessman accused of running a $350 million fraud scheme. (AP)

SALT LAKE CITY – A Utah businessman accused of running a fraudulent $350 million software scheme says the state attorney general arranged a deal to pay Senate Majority Leader Harry Reid to make a federal investigation into the software business disappear.

St. George businessman Jeremy Johnson, who's accused of billing hundreds of thousands of consumers for products they never ordered, told The Salt Lake Tribune that newly elected Utah Attorney General John Swallow set up a deal in 2010 for Johnson to pay $600,000 to people connected to Reid.

Johnson says be believed that Reid, a Nevada senator, might intervene in the Federal Trade Commission's investigation.

Swallow strongly denies the allegations and maintains he only offered to connect Johnson with a lobbying firm. At the time, he was serving as Utah's chief deputy attorney general.

The FBI and Reid's office would not comment on the allegations.

Federal prosecutors initially charged Johnson, 37, with one count of mail fraud. He was set to enter a guilty plea Friday to two additional charges of bank fraud and money laundering as part of an agreement with the government.

But that deal fell apart Friday after Johnson and prosecutors disagreed over the terms. Johnson instead decided to maintain his not guilty plea and the case is set to go to trial.

If convicted, Johnson could face decades in prison. He is currently free on a $2.8 million bond.

On Saturday, The Tribune reported that Johnson provided emails, financial statements, photos, and a transcript of a recorded meeting with Swallow to the newspaper. Only one email from Johnson was available on the newspaper's website.

After the Federal Trade Commission filed a lawsuit against Johnson and nine business associates in December 2010, Johnson said he asked Swallow to return part of the $250,000 he had paid. Johnson said he doesn't know if anyone connected to Reid received it.