Utah Charges Brought Against Two Former AGs

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DALLAS — Two former attorneys general for Utah took bribes in criminal and civil cases, prosecutors said in charges filed in the state's 3rd District Court in Salt Lake City.

Three-term attorney general Mark Shurtleff and his "hand-picked successor" John Swallow were arrested on July 15 in a wide-ranging corruption scandal, accused of accepting gifts, trips and campaign contributions in return for intervening in legal cases.

Shurtleff was in the elected office from 2001 to 2013, while Swallow held office only 11 months, resigning during the unfolding scandal on Dec. 3, 2013.

Both have denied that their actions in office were criminal. Shurtleff told reporters that Salt Lake County District Attorney Sim Gill was politically motivated in bringing the case.

Among the many circumstances cited in the criminal complaint was Shurtleff's and Swallow's involvement in a mortgage fraud settlement with Bank of America, according to court records.

Swallow was chief civil deputy for Shurtleff and running to succeed him in 2012 when the attorney general intervened in a lawsuit against Bank of America.

The lawsuit by Timothy and Jennifer Bell challenged the foreclosure practices of Recon Trust, a Texas-based subsidiary of Bank of America.

The Bells' lawsuit, filed in 2011, was separate from the class-action case against Bank of America and other banks for their foreclosure practices, according to the complaint filed by the Salt Lake County District Attorney's Office.

Utah's share of a $25 billion settlement with five banks in 2012 came to about $171 million in money, reductions in mortgage principals and loan modifications. Utah was one of 49 states signing onto the deal. Only Oklahoma refused to sign.

After the attorney general's office sought court permission to intervene in the Bells' case, the Bells held a fundraiser for Swallow that was valued at $28,024, according to the complaint.

On Oct. 30, 2012, the Bells were accepted into a loan modification program with Bank of America that reduced their loan balance by $1.13 million and their loan rate to 2.65% from 7.5%, according to the complaint.

"The modification did not affect the pending litigation on behalf of thousands of Utahans whose interests in foreclosure were being represented by the Utah Attorney General's Office," the complaint said.

The agreement to modify the Bells' mortgage came the same day that Shurtleff was interviewing for a job with Troutman Sanders, a law firm representing Bank of America, according to the complaint.

Among the counts against Shurtleff in the complaint is "accepting employment that would impair judgement," a second-degree felony. Shurtleff was hired at Troutman Sanders, an international law firm whose work includes bond counsel for the state of Virginia.

Shurtleff moved to Washington, D.C., to work for Troutman Sanders' practice that dealt with regulation by the state attorneys general, the law firm said in December, 2012. Shurtleff's area of practice included campaign finance law.

Shurtleff left the firm after six months.

Bob Webb, chairman of the law firm, told The Bond Buyer on Wednesday that Shurtleff's hiring was not influenced by the Bank of America case.

"We are not being investigated," Webb said.

As in other states, the attorney general in Utah must approve all bond issues. However the complaint does not identify any misdeeds involving bond transactions.

After his two predecessors were named in the complaint, current Utah Attorney General Sean Reyes, appointed by Gov. Guy Hebert after Swallow's resignation, pledged to cooperate with the ongoing investigation.

"Since my appointment in late December, my new executive team and many respected leaders throughout our office have worked unceasingly to create a culture change and restore public trust," Reyes said in a prepared statement. "Today, the Utah Attorney General's Office has new and renewed leadership teams throughout the criminal, civil and appellate departments."

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