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SWALLOW AND SHURTLEFF CHRONICLED PART 39 OF A SERIES Wanted Dead or Alive How the mysterious Ronald Tolman connects Marc Jenson and Jeremy Johnson to Harry Reid. by Lynn Packer May 30, 2014
When Ronald Lynn Tolman of Henderson, Nevada suddenly disappeared in April 1995 it touched off a mystery that continues to this day. Was he murdered? Did he commit suicide? Or did he go into hiding? Is he dead or alive?
By odd coincidence Tolman links the two highest profile witnesses against former Utah attorneys general Mark Shurtleff and John Swallow: Marc Jenson and Jeremy Johnson. Those loose connections also extend to Nevada Senator Harry Reid.
It may never be known if the ties are more than coincidental now that Harry Reid seems off limits for the ongoing FBI criminal probe. Even so Tolman’s story provides a peek behind the scenes of Nevada’s world of corrupt business practices and politics.
Gold mine investment fraud? Check. Penny stock swindles? Check. Online gambling skimming? Check. Ron Tolman, one of eight children in a devout Mormon family, was born in 1941 and grew
up in Downey, California just outside Los Angeles. One of his younger sisters, Joy, born in 1953, will later figure into this story.
Ron’s father, Leo Ronald, ran Tolman’s Cleaners on Paramount Boulevard. Ronald graduated from Warren High in 1959. (The school was first named Earl Warren Senior High school after the former California governor and U.S. Supreme Court Justice. But when Warren turned liberal on the bench—he was anti school segregation—the arch conservative Downey school board dropped Earl from the high school’s name to downplay the connection.)
The next year Tolman was called to serve an LDS mission in the North British Mission. There he was promoted to traveling elder, the second highest position a missionary could achieve at the time.
Not long after returning from his mission Tolman married Joan Marilyn
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Nuffer from Arizona in the Los Angeles Temple. The couple had their first two of three children children in Downey in 1964 and 1969.
Meanwhile, in 1973, Leo Tolman moved his family to Bountiful, Utah. Ron and Joan followed and had their third child there in 1969.
Ron Tolman eventually settled in Arizona where he launched his quest to find the pot of gold at the end of the rainbow via penny stock and gold mining schemes. His biggest penny stock venture appears to have been in cold fusion, a stock he promoted up through his disappearance.
Cold fusion made Utah the laughing stock of 1989. Two University of Utah scientists, with worldwide fanfare, claimed to have invented an apparatus to generate huge amounts of energy at room temperate rather than at extreme temperatures required with nuclear fission. Stanley Pons and Martin Fleischmann raised hopes that the solution to the world’s energy problems was at hand. But other scientists were unable to replicate Stanley and Pon’s experiments and the two were dismissed as quack inventors.
Except Utah’s governor, the legislature and a congressman still believed. The state appropriated $4.5 million to continue research and the university opened the off-campus Fusion Information Center headed by missile systems engineer/entrepreneur Hal Fox. Rep. Wayne Owens, a Democrat, sponsored a bill that would have created a national fusion research center at the university, which was in his district.
Hal Fox happened to bring along an investment vehicle he created earlier, his Utah educational software company CAI, Inc. CAI had previously merged with Hot Tub Supply, Inc. The venture had been raising money via a Utah exemption to securities registrations and had a brief brush with Utah’s Securities Division for violating its rules.
Soon CAI’s new raison d'être was cold fusion. It acquired part ownership of the Fusion Information Center. Fox claimed that “cold fusion is a reality” despite what the news media reported. Conspiracy theories abounded. Big Oil had to stop cold fusion just like it bought the rights to the 100 mile-per-gallon carburetor.
Before he died in 2012 Fox formed yet another company, Trenergy, to continue hawking cold fusion stock. But also to develop a device that would mute offensive words on television and another to scramble offensive scenes on TV. Trenergy also promoted fringe-theory (some say sham) scientists like Ruggero Santilli. (The Italian-American claimed to have invented new types of fuels that would meet the world’s demands for cheap, clean energy.)
Cold fusion, however, was not Tolman’s main thing even though he once had at least 50,000 shares of Fox’s CAI, Inc. He delved deep into penny stocks and gold mining. By 1970 he owned 168,290 shares of the Utah corporation Atomic Mining and Oil. That stock was later deemed worthless by an investor who got it as collateral on a loan that was never repaid.
In 1972 Tolman obtained 2,000 shares of another Utah corporation, American Scientific Industries International. The SEC suspended an exemption for that stock in February 1973, for failure to comply with the rules and for failing to disclose a $12,000 “loan” to David R. Nemelka of Mapleton, Utah, the secretary treasurer.
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(Nemelka, a West High graduate, returned LDS West German missionary and former Utah legislator, had been involved in several penny stock promotions, seemed continually in and out of trouble with regulators, and in 2005 pled guilty to federal criminal charges stemming from a reverse merge involving two of the companies.)
Tolman began filing mining claims all over Nevada. By 1984 he sought investments for a mining venture he was promoting in the tiny town of Tule, in Emeralda County, Nevada near the California border about halfway between Las Vegas and Reno.
But Clark County, the county where Las Vegas is situated, gold and platinum was his focus. He filed several dozen mining claims there. He divorced his first wife and moved to Henderson, Nevada where he met his second wife, real estate agent Michelle Rosenberry.
Tolman connected with prominent, Vegas-area real estate figures like Rick Butler and Richard Lee. (Even though he was pushing mining investments he continued promoting cold fusion. While living in Henderson he took his future wife and parents-in-law to a cold fusion conference in Hawaii.)
At some point in the mid 80’s Ron Tolman hooked up with Utahn Gordon D. Walker. Walker won’t say exactly when or how. It was probably when Walker was still with HUD in Washington. But certainly by time Walker became president of Deseret Federal Savings and Loan in Utah. (See report 38, The Deseret Federal S&L Cover-up on page 2 of this site.)
Walker formed at least two companies, Aqua Regia, Inc. and Golden Rod Ltd. to solicit investor funds. Most Golden Rod investor were fellow employees he met while at HUD. Most Aqua Regis investors were people he met in Utah, including several employees of Deseret First Federal. The money he solicited was funneled through other Arizona and Nevada entities. Investors contacted by packerchronicle don’t know how the money was spent and in whose pockets it ended up. They just know they lost everything.
Walker and his fellow promoters had two plans to strike it rich. They attempted to prove there were recoverable gold, platinum and other precision metals on Tolman’s claims. And they were trying to develop a new method to recover precious metal from low-grade material like desert gravel and tailings from previous mining operations. Mostly using other people’s money.
The projects’ thirst for continual funding was insatiable. Promoters kept claiming progress yet continued asking for more cash to achieve an imminent breakthrough. In January 1990, for example, Walker wrote to investors saying he had spent most of that previous year in the Nevada desert “learning about chemistry and geology.” He said there had been a continuous flow of good news mixed with a little bad.
Walker‘s letter said the technology problems had been solved. They just needed a “little additional financial commitment” and were “one step away” from a facility large enough to produce sufficient volumes. “One million dollars would be sufficient.” He promised “no money has ever been spent on management salary or expenses (at least in my case) and most of the regular line workers have not received a salary for months.”
Given Tolman’s disappearance and Walker’s refusal to talk it’s unclear how long Walker’s efforts continued after Tolman’s disappearance in 1995 and Arizona developer Del Webb’s final court victory regarding the Henderson claims in 1999.
Walker’s resume obtained by packerchronicle does say he worked between 1988 and 1991 as president and director of United States Resources, Inc., which seems to be the parent company over all others related to the mining ventures. (Note: an upcoming report will deal in depth with Walker’s claimed accomplishments prior to being named a division director, the position he currently holds in state government.) But his resume fails to show the true time span of his
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involvement in mining. Facts indicate he began before 1988 and extended his involvement well beyond 1991. He probably kept at least one finger in the gold pie until the Del Webb court battle concluded. His resume says his work in the’88 to ’91 time frame included “11,000 acres of prime Las Vegas developmental area real estate involved in a BLM land swap requiring extensive negotiations with the federal government” and that the land was “currently being developed in (a) highly successful build out stage.”
Developer Del Webb did swap land with the federal government in order to build the residential community, Sun City Anthem, at Henderson in the foothills of the Black Mountains in view of the Las Vegas Strip. Del Webb had to
sue Tolman, United States Resources and other claim holders to conclude the deal. It appears Walker was been working against the housing project not for it.
In the meantime no trace of Tolman has been found. Well, not exactly no trace. Even after Henderson police ceased investigating Tolman’s father in law, Charles Rosenberry, continued his investigation. One clue Rosenberry found was someone with a Russian-sounding name using Tolman’s social security number in California. Tolman’s brother in law thought Tolman served a mission in Russia and spoke the language. (In fact Tolman served in England.)
Otherwise acquaintances are evenly split among three theories: Tolman merely left and then committed suicide where his body could not be found (least popular theory), that he left and changed his name, or that he was abducted and murdered. “He is out in the desert near Las Vegas, six feet under,” as one relative put it.
The Murder Theory
There are grounds to support a murder theory. He owed a lot of people a lot of money. He
put Gordon Walker into an embarrassing and legally vulnerable position with his friends and family investors.
The missing person police report obtained by packerchronicle summarizes the disappearance:
Charles E. Rosenberry…advised that at approximately 15:30 hours, 04-‐21-‐95 he and his
son-‐in-‐law Ronald L. Tolman 11-‐09-‐41, were having a business meeting at Café Sensations. Tolman advised that he had a fax in his vehicle, which he wanted to show Rosenberry. Tolman left the table leaving his cellular phone and went outside to where his vehicle, a 1988 Jaguar, CA/2LKK472, was parked in the North parking lot. Tolman advised that Tolman never returned. Rosenberry advised that he checked the vehicle, which was locked, and in the businesses, in the surrounding area, which met with negative results. Tolman’s residence, place of business and his answering service were called, with no success. Tolman’s wife, Michelle, was interviewed. She advised that her husband was involved in “Big Business.” She advised that earlier that day Ronald Tolman had uncovered the fact that an unknown business, which was to fund the building of new schools in the City of Henderson, were junk or fraudulent bonds and had contacted the U.S. government regarding them. Michelle also advised that that Ronald was also tied up in litigation with a man
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named David Rashmir, 1200 Mercedes Circle, Las Vegas, NV 89102, and that if Ronald made certain statements in court that Rashmir had “a lot to lose.” Michelle further stated that Rashmir had threatened Ronald’s life in the past.”
Rashmir may have threatened Tolman but he and “Chuck” Rosenberry, the father-in-law,
formed Black Mountain Mining, Inc. in 1996 the year after Tolman’s disappearance. Rosenberry was president, Rashmir secretary and Larry R. Tolman, Ronald’s brother, treasurer. Rosenberry is now deceased and Rashmir left Nevada. Black Mountain Mining may have been formed to manage any mining claims Ron Tolman left to his wife. It was also a defendant in Del Webb’s lawsuit against claim holders.
A newspaper account called Tolman “a business consultant for Common Wealth Foundations” a company that sets up and manages business investments for various trusts.”
The school the police report referred to was a proposed charter school at the planned community in Henderson’s MacDonald Ranch property. The Henderson newspaper, three months after the disappearance, said Tolman was instrumental in the development and funding of the proposed Warren-Walker Middle School and the Green Valley Academy on the McDonald Ranch property. “His disappearance caused a delay in the project’s construction,” the report said. The paper made no mention of the purported fraudulent bonds Tolman purportedly discovered and reported to authorities.
The MacDonald property was next to Del Webb’s Anthem land where Tolman had mining claims. Del Webb’s legal fight to clear Anthem’s title of mining claims dragged on for years. Even after Del Webb swapped land with the BLM to gain private ownership, parties continued to file mining claims. Apparently to use those claims to hold the property hostage.
In May 1998 the Henderson paper quoted a Del Webb spokesman under the headline “Residents’ mining claims slow progress at Del Webb Anthem.” I have never ever in my entire career and life been involve din anything as convoluted and strange as this,” he said. “Contrary to what they believe there is no gold in them that hills,” he said.
Even though Tolman was missing three years at that point his name was still prominent as the lead plaintiff and main target of Del Webb’s wrath. “Del Webb officials said Tolman’s claims to the land are a scam and he convinced the others to invest their money in the mining operation knowing no minerals exist,” the paper reported. Del Webb also contended no minable minerals were eon the property. And the developer contended that U.S. Resources was selling interest in claims for which it never acquired an interest.
MacDonald Ranch co-owner Rich MacDonald told the reporter he recalled being approached by Tolman in the 1980s regarding a mining operation in the Eldorado Valley on the other side of Black Mountain east of Henderson. “MacDonald said Tolman abandoned that effort since much of the area was protected by environmental laws because it is Desert Tortoise habitat,” the paper reported. “Tolman turned his attention to the Henderson side of Black Mountain on a recommendation by MacDonald.”
MacDonald Ranch was not really a ranch at all but 2400 acres of desolate, desert land being bought on speculation by the MacDonald family in anticipation of Las Vegas expansion. “It was nothing,” says co-developer Frances MacDonald. “Just a bunch of rocks.” If people thought the family was nuts the Macdonald’s had the last laugh. All the way to the bank.
Rich MacDonald, contacted recently by packerchronicle, said his statement to the press in 1998 was mostly a jab at Del Webb. At the time he and his partners were somewhat at odds with the developer. MacDonald says he had no idea if there were precious metals on the properties.
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MacDonald said he does recall Tolman approaching him about a charter school for which he was raising money to be located at the site. Then, he said, the talk turned to gold. “For some reason he wanted me to get involved,” MacDonald said. He volunteered to give him a piece of the project; assets that Tolman said could end up being worth hundreds of millions. MacDonald said Tolman may have talked about turning the mineral rights into actual ownership of the Anthem property. MacDonald said he dismissed the offer outright.
Macdonald knew about Tolman’s disappearance and said he heard a rumor Tolman had gone into witness protection. If Tolman was abducted and murdered MacDonald guesses investors could be suspects. “If he had been collecting money from people up in Utah maybe one of those guys decided they were getting tripped off an decided to do something about it,” he said.
The MacDonalds ended up making peace with Del Webb and sold them the property after doing the initial planning and infrastructure development. Today it’s the so-called “active adult community” of Sun City MacDonald Ranch built between 1996 and 2001.
Who knows? Tolman’s remains may lie somewhere under Sun City.
The Staged Disappearance Theory Both the murder and witness protection theories behind Tolman’s disappearance seem a bit
fat fetched. Even if possible. Which leaves the planned disappearance/change-of-identity theory. Prior to vanishing he gave his bother power of attorney. The same one who became a
principal of Black Mountain Mining, Inc. There’s also his social security number popping up in California near where his brother lives.
And then there’s the curious coincidence that Ron Tolman’s brother-in-law seems to be following in the same footsteps as a penny stock promoter.
Ron’s younger sister Joy (now 60), married Steven Leon Sunyich. All three had attended the same high school in Downey. Sunyich, like his missing brother-in-law, became involved in penny stock ventures.
So, did Sunyich learn the penny stock biz from Tolman before or after Tolman’s disappearance? Or did he learn it from someone else? It could be coincidental that both formed businesses funded by public, penny stock offerings.
Tolman was interviewed by the FBI in 1991 in connection with its bungled probe of Deseret Federal Savings and Loan He was never
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charged criminally, perhaps was not even a suspect. Sunyich, however, was not so lucky. The Federal Trade Commission (FTC) filed a civil
fraud case against him and his children Michael, Christopher, Shawn and Milissa Joy Gardner. But not for penny stock fraud. The Securities and Exchange Commission (SEC) did not allege any penny stock pump and dump scheme involving their Nevada company, Ideal Financial Solutions, Inc., formed in 1993, two years before Tolman’s disappearance. Instead they were accused of the unauthorized debiting of consumers’ bank accounts and unauthorized billing of their credit cards. To the tune of $24 million.
Ideal Financial Solutions Inc. (OTC Pink: IFSL) created and marketed a proprietary financial software system purportedly designed to assist individuals with debt-related issues in improving their personal financial condition.
Using the Ideal Financial system enrolled users can optimize how they pay credit cards,
student loans, and mortgages to get out of debt in the shortest period of time by attacking the highest interest, non-‐asset building debt tactically and initially. Ideal uses its automated CashFlow Management(C) tools and its Credit to Wealth Systems to assist individuals, families and small businesses in building financial independence. Users also can access financial education, support and automated tools to create additional cash resources, rapidly eliminate all non-‐asset-‐building debt and build financial independence. (Company PR statement. Also see an online video interview at http://vimeo.com/3956528) As is typical with newly formed penny stock companies, the price of the stock begins at
just a few cents per share with insiders usually holding millions of shares. If for some reason the stock captures the public’s imagination the price can quickly double, triple or even soar several
hundred percent. That’s what happened
with Ideal Financial Solutions. According to its own press, sales shot up along with the stock price in 2009: “Subsequently, the company became a heavily traded stock in the sub-penny, microcap sector and experienced tremendous increases in price per share (PPS) and Average
Daily Volume, peaking at a split-adjusted price of $2.30 per share in 2009.” After that the price plummeted. (See accompanying chart.) Was it part of a fraudulent
pump and dump scheme where insiders were reaping huge profits? Or because of an unforeseen setback.
A company statement said the latter. “Soon after in 2010, given substantial changes to the credit card processing industry on which many of Ideal's transactions were reliant, the company entered into a self-imposed restructuring of its business model during which it reported frequently to the market via press releases. In this period of time, the company altered both its marketing strategy and processing.”
That business model change appears to have been from targeting consumers, generally, to targeting consumers who applied for an/or took out payday loans. (Note: Payday loans are small
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dollar, short term—often just days, unsecured, very high interest—often several hundred percent, and high default rate loans. The ongoing FBI investigation is looking at whether any criminal conduct is associated with former Utah AGs Shurtleff’s and Swallow’s ties to the payday loan industry.)
“The company is unique in that its software systems have recently become a popular addition within the rapidly growing payday loan industry,” the company reported.
“Notably, the company's financial systems are unique insofar that they actually, when
applied correctly by the user, can lead to a payday loan customer not needing the very loan through which they were introduced to Ideal Financial Solutions. As of November 2011, Ideal Financial Solutions was providing its debt services to thousands of consumers daily in numerous verticals in addition to the payday loan industry and white label relationship.” In late 2011 the stock price for IFSL jumped up again. The new payday business model
was generating millions in cash. Ideal Financial Solutions had tens of thousands of customers paying about $30 a month that was being automatically withdrawn from their bank and credit card accounts.
Most Ideal customers either had payday loans or had at least gone on line to apply for a payday loan. The FTC alleges most of them had never heard of Ideal Financial Solutions and, suddenly, money was being automatically withdrawn from their accounts.
The FTC investigation revealed that those who noticed unwanted charges on their statements and disputed the charges with Ideal “were told they had purchased something, such as financial counseling or loan matching services, or assistance in completing a payday loan application.” “How the defendants got the consumers’ financial information is not known, but some consumers had recently applied for payday loans via the Internet, and entities that receive payday loan applications often sell the information to other parties,” the FTC complain says.
Clearly Sunyich had ties to someone doing payday loans in order to get lists of potential “customers.”
In January 2013 the FTC struck. The federal agency asked a Nevada federal judge to rescind Ideal Financial Solutions contracts, to require refunds and disgorge “ill-gotten monies” and to appoint a receiver. The FTC summarized its civil fraud case: “Using a network of front companies, defendants take money from consumers without prior notice or consent, making more than $24 million in unauthorized debits and charges without providing any product or service in exchange for that money. Defendants subsequently tell complaining consumers that they purchased Defendants' phantom products at a website that Defendants will not identify.”
The judge granted the FTC’s motion in February 2013 effectively putting the company out of business.
Even before the FTC acted Ideal Financial Solutions stock prices were going down the toilet for a second time. Whether it was part of a second dumping scheme may never be investigated by authorities. Even though the price curve of IFSL stock indicates a classic pattern of two, repeated pumps and dumps, no securities fraud has been alleged against the Sunyiches.
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Sunyich countered the FTC’s charges with an apparent posting on the internet. “The FTC has destroyed my family and our twelve-year old business and our shareholders,” he purportedly wrote.
Finally I would like to express the fear and panic that is caused when all of the money in your bank account is seized and you are left with the money in your pocket. How do you buy food, gas and medication? Imagine what it is like to have all of your phones and computers confiscated. Now imagine if this happened to your entire family? Finally try to feel for just a few moments you have been wrongly accused and you have no way to defend yourself or your family?
Then more heat came down on the Sunyich family. In March last year Chad Christopher
Sunyich, 37, one of Ideal Financial Solutions directors named in the FTC complaint, was arrested along with Jason Thomas Vowell, 38, an associate and neighbor of Jeremy Johnson. The arrest
warrants originated in Tampa Bay Florida where authorities alleged the two had been engaging in an air drug smuggling operation. The U.S. Drug Enforcement Administration (DA) says the air smuggling venture began in 2010, continued through 2012 and involved routine trips every month and a half or two months transporting 30 to 99 pounds of pot with each trip.
At a hearing Chad Sunyuich’s attorney argued for bail on the basis that Sunyich would not pose a significant risk of fleeing to avoid justice. The St. George
Spectrum reported that Sunyich’s attorney told the judge her client was a longtime St. George resident, had no criminal history, had graduated from Brigham Young University and had served as a missionary for Mormon Church before that. The prosecutor countered that Sunyich had been a steady drug user since college.
Sunyich, Vowell and a third defendant eventually pled guilty to conspiring to distribute more than 100 kilos of marijuana. Vowell agreed to forfeit his Piper Aerostar plane and $166,228 in cash. Sunyich was sentenced to five years and Vowell to one year.
Jason Vowell is also named in the FTC's lawsuit against Jeremy Johnson as one of the primary individuals suspected of moving millions of dollars of Johnson's money between various financial institutions in an alleged effort to hide the money from the government. Jason Vowell and his brother Todd, an accountant, had helped Johnson process online poker payments mostly during 2009, via their Utah company Triple Seven, LLC. (The payments were process through Triple Seven had several DBAs, among them flingpay.com, netwebfunds.com, and paytoaccount.com.)
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So why all the businesses that the FTC said were shells being created and how were poker payments being processed. Here’s a quick synopsis based on press and government reports:
The FTC’s and FBI’s investigations into online gambling corruption began with wiretaps by a sheriff’s office in New York. The case was referred to the FBI because of links to organized crime. The path led to St. George Utah’s SunFirst Bank where large amounts of online gambling money were being deposited. In violation of federal law. The law did not outlaw internet gambling but did ban transfers of funds from financial institutions to internet gambling sites. Meanwhile, in 2010, an estimated $30 billion was being generated via online gambling, money that needed to be processed yet banks barred from participating in the cash flow.
At SunFirst it was damn the torpedoes, full speed ahead. That bank blatantly processed the money while processors used “shell” companies to trick many other banks into believing the money was not online gambling revenue. Thus the creation of all kinds of “fake” companies.
St. George’s Jeremy Johnson was an investor and part owner of what had been a cash-strapped SunFirst Bank. Floridian Chad Elie who had been processing money for three of the country’s largest online poker companies—PokerStars, Full Tilt Poker and Absolute Poker—needed a bank. Whch led to the Elie/Johnson partnership.
Elie met Johnson at an online marketing event in Las Vega and the two hooked up. They formed a new procession company, Elite Debt, proceeded to pump millions into SunFirst and processed many more millions through it.
On April 15, 2011, the day known as “Black Friday” among online gamblers, the federal government seized the domains of three largest poker sites and indicted Elie and SunFirst vice chairman John Compos. Johnson was not charged in that sweep but continues to face charges brought by the FTC. (Compos copped a plea deal that changed all the charged felonies to a single misdemeanor. He admitted to processing $200 million in gambling proceeds since late 2009, agreed to a lifetime ban from banking and accepted a three-month prison sentence. Elie also pled out, got a five-month sentence, which he served last year.
Elie and Johnson had a falling out. Elie sued Johnson accusing him of skimming Elies’ share of the proceeds. The civil complaint accused Johnson, the Vowells and other
defendants of stealing most of the $46.5 million from the SunFirst Bank processing operation.
Gaming industry reporter Haley Hintze wrote “the roles of Johnson and brothers Todd and Jason Vowell in the payment-processing schemes channeled through SunFirst have, to date, been largely underreported throughout the poker world.”
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Elie and Johnson were to split the processing proceeds 50/50, with Johnson and
his business associates handling much of the paperwork required to bring the SunFirst operation on board. Instead, it appears that Johnson retained most of the proceeds for himself and his cohorts. In a 2010 legal action funded by Stars and Tilt, Elie alleged that Johnson and his associates, including Jason and Todd Vowell and Scott Leavitt, conspired to defraud Elie by preparing duplicate sets of financial records, with those provided to Elie asserting that most of the $46.5 million in actual gross profits was instead absorbed by operational expenses, which were actually a negligible part of the operation. Hintze wrote that Elie told her neither he nor the companies he represented would
ever have done business with Johnson had they known the true nature of Johnson’s operation. “I would have never went into business with him. The AG of Utah was always with Johnson. Who ever knew?!” Elie told Hintze.
What about Johnson’s purported attempt to bribe Senator Harry Reid so he would call off the FTC? In an interview posted last year on YouTube Elie said, “I don’t know about Harry (Reid being paid by Johnson). But (Johnson) tried to pay everyone. I do know about John Swallow, I know about the former Attorney General. I definitely know there was a lot of money exchanged between the three of them.
Elie did not escape the attention of investigators working for the Utah House of Representatives. Its Report of the Special Investigative Committee, released March 11 this year, had a section on online gambling:
The story of Mr. Johnson’s interest in processing payments from online poker playing
has its roots in 2006, when the United States enacted a new federal law called the Unlawful Internet Gambling Enforcement Act (UIGEA). UIGEA prohibited an entity “engaged in the business of betting or wagering” from “knowingly accept[ing]” credit card payments, electronic fund transfers, checks, and certain other forms of payment “in connection with the participation of another person in unlawful Internet gambling.” The statute defined “unlawful Internet gambling” as betting using the Internet if the betting itself was otherwise “unlawful under any applicable Federal or State law.”
When a gambler plays poker at an actual casino, wins and losses are tallied immediately in chips that are backed by hard currency. Online poker is different. To make the game work, wins and losses are tallied electronically and there must be an entity involved to electronically move the money derived from the game into bank accounts of both the players and the online “casino.” The entity that moves the money is called a processor. In 2010, online poker generated $973.3 million, according to academic researchers. Ex. 7. But UIGEA made it difficult for many online poker companies to make and receive payments from players, and indeed, after Congress passed UIGEA, some online poker companies stopped operating entirely in the United States. Others continued operating, using companies that specialized in processing only poker payments to handle the transfer of funds. But because the legality of the entire online poker industry was in dispute, many banks refused to set up accounts for processors to deposit funds. Without bank accounts, online poker companies could not operate in the United States, and the multi-‐million dollar industry was threatened with collapse.
In 2009, poker payment processor Chad Elie started looking for ways to convince banks, and law enforcement officials, that processing poker payments was legal notwithstanding UIGEA. At the heart of his approach was the complex interplay between federal and state law. UIGEA, as noted, prohibited transmitting payments related to online poker playing—if the poker playing itself was in violation of federal or state law. If playing online poker for money was legal under the law of a particular state, then the payment
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processors could advance an argument that processing payments related to poker playing was also legal in that state. In many states there was little room to argue that poker playing was legal; so the challenge for the industry was to find a state where they could argue that online poker playing was legal, and to find a bank willing to accept their arguments and therefore accept deposits from the online game.
Mr. Johnson provided the solution. Mr. Elie got to know Mr. Johnson in 2009, and learned that Mr. Johnson had a connection to a bank that was a strong candidate for handling the payments.35 He (Johnson) was friendly with officials at SunFirst Bank in his hometown of St. George, and SunFirst was in financial and regulatory difficulty and desperately in need of an infusion of capital. In June 2009, the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (DFI) had found “unsafe and unsound banking practices” at SunFirst because of low capital reserves. Ex. 8. Mr. Johnson and Mr. Elie were willing to solve that capital reserve problem by investing millions of dollars in the bank—on the condition that SunFirst agree to process poker money. The bank struck an informal deal with Mr. Johnson and Mr. Elie to do exactly that in September 2009. Mr. Johnson eventually invested $4.4 million in SunFirst, mostly in the name of his brother or a family partnership.
From the start of their relationship, according to Mr. Elie, Mr. Johnson also boasted about the influence he had with the Attorney General’s Office. Ex. 9. “It was his thing, that he had the A.G. in his pocket,” Elie said in a 2012 interview. “He was always with the attorney general at events, signed off on everything he was doing.” For a payment processor with an interest in persuading a bank that handling online poker money was legal, a strong connection to a state’s top legal officer was a significant benefit. Mr. Johnson’s connection to SunFirst and his promised insider status in the Attorney General’s Office made Mr. Elie believe, he said in 2012, that SunFirst “would be the best place ever to process with.”
. . . . . . . . . . Chad Elie has also alleged that he saw Mr. Johnson give Mr. Swallow a bag containing
$20,000 in cash. He said that Mr. Johnson pulled the cash from one of many safes on his property in St. George. A court-‐appointed Receiver in a case against Mr. Johnson has confirmed that Mr. Johnson kept large amounts of cash at some of his properties, but Mr. Elie’s story is otherwise uncorroborated.
The Ron Tolman Flow Chart
The Six Degrees of Separation theory has it that anyone on the planet can be connected to
any other person on the planet through a chain of acquaintances that has no more than five intermediaries. So that anyone in the world can be connected to anyone else, not matter how remote, in six or fewer steps.
So it’s no surprise that in one manner or another it’s possible to connected Ron Tolman, the main subject of this story, to Senator Harry Reid. It’s not only easy to make the connections; it’s possible to make them via two different routes. (See flow chart on page 14.)
The question is not whether the connection can be made, but how close are the connections? Merely having met someone or being acquainted with someone does not mean there’s a close tie. If one or more of the links from person A to B to C to D is weak, then more so is the connection, via the links, of person A to D.
For example, one series of possible links shown on the chart is between Jeremy Johnson and Senator Reid when Johnson allegedly tried to pass bribe money to the Senator in an effort to get the FTC to back off. Money, in a deal allegedly orchestrated by former Utah Attorney General John Swallow, was purportedly planned to have gone from Johnson to the late Richard Rawle, a Provo payday lender, to a Reid associate then to Reid himself or an entity he controlled. The trail
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ends with a Rawle associate claiming contact had been made. Money may not have ever found its way to the Reid camp and, if it did, it didn’t work because Johnson ended up being charged.
Was Jeremy Johnson scammed and no attempt to engage Reid was made? Johnson wanted his money back.
Reid’s office provided a statement to The Salt Lake Tribune:
The allegations of bribery by Mr. Johnson, a man with a background of fraud, deception and corruption, are absurd and utterly false. Bribery is a crime for which Senator Reid has personally put people behind bars. Senator Reid will not have his integrity questioned by a man of Mr. Johnson’s low record and character, and his outrageous allegations will not go unanswered. Clearly, a desperate man is making things up.
Johnson purportedly also wanted Senator Reid’s help on another matter: legislation
favorable to online gambling. At first Reid opposed online gambling. Then he favored it. Johnson said the announcement of that change-of-heart came at a Reid campaign fundraiser with online gambling promoters in Las Vegas in 2010. Reid told fundraiser attendees, “Look, I’ve polled my constituents and they don’t like online poker, bottom line. … It’s bad for jobs here in Las Vegas. But I’m going to back what you guys are doing here. I’m going to introduce a bill for you.”
During the secretly taped, infamous Krispy Kreme meeting Johnson told Swallow that after Reid departed, he asked another attendee, “How in the hell did you guys get (Reid) to do that?” “And he says, ‘Let’s just say he got a little something in his retirement fund.’”
In March The Washington Times reported on the fundraiser: Mr. Reid did introduce online poker legislation one month after his re-‐election in a closely contested race in 2010. The proposed legislation never went anywhere. Jeffrey Ifrah, an online gambling industry attorney, attended the 2010 event with what he guessed were 60 to 70 others. He confirmed to ABC News that Mr. Reid announced his change of position on Internet poker in front of the donors. But he said he did not think the contributions influenced the decision and laughed off Mr. Johnson’s suggestion that Mr. Reid was paid to make that change. “If someone said that, they must have been joking,” Mr. Ifrah said. “Let me tell you something about gamblers: They don’t give their money to anybody and I highly doubt they would have given it to Reid. When they have cash to spend, they gamble with it — period.” Adam Jentleson, a spokesman for Mr. Reid, confirmed that Mr. Johnson attended the fundraiser. “Senator Reid met with a large group of supporters, just as he met with thousands of people over the course of his re-‐election campaign, and took pictures and shook hands with countless people. The record indicates that Mr. Johnson was present at this large group meeting, but Senator Reid does not recall him as anything other than a face in the crowd,” Mr. Jentleson said.
The Ron Tolman flow chart shows Tolman’s connections to harry Reid in two directions,
clockwise and counterclockwise. By time they get to Reid the connections are mostly alleged, with no direct tires proven.
Counterclockwise (see chart): Tolman was partners with Gordon Walker to develop mining claims in Nevada. Harry Reid
has mining property and claims at Searchlight. In 1989 Walker and Tolman worked a mining claim
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at Searchlight but it may be mere coincidence. Reid’s office declined comment on whether he knew Walker or discussed gold mining with him.
Gordon Walker was in Harry Reid’s LDS ward in Virginia when Walker was with HUD. Even though Walker became interested in Nevada gold near that time he may never have discussed with Reid.
Walker knew Stephen Studdert both as a possible partner in the gold venture and Studdert was once president of Walker’s and Reids’ LDS stake in Virginia. Studdert is now involved with gold mining in Nevada but near Reno not Las Vegas.
Clockwise: Tolman’s brother-in-law Steve Sunyich had a company that made software that could have
been useful for processing the type of online gambling payments Jeremy Johnson handled. But there are no press accounts of Johnson and Sunyich partnering on anything.
Sunyich’s son, Chad, was involved with Jason Vowell in drug smuggling. But there is no published, direct tie between Chad Sunyich and Jeremy Johnson. The St. George Spectrum merely
reported that “the FTC's action is reminiscent of its Las Vegas federal lawsuit against St. George businessman and philanthropist Jeremy Johnson, who was targeted by the FTC for alleged fraudulent billing practices related to his Internet-based company iWorks.”
Steve Sunyich was directly connected to Rick Koerber who was tied to Mark Shurtleff. (Utah’s Commerce Department was frustrated with
Shurtleff’s failure to file state charges against Koerber so turned its investigative findings over to federal prosecutors. The same commerce Department in 2008, found that Steve Sunyich and his daughter Melissa Joy Gardner violated Utah securities laws in a transaction that involved routing investor money to Koerber.)
Chad Elie, of course, figures into the chart. He was a Johnson partner. He met Harry Reid at least once. He clams to have seen Johnson give money to John Swallow. He worked with the Vowell brothers and may or may not have known Chad Sunyich or his father Steve.
It seems possible Elie at least met the Sunyiches given both had developed money-processing software. Elie explained his involvement with software in an interview:
Oh yes. At the same time I was processing checks for years and years and we came up with check21 software. To boor the people listening or reading, it’s X937 files, something that the government put in for the 2001 crisis, when all the checks got clogged up in the airplane. So it’s a digital check that goes thru the system. So we developed the software
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and we thought it would be great for processing. It turned out to be good and we put that in, and reached out to Jeremy and said, “Hey I really believe in this software and processing for peer-‐to-‐peer poker. So Elie did connectwith Johnson, formed a company and began processing through
SunFirst. Elie claims Johnson and the Vowell’s allegedly used the software to skim money: We were processing anywhere from $ 1 million to $ 3 million per day. So that adds up very quickly. So if you are processing let’s say $ 1 million per day, you have $ 1 million per day going out in credits to players…if you stop the credits going out to players, then you are stuck with this big pile of money and that’s what they ended up doing, and running off with it
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