Fed indicts two for role in Salt Lake

Posted: Friday, July 21, 2000

SALT LAKE CITY -- Two former Utah Olympic officials were indicted Thursday on charges they made $1 million in illicit payments to help lure the 2002 Winter Games to Salt Lake City.

Tom Welch and Dave Johnson are the highest-ranking officials charged in the biggest scandal in Olympic history. They were accused of lavishing cash, gifts, travel and other inducements on members of the International Olympic Committee and their relatives to get the IOC to select Salt Lake as the host city.

The 15-count indictment alleges that Welch and Johnson ''offered and paid $1 million to influence the votes of more than a dozen International Olympic Committee members,'' the Justice Department said in Washington.

Welch, 55, the former president of the Salt Lake City Olympic bid committee, and Johnson, 41, the ex-vice president, ''prepared and executed a series of bogus contracts and falsified ... books, records and other publicly available documents so as to conceal their activities,'' the Justice Department statement said.

The indictment followed the collapse of plea bargain negotiations this week.

The two were charged with one count of conspiracy, five counts of mail fraud, five counts of wire fraud and four counts of interstate travel in aid of racketeering. Welch resigned from the bid committee in 1997 and Johnson resigned in 1999.

Each of the charges carries a maximum sentence of five years in prison and a $250,000 fine.

The Justice Department also said Welch and Johnson ''personally diverted $130,000'' in bid committee income. Johnson's attorney already has said the $130,000 came from Olympic sponsor Jet Set Sports, a New York-based travel agency that specializes in Olympic vacation packages.

But the attorney, Max Wheeler, said Welch and Johnson spent the money on the bid effort and did not pocket it.

''The idea that we defrauded the bid committee or anybody else is preposterous. So is the charge that we bribed anybody,'' Welch said in a statement.

For the scandal-scarred Olympics the charges are yet another blow. The Salt Lake Organizing Committee has struggled to raise money since the scandal broke in November 1998.

''These indictments come as no surprise,'' SLOC President Mitt Romney said from New Hampshire, where he is vacationing. ''I do not believe this will have significant financial consequences for the games.''

Romney, who was hired to clean up after the scandal, still has $80 million to raise for the $1.32 billion Olympics to reach his goal of a break-even games.

The IOC, in Lausanne, Switzerland, said it ''stands ready to cooperate, as it has from the beginning.''

''We have no influence on the Department of Justice's action or decision nor do we seek to have any,'' IOC spokesman Franklin Servan-Schreiber said. ''Of course, it would be nicer for this not to impact on the Olympic Games in 2002.''

In Colorado Springs, Colo., the U.S. Olympic Committee said the charges ''represent another important step in bringing closure to this matter.

''With the investigation apparently complete, we look forward to attention once again being focused on the athletes of the world as they prepare to compete at the 2000 Olympic and Paralympic Games in Sydney, Australia and the 2002 Olympic and Paralympic Winter Games in Salt Lake City, Utah.''

On Monday, Welch and Johnson rejected a deal that would have had them plead guilty to a scheme to obstruct the Internal Revenue Service from collecting taxes.

That strategy builds on the case of a former U.S. Olympic official, Alfredo La Mont, who admitted evading taxes in a secret consulting agreement with Salt Lake City bidders.

Welch and Johnson consider themselves scapegoats for the vote-buying scandal, which has been under a Justice Department investigation for 1 1/2 years.

''What the government is doing from a moral standpoint is far worse than what Johnson and Welch ever did. It's not going to cause harm only Welch or Johnson. It will cause irreparable harm to other people in this community and the effort to put on successful games,'' Wheeler said.

He expects the case to take at least a year to play out, probably longer -- meaning a trial could drag into the February 2002 games and steal attention from the athletes.

A Salt Lake ethics panel found that the bid spent more than $1.2 million on members of the IOC and their relatives. The panel largely blamed Welch and Johnson.

Bid trustees, including Gov. Mike Leavitt, have insisted they were kept in the dark by Welch and Johnson.

Romney said he made a personal plea to Welch to settle the case for the good of Utah.

''We talked to both sides, expressing our hope this could be resolved in a timely manner. But both sides felt they needed to proceed for their own reasons, and we don't argue with that,'' Romney said.

In the wake of the scandal, 10 IOC members resigned or were removed from the 105-year-old organization, and Salt Lake's organizing committee's upper management was replaced.

Communications executive David Simmons pleaded guilty to tax fraud and admitted conspiring with bid leaders to provide a phony job for John Kim, son of South Korean IOC member Kim Un-yong. The younger Kim was indicted for allegedly entering the country on an illegally obtained visa and lying to the FBI.

La Mont, the former USOC international relations director, pleaded guilty in March to filing false tax returns and admitted to conspiring with two unidentified bid officials in the process.


Eds: Pete Yost in Washington contributed to this story.

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