2 Officials Indicted in Utah Olympic Corruption Case

The two top officials of Salt Lake City’s winning bid for the 2002 Winter Olympic Games were indicted Thursday on a broad range of criminal charges, setting the stage for a trial delving deeply into Olympic corruption just months before the Salt Lake City Games commence.

Tom Welch, the president of the bid, and his chief aide, Dave Johnson, each were indicted on 15 counts stemming from the wooing of International Olympic Committee members with more than $1 million in cash, gifts, bogus scholarships and other inducements. The federal indictments allege conspiracy, mail and wire fraud and interstate travel in aid of racketeering.

The charges are the result of a 19-month U.S. Justice Department investigation sparked by the worst corruption scandal in Olympic history.

No IOC members were indicted Thursday. Ten members have resigned or been expelled since the scandal erupted; the IOC in December passed a 50-point reform program.

Because it takes considerable time to gear up for a trial in a case like the one unveiled Thursday, Welch and Johnson could very well get what they have always said they wanted: the chance to tell their side of the story for a Salt Lake City jury just before the start of the Games. The opening ceremonies are Feb. 8, 2002.

“I still believe in the Olympics,” Welch said in a statement issued Thursday by his attorneys that offers a preview of the emotional tenor the defense is likely to set throughout the case.

“It is ironic that now that [the Games] are reality in Salt Lake for everyone else, Dave and I stand alone in this nightmare.”

The statement also makes plain a clear thrust of defense strategy. Welch said: “We and our families must go through the agony of a criminal trial on the eve of the Games because we did what we, and many other people, thought was absolutely necessary and in keeping with the ideals of the community.”

To underscore the point, Welch made a brief appearance late Thursday outside the Huntington Beach home where he lives when not in Utah.

Calm and composed, dressed in a blue suit and blue tie for the TV cameras, he said: “We will present a defense that the people of Utah will understand.”

He also predicted: “We will be acquitted.”

After leading Salt Lake City’s bid--it won the Games in June 1995--Welch, now 55, served as president of the Salt Lake Organizing Committee until July 1997. He resigned amid allegations of domestic abuse. He has since remarried.

Johnson, now 41, resigned as SLOC vice president in early 1999, weeks after the scandal broke.

The Justice Department is known in high-profile matters to bring charges in only those cases its top officials feel highly confident of winning. Legal experts, however, said this case promises to be that rare fight rich with both legal issues and, perhaps more important, moral overtones.

‘That’s What They Were Hired to Do’

University of Utah law professor Paul Cassell, a former federal prosecutor, said: “The truth of the matter is that Welch and Johnson had a job to do, which was win the Games, and they did it. That’s not a fraud. That’s what they were hired to do.”

But Laurie Levenson, a Loyola University law school professor who also is a former federal prosecutor, said of Cassell’s observation: “If [Welch and Johnson] succeed in that argument, it’s like saying, ‘There were no rules. We did what we had to do.’ That’s the real issue that will face a jury: Were there any limits, any rules, governing Salt Lake’s conduct in trying to obtain the Olympics?”

She did note, however, that Welch and Johnson “were likely to have the most sympathetic jury [they] could find in this country.” Prosecutors said Thursday they hadn’t decided whether to seek to move the trial out of Utah.

The indictments make it certain, meantime, that the scandal will continue to dog the IOC throughout the Sydney Summer Games, which begin Sept. 15. Senior Olympic officials said they could only hope for a resolution by February 2002.

“The most important thing is to finish this problem as soon as possible,” IOC President Juan Antonio Samaranch said in a telephone interview from Lausanne, Switzerland.

Added Mitt Romney, the chief of the Salt Lake Organizing Committee: “A trial could color the pride of the community and the nation that’s watching the Games. I hope it does not.”

The Justice Department investigation has led to three other cases. David Simmons, a Salt Lake businessman, pleaded guilty last August to a misdemeanor tax charge. He said he helped create a sham job for John Kim, son of influential IOC member Kim Un Yong of South Korea.

John Kim was indicted Sept. 1 on charges that he lied to investigators and entered the United States with a fraudulently obtained green card. Before being indicted, he moved to Seoul. The elder Kim received a “serious” warning from the IOC for his role in the scandal.

Alfredo LaMont, the U.S. Olympic Committee’s former director of international relations, pleaded guilty March 14 to two felony tax counts.

The indictments issued Thursday follow weeks of intense negotiations in which prosecutors and attorneys for Welch and Johnson sought to broker a deal--with both sides under pressure to settle from key Utah and Olympic officials. Sen. Orrin G. Hatch (R-Utah) was among those pressing for a plea bargain.

Talks broke down last week, however, when Welch and Johnson balked at a proposal to plead guilty to tax fraud. They objected to statements prosecutors had prepared for a plea bargain that went well beyond tax matters.

The two sides met again Monday without sealing a deal. After that, it was clear an indictment was imminent.

The 35-page indictment does not straight-out charge bribery. The IOC uses a secret vote to select a city for the Games, making it problematic to prove in court that cash or gifts bought a vote.

Instead, the indictment alleges that Welch and Johnson paid more than $1 million to “influence” the votes of 15 IOC members; prepared and executed a series of bogus contracts and falsified the bid committee’s books; and personally diverted about $130,000 in bid committee income.

Each of the 15 charges carries a maximum prison term of five years and a fine of up to $250,000.

Much of the indictment focuses on material already brought to light during several prior investigations--by, among others, the IOC and the U.S. Olympic Committee.

The new twist is the allegation that Welch and Johnson diverted bid money for their own benefit. Defense attorneys say it’s not true.

Allegations of Cash-Filled Envelopes

On four occasions between August 1994 and May 1995, the indictment alleges, Welch or Johnson accepted envelopes stuffed with thousands of dollars of cash.

The indictment alleges that the two men instructed a “potential sponsor” to pay them in cash so the money would not appear on bid committee books and “could be diverted by the defendants for their own personal purposes.”

Envelopes changed hands, according to the indictment, at the Salt Lake airport, at a Nashville hotel, at an Atlanta hotel and at John F. Kennedy International Airport in New York.

Defense attorneys said earlier in the week that all the money went toward bid expenses--not into Welch’s or Johnson’s pockets.

The indictment does not name the sponsor. Defense attorneys have identified it as New Jersey-based Jet Set Sports, owned by businessman Sead Dizdarevic. Jet Set is a longtime supplier of travel, ticket and corporate hospitality packages to the Olympics.

Jet Set’s attorney, Robert Boyar, issued a statement acknowledging that Jet Set had “made contributions” to the Salt Lake City bid committee.

It said Dizdarevic had “fully disclosed and explained” the payments to federal investigators, concluding, “No further comment is appropriate at this time.”