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Salt Lake investigation reaps guilty plea

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Posted: Tuesday August 03, 1999 09:48 PM

  David E. Simmons (right) said he used fake contracts and phony invoices to conceal the misconduct. AP

SALT LAKE CITY (AP) -- A businessman pleaded guilty Tuesday to tax fraud in the first criminal case coming out of the federal investigation of Salt Lake City's winning bid for the 2002 Winter Olympics.

David E. Simmons admitted to helping the son of a powerful International Olympic Committee member from South Korea obtain lawful permanent resident status by setting up a sham job at his now-defunct communications company.

He pleaded guilty to a single charge of filing a fraudulent tax return, a misdemeanor that carries a prison term of up to a year in jail and a $10,000 fine.

Simmons agreed to cooperate fully with the investigation, which was begun in December and now involves the Justice Department, the FBI, the Internal Revenue Service and the U.S. Customs Service.

In a statement, Simmons said he used fake contracts and phony invoices to conceal the fact that John Kim's salary was being paid by the Salt Lake City Olympic Bid Committee.

The goal, he said, was to win support for the city's quest for the Olympics.

"I included in a tax return for Keystone Communications salary for an [IOC] relative and I knew it false. The purported salary was not genuine," Simmons told U.S. Magistrate Ronald N. Boyce in a voice barely above a whisper during a court appearance Tuesday.

Since December, federal and state investigators have been looking into gifts, favors, cash payments, medical care and jobs lavished on IOC members and their relatives by Salt Lake's Olympic bidders.

Ten IOC members either resigned or were expelled for receiving cash and other improper inducements from the Salt Lake committee trying to win the right to hold the Olympics.

Salt Lake Olympic officials have blamed the vote-buying scandal on the actions of a few bid committee officials. The former two top Salt Lake bid and organizing committee officials lost their jobs in the scandal.

The government's court papers said the scheme began in summer 1990 with an agreement between Simmons and an officer of the committee working to bring the Olympics to Salt Lake City.

The government didn't identify the committee official, but Simmons said the deal was arranged by Tom Welch, the committee's president. Welch has not been charged.

The son's name was not disclosed by the Justice Department, but a Salt Lake Olympic Committee ethics report filed last winter said Simmons helped set up the job for John Kim, the son of IOC member Kim Un-yong.

Howard Graff, a New York lawyer for the Kim family, said the arrangements for reimbursing Simmons were kept secret from the family.

"It is indeed unfortunate that by implication, Dr. Kim has once again been dragged into a story concerning the alleged misdeeds of others," Graff said in a statement.

The IOC's own investigation in March gave Kim Un-yong a "severe warning" for his conduct, but stopped short of harsher sanctions in the inquiry that led to an unprecedented 10 expulsions or resignations.

Family spokesman Bill Schechter said the younger Kim acted as a "rainmaker" for Keystone Communications, introducing Simmons to the CEOs of Korea's major television networks on possible cable-TV deals.

Kim Un-yong, a member of the IOC's ruling executive board and president of an international confederation of Olympic sports, has consistently denied any wrongdoing in the Salt Lake scandal.

"In our efforts to assist Kim and to receive reimbursement for his salary costs, we complied with the requests of Kim, Kim's attorneys and Welch that resulted in incorrect and misleading statements and agreements," Simmons said in a statement.

"Our involvement was prompted by a sincere desire to assist the bid committee in their efforts," he said.

Welch went on from the bid committee to become president of the city's Olympic organizing committee, until he resigned in the wake of spouse-abuse charges in 1997.

Tom Schaffer, Welch's attorney, said Simmons' testimony likely would be used against his client. "It's the way the feds work," he said. "Start at the bottom and work your way up.

"If Simmons has an interest in getting the Olympics and does this on his own, that's his business," Schaffer said.

Investigators said the IOC member's relative was hired as the marketing manager for Asian operations in 1990. He remained on Keystone's payroll until October 1992, though he stopped coming to Keystone's New York City office and was not performing work for Keystone.

The relative's salary, according to government documents, began at $50,000 a year and was raised on May 1, 1992, to $70,383 a year. The government said most of nearly $200,000 paid out by Keystone came from the bid committee.

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