TWO PORTS — Mayor Chris Swanson has repeatedly used his official position in the city “for personal gain or business interests,” a violation of the city’s communications policy, the prosecutor has found.
Swanson also made several city ordinance violations, but evidence presented to the attorney showed no city charter violations.
The findings come from a wide-ranging memorandum of opinion written by prosecutor Tim Costley investigating complaints about Swanson’s underwater hotel operations, a website that seeks investors for the underwater hotel, tweets about a city cryptocurrency and one of its companies using his title as Mayors to advance their own financial or personal interests, and the use of information obtained in confidence to further their own financial or personal interests.
Although the opinion was not presented at Monday night’s meeting, it was available for public inspection in a full Council package.
As the statement was finalized on Sunday, Swanson asked the council to postpone discussion of it so it had more time to review it. He commented on most of the points in the statement during the announcement portion of the meeting.
It is expected to be discussed at the April 25 session. Swanson will not attend the April 11 meeting.
After Monday’s meeting, Swanson declined to comment specifically on the memorandum of opinion to the News Tribune.
In the statement, Costley said in all matters he is considering there is no evidence that the city has entered into any contracts and that he has “no direct evidence that Mayor Christopher Swanson has a personal financial interest in these matters.” .
In August 2021, Swanson appeared as a guest on the “Ask a Billionaire Podcast” where he featured “Mr. O,” which is a pseudonym for a man who claims to be a billionaire. He was later identified as Daniel Victor Hancock, a Las Vegas criminal who had a history of luring investors with empty promises.
Costley wrote that Swanson failed to make a disclaimer that the opinions were his own and that they were not representative of those of the City of Two Harbors, as required by the city’s communications policy.
“Mayor Swanson’s statement that part of the plan for the underwater hotel includes an RV park as part of the city’s municipal golf course implies that the city has such a plan,” Costley wrote. “This is incorrect and constitutes a misrepresentation. Making this statement and presenting it as a city business without using a disclaimer is a violation of this policy.”
“In my opinion, it is a violation of this policy to identify and/or allow yourself to be identified as the Mayor of Two Harbors on this podcast to further one’s personal business interests and potential personal gain,” wrote Costley.
During Monday’s meeting, Swanson apologized for the distractions caused by his underwater hotel idea and that it would not be within city limits because it would be underwater in Lake Superior.
“Needless to say, the past few months have been extremely humbling for me,” Swanson said. “I want to deeply apologize for the distractions this has caused at this council.”
Swanson also told the council that he disclosed plans to the city attorney general.
“Tim (Costley), I’m not throwing you under the bus here, but I sat in your office and we had a meeting and there were witnesses and I told you about this Mr. O and the economic development project,” Swanson said. “I think it was important to share that because I don’t know that people know that.”
Costley later responded by calling it “a false statement” and saying he told Swanson at the time that an underwater hotel was a “whistle dream that will never happen.”
“To imply that I knew something beforehand and that I was involved with Mr. O or knew that was part of what was going on, I want this council to know that, that’s not true,” Costley said .
The report cites a story from the Duluth Monitor news site, which explains that Knife River’s Brian Entzion met with Swanson and Lake County Chamber of Commerce President Janelle Jones in 2017 to share his vision of building the Lou’s Fish House Building in Two Harbors for him to buy his own business.
By 2018, a company founded by Swanson’s wife, Rebecca Swanson, bought the property and later reopened it. Entzion alleged that Swanson used the information he provided to influence his wife’s purchase of the property.
Costley said if that’s true, and because the information shared in the meeting would be considered “trade secrets,” it would be a violation of city statute, which says using nonpublic information for financial or personal gain is “unlawful.”
“Unless this is disproved…I believe that Mayor Swanson, in his official position as mayor of the city, received information that was used to further his financial or other interests,” Costley wrote.
And as with the other four issues Costley considered, he said Swanson used the city’s official position “for personal gain or business interests,” which is prohibited by the communications policy.
Swanson addressed the issue during Monday’s meeting, confirming that he had met with Entzion but that it did not affect his wife’s purchase of the building.
“I don’t think you can expect someone who comes up to you and says they want to buy your house and eight or nine months later still hasn’t signed the contract to think they’re very serious,” called Swanson. “I’m sorry, Mr. Entzion, but that’s the way business works. You have to show that you mean business.”
According to a complaint by former Two Harbors urban planner Mark Johnson in 2020 and then again in February 2022, Swanson used his title as mayor and his official city email address to solicit funds for Friends of the Band Shell Park, which hopes to replace the bandstand in Thomas Owens Park with a performing arts centre.
At the same time, Johnson said that Swanson’s company, Garage Starts, charged the Bandshell group $65 for each call it had soliciting funds from Johnson.
Swanson serves as CEO of Garage Starts, according to his website.
Costley said Swanson failed to include a disclaimer clarifying that he was not speaking in his official capacity as mayor, which violated city ordinances. In addition, Swanson violated communications policy by “using an official position for personal gain or business interests.”
“I sent emails using my mayoral email account,” Swanson said Monday. “I shouldn’t have done that.”
Costley said an unfinished but active website for the underwater hotel project VibeTwoHarbors.com also violated city ordinances and communications policy because Swanson used his mayoral title without a waiver and used his position in the city “for personal gain or business interests.”
A contact form on Vibrant Two Harbors’ website asks “people looking for high-yield investments” to enter their contact information so that “Mayor Swanson will get in touch with you.”
“Seeking investors and furthering one’s personal business interests and potential personal gains is, in my opinion, a violation of this policy,” Costley wrote.
Swanson said Monday the site was “created with the hope of showcasing the cool stuff for interested companies looking to invest in your community.”
Because there is no treaty between the city and Vibrant Two Harbors, there is no violation of the city charter.
The website also promotes his daughter’s Two Harbors stores, Lou’s Fish House, Callie’s Sweets, and Burlington Station, as “completed projects” by the Vibrant Two Harbors team.
“From this representation, one could reasonably assume that a business relationship exists between Vibrant Two Harbors and these three companies. I have no independent proof of a connection,” Costley said, adding that Swanson said he invested $1.7 million in Callie’s Sweets during the Mr. O podcast.
“If such a connection shows up in the future, and if the city council has voted to encourage this deal in any way, further analysis would be required,” Costley said.
Swanson used his Twitter account “Mayor Chris Swanson” to
to announce the possibility of establishing an official city cryptocurrency for Two Harbors. He also used it to promote his Garage Starts business.
Costley said both were city policy violations.
When Swanson tweeted about the possibility of the city earning revenue from a cryptocurrency, then using the revenue to mine more and putting some into a mutual fund where residents can then vote on using it in city projects, it did in a way presented, which sounded like an official plan or policy since Swanson did not include a disclaimer, Costley wrote.
“The President (Joe Biden) recently tweeted how he sees cryptocurrencies as the future,” Swanson said Monday. “I didn’t think people would think I was making an official statement for the town of Two Harbors.”
Costley wrote that his promotion of Garage Starts on Twitter violates communications policy because he “uses official city positions for personal gain or business interests.”
“The communications policy also prohibits the creation of social media account names associated with the city,” Costley wrote. “In my opinion, the use of the title ‘Mayor Chris Swanson @mayorswanson’ on Mr. Swanson’s personal Twitter account violates this policy.”