March 13, 2014  -- Two local prosecutors in Utah say a corruption investigation looking at state politicians and online gambling interests has yielded evidence that could implicate Senate Majority Leader Harry Reid, D-Nevada, and Senator Mike Lee, R-Utah.

The two district attorneys – one Democrat and one Republican – already working with a team of FBI agents, are urging federal prosecutors to pick up the case and investigate – something the Department of Justice has thus far declined to do.

The Utah officials say the evidence relates to suspect campaign contributions and other financial transactions.

Reid, a liberal Democrat, and Lee, a rising star in Republican politics, could not be more opposite politically, but the campaigns of each have ties to online poker, the prosecutors say.

“The most appropriate entity to review those type of things, if they would, would be the Department of Justice,” Davis County District Attorney Troy Rawlings, a Republican, told ABC News. “Basically to look at their own. To look at allegations of conduct or misconduct involving federal officials.”

Sim Gill, a Democrat, who is the district attorney for Salt Lake County, agreed.

“Could there be an innocent explanation for [the evidence]? Possibly. Could there be a more sinister explanation for it? That's also possible,” Gill said. “So I think the-- those are the things that we have to try to figure out.”

Rawlings and Gill first took over the investigation in late 2012.

When they began, their effort was narrowly focused on allegations of corruption facing the newly elected Utah Attorney General, John Swallow. Swallow has denied the allegations against him, but resigned his state post in November, less than a year after being elected.

Both prosecutors expressed disappointment that the Department of Justice had declined last year to embrace the investigation into what the local officials considered “serious allegations.”

“They already made the decision that the Department of Justice is going to run away on this case. That’s done,” said Rawlings. “So I guess unless they change their mind about that for some reason there will be no federal prosecution.”

The investigation, with the assistance of the FBI team, has continued to focus largely on state players. But the two local prosecutors said they may be forced to consider expanding it to include federal players if the Department of Justice remains on the sideline.

“If somebody commits crimes and there's a nexus to the state of Utah and we can prove it beyond a reasonable doubt, it doesn't matter who they are,” Rawlings said. “Even a U.S. senator. And no, we're not afraid of that. That's our job.”

A spokesperson for the FBI declined to comment, but a senior law enforcement official told ABC News the unusual arrangement between the FBI and local prosecutors was “satisfactory because the main concern is that justice is served.”

Over the past year, the FBI agents and state investigators have collected more than 100,000 bank records, e-mails and other documents and interviewed more than 200 witnesses as part of the bi-partisan probe, according to the two district attorneys, who gave their first interviews to ABC News and The Washington Times this week.

The prosecutors said they obtained a federal judge’s order to allow them access to information obtained from a federal grand jury and praised the work of the FBI agents.

“They’ve done an incredible job, and we’ve certainly benefited from that,” said Gill.

In their interview, the two prosecutors said they were limited in what they could share because the investigation is still unfolding. But they confirmed their agents have forwarded evidence to the FBI that raises questions about contributions to the campaigns of both Senators.

Rawlings said the agents began picking up “bread crumbs” that raised questions about Senator Reid’s contacts with representatives of online poker industry.

“As we do our investigation focusing primarily on the state officials, we are sweeping up these bread crumbs and then, [will] combine them to see where they go,” Rawlings said. “We’re not ready to pronounce [the] prosecutions of any federal officials. But I will tell you this. By virtue of somebody being a federal official-- be it an elected or an appointed official, whatever it is, does not give them immunity from state crime.”

Adam Jentleson, a spokesman for the Senate Majority Leader called the statements by the district attorneys “a publicity stunt.”

He said Reid “has never been contacted in regards to this investigation” and said questions about the investigation submitted by ABC News were “nothing but a fever-brained witch hunt.”

A spokesman for Senator Lee said in an email that no one from the prosecutor’s office or from the FBI has contacted the senator about the investigation.

Despite strong public opposition to gambling in the state, Utah briefly became an unlikely foothold for one of the world’s largest online poker companies in late 2009, which used a bank in the city of St. George to process hundreds of millions of dollars in proceeds.

One of the key figures in the bank that handled those transactions, Jeremy Johnson, told ABC News that poker interests had entered the political fray in search of help to prevent a crackdown on the processing of poker proceeds.

Johnson says it was those interests – among others -- that led him to start arranging for what he says would become tens of thousands of dollars in contributions to an array of state and federal political campaigns, including that of Reid.

Today, Johnson remains a controversial figure in Utah, awaiting trial on 86 internet fraud charges alleging he bilked consumers out of millions of dollars.

Because of that case, Johnson is now under a gag order. But in an interview with ABC News conducted before the gag order was imposed, Johnson described his allegations involving Sen. Reid and others.

“There is a kind of gray area in the law whether or not poker is legal and it was an unsettled area to that point and they wanted Harry Reid to get that cleared up,” Johnson said.

Johnson claims he was instructed by online poker figures to hide illegal contributions to the campaigns of Reid and Lee in 2010 by finding “straw donors” who were reimbursed from poker accounts in the bank for money they supposedly contributed.

Reid’s spokesperson, Adam Jentleson, called Johnson, “a desperate individual who’s been indicted on over 80 counts. His allegations are false and the flailings of a desperate man.”

Another Johnson allegation involves a 2010 fundraiser event at the Rio Casino in Las Vegas, where on-line poker industry officials hosted Reid.

Johnson says Reid promised to introduce federal legislation to legalize on-line poker if he was re-elected.

In a later, secretly recorded conversation with the then-Attorney General Swallow, widely publicized in Utah, Johnson related how he asked one of the poker executives how the industry was able to obtain Reid’s support.

“I said how in the hell did you guys get him to do that. And he says let's just say he got a little something in his retirement fund. And I was like okay, that's how it is," Johnson says in the recording.

The secretly recorded conversation between Johnson and Swallow took place in a Krispy Kreme donut shop in Orem, Utah on April 30, 2012 and its revelation in the Salt Lake City Tribune helped spark the investigation.

Reid’s spokesman said the Senator always opposed “broad-based on line gambling,” but said Reid had, over time, decided to alter his longstanding opposition to on-line poker before the meeting and denied Reid had offered to change his position on on-line poker in return for campaign contributions.

“Senator Reid became convinced over time that states should be allowed to decide for themselves whether to allow on-line poker,” said Jentleson, the spokesperson. “New regulations and new technologies have been developed, including technologies that would enable sites to block minors,” the spokesperson added.

One month after his re-election in a closely contested race in 2010, Reid’s office issued a statement saying he was “working to pass” a bill that would legalize on-line poker. The Senator dropped the proposal one month later.

“Senator Reid’s position on online poker will always be based on what is best for Nevada jobs, and he will never stop fighting for Nevada jobs,” the Senator’s spokesman said.

Jeffrey Ifrah, an online gaming industry attorney, says he attended the 2010 event with about 60 to 70 others and does not think Reid’s change in position was connected to campaign contributions.

And he said any comments about Reid’s retirement fund were likely a joke.

“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,” he said.

Rawlings and Gill said they remain unsure where the evidence will lead, but they believe a deeper, federal investigation is needed.

“We're limited and we're bound by only what we can prosecute-- under Utah state code. But are there ramifications beyond that? Absolutely,” Rawlings said. “The breadth, the scope and the depth of this investigation is far beyond I think what's out there in the general public knowledge."

This story was updated to further explain Sen. Reid’s efforts to promote online poker legislation in December 2010.

Sammy Linebaugh (@SammyLinebaugh) is a freelance reporter based in Utah.

John Solomon, a former Deputy AP Washington Bureau Chief and now the Editor of The Washington Times, contributed reporting to this story. All interviews were conducted by ABC News.

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