Ex-millionaire's plea deal unravels in attempt to protect family, new A.G.
No reason for John Swallow to be on no-indictment list, spokesman says
Jeffrey D. Allred, Deseret News
SALT LAKE CITY — A court hearing at which erstwhile multimillionaire Jeremy Johnson intended to admit to federal fraud charges took a left turn Friday when he produced a list of people he wants protected from prosecution should he plead guilty.
The list included Johnson's wife, parents, friends, business associates — and newly sworn Utah Attorney General John Swallow, according to a copy Johnson provided to the Deseret News before the hearing.
Johnson, though, would not discuss why he included Swallow's name but said it involves money. Johnson's attorney, Nathan Crane, had no comment about Swallow's name being on the list.
Swallow declined to speak with the Deseret News on Friday. His spokesman, Paul Murphy, said Swallow did nothing wrong.
"This stuff has been bandied about since the political campaign," Murphy said.
Swallow, a Republican, has not asked to be on Johnson's list nor does he need to be on the list, he said. "He's not protecting John. He's damaging John."
Johnson approached Swallow for help when the Federal Trade Commission was investigating his St. George-based Internet marketing firm, iWorks, Murphy said, adding that Swallow put Johnson in touch with someone who does lobbying for the FTC and nothing more.
Murphy said no money exchanged hands between Swallow and Johnson.
Former GOP Attorney General Mark Shurtleff has relationships with both Johnson and Swallow, who served as his chief deputy until succeeding him as attorney general on Monday. Johnson contributed to Shurtleff's political campaigns and gave $50,000 to the attorney general's Internet Crimes Against Children task force.
Shurtleff said he and criminal prosecutor Kirk Torgensen met with Swallow regarding the allegations involving Johnson. Torgensen is now Swallow's chief deputy.
"I went to him and said, 'I need to know what you did do and what you didn't do,'" Shurtleff told the Deseret News last month. "There's things that Jeremy's saying and there's some documentation that may look bad and I think that's what people are basing it on. At the end of the day, I'm convinced John didn't do anything illegal."
The list Johnson tried to enter into the court record during Friday's hearing caused a stir among federal prosecutors. They balked at including any names of people Johnson wanted protected in a plea agreement in which Johnson was to admit to bank fraud and money laundering in connection with his once thriving company.
U.S. District Judge David Nuffer called a recess to allow the parties to negotiate. They came back about 90 minutes later and told him the deal was off.
Before the recess, prosecutor Brent Ward told the judge the U.S. Attorney's Office for Utah committed that there would be no further indictments against anyone else associated with iWorks.
"They wouldn't put it on the record. They said you gotta trust us," Johnson, 37, said after the hearing.
Ward, Utah's former U.S. attorney, said prosecutors would file an additional indictment in a month and asked the judge to schedule a trial in the fall. U.S. Attorney David Barlow would not say what those charges would be and whether anyone else would be indicted.
"We thought we had an agreement. We thought the agreement included protection for certain individuals by name," Crane said. "Jeremy didn't want anyone to go through what he's gone through. … Having the federal government over the top of you on a criminal case is not fun."
Johnson said in an interview before Friday's hearing that he is innocent and planned to plead guilty only to protect his friends and family, whom he says Ward threatened to arrest if he didn't cooperate.
"I told the prosecutor, 'I'll put a bullet in my head if that's what it takes. You can put as much (prison) time in there as you want, put anything in there that you want, and I'll tell the judge I did it. I'll do whatever it takes to stop you,'" Johnson told the Deseret News.
Barlow said no threats were made.
Before court on Friday morning, Johnson filed a report with Salt Lake police, alleging that Ward committed extortion. Police confirmed they received the report and assigned it a case number but had no further comment.
Federal authorities initially charged Johnson with one count of mail fraud for his company sending one of its products, a CD containing information about how individuals could obtain government grants, to a customer. That charge would have been changed to bank fraud and money laundering as part of the proposed plea deal.
The criminal charge came after the FTC filed a civil complaint against Johnson in December 2010.
The FTC alleges iWorks lured Internet consumers into "trial" memberships for bogus government grants and moneymaking schemes and then repeatedly charged their credit cards for programs they didn't sign up for, totaling nearly $300 million.
Johnson has steadfastly maintained his innocence and refused to sign a settlement agreement with the FTC.
The St. George man gained prominence in January 2010 when he flew his helicopter to Haiti the day after a massive earthquake devastated Port-Au-Prince and surrounding cities almost three years ago to the day.
Along with some iWorks co-workers and friends, Johnson flew injured children to hospitals and dropped food to homeless Haitians.
"That place changed me. I came away from there cursing God. Carrying these little kids that are all broken and bleeding and I didn't understand why already they're so poor," he said, his voice filling with emotion even three years later.
"A bad thing happened to them. That's something that helps me do what I'm doing because no matter how bad it is for me, I could have been born there. God forbid, what would my life have been like then?"
Johnson lived an extravagant lifestyle when iWorks was at its peak. He owned airplanes, helicopters, boats, classic cars and high-end sports cars. He maintained several homes. He started buying gold, some of which he once buried in the southern Utah desert because he worried about a break-in at his house.
In addition to his passion for flying helicopters, Johnson had a large appetite for gambling. He lost about $3 million in Las Vegas casinos and playing online poker.
It all came crashing down when a federal court seized his assets in the civil case in January 2011 and with his arrest six months later in the criminal case. Johnson was at the Phoenix airport en route to Costa Rica to start a helicopter touring company when federal agents stopped him.
Johnson spent three months in jail until his family and friends put up a $2.8 million property bond to secure his release pending resolution to the criminal case. He continues to live in a large St. George home but said he has fallen $350,000 in arrears on the mortgage.
He did not tell his wife or family that he planned to plead guilty Friday. Although an uncle showed up part way through the hearing, Johnson arrived at the courthouse with only a close friend and his attorney.
"My family has no idea what I am doing because if they did they would have absolutely come apart and do everything in their power to stop it," he said before going to court.
Johnson said he was prepared to go prison to protect his family and friends.
"It wasn't until the government threatened to start hurting people that I cared about that I was willing to give that up," he said.
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