Indicted businessman Jeremy Johnson files court papers saying FTC abused power
He claims A.G. John Swallow has been under investigation for nearly a year
Johnson touched off a political firestorm in January when he accused Swallow of helping arrange a $600,000 payment to enlist Senate Majority Leader Harry Reid in an effort to derail the FTC investigation into iWorks. Swallow adamantly denies the allegation. Reid has disavowed any knowledge of Johnson's case.
The U.S. Attorney's Office acknowledged in January that the FBI and Department of Justice are investigating Swallow, but did not say when the investigation began.
Swallow through his spokesman Paul Murphy said the only investigation he's aware of is the one he asked the U.S. Attorney's Office to conduct on him after Johnson's allegations hit the news. Murphy said Swallow has not received a "target" letter from any federal agency advising him he is under investigation.
Murphy said it's "highly suspect" that the proposed proffer refers to Swallow. Johnson, he said, has a history of not telling the truth.
The FTC case
In December 2010, the FTC filed a complaint in Las Vegas against Johnson and nine others, including some of those now charged in the criminal indictment.
The agency contends the company lured Internet consumers into "trial" memberships for bogus government grants and moneymaking schemes and then repeatedly charged their credit cards fees for programs they didn't sign up for, totaling $300 million.
The government shut down iWorks and seized Johnson's millions of dollars in assets, including luxury cars, airplanes and helicopters, houses and gold bars.
Johnson launched a website called evilftc.com in December 2011 where he rails against the FTC, specifically federal attorneys, with phrases such as "missed the class on constitutional rights in law school." He used a photo of actor Mike Myers' character Dr. Evil as a stand-in for one FTC lawyer.
On the site, he posted email exchanges between himself and the FTC, court transcripts and inflammatory rhetoric. He also set up Twitter and Facebook accounts.
Many of the allegations he makes on the website are included in the document he filed Thursday.
The criminal case
In March, federal prosecutors in Salt Lake City hit Johnson, Scott Leavitt, Loyd Johnston, Bryce Payne and Ryan Riddle with an 86-count indictment alleging bank fraud, wire fraud, money laundering and conspiracy in relationship to iWorks.
Riddle has called the charges a "vendetta" against Johnson because Johnson backed out of a plea bargain with federal prosecutors on a previous fraud charge involving iWorks.
All five pleaded not guilty last month before Magistrate Judge Paul Warner. In the hearing, defense lawyers complained that prosecutors in the criminal case were consulting with FTC attorneys and sitting on witness depositions in the civil case.
Warner said if he had the authority, he would put the civil case on hold pending the outcome of the criminal case.
"That would make it easy. But that's not my call. It's not in my power to do, so that's why we have some of these problems," he said during the hearing.
Warner also has advised all parties not to talk to the press pending his ruling on a government motion to impose a gag order in the criminal case.
In his court filing, Johnson wrote, "The government is worried that allowing us to move forward with the civil case will 'wreak havoc with the government’s criminal case.' Words cannot even begin to describe the havoc that has been brought on our lives because of the actions of the very government agents who are asking this court for a stay."
Johnson also reminds the court that he doesn't have legal training and asks the judge to overlook errors that fall outside established legal procedures.
Johnson is not alone in opposing the government's motion to put the FTC case on hold. Other defendants, some of whom are named in the criminal case, also filed opposition motions late Thursday.
Karra Porter, a Salt Lake attorney representing iWorks but not Johnson, wonders how questioning witnesses, some of whom have already testified, would interfere with anything.
"Surely (the government) is not suggesting that mere questioning of witnesses it may later wish to call at trial will collapse its case; one would wonder about the merits of such a case if that were true," she wrote in court documents filed late Thursday.
Porter argued a stay would stymie the civil case to the point that a trial could not take place.
"Not only will the defendants have to wait years for their day in court, but meanwhile, they cannot even take important steps in preparing their defenses," she wrote.
A hearing to discuss whether to stay the FTC case is set for May 16 in Las Vegas.
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