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
SALT LAKE CITY — Indicted Utah businessman Jeremy Johnson is taking his caustic social media fight against what he has called "dirty deeds by big government" to the courts.
Johnson filed a 39-page document in U.S. District Court in Las Vegas late Thursday lambasting the Federal Trade Commission over its lawsuit against him and his once-lucrative Internet enterprise, iWorks.
The document also reveals that Utah Attorney General John Swallow may have been under federal investigation as early as June 2012.
In the filing, Johnson accuses federal attorneys and agents of misconduct and conspiring to fabricate evidence against him. He contends investigators used threats, bribery, extortion, forgery and manipulation of judges to build their case.
"From day one in this case, the government has taken a 'shoot first and ask questions later' approach. Individuals have misused their undeniable power," he wrote.
Johnson cites two government witnesses — a consumer and a former iWorks employee — who now say the FTC coerced them into signing or forging their signatures on false statements.
The 37-year-old St. George man and three associates who are acting as their own lawyers in the case also use the document to proclaim their innocence and put their side of the story on the court record — something Johnson has said government lawyers have blocked him from doing.
Until now, he has relied on social media to make his case, as well as attack the government, including a vitriolic website called evilftc.com.
Johnson's Thursday court filing, including 167 pages of supplemental information, is a response to an unusual joint motion by the U.S. attorney for Nevada and the U.S. Attorney's Office in Salt Lake City seeking a court order preventing Johnson and other defendants from interviewing witnesses in the civil case. Federal prosecutors contend allowing him to gather evidence in the FTC matter will compromise the criminal case against him.
"The proposed stay is necessary to prevent these defendants from using the civil discovery process to obtain information to which they are not entitled in the criminal case," prosecutors in Las Vegas wrote.
Johnson and four former iWorks executives are named in two cases running simultaneously through the federal court system — the civil FTC complaint in Las Vegas and the criminal fraud charges in Salt Lake City.
The parallel cases have witnesses, facts and legal issues in common. The complications have caused a dispute among lawyers regarding access to witnesses, including those the government has identified as victims of alleged fraud.
Johnson's court filing sheds light on investigators' interest in Swallow.
It includes a copy of a proffer the U.S. Attorney's Office for Utah made to Johnson's former attorney "in connection with the government investigation of a person or persons known by your client concerning violations of federal statutes." It is dated June 20, 2012, and signed by assistant U.S. attorney Carlos Esqueda.
The proffer doesn't name Swallow, but Johnson said in his court filing it refers to Swallow, who was then a Republican candidate for attorney general. Johnson writes that prosecutors offered him a plea bargain in exchange for information about Swallow. Johnson, who faced a single count of mail fraud at the time, ultimately did not agree to help in the investigation.
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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