FTC seeks judgment in fraud case against St. George businessman Jeremy Johnson
Jeffrey D. Allred, Deseret News
SALT LAKE CITY — Federal regulators want a Nevada judge to find that a St. George businessman's "well-oiled fraud machine" tricked online customers into spending $281 million on bogus Internet services.
The Federal Trade Commission filed a motion for summary judgment and a final order in U.S. District Court in Las Vegas on Wednesday in its three-year-long case against Jeremy Johnson and his iWorks enterprise.
Along with the motion, FTC attorneys filed thousands of pages of exhibits and depositions that amount to what it says is "irrefutable evidence" that Johnson and his associates violated federal law.
IWorks lured customers into "trial" memberships for bogus moneymaking opportunities and government grants for personal expenses, the FTC alleges. Those who signed up for the "risk-free" offers were repeatedly charged monthly fees and enrolled in other programs without their knowledge, the commission says.
"At the height of the iWorks scam, defendants were making 150,000 sales per week. Defendant Jeremy Johnson received no less than $52 million from this well-oiled fraud machine," according to the FTC.
The government froze Johnson's assets in early 2011, and a court-appointed receiver began selling them to return money to consumers, FTC officials said.
Johnson, who represents himself in the civil case, has maintained his innocence and has refused to settle with the FTC. He said in an email Wednesday that he is not allowed to comment. A lawyer for iWorks did not return a phone call for comment.
Two of Johnson's associates named in the complaint, Bryce Payne and Kevin Pilon, settled with the FTC on Tuesday.
In addition to the civil complaint, federal prosecutors in Salt Lake City filed an 86-count criminal fraud indictment against Johnson and four former iWorks executives in March.
Johnson embroiled Attorney General John Swallow in scandal when he claimed in January that Swallow was part of an effort to bribe a U.S. senator in hopes of ending the FTC investigation into iWorks in 2010. Swallow steadfastly denies any wrongdoing and says Johnson made up the story.
The allegations led to investigations of Swallow on several fronts, including the U.S. Department of Justice, two county attorneys and a Utah House special committee, which recently issued a subpoena to Johnson. The DOJ declined in September to file criminal charges against Swallow.
Swallow, a first-term Republican, announced his resignation last week, saying he couldn't compete financially with the House committee's $3 million budget for its investigation.
In its motion, the FTC wants Judge Miranda Du to permanently prevent Johnson and the other defendants from running or helping any business involved in negative option marketing, selling information related to government grants or investments or serving as the ceremonial head of a corporation.
The motion also seeks millions of dollars of "ill-gotten gains" that went from iWorks to Johnson's wife and parents.
Johnson and iWorks have 21 days to reply to the FTC motion.
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