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Government shutdown hits Jeremy Johnson fraud case

Published: Wednesday, Oct. 2 2013 12:30 p.m. MDT

St. George businessman Jeremy Johnson leaves federal court in Salt Lake City on Friday, Feb. 1, 2013. The Federal Trade Commission wants a judge to postpone its fraud case against St. George businessman Jeremy Johnson due to the government shutdown. (Jeffrey D. Allred, Deseret News) St. George businessman Jeremy Johnson leaves federal court in Salt Lake City on Friday, Feb. 1, 2013. The Federal Trade Commission wants a judge to postpone its fraud case against St. George businessman Jeremy Johnson due to the government shutdown. (Jeffrey D. Allred, Deseret News)

SALT LAKE CITY — The Federal Trade Commission wants a judge to postpone its fraud case against St. George businessman Jeremy Johnson due to the government shutdown.

FTC attorneys say in a motion filed in U.S. District Court in Las Vegas that the shutdown prohibits them from working, even on a voluntary basis, "except for emergencies involving the safety of human life or the protection of property." They want the court to push deadlines for upcoming expert witness depositions and other matters until the government resumes operation.

Johnson and a co-defendant, Loyd Johnston, oppose the proposed stay as do lawyers for Johnson's online marketing company, iWorks. Johnson represents himself in the case.

"The FTC is seeking preferential treatment due to a self-imposed lack of funding, which treatment is not available — and has been denied — to other parties in this very case," iWorks attorney Karra Porter wrote in response.

St. George businessman Jeremy Johnson leaves federal court in Salt Lake City on Friday, Feb. 1, 2013.  (Jeffrey D. Allred, Deseret News) St. George businessman Jeremy Johnson leaves federal court in Salt Lake City on Friday, Feb. 1, 2013. (Jeffrey D. Allred, Deseret News)

Judge Miranda Du earlier rejected federal prosecutors' request to delay the case pending the outcome of a parallel criminal case against Johnson and four associates. Johnson contended it would have hindered his ability to mount a defense.

Porter also noted the FTC froze Johnson's assets, depriving him of money to hire a lawyer.

"Now the United States seeks a pass because it has defunded itself," she wrote. "This is inequitable. It is intolerable."

Porter argues that the government is no different from a private client refusing to pay its attorneys. Furthermore, she said, federal law allows the FTC to exempt workers from the furlough.

Johnson and two former iWorks executives are named in two cases running simultaneously through the federal court system — the civil FTC complaint in Las Vegas and an 86-count criminal fraud indictment in Salt Lake City.

Jeremy Johnson leaves federal court in Salt Lake City  Friday, Feb. 1, 2013.  (Jeffrey D. Allred, Deseret News) Jeremy Johnson leaves federal court in Salt Lake City Friday, Feb. 1, 2013. (Jeffrey D. Allred, Deseret News)

The FTC and criminal cases allege iWorks bilked online consumers out of $275 million by luring them into "trial" memberships for bogus moneymaking and government grant opportunities. Those who signed up for the "risk-free" offers were repeatedly charged monthly fees and enrolled in other programs without their knowledge, according to the complaints.

Criminal cases will continue as scheduled in federal courts, but civil cases could be postponed during the shutdown, according to the U.S. Department of Justice. The DOJ considers criminal cases essential to the safety of life and protection of property.

Government attorneys in civil cases must seek an order from the court to stay the case. If the court denies the request, the DOJ would allow minimum staffing to comply with the ruling.

Email: romboy@deseretnews.com, Twitter: dennisromboy; DNewsCrimeTeam

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