Mobile edition | Switch to full site | 33°Partly Cloudy

Jeremy Johnson faces 86 additional charges in new indictment

image
(Paul Fraughton | The Salt Lake Tribune) U.S. Attorney David Barlow speaks outside the federal courthouse in Salt Lake City in December about the case against St. George businessman Jeremy Johnson.

By Tom Harvey

The Salt Lake Tribune

First published Mar 06 2013 05:48PM
Updated May 20, 2013 10:05PM

A federal grand jury in Utah on Wednesday handed up 86 new criminal charges against embattled St. George businessman Jeremy Johnson and also indicted four former officers in his company accused of bilking tens of thousands of consumers out of millions of dollars.

Johnson, who had been facing a single mail fraud charge, is accused of setting up a series of shell companies in order to continue to process credit and debit cards after banks began closing Johnson’s I Works Inc. accounts because of a high number of chargebacks from consumers.

Indicted with Johnson were former employees — Loyd Johnston, Bryce Payne, Ryan Riddle and Scott Leavitt — as well as I Works Inc., the company Johnson owned and for which the others worked. An initial appearance in court for the five men is set for April 10.

The U.S. Attorney’s Office for Utah declined to answer questions about the indictment.

Ron Yengich, Johnson’s court-appointed attorney, said "we intend to defend it vigorously in court and not in the media."

The five now face charges of conspiracy, making false statements to bank, wire fraud, bank fraud, engaging in fraudulent banking activities, conspiracy to launder money and money laundering.

Federal prosecutors in Salt Lake City said in December that new charges would be filed after Johnson aborted a planned plea agreement in which he was to admit guilt to two charges and receive a prison sentence of about 11 years.

Johnson said in an interview before that December hearing that he was not guilty of bank fraud and money laundering charges but was pleading guilty because he had an agreement with the lead prosecutor in his case, Assistant U.S. Attorney Brent Ward. Johnson said the Ward agreed not to carry out threats to charge various other people, including family members involved in Johnson’s I Works company or with various financial transactions.

However, at the Dec. 6 hearing, prosecutors balked at including as part of the public record one of two lists of the names of people who Johnson wanted protected from prosecution.

Ryan Riddle, one of those indicted, said Wednesday he and others associated with Johnson and I Works had written to U.S. Attorney David Barlow recently "pleading with him not to allow Brent Ward to destroy our lives simply to settle a vendetta against Jeremy."

"It is very clear that we are only being prosecuted because the plea deal failed with Jeremy," said Riddle. "We have done no wrong."

No Johnson family members were listed in the new indictment.

The two lists of people that Johnson sought to protect included the four Johnson associates indicted on Wednesday, and family members, friends, and other business associates — as well as Utah Attorney General John Swallow.

Johnson has said that when Swallow was chief deputy attorney general in 2010 he connected Johnson with the late payday loan entrepreneur Richard Rawle, who helped cook up a scheme to bribe Sen. Majority Leader Harry Reid in order to scuttle a federal investigation into Johnson’s I Works company. Swallow, Reid’s office and Rawle’s company deny knowledge of such a plan, and Swallow says he merely connected Johnson and Rawle, his former employer, so the two could find lobbyists to help Johnson.

Johnson has said that even though he believed Swallow did wrong, he included Swallow on his lists of those to be protected because he didn’t believe Swallow deserved to have his life ruined by a federal indictment. Swallow is under investigation by the FBI and U.S. Attorney’s Office.

The FTC filed a lawsuit in December of 2010 against Johnson, I Works and others, alleging they bilked tens of thousands of consumers out of millions of dollars with unauthorized charges on debit and credit cards through sales of various products over the Internet. Johnson denies that his companies scammed consumers and blames I Works’ problems on other companies contracted to market I Works products but that instead defrauded the St. George operation.

Johnson was charged in June of 2011 on a single criminal count of mail fraud. But that charge has proved troublesome for prosecutors.

A federal agent who arrested Johnson has testified that authorities conducted no investigation — including no interviews of the alleged victim — before arresting Johnson on the advice of the FTC. Johnson has gone on the offensive in social media, on the Internet and through the news media, alleging prosecutors were acting improperly by threatening to indict family members and others if he did not plead guilty.

U.S. Attorney David Barlow has denied any threats were made.

The new indictment centers on a series of shell companies that Johnson and others began forming in 2009 when their chargeback levels were so high they led various banks to begin shutting off I Works’ card-processing accounts. Johnson and others then created companies with straw owners so they could not be traced to I Works and Johnson, and then used the companies to obtain new accounts from Wells Fargo bank, according to the indictment.

The defendants allegedly made false statements to the bank about the ownership and location of the companies, and about their business histories, while also creating dummy websites to fool Wells Fargo.

The case has been investigated by special agents of the Internal Revenue Service’s criminal investigation unit.

tharvey@sltrib.comclass="ItalicText">tharvey@sltrib.com class="NormalParagraphStyle">

Twitter: @TomHarveySltrib

Latest in Money
Comments
blog comments powered by Disqus