Business partner says Johnson took too much
Jeremy Johnson, the St. George philanthropist under fire from federal regulators for allegedly scamming millions of dollars from consumers through a massive Internet scheme, is in trouble with one of his partners.
Chad Elie, a Las Vegas businessman, claims Johnson is trying to cheat him out of his share of $20 million in profits from a payment-processing service the pair established in late 2009.
Johnson used Elie's 50 percent share of the profits to buy stock and invest in airplanes, real estate, oil, gold and energy deals, according to a lawsuit Elie filed last month in U.S. District Court for the state of Utah against Johnson and five other people.
Johnson also used Elie's money to pay his taxes, according to the suit.
Attempts to reach Johnson for comment on Thursday were unsuccessful.
The suit was filed a week after the Federal Trade Commission accused Johnson, nine others, 10 corporations and 51 shell companies of bilking consumers out of $275 million. The defendants allegedly lured thousands of consumers into memberships for bogus government-grant and money-making schemes and then repeatedly charged their credit and debit cards for services they hadn't requested.
Elie and the payment-processing service he set up with Johnson are not defendants in the FTC complaint, his lawyer, Kevin Anderson, said Thursday.
Johnson and Elie "had met and started this business (of processing payments for online transactions) together fairly recently. All the FTC allegations (against Johnson) took place before he was involved with Jeremy Johnson," Anderson said.
Elie's suit also names Scott Leavitt, Jason Vowell, Todd Vowell, Loyd Johnston and Kerry Johnson. All five are Utah residents, the suit says.
According to the suit, Elie and Johnson agreed to form a company that would provide services through SunFirst Bank, based in St. George.
SunFirst also figured in the FTC complaint. Although the bank wasn't named as a defendant, the agency noted that an unnamed person opened at least one depository account at SunFirst with funds from one of Johnson's companies, I Works Inc. The funds were deposited in the name of Elite Debit, also owned by Johnson.
In November, the Federal Deposit Insurance Corp. ordered SunFirst to stop providing third-party payment services to companies controlled by Johnson. Two of the companies Elite Debit and Triple Seven LLC are defendants in Elie's suit. So is SunFirst.
SunFirst President John Allen did not return a telephone call seeking comment.
The business Elie and Johnson established was a "50-50 partnership," in which both men would share equally in the expenses and profits of the firm, according to Elie's suit.
Elie allegedly negotiated several processing agreements with online merchants, including two contracts that generated $2.5 million a month from November 2009 to the same month of 2010.
But instead of paying Elie, Johnson kept his share of the profits, the suit says. Johnson, with help from the other defendants, allegedly concealed the gold, real estate and other investments from Elie by showing him a phony balance sheet indicating their business was a money-loser.
"A different, second balance sheet, however, obtained by (Elie) indicates that ... Johnson and his cohorts actually profited from this business venture," the suit says.