St. George businessman Jeremy Johnson had $26,400 in cash and a one-way ticket to Costa Rica when he was arrested on a fraud charge earlier this month at the Phoenix airport by IRS agents.
But his attorneys say the money was for a business he is trying to start in the Central American nation and that he frequently travels internationally on one-way tickets because it's often cheaper than having to change return dates on round-trip fares. They want him released from jail pending trial in federal court when he is brought from Arizona to Utah to face a mail fraud charge.
The money and ticket are part of the evidence the U.S. Attorney's Office is using to try to keep Johnson in jail until the case against him is resolved. At a hearing last week in Phoenix over whether Johnson should be freed, Assistant U.S. Attorney Jim Knapp said Johnson had $26,400 in cash on him when he was arrested at Sky Harbor International Airport on June 11. Knapp added that Johnson and three unnamed companions each had a one-way ticket to Costa Rica, according to a recording of the session.
"I think there are some very strong facts to suggest the defendant was trying to leave the country and trying to leave with some of the proceeds from the fraud scheme," Knapp told the U.S. magistrate presiding over the hearing. Johnson ended up waiving his right to contest extradition to Utah and is expected to be flown to Utah soon to face the mail-fraud charge.
Johnson was arrested five months after the Federal Trade Commission sued him, several business partners and their companies for allegedly running a massive Internet fraud scheme that brought in $350 million from consumers who the agency says were duped into giving up credit and debit card information that was used for unauthorized billings.
Johnson's Utah attorney, Travis Marker, said Wednesday his client was legally carrying the money in Phoenix, adding that it was for an investment in a business in Costa Rica. Marker said the source of the funds had been disclosed.
Marker said he and his legal team are preparing to argue in Utah that Johnson is not a flight risk. Johnson would not have tried to leave the country from Phoenix had he known a charge was pending, the attorney said.
Melodie Rydalch, spokes-woman for the U.S. Attorney's Office in Utah, said prosecutors will be asking that Johnson be detained.
After Johnson's arrest on the criminal charge, the Las Vegas judge presiding over the FTC lawsuit last week denied his request for the release of frozen funds so Johnson could pay legal bills and about $27,000 a month in living expenses.
U.S. District Judge Roger L. Hunt said Johnson appeared to have access to funds that enabled him to pay more than $200,000 in legal fees, transport his family back and forth to Costa Rica where they have a house and to meet other expenses.
Among the living expenses Johnson listed were $16,600 a month to meet mortgage payments on his St. George home and $2,650 a month for yard maintenance.
The judge pointed out that the St. George house is worth less than Johnson owes on it and said that the circumstances of the mortgage were "suspicious."
"Under these circumstances alone, the court cannot justify Johnson's request," Hunt said in his ruling released Friday. "Johnson is not entitled to monies that would continue funding a fiscally irresponsible lifestyle."
The federal grand jury that indicted Johnson on the mail fraud count continues to meet, the U.S. Attorney's Office said, so additional charges are possible.
The IRS also has made a $2.6 million claim against Johnson, according to court records.