Posted on 06/13/2011 8:22:53 AM PDT by Colofornian
SALT LAKE CITY — His shaggy red hair sticking out in all directions after a night's sleep, Jeremy Johnson tossed a wad of cash on the end of his inflatable mattress in a large tent on the Dominican Republic-Haiti border.
The cash — he probably had no idea how much — would cover gas for three helicopters and other expenses for the day's relief mission in earthquake- ravaged Port-au-Prince in January 2010.
But before the team, many of whom worked for one of Johnson's lucrative Internet enterprises, headed out to do some good, the boss was in the mood for a contest. And he was willing to throw some bills down to make it happen.
Money was never an object for Johnson, until the Federal Trade Commission came down on him and his company IWorks for allegedly luring consumers into bogus government grant and money-making schemes that netted $275 million.
And now the U.S. Attorney's Office for Utah wants the 35-year-old St. George man.
IRS agents arrested Johnson on Saturday afternoon at the Phoenix Sky Harbor International Airport as he changed planes en route to Costa Rica. Johnson moved his wife and two children to the Central American country earlier this year.
"This is a sizable case. I think it's one of the largest cases in the number of consumers and amount of consumer injury." -Collot Guerard
Federal prosecutors charged him with one count of mail fraud, a crime punishable by up to 20 years in prison. Johnson is scheduled to appear in U.S. District Court in Phoenix on Monday.
The criminal charge stems from Johnson allegedly using the U.S. mail to further his fraudulent business. According to the felony complaint, he used false advertising, false testimonials and phony reviews to market IWorks and dozens of shell companies.
The latest charge parallels a civil complaint the FTC filed against Johnson last December alleging IWorks scammed people by billing them online for products and services they didn't order. The complaint in federal court in Las Vegas alleges the company offers bogus moneymaking and government grant opportunities on various websites. Those who sign up for the "risk-free" offers are charged monthly fees of as much as $59.96 and enrolled in other programs without their knowledge.
"This is a sizable case. I think it's one of the largest cases in the number of consumers and amount of consumer injury," said FTC attorney Collot Guerard.
Edgardo Hong, of Holly, Mich., was one those consumers estimated by Guerard to number at least 5 million. Wanting to start a translation business, he ordered a CD ostensibly exlaining how he could obtain a government grant in Feburary 2009. He never received the CD, and found 12 unauthorized charges totaling $283.40 on his credit card, according to the FTC complaint.
A 63-year-old Kearns woman ordered a CD to get a grant to help with her house payment. It never came. When she tried to cancel her payment, she was given a telephone number to nowhere.
"It really did freak me out when I realized I'd been scammed," she said. Rather than let the charges pile up on her debit card, she canceled it and opened a new account. "It's a pain in the butt."
IWorks and its shell companies tried to appeal to customers by promiently displaying the American flag or a picture of President Barack Obama on their websites. Sources formerly associated with the company told the Deseret News it targeted people believed to be impoverished and less educated, particularly single African-American mothers in the South.
Johnson has denied IWorks' involvement in any wrongdoing.
"I look at the situation and I think of what is the right thing. Not what is the proper thing, what is the right thing? Look, even when Jesus was here, people thought he did things wrong, too, and he wasn't following the rules." -Jeremy Johnson
Court documents filed in the FTC case revealed sides of Johnson that were hidden to the public under his do-gooder persona.
That scene in the Dominican Republic, for example, showed someone who enjoyed putting money on the line for a little competition.
Johnson that day offered $200 to the first man to take down another in a wrestling match on the dirt baseball field he secured for his humanitarian aid base camp. Two gladiators quickly emerged: a stocky Johnson employee training to be an ultimate fighter and a muscular Dominican security officer Johnson hired to guard the camp.
A circle quickly formed around the combatants and the fight was on. The Dominican eventually grappled his opponent to the ground, and Johnson happily peeled off the prize money from a fat roll of bills.
Besides being a multimillionaire businessman and humanitarian, Johnson, court records show, is a chronic a gambler. And an internal FBI investigative report obtained by the Deseret News shows he isn't averse to bullying while transacting business.
By his own admission, Johnson is not good with money. But when you've made $275 million in a decade's time, what's the use of keeping track. He would rather spend it anyway.
Of that amount, court records show $59 million supported a lavish lifestyle devoted to mansions, property, gold and silver, businesses, a dozen helicopters and airplanes, a Ferrari and a Lamborghini. He gave money to family, friends and his LDS Church ward.
Johnson made international headlines last year as a daring helicopter pilot, dropping food to starving Haitian earthquake victims and rushing injured children to hospitals.
No one told Johnson to be a hero after the Jan. 12, 2010 earthquake. He just climbed into his custom-made helicopter and went — carrying $150,000 in cash. Some friends — mostly IWorks employees — joined him, turning helping people into an adventure. He spent more than $1 million on Haiti relief efforts.
The way he helped people, sort of playing Robin Hood in Haiti, drew some criticism as being disrespectful. But in a Deseret News interview last year he was undaunted.
"I look at the situation and I think of what is the right thing. Not what is the proper thing, what is the right thing? Look, even when Jesus was here, people thought he did things wrong, too, and he wasn't following the rules. He did what he thought he should do, and it was different than what everyone else thought he should do. I get held back, but if I had my way, I wouldn't care what anybody thought, or what the rules or laws said."
Johnson also frequently flew search-and-rescue missions for the Washington County Sheriff's Office.
In the same interview, he recalled his first rescue, an elderly hunter who had gone missing the mountains.
"Just having this feeling this guy was going to live was an unbelievable high. I thought to myself, 'It's like a drug.' It's a little bit of an addictive feeling, and you want to replicate it."
Saving people isn't the only thing Johnson found intoxicating.
Johnson gambled regularly at Wynn Las Vegas, the MGM Grand and other MGM properties, losing $1.35 million from June 2006 and January 2011, court records show. Between return humanitarian trips to Haiti, he dropped another $1.5 million playing online poker at sites including PokerStars and Full Tilt Poker.
In a January 2011 deposition, he admitted to a federal investigator that he was addicted to gambling.
Asked how often he gambled in Las Vegas, Johnson replied, "Too often. I can tell you that. I don't know how often."
Losing apparently didn't matter. He told the investigator he didn't know how much money he lost only that it was "way too much."
And he apparently doesn't consider playing online poker to be gambling. Asked if he gambled online, Johnson said, "No, I played poker online. … There's a difference."
Many of Johnson's business deals went through St. George-based SunFirst Bank. The bank's part owner and vice president, John Campos, was indicted in New York in April for allegedly running illegal online poker operations, specifically Full Tilt Poker and PokerStars.
Campos initially had "trepidations," but then allegedly agreed to process gambling transactions in return for a $10 million investment in SunFirst by a Las Vegas man named Chad Elie and an associate, according to prosecutors. The investment would have given Elie, who is named in the indictment, and his associate 30 percent ownership in the bank.
Johnson introduced SunFirst to the online gambling processing, while Elie handled the technological side of the deal, said FTC attorney Guerard.
Elie and Johnson had also conducted business together, and Johnson bought Elie a Cadillac Escalade at one point because "he told me to," court documents show. Elie also later sued Johnson for $20 million, but the case was dismissed.
Guerard said she met Johnson in the course of the FTC investigation and described him as "perfectly pleasant."
But an FBI investigative report obtained the Deseret News shows a darker side.
Johnson, according the report, was among a dozen men involved in holding hostage a man who apparently owed Johnson money.
Johnson invited the man to a June 29, 2006 business meeting at his home in Santa Clara. When the man arrived, a "big guy" identified in the report as possibly a bounty hunter or bouncer greeted him. The next thing the man remembers is waking up on the floor with his hands handcuffed behind his back. The big guy sat him on a chair and restrained his legs with zip ties.
Johnson, according to the report, arrived after the man was tied up. The man was held for about four or five hours before being released.
In an interview with the FBI about the incident, Johnson wasn't particularly forthcoming.
"Johnson refused to identify the individual who arranged for the 'big guy' to be at the home," according to the report. He also would not provide contact information of others who were there.
"During the meeting, Johnson was very careful not to ask … for money or anything else because Johnson did not want to be accused of extortion."
According to the report, Johnson was concerned about possible criminal charges and contemplated talking to an attorney. No charges were filed against him.
The criminal charge leveled against Johnson last week in connection with the alleged IWorks scam will keep in him jail over the weekend. He will likely have a detention hearing this week to determine whether he will be held in custody before being returned to Utah to answer the charge.
In the months since the FTC complaint, Johnson has moved his family Costa Rica to "pursue other business opportunities," court records show, and was headed there when IRS agents arrested him. But how he has managed to shuttle between there and St. George has federal investigators wondering where's he getting the money.
A federal judge in Nevada froze Johnson's assets and appointed a receiver to manage them pending the outcome of the FTC case. According to the new criminal charge, he has "substantial resources" in other countries including real estate in Belize and the Philippines.
But in a recent filing in the FTC case, government attorneys say Johnson hasn't been candid about his assets and question how he apparently continues to live the high life. He asked the receiver for permission to use a million-dollar houseboat over the recent Memorial Day weekend.
"How can Johnson and his family have funds to travel to Lake Powell, expend the funds necessary to use their luxurious houseboat for a weekend getaway, and then return to Costa Rica or St. George, when all of their non- receivership assets have purportedly been 'depleted?'"
Email:dromboy@ksl.com
From the article: Besides being a multimillionaire businessman and humanitarian, Johnson, court records show, is a chronic a gambler...By his own admission, Johnson is not good with money. But when you've made $275 million in a decade's time, what's the use of keeping track. He would rather spend it anyway. Of that amount, court records show $59 million supported a lavish lifestyle devoted to mansions, property, gold and silver, businesses, a dozen helicopters and airplanes, a Ferrari and a Lamborghini. He gave money to family, friends and his LDS Church ward.
JOHN L. SMITH: Thieves in the temple: How 'affinity fraud' hurts LDS church members
Source: Las Vegas Review-Journal, Sept. 12, 2010
Local political gadfly arrested for exploiting elderly woman
Source: Provo Daily Herald, May 4, 2010
Preying on the faithful: Though Mormons often victims, LDS church skips fraud-prevention event
Source: Salt Lake Tribune, May 2, 2010
Kaneohe swindler is sentenced
Source: Honolulu Star-Bulletin, April 6, 2010
Investors with troubled firm have Mormon ties
Source: Austin American Statesman, Jan. 16, 2010
Man Who Defrauded Fellow Church Goer Pleads Guilty
Source: www.connect2utah.com (KUTV) Jan. 7, 2010
Lindon Man Accused of Trying to Kill Witnesses to Alleged Scam
Source: MidUtahRadio.com, Nov. 19, 2009
KSL 5 News investigates affinity fraud
Source: KSL.com Nov. 9, 2009
Mormon victims are caught up in $50M scam to sell gold bullion
Salt Lake Tribune, Sept. 18, 2009
LDS Church returned $200K in Southwick Tithing
Source: AP, Sept. 14, 2009
Merriman's church donations may be tained [Momon Ponzi schemer's tithe monies ill-gotten?]
Source: Denver Post, April 24, 2009
Man Who Defrauded Fellow Church Goer Pleads Guilty
Source: Fox News, April 8, 2009
Calif. Man Charged with $40 million Ponzi scheme
Source: AP, March 20, 2009
The bottom line here is that you would expect a church that has 2% of the nation's population to have about 2% of affinity fraud cases -- even if they were as criminal as the atheists and agnostics! [You would expect them to have less than 2% if there was a true higher moral standard at operation here]. You don't expect cases involving $one and a half BILLION!
If you only have time to click on one article link above...read the first...be sure to read the comments of FBI special agent Cameron Saxey (who is Lds)...the article mentions how the Utah jurisdictional Securities Fraud Task Force was working on 100+ cases...meaning that $1.4 billion total mentioned in the article doesn't tell it all!
...and did this actually APPEAL to potential 'customers'?
From the Salt Lake Paper:
In a lawsuit filed last month in Las Vegas, the Federal Trade Commission alleged Johnson, I Works and 60 related entities “tricked consumers into providing their credit and debit card billing information and then repeatedly billed these customers for memberships in various websites they never agreed to join.”
The websites touted products for “make-money schemes,” “stay-healthy programs” and information about government and private grants that purportedly could be used to pay personal expenses, the lawsuit said.
This is the guy who spammed you email box with “FREE OBAMA MONEY!” offers. What’s REALLY scaring is the number of complete idiots who bought in to the scam, and gave this moron thier credit card info.
Remember this:
““Pres Obama wants to give you Free Cash. You could be Cashing your Federal Check In as little as 12 days.”
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