- Jeremy Johnson, 37, is charged with defrauding more than $275 million from ‘unwitting’ customers over five years in an online marketing scam
- The scam would allegedly sign customers up to online programs with monthly fees without their knowledge
- Johnson, who has grabbed headlines for charitable acts including flying his own helicopter on rescue missions to earthquake-ravaged Haiti, has denied the charges
- The Utah businessman and his affiliates have been gagged from speaking publicly about the case after campaigning online against his prosecutors
By Alex Greig
PUBLISHED: 19:34 EST, 17 June 2013 | UPDATED: 20:28 EST, 17 June 2013
An internet marketing millionaire from St George, Utah, has been accused by the Federal Trade Commission of being the ‘mastermind’ behind one of the biggest cases of online marketing fraud ever perpetrated in America.
Jeremy Johnson, 37, has become known in his native Utah for his selfless acts of heroism, including mounting his own relief mission to Haiti after the earthquake in 2010, and literally giving the shoes off his feet.
But according to the FTA, the money Johnson has so generously donated wasn’t his to give, and had in fact been amassed by luring online customers with promises of free CD-ROMS for which they only had to pay a nominal shipping fee. These customers’ credit cards would then be charged for recurring monthly memberships they hadn’t agreed to and weren’t aware of.
Alleged scam: Indicted St. George businessman Jeremy Johnson walks to the federal courthouse before a hearing Thursday, June 13, 2013, in Salt Lake City
Over a five-year period, the company of which Johnson was founder and CEO, I Works, allegedly stole more than $275 million from customers, and discouraged them from seeking compensation from their credit card companies by threatening to report them to a website called BadCustomer.com – a site run by I Works.
And while Johnson’s philanthropy was well-known, his lifestyle was not exactly humble. According to The New York Times, he owns a 22,000-square-foot home in a gated community in a St. George suburb, a 1957 Chevrolet Bel Air and other classic cars, houseboats and helicopters. His case files contain statements from witnesses alleging he ‘amassed bundles of cash and buried caches of gold’.
It’s a fall from a great height for the six-foot-tall, red-headed Johnson, who appeared to be casting himself into the ‘affable millionaire’ mold by rescuing stranded mountaineers in his helicopter and housing people fleeing from Utah’s polygamous communities.
‘When I think of Jeremy Johnson, I think of the most generous person I ever met,’ Daniel Gardner, an assistant loan officer in Provo, Utah and friend of Johnson, told The New York Times. ‘Whatever he had, he would give and give and give.’
Gardner described Johnson, who he met as a boy scout, as ‘one of the most Christ-like people I have ever come to know.’
Philanthropy: Here, Johnson works to provide aid for people affected by the Haiti earthquake in 2010
In addition to the FTA investigation, Johnson and five of his associates are now facing 86 related criminal charges, including making false statements to bank, wire fraud, bank fraud, engaging in fraudulent banking activities, conspiracy to launder money and money laundering brought by the United States attorney in Utah.
Johnson categorically denies any wrongdoing in both cases. According the the Times, court filings by his lawyers say the FTC’s case is ‘filled with half-truths, distortions and inflammatory rhetoric that is not supported by the evidence.’
According to The Salt Lake Tribune, the company allegedly set up 80 ‘shell accounts’ to accept payments without being detected.
High places: Utah Attorney General Mark Shurtleff received more than $200,000 in campaign donations from Jeremy Johnson but is no longer commenting on Johnson or the case
‘They had no employees, they had no office locations, they were mail drops,’ Collot Guerard, the lead FTC attorney on the lawsuit, told the Tribune.
‘They were essentially fronts, and they didn’t have any substance to them other than lending their name to obtain a new merchant account when Jeremy Johnson and I Works were no longer able to get merchant accounts.’
Johnson’s business offered customers catalogs of government grants and information about how to apply for them. Once someone signed up for a catalog, to be delivered via main on a CD-ROM, they were then given one week to cancel their membership, after which they were signed up for membership to various different programs which all charged a monthly fee.
Denial: Johnson has denied any wrongdoing in the case against him, in which he allegedly swindled more than $275 million from unwitting consumers
This is legal – if the marketing material makes full disclosure to the customer and the customer consents.
But according to federal prosecutors, I Works-affiliated sites often displayed disclosures in very small print, and sometimes didn’t disclose the information at all.
According to The New York Times, the FTC began investigating I Works in 2009 after Visa noticed an ever-growing number of customers wanting to reverse charges for online membership programs, called a ‘chargeback’.
It was difficult at first to link the chargebacks to I Works, since the company was operating under so many different names and so many different programs, including Easy Grant Finder, Bottom Dollar, Business Funding Success, Fast Gov Grants, Cloud Nine Marketing, CPA Upsell Inc., Employee Plus and many, many more, according to court papers.
I Works was closed after the charges were brought, but according to prosecutors, Johnson transferred many of his assets, including gold bullion and his home, into the names of his parents and his wife, Sharla, who have now been named as ‘relief defendants’ by prosecutors for receiving ill-gotten gains.
Johnson went on the offensive after being indicted. According to The Salt Lake Tribune, he launched an online campaign to clear his name. He accused federal prosecutors of threatening to indict his family if he doesn’t plead guilty in his criminal case and accused a FTC attorney of tampering with witnesses in YouTube videos, created an EvilFTC.com website which he promoted on Twitter, made a Facebook page where people can make negative comments about the United States Attorney for the District of Utah and conducted interviews with reporters in which he reiterated the points he’s made online.
Federal prosecutors grew weary of this and a federal judge granted a gag order against Johnson and his associates to prevent them from commenting publicly about the case.
According to the Tribune, Johnson has been arrested twice since he was charged in 2010: ‘once in a Phoenix airport attempting to leave the country en route to Costa Rica, a few months after receiving a federal indictment for mail fraud’ and again ‘in Washington County for an outstanding Nevada warrant, which was issued after he bounced several bad checks meant to cover more than $100,000 in gambling losses at a Las Vegas casino’.
The FTC case against Johnson in the District Court of Nevada is ongoing, and the criminal charges against him will be pursued at its conclusion.
Read more: http://www.dailymail.co.uk/news/article-2343476/Local-hero-Christ-like-millionaire-accused-massive-fraud-Utah.html#ixzz2WXqQLDWJ Follow us: @MailOnline on Twitter | DailyMail on Facebook
Categories: Cyber Security