Cyber Security

Local hero and ‘Christ-like’ millionaire accused of massive fraud in Utah

  • 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 

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 

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 

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 

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

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