ST. GEORGE — St. George businessman Jeremy Johnson – who is set to begin an 11-year federal prison sentence in a criminal case – and his family have “reluctantly agreed” to a settlement in an ongoing case brought against them by the Federal Trade Commission in Nevada.
Johnson is agreeing to a default judgment against him of $280.9 million – the amount sought by federal regulators when they first sued the online entrepreneur in December 2010, alleging he had defrauded customers of his I Works business.
The payment of that amount, however, is suspended upon surrender of Johnson’s assets and those of his companies.
As part of the settlement, Johnson’s wife, Sharla Johnson, will move out of the couple’s St. George home, but will keep a car and some other property.
Jeremy Johnson’s parents, who had most of their assets seized by the government during the ongoing case, have agreed to settle for the return of $750,000.
In a statement issued Thursday, Sharla Johnson and Karra Porter, an attorney representing the Johnson family, said they are now focusing all of their efforts on appealing Jeremy Johnson’s criminal conviction, and that his parents are planning to apply part of their returned money to help fund the appeals.
Jeremy Johnson will no longer be able to defend the Federal Trade Commission case because he will be in prison, Porter said, adding: “The federal government has destroyed this family.”
Porter said the Johnson family had wanted to go to trial on the FTC lawsuit and that she believes the family could have defeated the FTC in court if the civil case had proceeded to trial.
“We were not going to admit any wrongdoing, because we have spent years proving that the FTC case lacked merit,” Porter said in the statement. “So we did not agree to any language that the FTC would have won its case. But the family’s top priority had to be Jeremy’s criminal case.”
The FTC filed the 2010 civil complaint against Jeremy Johnson and others from his I Works companies, alleging he lured I Works customers into fraudulent moneymaking schemes and conned consumers out of millions by charging their credit cards recurring monthly or one-time fees that were not properly disclosed.
In 2011, the FTC persuaded a judge to appoint a receiver and seize all of Johnson’s assets and those of his companies, family members and other defendants. Johnson’s homes, luxury cars, helicopters and other assets were seized by the federal government.
Approximately $22.9 million in assets were seized, but a large sum of that has been spent on professional fees for the receiver and its attorneys, according to court documents.
The FTC would then contact the U.S. Attorney’s Office for Utah about going after Jeremy Johnson on possible criminal charges. At the time, prosecutors in Utah decided to charge him with one count of mail fraud, but when a plea deal with prosecutors blew up, that charge later grew to 86 counts of fraud-related charges after federal prosecutors accused Jeremy Johnson of conspiring to defraud Wells Fargo Bank.
Facing 86 felony charges, Jeremy Johnson, who represented himself at trial, was convicted by a jury in March of eight counts of providing false information to banks. In a surprise upset for the prosecution, the jury found Jeremy Johnson not guilty of 78 counts of money laundering, wire fraud and bank fraud.
U.S. District Judge David Nuffer sentenced Johnson to 11 years in federal prison Friday for the eight felony convictions.
Porter said the timing of the two cases conflicted with each other, adding that the civil case was scheduled for trial in January, but federal attorneys were able to postpone it. The federal court in Utah “refused to move the criminal trial” to accommodate Johnson, Porter said.
Jeremy Johnson’s family is now planning an appeal of his conviction – potentially to the U.S. Supreme Court – and has created a Justice for Johnson website to raise money and to speak out about what many people believe to be injustices on the government’s part in the cases pursued against Jeremy Johnson.
“The court’s gag order has finally been lifted, and we are going to take this opportunity to explain to people what Jeremy’s case is really all about,” Sharla Johnson said. “We also want to point out things that we think the public would be shocked to hear about the federal criminal justice system and this case.”
Porter said she anticipated an appeal to the 10th U.S. Circuit Court of Appeals next week.
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