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Judge to decide whether to put FTC case against Jeremy Johnson on hold

LAS VEGAS — Prosecutors want a Nevada judge to put a federal lawsuit against St. George businessman Jeremy Johnson on hold pending the outcome of a criminal case against him in Salt Lake City.

Among the reasons for the proposed stay is the government's claim that Johnson has intimidated witnesses.

"To say Jeremy is intimidating and threatening witnesses, to me, that's a joke," said his brother, Andy Johnson, who along with two other former colleagues are defendants in the Federal Trade Commission lawsuit against Johnson's Internet marketing company, iWorks. "He's not threatening. There's not an intimidating bone in his body."

Federal attorneys contend that allowing Johnson to interview witnesses and gather evidence in the civil FTC case would "wreak havoc" with the government’s criminal case. They say a stay is necessary to prevent Jeremy Johnson from using the civil discovery process to obtain information to which they are not entitled in the criminal case.

U.S. District Judge Miranda Du heard arguments on the issue Monday. She took the request for a stay under advisement. Du ordered the government to provide a sealed document of witnesses on a no-contact list and required the Utah U.S. Attorney's Office to file a sealed copy of certain orders in the Utah criminal case.

Du also said she would not read or consider a document Jeremy Johnson filed last week that, among other things, claimed Utah Attorney General John Swallow was willing to be interviewed as a witness in the FTC case as recently as October. Federal prosecutors asked the judge to disallow the filing because Johnson failed to follow court rules.

Jeremy Johnson and two former iWorks executives are named in two cases running simultaneously through the federal court system — the civil FTC complaint in Las Vegas and an 86-count criminal fraud indictment in Salt Lake City.

The parallel cases have witnesses, facts and legal issues in common. The complications have caused a dispute among lawyers regarding access to witnesses, including those the government has identified as victims of alleged fraud.

Jeremy Johnson and three former colleagues who represent themselves in the FTC matter and Karra Porter, a lawyer for iWorks, argued against the stay Monday. They contend it will hinder their ability to depose witnesses, something they say government has had the opportunity to do. They also claim the government has harassed witnesses and coerced false statements from them.

The FTC lawsuit alleges iWorks bilked online consumers out of $275 million by luring them into "trial" memberships for bogus moneymaking and government grant opportunities. Those who signed up for the "risk-free" offers were repeatedly charged monthly fees and enrolled in other programs without their knowledge, according to the complaint.

Andy Johnson said it would be a "major burden" on him to delay the civil case. He estimated the criminal case would not go to trial for years, noting it is complicated and contains millions of pages of documents.

Andy Johnson, who does not face criminal charges, said federal authorities filed the criminal case knowing the FTC case was going on.

"Now they want to have it both ways," he said.

Swallow is among the witnesses Jeremy Johnson wants to interview. He said in court documents that Swallow has intimate knowledge of how iWorks operated. Federal prosecutors argue that Swallow is irrelevant to the civil case.

Jeremy Johnson ignited a political firestorm in January when he accused Swallow of helping arrange a $600,000 payment to enlist Senate Majority Leader Harry Reid in an effort to derail the FTC investigation into iWork. Swallow adamantly denies the allegation, saying he only connected Jeremy Johnson with people who could lobby on his behalf. Reid has disavowed any knowledge of the case.


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