Politics • Shurtleff says he'll wait for fraud case against major campaign donor Johnson to unfold.
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Grinning from the leather swivel seats on a private jet, Utah Attorney General Mark Shurtleff and one of his biggest backers, Jeremy Johnson, were headed to Southern California for a fundraiser.
Waiting on the tarmac was Johnson's bright-yellow Lamborghini, and Shurtleff was eager to get behind the wheel.
That was the summer of 2009.
Today, Johnson is behind bars, detained on a mail-fraud charge. Federal investigators have also accused him of running one of the largest scams in Utah history, defrauding hundreds of thousands of customers out of an estimated $275 million.
The court has frozen tens of millions of dollars' worth of assets held by Johnson's company, I-Works, and other affiliated businesses.
On Friday, Shurtleff, who received more than $200,000 in campaign contributions from Johnson and his partners since 2008, said through a spokesman that he is no longer commenting on Johnson until the case makes its way through court.
But in past interviews, he has steadfastly defended his relationship with Johnson, praised his considerable philanthropic work and called I-Works a "model" that other direct-marketing companies should emulate.
"This company was fined $250 six years ago, so you shouldn't take a campaign contribution from them?" Shurtleff asked in late 2009. "They've done millions of transactions, and they were fined $250."
Allegations• Johnson is accused of luring customers to sign up for grant-writing or business-coaching programs through introductory offers that cost a few dollars. He would then charge their credit cards monthly premiums, sometimes totaling hundreds of dollars, according to the complaint by the Federal Trade Commission.
Credit card companies that had to refund customer charges eventually fined I-Works-affiliated companies millions and cut off service, so Johnson allegedly set up dozens of shell companies to process payments.
Johnson, through his attorney, has denied any wrongdoing and said he ran a legitimate business.
The state Division of Consumer Protection investigated similar complaints against I-Works years ago, but they were resolved when the company agreed to refund payments and pay a small fine.
Shurtleff has said repeatedly that he had no hand in the state investigation and handling of Johnson's case and that it was "not my job to go after him and monitor him."
Johnson lived extravagantly, with private jets, sports cars, lavish homes and a million-dollar gambling habit.
A review of campaign-finance reports, court documents and corporate records indicates that Johnson and his cohorts contributed more than $200,000 to Shurtleff since 2008 roughly three times more than previously reported.
Shurtleff later refunded $24,000 when he decided not to run for a U.S. Senate seat last year.
It is the type of big-money contributions that led state Sen. Steve Urquhart, R-St. George, to meet federal investigators in August 2009 to express concerns that Shurtleff was "selling fire insurance" taking donations from companies under investigation and then declining to prosecute.
Urquhart's allegation surfaced last March as part of a case involving Rick Koerber, founder of the Free Capitalist Project, who federal prosecutors say ran a $100 million Ponzi scheme. Shurtleff angrily denied Urquhart's charge and called it irresponsible, unethical and baseless.
The attorney general said the campaign money he received from Johnson is already spent, and he has no plans to return it, although he said he might reconsider if Johnson is convicted.
Thomas Waite wasn't surprised to learn of Johnson's political support for Shurtleff.
"If the attorney general in Utah was doing his job, this guy would be out of business and probably behind bars, but, obviously, something is going on," said the Desloge, Mo., man who believes he was burned by I-Works.
Waite was working on a business proposal when he saw an ad for a $2 CD promising to help land a business grant. When it came, it was junk, and Waite tossed it aside.
Soon, multiple $40 charges began showing up on his bank account. When he called to complain, he was told he wouldn't be given a refund because he had agreed to the charges, about $240 in all.
After about 15 calls and help from the Better Business Bureau, he recovered most of his money.
"In my opinion, and I'm sure there's lots of evidence to support it, that whole I-Works thing is crooked as the day is long," he said. "They're tricking people into signing up for these BS services."
Humanitarian work • In addition to the political contributions, Johnson allowed The Lost Boys, a charity Shurtleff supports, the use of the "House Just Off Bluff," one of his homes in southern Utah, as a refuge for young people trying to escape from polygamous sects. Zoning issues recently forced the charity to stop using the home.
Another cause that made allies of Shurtleff and Johnson was a program to cleanse toxins from the bodies of drug officers.
In the summer of 2009, Johnson ferried the attorney general to Southern California for a fundraiser for Meth Cops. The detoxification program with roots in Scientology is designed to help police officers and firefighters sickened by their exposure to chemicals while breaking up methamphetamine rings.
It was on that trip that the beaming Shurtleff posed for pictures in Johnson's Lamborghini in a set of photos t posted on the Facebook page of one of Johnson's associates. Shurtleff said the alternative was to have the state fly him to California for the event.
"We went to an event to try to raise some money," Shurtleff said. "He's got a Lamborghini. I've never sat in a Lamborghini. Who doesn't want to sit in a Lamborghini and get their picture taken?"
Also last summer, Shurtleff sent out on Twitter photos of him and Johnson in front of Johnson's helicopter, which they took to a Globus Relief fundraiser.
It is a small piece of the humanitarian work Johnson did, including flying relief supplies to Haiti and other causes. For his charity, Johnson received a Best of State Award last year. Shurtleff attended the gala, accepting the award on Johnson's behalf.
"Jeremy is a very charitable guy. He supported Operation Kids. He started early down there with the Lost Boys, and he works a lot with cops when he volunteered to fly rescue missions and he wanted to help out with our Meth Cops," Shurtleff said in an interview earlier this year. "The bottom line is, I'm not jet-setting around with this guy all over the world. … It is a charitable thing."
"Sincere" • Tim Lawson, a friend of both men who introduced them in 2007, said he has never known Johnson to ask Shurtleff for any favors, and he believes their relationship is aboveboard.
"I believe his heart is absolutely sincere, that he's never donated to Mark's campaigns or Mark's charities or any of the other charities with any ulterior motive," Lawson said.
Shurtleff said he warned Johnson and his colleagues early on that they needed to be careful since "there's going to be buyers' remorse and complaints."
He said he advised them to be aboveboard, have supervisors monitoring calls and have the calls recorded and that complaints needed to be dealt with quickly.
He said in the late-2009 interview that he had spent five hours at the I-Works offices, going step-by-step through their operation and business plan.
"I'll tell you flat-out, they are a model. Everyone ought to be following how they do it," Shurtleff said at the time.
He said most of the complaints against the companies were for past missteps that they had tried to resolve.
As for Johnson's future, Shurtleff said earlier this year that he will see how the government's case against him unfolds.
"He's a very charitable guy, and you know what? I don't know what the FTC is going to be able to show with him," Shurtleff said. "He's got good defenses, and we'll just have to see how this plays out."
Contributions from Johnson and associates
$25,000 • March 21, 2008, I-Works
$25,000 • March 27, 2008, I-Works
$25,000 • Jan. 16, 2009, PC Passport, which is, according to the FTC, one of Jeremy Johnson's shell companies.
$25,000 • Jan. 16, 2009, MJL Holdings, owned by Johnson associate Scott Leavitt, who is also named in the FTC complaint.
$25,000 • Jan. 16, 2009, IMI Media Inc., owned by Ryan Riddle, a former general manager of I-Works who is also named in the FTC complaint.
$25,000 • Jan. 16, 2009, Dreamworks Mortgage, owned by Angela Spinks, wife of Johnson associate Terry Spinks, who is named in the FTC complaint.
$15,000 • May 26, 2009, I-Works
$5,000 • Sept. 9, 2010, MJL Holdings
$7,200 • June 28, 2009, Terry Spinks*
$7,200 • June 29, 2009, Jeremy Johnson*
$7,200 • June 30, 2009, Robin Fielding, wife of Johnson associate Duane Fielding, who is named in the FTC complaint*
$7,200 • Sept. 30, 2009, Kerry Johnson, Jeremy's father*
$7,200 • Sept. 30, 2009, Barbara Johnson, Jeremy Johnson's mother*
Total • $206,000 in donations ($24,000 was refunded, bringing the final number to $182,000).
*Shurtleff was required to refund $4,800 of each of these contributions after he decided not to run for U.S. Senate in 2010.