Deal • Agreement puts restrictions on the duo who did not admit any wrongdoing.
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Two former top employees of St. George businessman Jeremy Johnson have reached settlements with federal regulators in a lawsuit alleging Johnson's I Works company bilked U.S. consumers out of tens of millions of dollars.
Former I Works General Manager Bryce Payne and Kevin Pilon, a former project coordinator, have signed settlement agreements, according to documents in the Federal Trade Commission lawsuit filed in 2010 against I Works in Las Vegas.
They had been accused in the lawsuit of aiding in fraudulent sales and billing tactics for online products such as information on how to get government grants for personal expenses, make-money schemes and stay-healthy programs.
When credit card companies began to cut off I Works accounts because of a large number of chargebacks from consumers, Johnson and others created shell companies that hid their true ownership in order to continue to accept debit and credit cards, according to the lawsuit and criminal charges in Salt Lake City against Johnson, Payne and three others.
Johnson and others have steadfastly denied the allegations and said I Works operated within the laws. Payne said in an email on Thursday that he would like to explain why he couldn't continue fighting the lawsuit but was prohibited from speaking publicly by a gag order in the criminal case. Pilon did not return emails seeking comment.
While Payne and Pilon did not admit to any of the allegations in the lawsuit as part of their settlements, they agreed to a series of restrictions on their future business activities and to forfeit some funds.
In Payne's case, he is prohibited from selling any grant-related product and offering any product through what's called a negative option in which consumers have to specifically opt out before they are billed. He also is not to sell through a so-called "forced upsell" in which a product is bundled with another sale with no opt-out opportunity.
Payne is to pay the FTC $20,000, plus an unspecificed amount from the value in three life insurance policies, his interest in a mutual fund, one gold coin and any interest in an investment company.
Pilon agreed in the future he would not charge a customer without his or her express authorization and that he will not apply for a merchant account at a bank on behalf of a business without being the person who actually controls that entity.
Pilon is to pay the FTC $1,000 and surrender any other funds related to I Works entities.
The settlement has been approved by FTC commissioners but still awaits the judge's signature, said Frank Dorman, a spokesman for the agency. Johnson and 10 other family members and former employees remain part of the lawsuit.