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St. George businessman Jeremy Johnson and federal prosecutors are in a legal tug-of-war over whether he should remain in jail while a court sorts through the latest charge against him.
And the receiver who has control of his assets also is at odds with Johnson over his request to spend lavishly at a time when he is supposedly struggling financially.
Johnson was ordered Monday to appear in court later this week in Phoenix to determine whether he will remain in jail after his arrest on a charge related to his alleged involvement in taking $275 million from U.S. consumers through bogus means.
Federal prosecutors are asking that Johnson be held pending the outcome of a federal charge of mail fraud. But Johnson also could be facing more charges after his arrest Saturday by IRS agents at the Phoenix airport before he was scheduled to board a flight to Costa Rica, where he now lives.
Johnson was arrested Saturday based on a "felony complaint." Normally, in the federal court system such a complaint serves as a way to hold a suspect, said Melodie Rydalch, spokeswoman for the U.S. Attorney's Office for Utah that filed the charge in Salt Lake City.
"We include enough information to establish probable cause for a judge to approve the issuance of a federal arrest warrant," she said Monday. "Typically, when the case is presented to a grand jury for consideration, other charges are added."
Johnson's St. George attorney, Travis Marker, said the charge came as a surprise, adding that Johnson had been cooperating with the government and would have stayed in St. George after a visit last week if he had known he might be arrested.
"We're just concerned that it had to happen this way," Marker said. "I think the process was disingenuous on the government's part. I think Jeremy would have cooperated and helped out where he could and taken care of this before he left and had been put in jail."
Johnson and his I Works company, along with associates and related entities, were sued by the Federal Trade Commission in December for allegedly using shell companies and false advertisements to entice consumers to buy information on "make-money schemes" and "stay-healthy programs" and to obtain government and private grants.
Consumers who gave credit- or debit-card numbers for a minimal handling charge, usually $1.99, were then charged unauthorized monthly fees of $59.95, and some faced a one-time fee of $189, according to the suit.
Hundreds of thousands of Johnson's customers sought refunds from credit-card companies over the charges, the suit said. When Visa and MasterCard terminated those merchant accounts, the complaint says Johnson and others created dozens of shell companies to accept card payments in order to avoid detection.
Since 2006, Johnson's companies have taken in more than $350 million from sales and returned about $75 million to customers who complained to their credit- or debit-card companies, while keeping more than $275 million, according to court records. Johnson has received more than $48 million in salary and other distributions since 2006, the FTC said.
Johnson recently filed an emergency motion in the FTC lawsuit asking a judge to release funds that the court froze so he could pay personal bills of about $26,700 a month. Those include about $16,600 for payments on his St. George home and $2,650 a month for yard maintenance.
Johnson's request is being opposed by the FTC and the court-appointed receiver, Robb Evans & Associates, which controls Johnson's companies and assets.
The receiver complained that Johnson has not been cooperating in sorting through his assets, failed to show how he was paying for flights between the U.S. and Costa Rica where he and his family are living, and pointed out that Johnson asked that he be allowed use his million-dollar houseboat on Lake Powell over Memorial Day weekend.
"How can Johnson and his family have funds to travel [either from Costa Rica or St. George] to Lake Powell, expend the funds necessary to outfit and use their luxurious houseboat for a weekend getaway and then return to Costa Rica, or St. George, when all of their nonreceiveship assets have purportedly been 'depleted?' " the receiver asked in opposing Johnson's request for funds.
In the same document, the receiver says Johnson reported that he has recently sold a cache of gold and silver, a house in Santa Monica, Calif., and a Lamborghini and a Ferrari.
Johnson's request is still pending before the court.