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In an effort to conceal $51.4 million earned mostly by processing online poker payments, St. George businessman and philanthropist Jeremy Johnson moved funds and gold coins and bars back and forth through dozens of shell companies, according to a court-appointed receiver.
Johnson tried to hide the funds and gold after the Federal Trade Commission sued other companies like his and then sent him a letter telling him to preserve all his assets as part of its investigation into his I Works operations, according to a report filed as part of a lawsuit in Las Vegas.
Johnson on Friday denied the allegations, portraying the receiver as out of control and greedy, grabbing for funds it is not entitled to through the lawsuit in which the FTC has sued Johnson and nine former officers and employees.
That $51.4 million is in addition to the nearly $50.4 million in profits Johnson paid himself through I Works companies that sold products online to hundreds of thousands of U.S. consumers, according to court records.
The FTC sued Johnson and nine others in 2010 in federal court in Las Vegas alleging that he sold products online for a minimal handling fee and then charged large unauthorized amounts on consumers' credit or debit cards, taking in some $350 million.
A U.S. District Court judge appointed Robb Evans & Associates as receiver to take over all the companies and Johnson's assets in order to preserve them while awaiting the case's outcome.
In a recent report to the court, the receiver said that in examining records from 35 financial institutions and 25 other businesses, as well as those of 115 known affiliated companies, investigators uncovered 65 previously unknown entities that were "involved in moving funds and concealing" assets.
"A majority of these entities do not appear to have generated any business income and were used as conduits to reroute funds and to commingle and hide funds," the report said.
Those companies were not in the court order freezing assets and appointing the receiver but are clearly Johnson's and the receiver should be allowed to go after them, the report claimed.
Johnson, known in Utah for his philanthropic efforts that include flying helicopters to Haiti after the 2010 earthquake, said the monies the receiver was after were not his and he denied making an effort to hide assets. Instead, he said the funds were in merchant accounts at SunFirst Bank that were used to deposit electronic checks processed through Johnson's company called Elite Debit.
He also denied he had control over entities to which money was transferred.
"No, it's not true," Johnson said by telephone. "They don't have a shred of evidence or anything. That's just their theory."
Johnson, who is representing himself in the lawsuit because he says he has no money for an attorney, said there was a "ton of money in the customer accounts." But the FTC is concocting an "elaborate scheme" claiming the money is really his.
Johnson said he has no interest in the money the receiver is seeking.
The receiver's report does not mention merchant accounts but refers to the missing monies as earned largely from processing transactions for online poker companies.
Todd Vowell, an accountant, and his brother Jason, were named as being primarily responsible for helping Johnson move assets around. Johnson's wife and his parents also were named as were three others associated with the Vowells.
Matthew R. Lewis, a Salt Lake City attorney who represents Todd Vowell and some of the companies jointly owned by the brothers, said he could not comment on specifics in the receiver's report. But he did say "we believe the report is fundamentally flawed because it is premised on the incorrect assumption that all of the $51.4 million referenced in the report belonged to Jeremy Johnson. … Moreover, despite the extraordinary expenditure of time and receivership funds required to prepare the report, our preliminary review has already uncovered a number of significant errors."
Jason Vowell did not return a phone call seeking comment.
Most of the money being sought by the receiver is from funds that had piled up in SunFirst Bank in St. George and that was owed to the two poker companies whose payments were processed through the Vowells' company Triple 7, Johnson said in an email. The poker companies gave the Vowells permission to invest the money, Johnson said.
"They said they could not afford to have us stop processing so they gave permission for Triple 7 to invest the money until they could get their account overseas figured out," he said.
Johnson denied the receiver's allegations that he controlled Triple 7 and that the Vowells were owners in name only.
Nearly $25 million of the funds were routed to stock trading accounts at TD Ameritrade, where they were used to purchase shares, the report said. In addition, the receiver said about $5.5 million was sent to offshore bank accounts in Cypress and Andorra.
Todd Vowell has asserted his Fifth Amendment privilege against self-incrimination, as have Johnson's parents, according to the FTC.
Las Vegas businessman Chad Elie testified in court last year that Johnson showed him caches of cash, coins, gold and silver when they became partners in the business that processed payments for online poker companies. Johnson told him the money, bars and shavings of gold and big bricks of silver were being kept hidden in case he got sued or investigated by the federal government, Elie testified.
Elie is under indictment in New York for his role in the poker processing. Former SunFirst Bank official John Campos also was indicted in the same case. Both have pleaded not guilty and are arguing that the processing online peer-to-peer poker payments was not illegal.
Johnson was not charged in the case despite his being a major player involved in the poker processing, according to court documents.
Johnson is currently facing a single fraud charge in U.S. District Court in Utah, where he has a court-appointed attorney. Johnson has pleaded not guilty to the charge, but prosecutor Brent Ward has said he expects a new indictment with more charges against Johnson and others around May.
Johnson on Friday also was critical of an effort by the receiver to get the LDS Church to return tithing monies he paid. The receiver has been "pounding" on church attorneys for the return the millions of dollars, Johnson said. That's despite no resolution of the lawsuit against him, he said.
The Church of Jesus Christ of Latter-day Saints has a policy of returning ill-gotten tithing monies.