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Just as their lawsuit against Jeremy Johnson reaches a critical stage, federal regulators are being challenged on the evidence and tactics they used to shut down the St. George businessman's online-marketing machine and seize most of his assets.

In the first evidence-laden response to a Federal Trade Commission lawsuit filed more than three years ago, attorneys for Johnson's I Works company and his family say the agency ignored or lost evidence potentially unfavorable to its case. Regulators have few witnesses who can support their allegations, which are refuted by evidence gathered in the case, the attorneys argue.

Beyond allegations specific to the I Works case being heard in Las Vegas, lawyers say they have uncovered a strategy that FTC attorneys use against online marketers that are smaller than giants such as but still have substantial assets. The strategy calls for swooping in to deprive these targets of resources for attorneys, so regulators then can quickly win the case with little challenge to the evidence.

In addition the FTC lawsuit, Johnson — who is at the center of a scandal that forced former Utah Attorney General John Swallow from office — and four other I Works employees face 86 criminal charges in Salt Lake City's federal court related to I Works, a case separate from the civil suit but reliant on some of the same evidence.

The FTC sued Johnson, I Works and others in December 2010, alleging they bilked consumers out of hundreds of millions of dollars by getting them to bite on "free" offers of information about how to obtain government grants and make money while working at home as well as other products. Consumers' credit cards or bank accounts then were assessed large monthly or one-time fees that weren't adequately disclosed, the agency asserts.

Shortly after the lawsuit's filing, the FTC persuaded a federal judge to order the seizure of the assets of Johnson, I Works and other defendants.

Now federal attorneys have asked U.S. District Judge Miranda Du to rule in their favor without a trial. FTC attorneys argue the evidence of wrongdoing the agency gathered is substantial and without adequate challenge. They want the defendants held liable for $280 million in restitution.

"Defendants' violations of [federal laws] are documented in voluminous irrefutable evidence," the FTC argued, "including defendants' pleadings, discovery responses, deposition testimony, business records and the testimony of defendants' former employees."

Not so fast, counter Salt Lake City attorney Karra Porter and other lawyers who represent I Works, Johnson's wife and parents and other related businesses. (Jeremy Johnson is acting as his own counsel in the FTC suit because he said he cannot afford one after the feds seized his assets).

"We would like to go to trial," Porter said. "We think there are issues on just about everything the FTC has raised."

Jeremy Johnson declined to comment for this story, saying he would like to address the issues but a gag order in the criminal case prevents him from doing so. He filed his own opposition to the FTC's motion and asked for a trial.

The FTC also declined to comment, noting the lawsuit is still pending.

The judge has yet to set a date for a hearing on the FTC motion and counterarguments.

Johnson had been waging an online war with the agency by creating websites and gathering evidence he maintained showed the agency bullied witnesses and doctored their statements.

For her part, Porter takes exception to FTC statements such as the evidence "unequivocally demonstrates" I Works was defrauding consumers out of millions of dollars.

"To a great extent, the FTC conflates hyperbole with undisputed evidence," her memo to the court said. "Dismissive pronouncements that the defendants 'bilked' or 'duped' consumers add nothing to the debate."

Agency investigators acknowledged in depositions they were selective in their evidence, Porter's memo says, "the main criterion appearing to be whether it supported the FTC's allegations."

In one instance, investigators digitally recorded "undercover" online buys of I Works products, but didn't disclose the effort until recently. They then conceded the recordings were lost, the memo says.

Investigators also used software to capture I Works Web pages that substantially reduced their size, making them appear more faded and harder to read when printed out.

The FTC case originally included statements from 16 out of 10 million customers, or 0.00016 percent, Porter and other attorneys note. Of those 16, three have since been dropped and three were discovered to have made their purchases from a non-I Works website. Fewer than half the remaining complainants said they were inadequately informed of the credit card or bank charges.

In the case of an I Works product that purports to show consumers how to make money online using Google AdWords, Porter said, the agency does not name any defrauded consumers.

"They don't have a single consumer," she said, "who's actually complaining about it."

By alleging all I Works products were fraudulent, Porter added, the FTC persuaded a judge to close the operation.

While some problems emerged early at I Works with improperly disclosed terms of sales, the defendants' attorneys say, the company fixed the errors, especially after it began following the agency's own guidelines spelled out at a 2007 conference attended by Johnson and others.

A main FTC complaint is that I Works advertised it could help consumers get government grants for personal expenses, none of which existed. But the memo argues the government relies on a narrow grant definition and ignores the availability of private grants that also were advertised.

Even so, defense attorneys argue, government grants are available for education, home improvements, rental assistance, car repairs, medical needs, phone bills, energy savings and more.

The defense memo also attempts to counter the FTC's contention that Johnson directed others to create "shell companies" to continue to process consumer payments after credit card companies and banks began to cut off I Works because of high chargeback rates.

But Kelly Macfarlane, an attorney working with Porter, said Johnson's involvement was fully disclosed as the guarantor of the accounts for those companies, the formation of which is standard practice for Internet sellers.

"There was not a single dollar lost [by banks]," Macfarlane said. "It was the largest fraud case in the history of the world that had no damages."

While Porter said defense attorneys were commenting only about the FTC lawsuit, the question of fraud involving banks is at the heart of the criminal case against Johnson and the four others.

If Porter succeeds against the government's motion for summary judgment and the civil case goes to trial, it could be the first real challenge to the FTC's litigation strategy, the memo says.

"This case," Porter wrote, "thus presents a rare instance in which the FTC's evidence is actually being tested."

Twitter: @TomHarveySltrib