The Federal Trade Commission is going after the wife and the parents of an alleged Internet scammer, looking to recover $22 million in ill-gotten gains.
The FTC in late 2010 charged Jeremy Johnson and others with bilking consumers out of $275 million by selling deceptive "trial" memberships for bogus money making schemes. Johnson was subsequently indicted by the Department of Justice for mail fraud.
On January 23, the FTC turned its focus on Johnson's family, alleging that his wife, for example, made off with at least $5 million in funds and property, including a multi-million-dollar, 20,000-square-foot mansion in St. George, Utah that was used to secure a $3.1 million home equity line of credit.
In the original complaint filed in December 2010 in U.S. District Court in Nevada, the FTC charged that Johnson (described as the "lynchpin of the enterprise") as well as nine other people and 61 corporations cheated consumers by "misrepresenting that government grants are available for paying personal expenses, that consumers are likely to obtain grants by using the defendants' program, that users of their money-making products will earn substantial income, and that their offers are free or risk-free."
The defendants allegedly asked consumers to provide their credit card numbers, supposedly to cover small shipping and handling feestypically $1.99. Instead, the FTC said the defendants charged people one-time fees of up to $129.95 and monthly recurring fees of up to $59.95, as well as additional monthly fees for unrelated programs.
"No consumer should be sucker-punched into making payments for products they don't know about and don't want," FTC Chairman Jon Leibowitz said at the time.
In early 2011, the FTC won a temporary restraining order and preliminary injunction freezing Johnson's assets and appointing a receiver. Earlier this month, agency lawyers petitioned the court to impose sanctions, noting that "The Defaulting Corporations have continuously disregarded this Court's Orders and the FTC's discovery requests. Such inexcusable behavior negates the public's interest and supports the requested sanctions." According to court papers, the lawyer for the defendant corporations, Adriana Pereyra, withdrew as Nevada counsel in September. The judge ordered the defendants to obtain new counsel, but they have not done so.
In an amended complaint filed today, the FTC targets Johnson's wife and parents plus five companies they control with improperly receiving money from the scam. However, the relief defendants are not charged with participating in any fraud.
Johnson's father, Kerry Johnson, for example, allegedly received about $1 million worth of silver bars from his son and nearly $700,000 in cash. His mother Barbara Johnson allegedly got at least $77,000. According to the FTC, companies controlled by Johnson's wife Sharla Johnson and his parents received more than $20 million from him or his businesses.
Kerry and Barbara Johnson and the KB Family Limited Partnership are represented by Michael Stanger of Callister, Nebeker & McCullough and John Aldrich of the Aldrich Law Firm, according to court papers. Stanger could not immediately be reached for comment.
Contact Jenna Greene at email@example.com.