Owner of iWorks owner pleads not guilty to charge

July 7, 2011 - 4:59 PM

SALT LAKE CITY (AP) — A Utah businessman has pleaded not guilty to a federal mail fraud charge stemming from allegations that his Internet companies netted $350 million by billing hundreds of thousands of consumers for products they never ordered.

Jeremy David Johnson entered the plea Thursday in U.S. District Court in Salt Lake City. If convicted, he faces a 20-year prison term.

Prosecutors say Johnson's company, iWorks, sent software to consumers for a supposedly risk-free trial, but then billed them anyway. Authorities have said that victims of iWorks and dozens of related shell companies included individual consumers and merchant banks.

The single criminal charge parallels a civil complaint filed in Las Vegas by the Federal Trade Commission last December.

Johnson has denied those allegations as well

Assistant U.S. Attorney Brent Ward on Thursday told a federal magistrate he anticipates filing additional criminal charges against Johnson, based on information being culled from the "hundreds of thousands of documents" from the FTC case.

After the hearing, defense attorney Nathan Crane said he doesn't believe Johnson has done anything wrong.

"We think he was running a legitimate business," Crane said.

Johnson was arrested last month at the Phoenix airport waiting for a flight to Costa Rica, where he has a second home. He's been in custody since his arrest and is currently being held in the Davis County Jail. A detention hearing is set for Monday.

Ward plans to fight Johnson's release, telling Magistrate Judge David Nuffer authorities consider the businessman a flight risk who presents a financial threat to the community. Ward said those opinions were based on statements made by Johnson and others who knew him and on Johnson's failure to comply with court orders in the FTC case.

Crane and Travis Marker, an attorney representing Johnson in the FTC case, say Johnson has cooperated with the FTC's investigation. They also deny Johnson presents a flight risk because his family lives in Utah. Federal agents have also already seized Johnson's passport, the attorneys said.

"He's not going anywhere," Crane said.

Johnson is said to be worth millions, but it's not clear how he might post bail if a judge grants permission for his release, because a federal judge in Las Vegas has ordered his assets frozen as part of the FTC case.

Johnson is a well-known Utah philanthropist who has used his personal aircraft to help state law enforcement agencies with search-and-rescue operations. He's has donated to charities and contributed some $50,000 to the political campaigns of Utah's current attorney general.

Johnson made international headlines in January 2010 when he purchased a plane to fly doctors and other critical supplies to Haiti following a devastating earthquake there.

In 2006 and 2007, Johnson and iWorks were cited by the Utah Division of Consumer Protection, for alleged deceptive and fraudulent practices. The citations were dismissed after the company agreed to alter its sales tactics and pay refunds to unhappy customers.

The Securities and Exchange Commission also charged Johnson in 2001 with making false statements, after he recommended that investors buy stock in a company without divulging he was a stockholder. The case was settled without an admission of wrongdoing.