Thursday, Jan. 13, 2011 | 2 p.m.
A Las Vegas businessman says in a new lawsuit he was defrauded by Utah businessman Jeremy Johnson, who already faces a Federal Trade Commission complaint in what the FTC calls an Internet billing scheme that cost consumers nationwide $275 million.
Newly-unsealed Utah federal court documents show the Las Vegas businessman, Chad Elie, filed suit on Dec. 28 seeking $20 million against Johnson and several co-defendants in the St. George, Utah, area.
The codefendants in the new Utah case are SunFirst Bank -- which has already been hit with a Federal Deposit Insurance Corp. enforcement action over its dealings with Johnson -- an entity called Triple Seven LLC, and executives Scott Leavitt, Jason T. Vowell, Todd L. Vowell, Loyd Johnston and Kerry Johnson.
The FTC lawsuit filed in Las Vegas on Dec. 21 against Johnson claims he and his companies including I Works and Elite Debit scammed consumers by luring them into obtaining trial memberships for bogus services and then repeatedly charging their credit and debit cards monthly fees for the worthless services.
Johnson has denied those allegations.
Elie says in his Utah lawsuit he is the CEO of Florida company Viable Marketing Corp. Records show he also has a Las Vegas company called 21Debit that's involved in the payment processing industry.
Records in Florida show Viable Marketing has had its own issues. It was named in a Feb. 17, 2010, statement from Florida's Attorney General and the FTC as one of several companies that received subpoenas investigating potential violations of Florida’s Deceptive and Unfair Trade Practices Act.
The Viable Marketing subpoena related to "unauthorized recurring charges" associated with a work-at-home Internet business opportunity.
One of Elie's attorneys on Thursday said he believe that investigation is now closed and that he was looking into it.
Elie says in the new Utah lawsuit that he provides "Check21" e-payment processing services for online merchants whose customers prefer to pay over the Internet by check or debits from their banks instead of using credit cards.
Elie says he became acquainted with Johnson during a trade show in 2009 and that Johnson represented he had a trusted relationship with SunFirst. Elie says that Johnson told him that in exchange for become 50/50 partners, Elie could begin processing payments for his online merchants through SunFirst.
Elie says processing revenue for the merchants involved in the arrangement ran from SunFirst through the Triple Seven entity -- described as a money-transmitting business that provides payment-processing services and money wires to offshore online merchants.
The Utah lawsuit says Triple Seven is controlled by well-known St. George businessmen Jason and Todd Vowell. One or both of the Vowells have been in the auto dealership industry and had an interest in the St. George Roadrunners minor league baseball team and the Liahona Academy for troubled youth in Southern Utah, records show.
Elie alleges in his lawsuit processing revenue from the business venture involving Johnson and the Vowells averaged close to $2.9 million per month from March 2010 to November 2010, but that Johnson and the Vowells presented false financial information to Elie to defraud him and exclude him from his 50 percent share of the profits.
"Rather than providing plaintiff 50 percent of the profits from the processing revenue as agreed to by the parties, Johnson used the money generated as revenue to invest in private real estate and energy deals to which plaintiff was not a partner," attorneys for Elie say in his lawsuit.
The suit goes on to say that after Johnson learned the FDIC was auditing his accounts, including the processing account with Elie at SunFirst, Johnson transferred funds out of SunFirst -- including funds Elie had a stake in.
Later, Elie says, the FDIC froze some of Johnson's bank accounts at SunFirst.
Elie says in his lawsuit he was told by Johnson that in February -- 10 months before the FTC lawsuit was filed in Las Vegas -- that the FTC had ordered Johnson not to dissipate any of his assets or financial resources.
Nevertheless, "Johnson took numerous steps to dissipate his assets and to transfer those assets to various individuals to avoid liability," the suit says, adding "Johnson converted some of his assets into such liquid assets as gold and cash."
"Based on the defendants' activities over the past several months, if this court does not take immediate action to stop the transfer and dissipation of these assets, the cash and gold will disappear," says the Utah court filing, which seeks to garnish or freeze assets Elie claims belong to him.
Separately, the FTC intervened Thursday in the Elie case, saying it wanted to prevent the issuance of any order to encumber the assets of Johnson and any entities that he owns or controls.
"The commission is entitled to intervene as a matter of right because it has an interest in ensuring that these assets are available for distribution to consumers defrauded by Johnson and his companies," FTC attorneys said in their Utah court filing.
The FTC charged that Elie "has engaged in a secretive race to the courthouse in an effort to grab money held by the defendants."
Kevin Anderson, an attorney for Elie with the Salt Lake City law firm Fabian & Clendenin P.C., denied those assertions. He said Elie's lawsuit, initially filed under seal, or secretly, was aimed initially at freezing the assets at issue so the court could decide later how they would be apportioned among the alleged victims of Johnson.
The FTC noted that in its Nevada lawsuit, it's filing an emergency order for a temporary restraining order to freeze the assets of Johnson and 61 corporations because of the alleged $275 million scheme.
"Elie argues ... that Jeremy Johnson has concealed funds, possibly transferred funds to overseas banks, dissipated funds by purchasing investments, aircraft, and automobiles, and transferred investments to other defendants named in this action. The FTC does not doubt the truth of these particular assertions by Elie. But, the FTC intervenes to ensure that Johnson’s assets are not grabbed by Elie to the detriment of millions consumers who fell prey to Johnson’s scheme," FTC attorneys argued in Thursday's Utah court filing.
Johnson and the other defendants have not yet responded to the new lawsuit.
A request for comment was left with Johnson's attorney.
The Vowells couldn't immediately be located for comment. John Allen, CEO of SunFirst Bank, said he was unable to comment on the litigation.
Town & Country Bank of St. George was also named as a defendant in Elie's Utah lawsuit.
But an attorney for Elie said that was based on the mistaken belief that Town & Country had agreed to do business with Johnson after the FDIC started auditing Johnson's accounts at SunFirst.
It turns out that Town & Country is not doing business with Johnson, the attorney said.
A request for comment was placed with Town & Country on Thursday.