$275 million scam

Man accused in nationwide scam lost millions at Las Vegas casinos, officials say
By Steve Green

A Utah man implicated in a $275 million scam victimizing consumers nationwide gambled away and lost millions of dollars at Las Vegas casinos and by playing Internet poker, investigators say.

Documents newly filed in Las Vegas federal court by the Federal Trade Commission allege Jeremy Johnson of St. George, Utah, gambled away some of his money even after he was ordered by the FTC to preserve his assets because he had been targeted in an FTC investigation.

The FTC says Johnson and his companies scammed consumers out of $275 million 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's attorneys deny these allegations.

The documents about Johnson's gambling were filed in advance of a hearing in which government attorneys are trying to extend a temporary order freezing the assets of Johnson and scores of associated companies.

By freezing the assets, the government can try to seize and liquidate them in order to make restitution to the alleged victims.

A court-appointed receiver company that has been sorting through the assets of Johnson and his companies reported to the court this week that Johnson's I Works company and related companies generated $332 million since 2000 in revenue related to their Internet businesses.

Of that amount, "$59 million was dissipated by supporting lavish lifestyles and investments in real properties, aircraft, vehicles, businesses, brokerage trading accounts, precious metals and was distributed or loaned to family, friends and related entities," the receiver reported.

While sustaining millions of dollars in gambling losses, Johnson, known in Utah as a philanthropist, through I Works over the years gave $1.5 million to the Church of Jesus Christ of Latter-day Saints and its Little Valley 5th Ward in St. George, the receiver reported.

Samuel Jacobson, an FTC investigator, said in a court declaration Wednesday that Johnson has been a frequent gambler at Wynn Las Vegas, the MGM Grand, other MGM Resorts International properties and also gambled extensively at the online site fulltiltpoker.com.

Tiltware LLC, owner of the website, last month provided information to the FTC showing Johnson played there using the name ginette22.

Between April and October 2010, Johnson lost $1.536 million on the poker site, Jacobson said.

Wynn Las Vegas, in the meantime, reported to the FTC that between June 17, 2006, and Jan. 21, 2011, Johnson lost $1.35 million gambling there, Jacobson said.

That includes some $836,000 lost after Johnson received an asset preservation letter from the FTC on Feb. 22, 2010, Jacobson reported.

Johnson received $120,000 in markers, or gambling credit, from the casino in November and still owed Wynn $100,000 as of Monday, Jacobson reported.

Since receipt of the asset preservation letter, Johnson has lost at least $2.371 million at the Wynn and playing poker on Full Tilt's site, Jacobson reported.

"The FTC has also received records from the MGM Grand Las Vegas in response to a subpoena, which show that Jeremy Johnson had gambling losses at various MGM casinos," he said in the court declaration.

Johnson, in the meantime, said during a Jan. 31 deposition that he has also gambled in the Philippines, in Mesquite, mostly at the Eureka hotel-casino there; in Winnemucca and Reno in Northern Nevada; and at MGM Resorts' Bellagio and Luxor resorts in Las Vegas.

Asked by an FTC attorney how often he went to Las Vegas to gamble, Johnson said: "Too often. I can tell you that. I don't know how often."

Asked how much he lost, Johnson said he didn't know but agreed it was "way too much."

Like many high-spending gamblers, Johnson said he received comps in Las Vegas such as hotel rooms and food, but not liquor since he doesn't drink.

Johnson said he was addicted to gambling but has curtailed his gambling.

"I gambled with money that I earned from my companies, and since I no longer have any of that, it's been a really good cure for me, my addiction," he said.

Asked further about his addiction, Johnson said "Sometimes I'd win a lot of money and then I'd think in my mind -- I'd try that same way and do it again, and it didn't work and didn't work. ... And you'd lose even more trying to win what you had before."

Johnson in the deposition said that besides playing poker on Full Tilt, he played online at a site called "PokerStars" as well. Johnson indicated he doesn't consider playing poker to be gambling.

Asked if he gambled online, Johnson said: "No. I played poker online. ... There's a difference."

Asked more about his online poker activities, Johnson said that at times he turned his account over to some supposed poker pros who would split the winnings with Johnson. But they made no money for Johnson, he said.

Johnson also said in the deposition that his companies had merchant account arrangements with online poker companies including Full Tilt and that he used -- with their permission -- some money belonging to the merchants to invest in oil-drilling ventures.