Direct Marketing Kingpin Jeremy Johnson is currently representing him in a very heated criminal trial in Salt Lake City, Utah. Before I go into details around the massive fraud that Johnson is exposing in the performance marketing industry, here’s some interesting facts and updates around the case:
- Jeremy Johnson made hundreds of millions of dollars in his internet schemes over the years. With that capital he acquired mansions, fancy cars, helicopters, and more.
- When the FTC took action on Johnson, they seized all of his assets. This is called “government forfeiture.” Under forfeiture acts, the government usually cannot seize money that was placed in legal retainers so long as it was placed in there prior to the action. In this case Johnson did not have sufficient funds in legal retainers and therefore once his assets were frozen he was unable to pay for top notch legal representation.
- Instead of settling the civil lawsuit with the FTC, Johnson took a piss on the Federal Government and put up a website called EvilFTC.com, which has since been taken down. Here’s a snapshot of the site: https://web.archive.org/web/20130526133338/http://evilftc.com/
- This pissed off the Feds and they started bringing criminal charges against Johnson, many of which have been dropped or amended.
- The FEDs shut Johnson up by having the judge sign a gag order, which prohibits Johnson from discussing the case in the media or talking about it online. Hence EvilFTC.com is shut down.
- Johnson, not having the financial resources to hire competent counsel, decides to represent himself. I think this was a smart move considering the fact that he would surely have been convicted if he had a public defender as his only counsel.
- Criminal trial begins with lots of media coverage, in sequence:
http://www.sltrib.com/home/3463122-155/one-of-the-defendants-in-jeremy
http://www.sltrib.com/home/3468666-155/emails-to-remain-missing-in-jeremy
http://fox13now.com/2016/02/08/trial-for-jeremy-johnson-gets-underway-monday/
http://www.sltrib.com/home/3544712-155/ex-employee-testifies-about-setting-up-companies
http://www.sltrib.com/news/3553225-155/jeremy-johnson-says-trial-judge-is
http://www.sltrib.com/home/3572290-155/tensions-flare-between-judge-defense-at
What’s very interesting about this case is that Johnson is exposing the massive credit card fraud in the US free trial marketing space. During testimony it has come out that the banks that process free trial credit card offers are deeply involved and fully aware of what their clients are doing to stay below Visa/MC chargeback regulations:
- Create multiple shell corporations with different “signers” to acquire Visa/MC merchant accounts.
- Load balance transactions across each of these shell corporations so that each company never breaches Visa/MC fraud alerts.
- Pump through fake transactions or small dollar amount transactions to keep transaction rates higher and chargeback rates lower, flying below the Visa/MC fraud radar screens.
While it seems as if the banks never lost any money and were deeply involved in the “scheme”, it is still unlawful to process transactions like this.
There are a number of merchants here in the US that defraud consumers under this type of billing model, and in the future we will look to review their business models and how it works in greater detail.
Should be interesting to see the outcome of the case. My guess is that Johnson will beat some of the charges levied against him but will be found guilty of some of the other charges. What are your thoughts?
