While the FTC charged multiple individuals for the scheme, including those involved in late-night infomercials hawking real-estate success programs and Internet-marketing programs, Tom Syta, the assistant regional director for the FTC’s West Coast office, says the majority of the $450 million in damages resulted from the call centers upselling consumers on coaching services, ostensibly to guide them to wealth and riches.
“In the Mentoring of America case, it was less than 1 percent [of clients] that made a profit, and it was an even smaller number that made a significant profit,” Syta says. The majority of the company’s clients were sold coaching services with big price tags, with some clients being charged as much as $14,995. Syta also says that victims were not quoted the same rates; company operatives would find out how much credit the consumers had and then would sell them coaching packages designed to use up their available credit.
Syta says “upselling” thrives in good times and bad. When the economy is good, people take risks on business opportunities hawked by call centers. “When things are going bad, people think, ‘I need to replace income or I need to replace the job I lost,’ ” Syta says. “People are grasping.”
Jason Jones, a former lawyer who devotes himself full-time to reporting on the OBO industry, says he first started his blog The Salty Droid as a joke in 2009. Since then, he says, advocacy has become a full-time job. In 2011, for example, he says he provided evidence to the FTC of IWorks’ efforts to bully unhappy customers into not complaining about the coaching they received. Jones says his declaration helped the FTC get an injunction to freeze Jeremy Johnson’s assets.
Jones says the entire industry is built on a farcical idea that people can make money online without effort. “The tagline of my site is, ‘You can’t make money online,’ ” Jones says. “That’s the most important unicorn to kill.”
Jones, who grew up in Utah, says the lackluster regulation of the OBO industry is a direct result of Utah’s pro-business climate, the kind that favors businesses that don’t upset Utah consumers—or its voters. “It’s not just negligence, the non-enforcement of this stuff, but the politicians actively fostering it—being a part of it,” Jones says. “Everyone in Utah politics has at some point touched some part of this money, without a doubt.”
Indeed, the industry has found many ways to coach Utah’s politicos on the benefits of their Utah-based companies.
One way is to donate to political campaigns. Mentoring of America attempted to show its support of Shurtleff’s candidacy to the tune of a $32,500 donation in 2008. However, for reasons still unknown, Shurtleff returned $30,000 to the company.
Before Shurtleff decided to return the donation he was enough of a presence at the company for a salesman to invoke the attorney general’s name as a character reference while attempting to make a sale. From e-mails obtained in a 2009 records request, a consumer wrote to the Division of Consumer Protection on April 22, 2008, to say she was considering purchasing MOA’s services. A Mentoring of America salesman named Larry Bickel told her she could count on Shurtleff as a reference to his “honesty and integrity.”
The woman wrote: “I am considering investing a lot of money in his program. I want to invest wisely and not lose it on a scam,” presumably asking Consumer Protection to set her straight. The division forwarded the e-mail on to the Attorney General’s Office.
Later that year, in December 2008, Bickel was arrested for a Christmas-time shoplifting spree, having tried to take $1,600 worth of goods from a Utah County mall. In a 2009 interview with City Weekly, Shurtleff said he had referred the matter of Bickel using Shurtleff’s name as a reference to his subordinates. Assistant attorney general Blaine Ferguson confirmed the office did not contact the would-be MOA customer.
Mr. Good Deed$
Before Jeremy Johnson was charged with running a massive fraud empire out of his St. George-based IWorks company, selling customers on programs to gain government grants, he’d established himself as a philanthropist. During the Haiti earthquake, Johnson grabbed headlines by flying helicopters with supplies to the devastated country.
In 2008, Shurtleff received $50,000 in campaign contributions from Johnson and, at the time, told City Weekly their friendship was based on Johnson’s support for the Lost Boys charity, a nonprofit home for children who had escaped abusive polygamist homes.
In 2009, City Weekly requested e-mail records pertaining to Jeremy Johnson from the Attorney General’s Office—records the AG’s office did not wish to make available. City Weekly took its request to the State Records Committee, where the committee reviewed the records and classified many as public documents. The Attorney General’s Office appealed the State Records Committee’s determination. In late 2011, 3rd District Court Judge Robin Reese affirmed the State Records Committee decision on most of the records. A year and a half after requesting the records, City Weekly was able to review a small collection of e-mails.
According to e-mail exchanges, Washington County officials, in 2008, were expressing concerns over investigating Jeremy Johnson in light of his charitable donations. Assistant Attorney General Kirk Torgensen had, in November 2008, asked a former Washington County Attorney Paul Graf if he was involved in investigating Johnson.
Graf, in an e-mail, explained that he was only peripherally involved but that he had spoken to an investigator “who is concerned that the county attorney and St. George [police department] have a conflict because Jeremy [Johnson] donates to many police causes,” Graf wrote.
Graf said further that the investigator was hoping for an impartial set of eyes to look at the case, perhaps from the state Attorney General’s Office. “In my conversation with the county attorney, I learned that he did not want to prosecute [Johnson] but is not of a mind to refer any prosecutions to the AG,” Graf wrote.
In a reply e-mail later that morning, Torgensen warned Graf that an impartial review should not come from his office.
“Strictly confidential, this guy is a campaign contributor to Mark [Shurtleff] and pretty good friends with him,” Torgensen wrote. “We should really not take it over so I am glad the County Atty is not thinking of doing so.”
Brock Belnap, a spokesman for the Washington County Attorney’s Office, says he could not comment on the specific allegations but says they were not related to consumer protection violations such as those the FTC charged Johnson with in 2010.
“Because Jeremy Johnson had given money to build the Washington County Children’s Justice Center (which is under the supervision of the County Attorney’s Office), we believed that there would be at least a perception of a conflict of interest” had the county been tasked with investigating Johnson, Belnap wrote in an e-mail.
He says since the case could not be referred to the Attorney General’s Office, it was referred in 2009 to Iron County. In April of that year, the office decided it could not prosecute the case, Belnap says, because of “evidentiary reasons.”
Shurtleff’s office did bring a suit against Johnson on behalf of Consumer Protection in 2008, but the office settled with Johnson and dismissed all charges. Since that time, Shurtleff has defended Johnson as a humanitarian who ran a company that dealt with thousands of consumers, one that invariably would face complaints from disgruntled customers.
Shurtleff’s e-mails also note Johnson’s offer to help out with state business. An e-mail reveals Shurtleff telling his staff assigned to a complex public-lands litigation project that Johnson was willing to fly AG staff over southern Utah to help spot road claims as part of a state lawsuit against the Department of the Interior. In the 2009 e-mail exchange, Shurtleff tells his staff in the Public Lands division that he will remind Johnson about the request when he sees him later in the week when he’ll be flying with Johnson to California.
According to previous media accounts, Shurtleff flew on Johnson’s private jet to California as part of a charity event in summer 2009. Photographs from that trip show Shurtleff grinning from the jet’s posh interior and also posing on the tarmac inside Johnson’s Lamborghini sports car.
Attorney Nathan Crane, who is representing Johnson in the FTC case, confirms that Johnson has been involved in charity activities and in helping law enforcement by lending his helicopter to state agencies as well as the FBI and the Drug Enforcement Agency in searches for fugitives. “[Johnson] spent a lot of time with both these agencies to help chase down bad guys,” Crane says.
Although Johnson’s FTC case is ongoing in the District Court of Nevada, the case has taken several twists and turns since Johnson’s 2010 charging. Johnson has been arrested twice: once in a Phoenix airport attempting to leave the country en route to Costa Rica, a few months after receiving a federal indictment for mail fraud. Later, he was brought in in Washington County for an outstanding Nevada warrant, which was issued after he bounced several bad checks meant to cover more than $100,000 in gambling losses at a Las Vegas casino.