FTC Sues Over 'Free' Government Grant Scams
The operation called itself I Works, and used web sites that claimed free money was available from the government in the form of Small Business Administration loans to help pay personal bills, or sold other types of money-making schemes, using the words "risk-free" and "free."The catch? The scammers asked consumers to provide a credit or debit card number to pay for a shipping and handling fee of, say, $1.99 to send the information. However, once I Works got the credit card numbers, it ran a variety of charges on them for programs people did not agree to buy.
The FTC says the scammers were first caught by attracting Visa and MasterCard's attention, due to the significant number of people who called their credit card companies and refused to pay the unauthorized charges. But once the chargebacks hit and the scammers were shut out of billing systems, they managed to keep communication channels to banks open by creating 51 shell companies, complete with fake executives and web sites.
Named in the FTC's complaint are Jeremy Johnson and nine others. This is not Johnson's first brush with controversy. Two years ago Johnson, whose company did business out of St. George, Utah, was cited by the Utah Division of Consumer Protection for 49 counts of charging a consumer for non-consensual transactions and other types of fraud, according to this account in a Salt Lake City, Utah newsweekly. At the same time, Johnson wrote two checks for $25,000 each to Utah's Republican Attorney General, Mark Shurtleff, a former Mormon missionary, that made up a significant portion of Shurtleff's campaign funding. Shurtleff said he didn't know Johnson and no conflict of interest existed.
In 2001, Johnson was sued by the Securities and Exchange Commission while he ran a web site called RumorSearch.com, a paid-subscription stock research service, for hyping a stock called Far East Ventures, Inc.
The FTC's complaint also says Johnson and the others posed as consumers to post deceptive positive reviews and publish deceptive testimonials hyping their services on their own web sites.
Besides Johnson and the 51 shell companies, the FTC named 10 corporations and Duane Fielding, Andy Johnson, Loyd Johnston, Scott Leavitt, Scott Muir, Bryce Payne, Kevin Pilon, Ryan Riddle and Terrason Spinks in the suit.
The FTC lists the names the shell companies and corporations involved in the fraud, and the list of banks scammed by the operation.