His company, iWorks, set up websites offering what it called free money from the government. They claimed that people could win government grants and use the money to stop foreclosures, pay down debt, purchase real estate, launch businesses, cover medical expenses, and even pay grocery bills and Christmas presents.
"Claim you money today," the websites advertised, according to the indictment. "Billions are given away every year — now you can get your share!"
IWorks sold "risk-free software" on a CD for a $2.29 shipping charge that claimed to show people how to claim money from the government.
Prosecutors say all the claims were without merit and the CD was useless, but buyers found their credit cards being charged monthly for "membership fees."
IWorks got in trouble with a number of banks over a high percentage of reverse charges ordered by angry customers. Johnson continued doing business by creating new business names and websites to re-establish credit-card processing accounts, prosecutors said.
When the Federal Trade Commission opened an investigation, Johnson sought advice from Swallow, who at the time was deputy chief of the Utah attorney general's office.
Swallow has said he referred Johnson to another businessman who could put Johnson in touch with lobbyists who could influence the FTC to drop its investigation.
Johnson said he paid $250,000 through an intermediary that was meant to bribe Senate Majority Leader Harry Reid to quash the federal investigation.
He later tried to enlist Swallow to recover his money, saying it bought him no protection.
Swallow and Reid have denied the complex allegations.
Johnson has also publicly accused Brent Ward, the federal prosecutor handling the case, of incompetence and misconduct. Ward signed the new indictment Wednesday against Johnson.
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