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How Not to Deal with Chargebacks

Discussion in 'BlackHat Lounge' started by Asif WILSON Khan, Feb 9, 2016.

  1. Asif WILSON Khan

    Asif WILSON Khan Executive VIP Jr. VIP

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    Long-awaited Jeremy Johnson fraud trial kicks off in federal court


    SALT LAKE CITY ? Nearly five years and three attorneys later, one-time multimillionaire Jeremy Johnson will literally defend himself in court against dozens of fraud charges related to his now defunct online marketing enterprise.


    Johnson's federal criminal trial began Monday in a case initiated with a single fraud charge against him that ballooned to an 86-count indictment involving four other former iWorks associates. Two of them have since been removed from the case, leaving Johnson, Ryan Riddle and Scott Leavitt as defendants.


    Less than a month before trial, Johnson, 40, parted ways with his lawyer and will represent himself. A judge appointed veteran defense attorney Greg Skordas to help him, though all of the arguments and questioning of witnesses rests with Johnson. Riddle is also acting as his own lawyer.


    Johnson deferred his first opportunity to address the 12-man, three-woman jury in U.S. District Court on Monday, opting to make his opening statement later in the scheduled six-week trial.
    "I wish I could talk about it," he told reporters outside the courthouse. "You know the rule."


    A judge imposed a gag order on all parties in the case three years ago.


    Johnson, Leavitt and Riddle are charged with conspiracy, bank fraud, wire fraud and money laundering in connection with Johnson's one-time flourishing St. George-based Internet marketing company, iWorks.
    "This is a case about lying to the bank," assistant U.S. attorney Robert Lunnen told the jury.


    Prosecutors allege iWorks panicked when it started getting a large amount of credit card chargebacks on the products it sold online because it threatened to destroy its business. Credit card companies such as Visa and MasterCard put iWorks on their lists of companies with high consumer chargeback rates, and banks closed iWorks accounts.


    "For a merchant selling on the Internet, it's like running out of oxygen," Lunnen said.


    IWorks' solution was to form 37 shell companies in the names of employees, family or friends so iWorks could open new merchant accounts and continue processing cards without disclosing who was really behind them, he said. Those companies set up merchant accounts at Wells Fargo through brokers to process iWorks customers' credit card transactions.


    Leavitt's attorney Marcus Mumford told the jury there was no fraud because the banks, brokers and the credit card issuers knew what iWorks was doing. Johnson, he said, put more than $5.5 million to cover any fines, penalties and expenses on the accounts.


    "No one was fooled. No one was deceived," he said. "It is unfair and incorrect to call this bank fraud, to call this wire fraud because the decisionmakers knew."


    The government's first witness, Martin Elliott, head of global brand protection for Visa USA, testified that the shell companies associated with iWorks incurred tens of thousands of chargebacks.

    "These are record levels for merchants," he said.


    No bank would approve of using shell companies to set up merchant accounts, Elliott said. He said they could be used to circumvent the monitoring system and often indicate fraud.


    Johnson complained to Judge David Nuffer about Elliott's use of the word fraud after the jury was dismissed for the day. He said iWorks processed payments for more than just its own companies and that the judge won't allow him access to electronic evidence to prove it.


    "I have no way to combat what they're doing. It's a frustration. I think its unfair," he said.


    Johnson will have his chance to question Elliott on Tuesday.


    Johnson initially faced one count of mail fraud when he and his attorney at the time negotiated a plea deal with the U.S. Attorney's Office in 2012. In exchange for his guilty plea, Johnson wanted the government to agree to not go after his family, iWorks employees and others, including former Attorney General John Swallow.


    The deal fell apart during a court hearing when prosecutors balked at submitting Johnson's list of names to the judge.


    Johnson is a key figure in the public corruption cases against Swallow and former Attorney General Mark Shurtleff. He wanted to bring them as witnesses in his trial because he claims they had once declared his business legitimate. But Nuffer barred Johnson from mentioning Swallow or Shurtleff during the trial.


    The case file contains more than 1,100 entries for briefs, motions, responses and orders, not to mention millions of pages of electronic documents. Johnson and defense attorneys filed a flurry of motions the past week seeking to get the case dismissed for a variety of reasons. Nuffer denied them.


    Once the trial is over, Johnson will have a quick turnaround to defend himself in a parallel civil trial in Las Vegas next month.



    Source: http://www.deseretnews.com/article/...on-fraud-trial-underway-in-federal-court.html
     
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  2. Ste Fishkin

    Ste Fishkin BANNED BANNED Jr. VIP

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    How the fuck did he think that would end well...

    What a fucking genius.
     
  3. apexbeat

    apexbeat Junior Member

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    "Johnson complained to Judge David Nuffer about Elliott's use of the word fraud after the jury was dismissed for the day. He said iWorks processed payments for more than just its own companies and that the judge won't allow him access to electronic evidence to prove it."


    There has to be more to this. Visa/Mastercard wont allow over a 1% chargeback rate, unless a relationship was established. I surprised the wells fargo brokers didnt cut the accounts first. Cool read.
     
  4. swagguru

    swagguru Junior Member

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    The big banks are such hypocrites! Nothing wrong with what they did. And the judge is a banker, all of em r. Hope they don't loose to many assets. Great read, thanks for posting.
     
  5. asap1

    asap1 BANNED BANNED

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    lol ain't this something.
     
  6. NSMITH15

    NSMITH15 Newbie

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    I am curious if he simply took the only defense available to him or if he genuinely believes that he did nothing wrong... That level of ignorance must be blissful.
     
  7. JustUs

    JustUs Power Member

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    Because he had Utah Sen. Mike Lee, Nevada Sen. Harry Reid, Utah Att. Gen Mark Shurtleff, and Utah Att Gen. John Swallow in his back pocket with payoffs. The Senators are slick enough that they were not charged. Shurtleff and Swallow are being charged locally along with several others.
     
    Last edited: Feb 25, 2016
  8. JustUs

    JustUs Power Member

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    The courts have limited his ability to defend himself. The US prosecuting attorneys seized attorney client emails and the judge ruled that the US government did not harm or prejudice the defense by seizing and reading the email.

    Because this trial is a cover up for two US senators, all stops are pulled. One of the senators, Mike Lee, is really a nobody; Harry Reid OTH....