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SALT LAKE CITY — Former Utah Attorney General Mark Shurtleff gave indicted businessman Jeremy Johnson "unsound" advice to derail a court hearing three years ago in which he was expected to plead guilty, federal prosecutors say.
Johnson faced one count of mail fraud in connection with his Internet marketing company, iWorks, in 2012. He and his attorney at the time, Nathan Crane, negotiated a plea deal with the U.S. Attorney's Office.
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.
Unbeknownst to federal prosecutors, Johnson was also talking to Shurtleff about ways to undermine the agreement and recorded an Oct. 8, 2012, meeting with him, according to court documents.
Shurtleff advised Johnson to go into court as though he was going through with the plea deal, and in the middle of the hearing "blow it up" by saying that the only reason he was pleading guilty was that federal prosecutors had threatened to indict members of his family.
"Shurtleff suggested to Johnson that such a tactic could derail the entire federal criminal prosecution of Johnson, iWorks, and related individuals, and also would provide an opening for Shurtleff to approach the U.S. attorney on Johnson's behalf," prosecutor Michael Kennedy wrote.
Johnson ultimately didn't plead guilty and the deal fell apart during a bizarre court hearing in January 2013.
Prosecutors made the assertions about Shurtleff in response to two defendants in the current criminal fraud case against Johnson and four associates seeking to have the charges dismissed.
Bryce Payne and Ryan Riddle say their names were on the list of people the government agreed in court not to prosecute regardless of whether Johnson pleaded guilty.
Prosecutors argue the list was never part of the proposed plea agreement and the deal fell apart in the hearing. They urged the court not to dismiss the indictment against Payne and Riddle.
Shurtleff suggested to Johnson that such a tactic could derail the entire federal criminal prosecution of Johnson, iWorks, and related individuals, and also would provide an opening for Shurtleff to approach the U.S. attorney on Johnson's behalf.
–Prosecutor Michael Kennedy
Shurtleff declined to comment Tuesday.
In the court filing, prosecutors say Johnson never intended to plead guilty.
"Rather, it is clear in hindsight that his strategy was to take Mr. Shurtleff's unfounded (and ultimately unsound) advice, and bet on Mr. Shurtleff's prediction that derailing the plea hearing with the suggestion he was pleading only to protect those he alleged had been threatened by federal prosecutors would make the whole case go away," Kennedy wrote.
Because Johnson didn't take the deal, "there is no possibility that any binding non-prosecution agreement by the government benefitting defendants Payne or Riddle exists or could ever have come into force, and of course it did not."
At the time of the proposed deal, only Johnson faced a criminal charge related to iWorks.
Two months after the agreement imploded, prosecutors filed a new indictment against Johnson, adding Payne, Riddle, Scott Leavitt and Loyd Johnston as defendants.
Johnson, Payne, Leavitt and Johnston are charged with 86 counts of conspiracy, false statements to banks, wire fraud, bank fraud, participating in fraudulent banking activities, money laundering, conspiracy to commit money laundering and aiding and abetting.
Riddle faces 55 counts because he had resigned before some of the alleged crimes had taken place.
