Chad Elie on Jeremy Johnson’s Black Friday Asset Excesses, Part 1
A special treat this time out, with some amazing excerpts from a court deposition given by convicted Black Friday participant Chad Elie regarding his dealings with Utah-based telemarketing fraudster Jeremy Johnson and the workings of online-poker processing company Elite Debit.
Elie and Johnson started up Elite to process poker transactions, first for PokerStars and later Full Tilt, all run through the doomed St. George, Utah SunFirst Bank at the core of the Black Friday indictments. Elie has recently resurfaced on Twitter, where he’s lobbed bombs toward Howard Lederer, Johnson, former Utah AG Mark Shurtleff (since deleted), and several others, which we highlighted last time out.
As we began to explore last in the previous piece, Elie Debit and its related entities were really Jeremy Johnson’s operation, not Elie’s. It was Elie who brought Stars and Tilt to the table, since they were on the hunt for a processor after Intabill’s collapse, and Johnson owned a significant chunk of SunFirst and had so much power there that employees called it “The Bank of Jeremy Johnson.”
All that started to fall apart before Black Friday, when Johnson’s fraudulent telemarketing empire was targeted by the Federal Trade Commission (FTC) in a $275 million action.
Johnson himself remained free until June of 2011 when he was finally detained in what might have been one of the biggest sham arrests ever, but by that time the damages related to Johnson’s IWorks telemarketing and Elite Debit poker-processing operations had occurred, with Johnson almost certainly taking advantage of nearly two years of lead time to secret tens of millions of dollars from the FTC and other enforcement agencies.
Elie was subpoenaed to testify at a detention hearing for Johnson in late July of 2011 in which he described some of the extreme asset-hiding measures undertaken by Johnson and his business associates. Sure, Johnson blew millions at Vegas casinos and online at Full Tilt, being a mega-fish under his “ginette22” screen name.
He also spent millions on homes, real estate, and aircraft, sunk millions into TD Ameritrade accounts traded badly by associate Lee Arvin Black, and converted into gold silver and boxes of US currency.
Elie’s deposition, which is believable for the fine detail it offers, shows the extreme nature of Johnson’s asset-hiding accesses. A few excerpts illustrate where a lot of the money went. In 2009, as Johnson and Elie consummated their Elite Debit partnership, Johnson flew Elie from Tampa to Utah on his private jet. Here’s what Elie saw, which was some of the proceeds of Johnson’s earlier IWorks scheme. Enjoy, and understand it’s just the tip of the story; in Part 2 you’ll get to see how this asset secretion grew, with the addition of Stars- and Tilt-related proceeds:
Attorney: What happened during that visit? How long were you there?
Elie: I was there about two days, spent the night, brought me to see his gold in his safes next to his mother’s house.
Attorney: I’m going to show you what has been marked as Plaintiff’s Exhibit No. 21. Do you recognize the property in those photographs?
Elie: Yes.
Attorney: Is that the property you visited with Mr. Johnson on this trip to St. George?
Elie: Yes.
Attorney: You say you saw some safes?
Elie: Yes, sir.
…
Attorney: In sort of an outbuilding, not connected to the main residence?
Elie: Yeah. It was like an outdoor casita.
…
Attorney: How many safes were in the building?
Elie: Roughly around two — I believe two.
Attorney: How big were they?
Elie: Probably about six foot, maybe a little taller than me.
Attorney: Roughly how wide and deep would you say?
Elie: Probably about as wide as this.
Attorney: Three or four feet?
Elie: Yes.
Attorney: How deep?
Elie: Extremely deep. I mean probably as deep as this [witness box] maybe.
Attorney: Did he show you the contents of the two safes?
Elie: Yeah. He opened one of the safes and there was cash, old quarters, like an old bag of quarters, little gold shavings of — like vials of gold shavings, cash wads, and a lot of gold, gold coins.
Attorney: Gold in the form of coins?
Elie: Yes.
Attorney: How would you describe the cash, the volume, the amount of cash?
Elie: At that time I would say, you know, roughly — you know, I mean there was a lot of cash everywhere.
Attorney: In bundles?
Elie: Yes — not bundles, in flat, you know, things with gold, white in the middle, $100 bills, 10,000, you know, packets.
Attorney: How many packages do you estimate?
Elie: I would have to — if I guessed, a couple hundred, if not more.
Attorney: A couple hundred packages of $10,000 each?
Elie: Yes, sir.
Attorney: And the gold coins, what was the volume or quantity of those as best you can remember?
Elie: He showed me, you know, probably, if I would guess, probably a couple million dollars worth of gold, gold coins.
Elie was so impressed with Johnson’s wealth and Johnson’s belief in the safety of precious metals that he agrees to buy $750,000 of gold coins from Johnson as a way of consummating their partnership. Here’s Elie on that:
Attorney: So you bought a quantity of these sheets with coins in them?
Elie: Yes, sir.
Attorney: Did he represent it was worth $750,000?
Elie: Yes, sir.
Attorney: Do you have an estimate as to what percentage of the total in that safe that represented?
Elie: I would probably say about ten percent.
Attorney: So that was about ten percent of the gold he had on hand?
Elie: Yes, sir.
Attorney: Was it in one safe or both of the safes?
Elie: It was in just one safe.
Attorney: Did you see the contents of the second safe on that occasion?
Elie: I did. He opened it up and he was showing me other old coins, more gold in a lot of these little vials with the shavings in them.
…
Here’s Elie on how he got the coins back to Florida:
Attorney: How did you transport your gold?
Elie: He flew me home in his jet.
Attorney: How did you carry it?
Elie: In a — he gave it to me in a Luxor bag, you know, just a regular [bag], the casino Luxor, that they give to people. So a black Luxor bag.
The strangest part of that final tale is likely that after Elie moved to California, Johnson stole the coins, re-transferring them to his own safe without Elie’s permission, while claiming that they were unsecure in the house, owned by Johnson, where Elie lived.
It would get crazier and better. Part 2 details more safes, and the extreme measures Johnson undertook to hide some of these illiquid assets.
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