In Utah, a Local Hero Accused

Mr. Johnson, 34 at the time, had never traveled to Haiti before. But his decision to stage a private airlift, using his own aircraft, did not surprise his friends and family. They were used to his impulsive acts of magnanimity.

Six feet tall, with unruly red hair and a toothy grin, Mr. Johnson was well-known around St. George for deploying his own helicopter to rescue hikers stranded in nearby canyons and for housing families fleeing from polygamous communities. One local resident who befriended Mr. Johnson when they were both Boy Scouts described him as “one of the most Christ-like people I have ever come to know.”

In Haiti, Mr. Johnson piloted his own helicopter, flying infant formula to remote orphanages, evacuating injured children and delivering 110-pound bags of beans and rice to outskirts of Port-au-Prince, said another friend, Daniel Gardner, who joined him on the mission. On the last day of the 12-day trip, Mr. Johnson gave away personal possessions — a baseball cap, his iPod — down to the hiking boots he had been wearing, Mr. Gardner recalled. Mr. Johnson flew home with his feet clad only in striped Paul Smith socks.

“When I think of Jeremy Johnson, I think of the most generous person I ever met,” said Mr. Gardner, an assistant loan officer in Provo, Utah. “Whatever he had, he would give and give and give.”

But what Mr. Johnson had to give — and it was quite a bit — may have come from consumers who got taken. The Federal Trade Commission says Mr. Johnson was “the mastermind” behind one of the largest and most intricate online marketing frauds ever perpetrated in the United States.

Mr. Johnson founded and ran a company called I Works, which, the agency says, marketed programs to help people get government grants for personal needs and earn easy money. According to a civil complaint filed by the F.T.C., the company lured consumers with online pitches for free or “risk-free” CD-ROMs that required only a nominal shipping fee and then charged their credit cards for recurring online memberships they were unaware of and had not consented to.

Over five years, Mr. Johnson, along with I Works, company executives and related corporations, supposedly swindled “unwitting consumers” out of more than $275 million, the complaint said. The company also discouraged dissatisfied customers from seeking refunds from their credit card companies, the complaint said, by threatening to report those customers to a company-operated consumer blacklist called BadCustomer.com.

All the while, proceeds from the enterprise were used to finance Mr. Johnson’s “lavish lifestyles” of helicopters and houseboats, classic cars and poker at a Las Vegas casino, according to a receiver’s report to the court on Mr. Johnson’s assets. Some details in the case file read as if they came from an Old West novel: according to testimony from a witness, Mr. Johnson supposedly amassed bundles of cash and buried caches of gold.

“This is the anatomy of a really interesting fraud done by a clever guy at the expense of the most vulnerable people,” asserted David C. Vladeck, a professor at the Georgetown University Law Center who worked on the case in his previous job as director of the F.T.C.’s Bureau of Consumer Protection.

Mr. Johnson has repeatedly and vehemently denied any wrongdoing; a court filing by his defense team describes the F.T.C.’s argument as “filled with half-truths, distortions and inflammatory rhetoric that is not supported by the evidence.” The purpose of BadCustomer.com, for instance, was simply to steer people to his customer service centers, he said in a court filing.

In addition to the F.T.C.’s civil case, taking place in the United States District Court of Nevada, he is now facing 86 related criminal charges — including conspiracy, money laundering and bank fraud — brought by the United States attorney in Utah. Mr. Johnson has denied those charges, too.

“We did not commit any fraud whatsoever,” he wrote in an e-mail to an F.T.C. lawyer in 2011.

Over the last 19 months, in an attempt to clear his name, Mr. Johnson has mounted a campaign that accuses federal agents of misdeeds, including interfering with his right to a fair and speedy trial. Because of his jeremiads, federal prosecutors asked a judge in federal court in Salt Lake to prohibit him from further public commentary. In May, the judge imposed the order on Mr. Johnson, along with others in the criminal case including defendants, defense lawyers and prosecutors, prohibiting them from making public statements about the case.

Melodie Rydalch, a spokeswoman for the United States attorney in Utah, said federal prosecutors could not comment on the criminal case because of the order. Peter Kaplan, a spokesman for the F.T.C., declined to comment on its case “given the posture of the litigation.” But in hundreds of court filings, federal regulators paint a portrait of I Works as an enterprise that went to great lengths to lure online users even as consumer dissatisfaction mounted. Rather than modify their business practices, an F.T.C. court filing says, “defendants adopted strategies that allowed their fraud machine to continue reaping millions of dollars from unsuspecting customers.”

Online Service Is Accused in Laundering of $6 Billion

The organization, Liberty Reserve, was responsible for laundering over $6 billion over the last seven years, with millions of customers around the world, according to the indictment. Prosecutors said that the company “facilitated global criminal conduct” and that the case, which involved law enforcement agencies in 17 countries, is believed to be the largest international money laundering prosecution in history.

The charges detailed a complicated system designed to allow people to move sums of money both large and small around the world with virtual anonymity, according to a three-count indictment announced by the United States attorney’s office in Manhattan.

“This was really PayPal for criminals,” a senior law enforcement official said, calling the company and a system of related businesses “a shadow banking system for criminal conduct” that was “able to facilitate all sorts of criminal conduct that would not otherwise happen.”

The indictment charges seven of the company’s principals and employees. Five of them were arrested Friday in Spain, Costa Rica and Brooklyn.

“Liberty Reserve was in fact used extensively for illegal purposes, functioning in effect as the bank of choice for the criminal underworld,” the indictment states.

Liberty Reserve, an online currency exchange, has surfaced as a preferred vehicle to transfer money between parties in a number of recent high-profile cybercrimes, including the indictment of eight New Yorkers for their role in looting $45 million from bank machines in 27 countries.

Liberty Reserve was incorporated in Costa Rica in 2006 by Arthur Budovsky, who renounced his United States citizenship in 2011, and was arrested in Spain on Friday.

Preet Bharara, the United State attorney in Manhattan, was expected to announce the charges at a Tuesday afternoon news conference along with officials from the Justice Department, the Secret Service, the Internal Revenue Service and the Department of Homeland Security.

In addition to the criminal charges, five domain names were seized, including the one used by Liberty Reserve, and officials seized or restricted the activity of 45 bank accounts.

The charges outlined how the money transfer system operated, offering a glimpse into the murky world of online financial transactions that bounces money between far-flung accounts from Cyprus to New York in the blink of an eye.

In order to transfer money using Liberty Reserve, a user needed to provide a name, address and date of birth. But they were not required to validate their identity.

“Accounts could therefore be opened easily using fictitious or anonymous identities,” the indictment states. Prosecutors cited “blatantly criminal monikers” used by Liberty Reserve clients like “Russia Hackers.”

Essentially, all a customer needed to open an account was an e-mail address.

The senior law enforcement official, who spoke on the condition of anonymity because the charges had not yet been announced, said that one undercover agent was able to register accounts under names like “Joe Bogus” and describe the purpose of the account as “for cocaine” without questioning. That no-questions-asked verification system made Liberty Reserve the premier bank for cybercriminals, facilitating a broad range of illegal online activity.

The senior law enforcement official said the case was significant because it attacked the financial infrastructure utilized by many cyber criminals in much the same way that drug money laundering prosecutions have sought to target the financial underpinnings of the narcotics trade.

“They’re not going to have this kind of fluid system that allows them to work globally in the same way,” the official said, noting that federal authorities were unaware of any other such system that operates on a similar scale. “It’s not the end of it,” the official said, referring generically to such cyber money laundering schemes, “but it’s a big deal.”

Bronx Officer Accused of Hiring E-Mail Hackers

But the detective was not seeking to build a case against the outfit, federal prosecutors said on Tuesday. Rather, prosecutors said, he became a client.

Using information bought from the hackers, the detective, Edwin Vargas, obtained login information for at least 43 e-mail accounts associated with 30 people, including at least 19 members of the New York Police Department in the Bronx, according to a complaint unsealed in Federal District Court in Manhattan.

The reason for the digital snooping appeared to be personal, law enforcement officials said: Detective Vargas, 42, suspected a former girlfriend — also an employee of the Police Department, an official said — had started a new relationship with a fellow officer. Detective Vargas and the woman had a child together, officials said, but had broken up.

“A 20-year veteran of the Police Department, never before under suspicion for any impropriety, let alone any criminal activity,”  James Moschella, a lawyer for the detective’s union, said of Detective Vargas, whom he represented at the arraignment. Detective Vargas was released on $50,000 bond.

“It’s my understanding that some of the victims are detectives as well,” said Michael J. Palladino, the head of the detectives’ union. “It would be inappropriate for me to comment any further.”

Prosecutors said that over the course of two years beginning in 2010, Detective Vargas contacted the e-mail hacking group multiple times and paid about $4,050 for the login information for accounts of fellow officers and some private citizens. He paid between $50 and $250 per account, according to the complaint, using a credit card or PayPal account registered to his Bronx address.

The low prices suggested that, for the hackers, the e-mail account information was not difficult to obtain.

It was not clear what was done with the information obtained. Detective Vargas is accused of gaining access to only one of the accounts for which he obtained login details. The complaint did not identify those targeted.

Prosecutors also accused the detective of accessing online records for a cellphone belonging to one of the victims.

The Federal Bureau of Investigation conducted the investigation along with the Police Department’s Internal Affairs Bureau. Law enforcement officials said it was during the course of a broader, continuing investigation into a Los Angeles-based e-mail hacking operation that investigators found accounts belonging to the New York police officers had been hacked. Detective Vargas, who joined the department in 1993, was arraigned on charges of conspiracy to commit computer hacking and of unlawful access to a law enforcement database.

The second charge came from what prosecutors said was an unauthorized use of a national crime database by Detective Vargas to look up information about two officers whose e-mails he had also obtained.

He did so, prosecutors said, from a Bronx precinct where he worked, though the complaint did not specify which one. Detective Vargas had worked at the 44th Precinct, where officials said some of the police officers targeted were based, but was currently assigned to the 40th Precinct.

“Of all places, the Police Department is not a workplace where one should have to be concerned about an unscrupulous fellow employee,” said George Venizelos, the head of the F.B.I.’s New York office.

In Private Manning Case, Jailers Become the Accused

Private Manning faces a potential life sentence if convicted on charges that he gave WikiLeaks, the antisecrecy organization, hundreds of thousands of confidential military and diplomatic documents. But for now, he has been effectively putting on trial his former jailers at the Quantico, Va., Marine Corps base. His lawyer, David E. Coombs, has grilled one Quantico official after another, demanding to know why his client was kept in isolation and stripped of his clothing at night as part of suicide-prevention measures.

Mr. Coombs, a polite but relentless interrogator who stands a foot taller than his client, has laid bare deep disagreements inside the military: psychiatrists thought the special measures unnecessary, while jail commanders ignored their advice and kept the suicide restrictions in place. In a long day of testimony last week, Private Manning of the Army, vilified as a dangerous traitor by some members of Congress but lauded as a war-crimes whistle-blower on the political left, heartened his sympathizers with an eloquent and even humorous performance on the stand.

“He was engaged, chipper, optimistic,” said Bill Wagner, 74, a retired NASA solar physicist who is a courtroom regular, dressed in the black “Truth” T-shirt favored by Private Manning’s supporters.

Private Manning, who turns 25 on Dec. 17 and looks much younger, was quietly attentive during Friday’s court session, in a dress uniform, crew-cut blond hair and wire-rimmed glasses. If his face were not already familiar from television news, he might have been mistaken for a first-year law student assisting the defense team.

It seemed incongruous that he has essentially acknowledged responsibility for the largest leak of classified material in history. The material included a quarter-million State Department cables whose release may have chilled diplomats’ ability to do their work discreetly but also helped fuel the Arab Spring; video of American helicopter crews shooting people on the ground in Baghdad who they thought were enemy fighters but were actually Reuters journalists; field reports on the wars in Iraq and Afghanistan; and confidential assessments of the detainees locked up at Guantánamo Bay, Cuba.

As the military pursues the case against Private Manning, the Justice Department continues to explore the possibility of charging WikiLeaks’ founder, Julian Assange, or other activists with the group, possibly as conspirators in Private Manning’s alleged offense. Federal prosecutors in Alexandria, Va., are still assigned to that investigation, according to law enforcement officials, but it is not clear how active they have been lately in presenting evidence to a grand jury.

The current tone of the legal proceedings against Private Manning is most likely temporary. His lawyer is asking the judge overseeing the case to throw out the charges on the ground that his pretrial treatment was unlawful, but that outcome appears unlikely.

As a fallback, Mr. Coombs is hoping the court will at least give Private Manning extra credit against any ultimate sentence for the time he spent held under harsh conditions at Quantico and earlier in Kuwait, where he was kept in what he described as “an animal cage.” After the uproar about his treatment, including public criticism from the State Department’s top spokesman and the United Nations’ top torture expert, military officials moved Private Manning in April 2011 from Quantico to a new prison at Fort Leavenworth, Kan., where he has not faced the same restrictions on clothing, sleeping conditions and conversation with other inmates.

As if to underscore the gravity of his legal predicament, Private Manning offered last month to plead guilty to lesser charges that could send him to prison for 16 years. Prosecutors have not said whether they are interested in such a deal, which would mean they would have to give up seeking a life sentence for the most serious charges: aiding the enemy and violating the Espionage Act.

Friday’s court session was attended by a dozen Manning loyalists, including Thomas A. Drake, the former National Security Agency official who was accused of leaking documents and pleaded guilty to a minor charge last year. They heard the commander of the Quantico brig, or military jail, explain why she refused Private Manning’s request to be taken off “prevention of injury” status.

Scott Shane reported from Fort Meade, and Charlie Savage from Washington.

Bits Blog: Woman Accused of Robbing Bank and Bragging About It on YouTube

Screen shot via YouTube The authorities say Hannah Sabata stole a car and robbed a bank in Nebraska, and bragged about it on YouTube.

This might seem obvious to some, but here’s a little life tip: If you steal a car and then rob a bank at gunpoint, don’t brag about it in a video on YouTube.

Hannah Sabata, a 19-year-old from Nebraska, stands accused of doing this very thing.

A YouTube user named Jellee Beanie, who the authorities say is Ms. Sabata, posted a seven-minute video last week bragging about a robbery of a Cornerstone Bank in Waco, Neb., where the county sheriff says Ms. Sabata stole $6,000.

Dale Radcliff, the York County sheriff, said in a phone interview that he had already arrested Ms. Sabata by the time residents started notifying him about the video.

“My doctor called me and told me about the video,” Sheriff Radcliff said. “Then we started getting a lot of other calls about the video from people.”

Sheriff Radcliff said that Ms. Sabata had been identified as a suspect by her ex-husband. She sent him a text message, the sheriff said, bragging that she “had a pile of money after robbing a bank and asking if he wanted to go get a new tattoo with her.”

The authorities said Ms. Sabata posted the video, titled “Chick Bank robber,” from her messy bedroom at her parents’ house. She was wearing the same clothes she had worn during the bank robbery, according to the sheriff: a pink and white striped T-shirt and black jeans.

A brief text description of the holdup was attached to the video: “I just stole a car and robbed a bank. Now I’m rich, I can pay off my college financial aid and tomorrow i’m going for a shopping spree.” It added: “Bite me. I love GREENDAY!”

“I’ve been sheriff for 19 years, and in law enforcement for 42 years, and I’ve never seen anything like this,” Sheriff Radcliff said.

In the video, Ms. Sabata writes on a pad of paper describing a play-by-play of the robbery, then holds up the pad to her webcam. It’s difficult to read because the camera creates a mirror image of the words, as most Web cameras do. For those who can’t read backward, the video had subtitles added.

Ms. Sabata paused in the video to smoke something from a pipe — the subtitle says it is a “full bowl of weed.” The Green Day song “Warning” accompanies the video.

At the very end of the video, Ms. Sabata holds up a large pile of cash and smiles. Sheriff Radcliff said the video would most likely be entered at any trial as evidence.

Sheriff Radcliff said that the case would be charged by the York County attorney’s office. Candace Bottorf Dick, the York County attorney, could not immediately be reached for comment.

Cee Lo Accused of Sexual Battery Singer Denies Wrongdoing

Cee Lo Green is the target of an LAPD sexual battery investigation, TMZ has learned … but  the singer is adamant he did NOTHING wrong. 

Law enforcement sources tell us … a woman recently filed a police report with the LAPD, accusing "The Voice" judge – real name Thomas DeCarlo Callaway – of a sexual assault. 

Our sources say detectives have already visited a restaurant in Downtown Los Angeles in connection with the case and questioned several employees, including the manager.   We do not know if the alleged incident occurred at the restaurant.

The LAPD is mum on the identity of the alleged victim, when and where the incident allegedly occurred, and what Cee Lo allegedly did.

Cee Lo tells TMZ he categorically denies ANY wrongdoing. In fact, the singer says he hasn't been to the restaurant in question in 3 months … and insists, "Nothing ever happened there or anywhere else."

We also spoke with a source who is constantly with Cee Lo … who tells us, "I have never seen Cee Lo act in a physical way toward anybody."

The investigation is in its infancy … no charges have been filed and the case has not been referred to prosecutors.

Bankrupt Toni Braxton — Accused of Fraudulently Giving $53,000 to Husband

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Toni Braxton fraudulently transferred $53,490 to her estranged husband in order to avoid paying back creditors in her bankruptcy case — so says the trustee of Toni's bankruptcy estate.

According to new docs filed in Toni's ongoing bankruptcy case, Toni's estranged husband Keri Lewis received the 5-figure sum after Toni's money was already earmarked to repay creditors.

Now, the bankruptcy trustee is suing Lewis to get the money back — much like John Mayer was sued for $465,000 following a giant Ponzi scheme collapse in Seattle.

TMZ broke the story … Toni filed for bankruptcy in 2010, claiming she owed between $10 million and $50 million in debts.

A rep for Braxton tells TMZ, "All of the payments made to Lewis prior to Toni’s bankruptcy filing were appropriate transfers for reasonable and necessary personal and business expenses in the ordinary course of her business."

The rep adds Toni will continue to provide the trustee whatever info is needed to address the allegation.