You are on page 1of 5

Thefollowingdocumentisputforthtoattesttothetruthofwhattheevidenceandtestimony

boreoutatthetrialofJeremyJohnson,RyanRiddleandScottLeavitt.Thegovernmenthasput
forthafalsenarrativeintheirsentencingmemorandumregardingtheevidenceandtestimonyas
presentedduringthetrial.Itismyhopethatthisinformationisprovidedtothepublicsothat
theymayknowthetruthofeventsthatoccurredduringthetrial.
Therearemanydiscrepanciesinthenarrativethegovernmentpaintsintheirsentencing
memorandum.Thisdocumenttouchesononlyafewofthosediscrepancies.Iffurther
clarificationoftheinformationprovidedinthefollowingparagraphsisneeded,Iwouldbe
willingtoanswerquestionsorprovidemoreindepthbackgroundtomycommentswithinthe
limitsofthecourtorderimposedonme.Ihavefiledseveralaffidavitsinthehopesthatsomeof
thisinformationwouldcometolight.However,JudgeNufferhasthusfarrefusedtoadmitor
evenconsidertheinformationpresentedintheaffidavits.JudgeNufferhasevenimpliedthatMr.
Johnsonhassomehowillegallycontactedmetoobtaintheseaffidavits.Iwilltestifyunderoath
thatIhavefiledtheseaffidavitsofmyownvolitionwithoutcontactorcoercionfromMr.
Johnsonorhiscounsel.
Thistrialwasalengthyandcomplicatedaffair.Duringthecourseofthe6weeksoftrial,I
becameincreasinglydistressedbytheactionsoftheprosecutionandtheapparentbiasesofthe
trialjudge.Ihavebeensodisturbedbytheseactions,thatIamcurrentlypursuingofficial
remediesforjudicialmisconductandprosecutorialmisconduct.
Themultitudeofevidenceprovidedduringthetrialrepeatedlydemonstratedthattheprosecution
hadnocaseagainstthedefendants.TheonlychargesIfeltcompelledtoofferaverdictofguilty
towereFalseStatementstoaBank.TheonlyinformationthatIcouldfindthatwasfalsewasa
singleblockontheapplicationsinquestionthatlistedthenumberofemployees.Ifeltcompelled
torenderthisverdictduetothefactthataccordingtotheguidanceprovided,intentoreven
knowledgewerenotnecessarycomponentstorenderaguiltyverdict.Furthermore,Iwasnever
providedanyinformationregardingtheimportanceorlackofimportancethisinformationhadon
thebanksdecisiontoboardthemerchantaccount.Theexpertwitnessforthedefensewhocould
haveshedlightonthiswasbarredfromtestifyingtothesurpriseofeventheprosecution.
ThefollowinginformationIampresentinginthisstatementisbasedonmyunderstandingasa
juroroftheactualphysicalevidenceandsworntestimonyofthewitnesses.

.
Iwillprovidesomenecessarybasicinformationastohowthecreditcardprocessingsystem
worksinordertostrengthenmyrebuttalofthegovernmentsassertions.
Amerchantobtainscreditcardprocessingaccountsinoneoftwoways.Firsttheymayapply
directlythroughabanksuchasWellsFargo.Alternatively,theymayapplythroughan
IndependentSalesOrganization(ISO)thatiscontractuallyboundtoanissuingbanksuchas
WellsFargo.Iworks,themerchant,obtainedmerchantaccountstoprocesscreditcardsthrough
Cardflex,anISOforWellsFargo.Cardflexservedasthebanksofficialagentasstipulatedinthe
signedcontracts.Effectively,CardflexwaslegallythebankasfarasIworkswasconcerned
andmaintainedalldecisionmakingauthorityregardingtheboardingofmerchantaccounts.This
arrangementmeantthatIworkshadnodirectcontactwithWellsFargo,theactualbank.
Therefore,AndyPhilipsofCardflexeffectivelyhadallauthorityovereverythingthathappened
withIworks281merchantaccountsconsideredinthistrial.
ThegovernmentassertsonPage25oftheirsentencingmemorandum:

IttookVisa,WellsFargoBank,andFirstDatamonthstofigureoutwhatJohnsonwas
doing,andwhenthepuzzlepiecesfinallycametogetherWellsFargoorderedCardFlex
toterminateallJohnsonassociatedaccounts,exactlyasJohnsonhadpredicted.Andthis
nearlydestroyedCardFlex,asAndyPhillipstestified:
A.[Johnson]darnneardestroyedmycompanyIspent30yearsbuildingby
greedandjusttakingadvantageof,Idontknow,Ishouldsaymynaivety,Ishouldnt
benaveafterthismanyyears,butIwasntaccustomedtothis.Again,Illgo
backtothedaysIwasprocessingforalotoftheadultguys,asbadastheyare,
boy,thoseguysdidntlietoyou.

Mr.Phillipshassubmittedasentencingdeclarationinwhichhespellsoutthemillionsofdollars
inlostbusinessopportunityJohnsonsactionshavecausedhim,alongwiththepersonal
reputationalharmhehassuffered.
PerhapsWillSwaimstestimonyoncrossbyJohnsonbestsumsupwhatJohnsondidto
CardFlex.
A.Thisisembarrassingtoadmit,butIthinkIwasconned.Ithinkwewereconned.
Idontthinkyouwereatallthepersonwebelievedyoutobe,andpeopleinyour
organizationstraightupliedtome.Itsanuncomfortablethingtosayinpublic,
butImtellingyou.Iwouldtellyouthatinprivate.

VisasRole
Mr.Elliotwasonthestandtwice.Thefirsttimeheclaimedhehadnoideaanyprocessing
breakoutwashappening.Thedefenseaskedhimifhehadeverhadaphonecalldiscussionwith
Iworksaboutthebreakoutoftheprocessingandhesaidnohehadneverhadanysuch
discussion.Hewasadamantandindignantthatthedefenseimpliedthatheknewanything.The
defenseattemptedtoadmitarecordedphonecallthatwouldimpeachMr.Elliotstestimony.
JudgeNufferwouldnotallowthesubmissionofthephonecallatthetimesinceithadnotbeen
officiallytranscribed.However,severalweekslaterthephonecallwasallowedintoevidence
andMr.Elliotwasbroughtbackontothestand.ThephonecallremindedMr.Elliotthathehad
infactdiscussedtheaffiliatefraudwiththedefendantsandhefurtherprovidedadvicetothe
defendantstobecompletelytransparentwiththeirnextacquiringbank.Mr.Johnsondidinfact
heedthisadvicewithCardFlexalthoughthegovernmenterroneouslycontendshedidnot.
NOTE:Breakingoutprocessinginthisfashiontocombataffiliatefraudwascommon
practiceanddoneregularlyatthistime(2008/2009).OneISOevenofferedtodoitforMr.
Johnsonandprovidedanemailwiththeirlawyersfeesassociatedwithbreakingoutthe
processing.
WellsFargosRole
NophysicalevidencepresentedinthecourseofthistriallinkedWellsFargotoanyIworks
activities.WellsFargoduringthetimeframeinvolvedinthecaseneverputMr.Johnsononthe
MATCHlist(theindustriesblacklist).ContrarytothegovernmentscontentiononPage25,
thereiszeroevidencethatWellsFargohadanyinteractionswithIworks.
FirstDatasRole
Evidencepresentedduringthetrialdemonstratedthatcontrarytothegovernmentsassertions
FirstDataknewabout,understood,andcommunicatedwithCardflextheirknowledgethatall
281accountspresentedinthistrialbelongedtoIworks.Additionally,noevidencewasever
presentedattrialofanymonetarylosstothebanksoreitherISO.Iworksprovidedmonetary
reservesinthemultimillionsofdollarstocoveranypotentiallossestothebanksortheISOs
relatedtoaffiliatefraudandfraudulentchargebacks.Iworksistheonlyentitythatthistrial
showedhadlostanyactualmoney.

DiscrepanciesinthetestimonyofAndyPhilipsandWillSwaim.
Mr.JohnsonsoughtoutMr.Philipsduetohisreputationandexpertiseinthecreditcard
processingworldatthetime.Mr.Philipswasknowntohavedealtwithandfixedsimilar
affiliatefraudproblemsearlierinhiscareerandMr.JohnsonbelievedthatMr.Philipscouldhelp
him.Mr.Philips,aftermeetingwithMr.Johnson,advisedIworksthattheycouldfixthe
problemsbybreakingouttheprocessingtoidentifywherethefraudwasoriginatingfrom.
Cardflex,underMr.PhilipsdirectionandwithMr.Swaimsfullknowledge,proceededtoboard
hundredsofaccountsusingthisbreakoutprocess.Mr.Philipsrequiredawrittenpersonal
guaranteefromMr.Johnsonforeachaccountboardedunderoneof16differentnames,
demonstratingthatMr.Philipsknewexactlywhatwashappening.Additionally,Mr.Philips
requiredmonetaryreservesfromIworkstocoveranychargebacks,feesorfines.Cardflexalso
increasedthefeestheywouldreceivefromIworksforanychargebacks.
TheabovefactsdemonstratethatMr.PhilipsandMr.SwaimstestimonyregardingMomand
Poptypebusinesseswereinfactcontrarytotheactualevents.Allofthe281accountswere
ownedbyjust16people,whowerealleitheremployeesofIworks,spousesofemployeesor
friendsofMr.Johnson.Theaccountswereconsolidatedasfollows:
LoydJohnston97accounts
ScottMuir90accounts
KevinPilon35accounts
SharonPilon13accounts
MichelleJohnson(Pilon)10accounts
MeganSpurling9accounts
AndyJohnson8accounts
Margaret(Lacy)Holm6accounts
RobertJudd4accounts
TristaJordan1account
KimHackett1account
FayeMarston1account
HeatherLamb1account
LeahRomero1account
MikkiWebb1account

SarahHarper1account
DarcieCloward1account
FinalThoughts
Theitemspresentedherearejustafewofthediscrepanciesandactionsthathavegreatly
concernedmeasajuror.Itismybeliefthatthetrialwasnotconductedfairly,thatthedefense
wasnotaffordedanopportunitytodefendthemselves,thattheprosecutionpossiblycommitted
prosecutorialmisconductandthatthejudgecontinuallydemonstratedbiasandprejudicecontrary
tothedictatesofjudicialconduct.Theprosecutioncontinuestopresentafalsenarrativeandis
attemptingtonullifythejurysacquittalofthefraudchargesbyproposingaridiculously
exorbitantsentenceforthemainlyminorfalsestatementcharges.Thesemenwererailroadedand
preventedfromfairlydefendingthemselvesinourjusticesystem.Ifitcanhappentothemitcan
happentoanyone.

Regards,
KathieCox