Action taken against bank tied to company in fraud case
Regulators disclosed Thursday they've taken action against a small Utah bank that processed transactions for a company named in a $275 million fraud lawsuit filed by the Federal Trade Commission in Las Vegas.

The Federal Deposit Insurance Corp. on Thursday said SunFirst Bank of St. George, Utah, signed a consent order Nov. 9 related to its dealings with companies including Elite Debit, which was named in the FTC's Las Vegas fraud lawsuit filed Dec. 21.

In announcing the lawsuit, the FTC said Elite Debit was part of "a far-reaching Internet enterprise that allegedly has made millions of dollars by luring consumers into 'trial' memberships for bogus government-grant and money-making schemes, and then repeatedly charging them monthly fees for these and other memberships that they never signed up for."

The FTC said the enterprise -- doing business under the names Elite Debit, I Works and scores of shell companies in Utah, Nevada and other states -- is controlled by St. George businessman Jeremy Johnson and nine other individuals.

Johnson has denied the allegations.

In court papers filed this week in Las Vegas federal court, FTC attorneys for the first time quantified the alleged scheme, saying it caused losses to consumers nationwide of more than $275 million since 2006.

The government attorneys also said they're preparing to ask a Nevada federal judge to appoint a receiver for the 61 corporate defendants, to freeze the assets of the corporate defendants and to freeze Johnson's assets personally. By freezing the assets, the government can then try to seize them should it prevail in the case.

In the FDIC action against SunFirst Bank, the bank agreed to the issuance of a consent order without admitting or denying allegations of unsafe or unsound banking practices.

SunFirst, with four branches in Utah's Washington and Iron counties, agreed to cease providing third-party payment processing -- unless approved by the FDIC -- to any third-party payment processor and specifically to "Triple Seven LLC, Mastery Merchant LLC, Powder Monkeys LLC, Elite Debit and its associated accountholders, customers, and clients."

The bank was ordered to maintain adequate reserves for potential chargebacks from third-party payment processing.

It also agreed to enhance and improve its compliance management system; its Bank Secrecy Act and anti-money laundering compliance programs and its oversight of third-party relationships.

"The (bank's) board shall demonstrate clear and unequivocal expectations regarding compliance with all state and federal consumer protection laws and regulations," the order says.

A message for comment on the order was left with bank President and CEO John Allen.

The FTC lawsuit said Elite Debit processes credit and debit card charges for I Works.

The FTC says that in December 2009, someone associated with I Works, using funds from I Works, opened one or more depository accounts in the name of Elite Debit, including an account at SunFirst Bank.

An alleged shell company associated with Johnson, Money Harvest, had opened an account at SunFirst Bank in November 2009, the FTC alleged.

The corporate defendants in the FTC lawsuit in Las Vegas are Anthon Holdings Corp.; Cloud Nine Marketing Inc.; CPA Upsell Inc.; Elite Debit Inc.; Employee Plus Inc.; Internet Economy Inc.; Market Funding Solutions Inc.; and Network Agenda LLC and Success Marketing Inc.

The 51 alleged shell companies named in the complaint are Big Bucks Pro Inc., Blue Net Progress Inc., Blue Streak Processing Inc., Bolt Marketing Inc., Bottom Dollar Inc., doing business as, Bumble Marketing Inc., Business First Inc., Business Loan Success Inc., Cold Bay Media Inc., Costnet Discounts Inc., CS Processing Inc., Cutting Edge Processing Inc., Diamond J. Media Inc., Ebusiness First Inc., Ebusiness Success Inc., Ecom Success Inc., Excess Net Success Inc., Fiscal Fidelity Inc., Fitness Processing Inc., Funding Search Success Inc., Funding Success Inc., GG Processing Inc., GGL Rewards Inc., Highlight Marketing Inc., Hooper Processing Inc., Internet Business Source Inc., Internet Fitness Inc., Jet Processing Inc., JRB Media Inc., Lifestyles For Fitness Inc., Mist Marketing Inc., Money Harvest Inc., Monroe Processing Inc., Net Business Success Inc., Net Commerce Inc., Net Discounts Inc., Net Fit Trends Inc., Optimum Assistance Inc., Power Processing Inc., Premier Performance Inc., Pro Internet Services Inc., Razor Processing Inc., Rebate Deals Inc., Revive Marketing Inc., Simcor Marketing Inc., Summit Processing Inc., The Net Success Inc., Tranfirst Inc., Tran Voyage Inc., Unlimited Processing Inc. and Xcel Processing Inc.
Originally published Thursday, Dec. 30, 2010