Lexington man in federal fraud case faces new charge over alleged gambling loss
A Lexington man convicted in a federal fraud case tied to a billion-dollar company has violated the terms of his bond on other charges by failing to report a $2,700 gambling loss, a federal grand jury has charged.
Charles E. Johnson Jr. was already facing three charges of making false statements by not giving information on his finances to probation officers. Now a grand jury has returned a superseding indictment adding two more charges. The indictment was handed down Thursday.
One charge is that he made a false statement by not reporting he lost money at the Hard Rock Cincinnati Casino in February. The other is that he didn’t appear for a court hearing.
Johnson has been in the news recently after being arrested by the U.S. Marshals Service in Minnesota on May 3.
Johnson wasn’t supposed to be out of the state without permission.
Johnson, a Lexington native, founded a company called PurchasePro, designed to provide software for companies to make purchases on the internet.
The company reached a market value of more than $1 billion in the late 1990s. In the early days, more than $200 million flowed into Kentucky for investors who had backed Johnson, but the company later went under, costing others millions.
Federal authorities accused Johnson of exaggerating the value of the company, and a federal jury convicted him in 2008 of conspiracy, securities fraud, witness tampering and obstruction.
He was sentenced to nine years in prison and ordered to pay restitution of $9.7 million.
Johnson also faced a period of supervised release after prison. His supervision included a requirement to provide financial information to the federal probation office.
Last August, a grand jury indicted him on three charges of making false statements by failing to disclose his control over a corporate bank account and for allegedly telling probation officers that payments from the account to three people were for their work for the company.
In fact the three provided “companionship and services personal” to Johnson, the indictment charged.
Johnson was released pending trial on those charges, with certain conditions. In addition to providing financial information to probation officers, he was barred from gambling until he paid his restitution, according to the indictment.
Johnson still owes millions on the debt.
The new charge of failing to appear in court relates to an April 14 hearing on a request by federal authorities to jail Johnson over alleged violations of his bond condition, including gambling.
Johnson could be sentenced to much more time in prison if convicted on the new charges.
On the charge related to not reporting his gambling loss, for instance, he could receive up to 10 years in prison, on top of any sentence on other charges in the indictment, because he committed the alleged offense while on pretrial release.
The jail in Sherburne County, Minnesota, still lists Johnson as an inmate.
It could take three to four weeks to arrange to bring him back to Kentucky, according to one court document.
