Magistrate urges Johnsons to get attorney in civil suit

A magistrate judge in Grand Junction called for a “brief delay” Wednesday in a national insurance company’s federal fraud lawsuit against Aspen couple Derek and Kerri Johnson and urged them to find an attorney during the interim.

“There are individuals who represent themselves and do so fabulously,” Magistrate Judge Gordon P. Gallagher said to the couple during a telephonic conference. “But the vast majority of people who represent themselves fail. So my recommendation to you is that you significantly and strongly consider getting an attorney involved.”

Wednesday originally was set as a scheduling conference for the case, but Gallagher instructed both sides to reconvene March 14 in order to give the Johnsons time to figure out how they plan to defend themselves.

They don’t have money to hire a lawyer, said Derek Johnson, who is living in Aspen after being released Feb. 3 from a halfway house where he had lived the previous 10 months. Gallagher implored them to seek a pro bono attorney through the federal court system.

“I wholeheartedly agree having an attorney would be in our best interest and we will explore our opportunities,” Derek Johnson said. “Financially, that is not possible given our situation.”

National Union sued the Johnson couple in federal court in November. The company is seeking $5.2 million, which is the amount its suit said it covered for Aspen Skiing Co.’s financial losses stemming from the couple’s ski-selling scam. Skico and its parent company, Henry Crown and Co., were reimbursed through their their “employee dishonesty” coverage with National Union Insurance, the suit said.

According to National Union’s lawsuit, the Johnson pair should be held responsible for the amount.

Derek Johnson, a former Aspen City Council member who once ran Skico’s retail division, was sentenced in January 2020 six years in state prison by Pitkin County District Judge Chris Seldin. Johnson had pleaded guilty to Class 3 felony theft the previous November for stealing Skico-owned skis and other equipment and reselling them on eBay and elsewhere.

The scheme lasted from 2006 until November 2018, National Union’s suit said.

“Given his position as Managing Director and his control of Aspen’s ski and snowboard inventory, Mr. Johnson was able to conceal the theft from Aspen during the course of the scheme,” the suit said.

Johnson spent 14 months in state prison and the majority of his remaining time in a halfway house. He currently is on intensive supervised probation.

Kerri Johnson, who was not a Skico employee, pleaded guilty to Class 4 felony theft in December 2019 and was sentenced to 90 days in the Pitkin County Jail and five years of probation.

The Johnsons’ plea deals with prosecutors called for them to reimburse Skico for $250,000, which was the amount Skico paid to satisfy its insurance deductible under its employee dishonesty coverage.

In an interview last month, Johnson declined to discuss the lawsuit’s claims or talk in detail about the ski-selling hustle and how it was orchestrated. He also shied away from talking about his defense strategy, adding like he did during Wednesday’s conference that he lacked the funds to hire legal representation.

The lawsuit’s civil counts against the Johnsons are conversion, civil conspiracy and unjust enrichment, along with separate counts of fraud and breach of fiduciary duty fraud against Derek Johnson.

National Union’s lead attorney in the suit told Gallagher he understood what the Johnsons are against and was willing to give them some slight leeway.

“Not withstanding the seriousness of the allegations in the complaint, we’re not totally unsympathetic to the challenges presented to the defendants and thus far representing themselves pro se,” said Victor M. Morales, an Englewood attorney who is representing National Union. “The plaintiff has no objection to allowing the Johnsons a reasonable amount of time to either engage counsel or familiarize themselves sufficiently to substantively participate, and that would probably be helpful at this juncture.”

The Johnsons said they will see what they can do.

“I would like to look into getting an attorney,” Kerri Johnson said.

rcarroll@aspentimes.com