Just when you thought the words "Ponzi scheme" might fade from the headlines, another massive fraud scheme has reared its head in Minnesota.

Federal and state court records show that the FBI is investigating an alleged Ponzi scheme that has gone on for about a decade involving Corey N. Johnston, 40, of Lakeville.

Johnston, through his business services company First United Funding LLC, allegedly sold at least 18 banks about $234 million worth of loan participation agreements on loans worth only $204 million, fraudulently taking in "tens of millions of dollars," according to filings by a court-appointed receiver.

Many of the underlying loans had links to Jerry Moyes, chairman and CEO of Swift Transportation in Phoenix, one of the nation's largest trucking firms. Moyes also is a former owner of the Phoenix Coyotes hockey team, which he sold in November to the National Hockey League for $140 million.

Moyes is working closely to help the receiver who now controls the loan portfolio, Steve Roman, a spokesman for Moyes, said Friday.

"It's an unfortunate situation, and not one of our causing," said Roman, who had no other comment.

Johnston also declined to comment Friday and referred a reporter to his attorney, Tom Kelly of Minneapolis. "All I can say is, Mr. Johnston has been cooperating and continues to cooperate with the receiver," Kelly said.

No criminal charges have been filed, though an FBI agent said in a December court filing that money from new loan participants was used to pay earlier loan participants, a pattern that he noted is typical of a Ponzi scheme.

Community First Bank of Wisconsin brought the allegations to light Oct. 23 when it filed an emergency motion for a restraining order in Dakota County District Court. Judge Thomas Poch granted the order and appointed Lighthouse Management Group of Maplewood as a receiver for First United.

Patrick Finn, a senior vice president of Lighthouse, said in court documents that First United was in the business of loaning money in exchange for promissory notes and other assurances of repayment. The firm then sold participation agreements on those loans to banks, whose deals are with First United rather than the borrowers.

First United "engaged in extensive fraudulent conduct," Finn alleged in a March 29 court filing. He said Johnston had improperly spent $7.5 million in First United funds on personal expenses or on affiliated businesses.

David Kukura, a special agent with the FBI, said in an affidavit that funds from the First United accounts were spent on a soccer camp for Johnston's daughter, a swimming pool and vacation excursions by private jet.

He said bank records show that money also was transferred to other business entities in which Johnston appears to have an ownership interest, including Renegade's Bar and Grill in Burnsville, GhostRiders motorcycle shop in Lakeville and Aircraft Resource Center, which he said owns a hangar and helicopter pad at the Lakeville airport.

The FBI got involved in mid-November after discussing the loan participation agreements with Will Stute, a partner at the Faegre & Benson law firm in Minneapolis who represents Western National Bank of Midland, Texas. The bank had entered into $25 million worth of loan participations through Johnston, according to a statement Kukura filed to obtain search warrants on two Johnston residences.

The search warrants sought documents and computer equipment related to Johnston and his wife, Renee, and 19 business entities. Renee Johnston signed many of First United's checks, Kukura said.

He said the investigation has turned up altered and forged documents dating as far back as 2002. As an example, Kukura cited a loan guaranty in which the signatures of Moyes and his wife were cut from another document and taped onto the guaranty. He said a financial statement for one of Moyes' companies contained the signature of an employee that had been similarly taped into place.

"A majority of the participation loans sold by Johnston and [First United] to participating banks were loans or entities related to Moyes," Kukura wrote.

The receivership is managing more than $100 million worth of loans in First United's portfolio. Finn described a series of $61 million in loans guaranteed by Moyes and associated entities and individuals. He said First United sold about $86 million in loan participations for those loans.

"Over $41 million of these loans have matured," Finn said. "Loans worth approximately $19.3 million have not matured, but will within the next three months. All of these loans are due in full at maturity."

Finn said the Moyes parties have indicated that they are unable to repay all of the loans, and the receivership concluded it was in the creditors' best interests to restructure them.

The receivership has concluded that the best way to make the banks whole is by pooling the loan agreements and redistributing any recoveries on a pro-rated basis.

First United "drastically oversold" participations on some loans but not others, Finn said. But tracing all of the First United transactions would involve following more than $1.4 billion in transactions over many years through many accounts.

Moyes resigned from Swift Transportation in 2005 following an investigation by the Securities and Exchange Commission into insider trading. He settled the case by paying a $1.26 million fine without admitting any wrongdoing. His family bought out the company in 2007. The NHL sued Moyes in March, seeking to recover $61 million for alleged contract violations involving his management and the ultimate Chapter 11 bankruptcy of the Coyotes.

Dan Browning • 612-673-4493