Johnson faces felony tax charges

GREELEY – John Johnson, owner of Eaton-based Johnson Dairy, is facing three felony charges of filing false tax returns.

Johnson was the subject of an 11-month investigation by the Colorado Department of Revenue. The department alleges that Johnson filed false returns in 2006, 2007 and 2008, leading the Weld County District Attorney’s office to formally file charges yesterday afternoon. Johnson could face up to nine years in prison as a result of the Class 5 felony charges. He is scheduled to appear for an arraignment on April 16.

Johnson Dairy filed for Chapter 11 bankruptcy protection in January, claiming debts of $50 million to $100 million versus assets of $10 million to $50 million. Its largest debtor, Greeley-based New Frontier Bank, says it is owed more than $42 million. The dairy is one of the largest in the country, producing 8 percent to 10 percent of all the milk sold in Colorado.

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The felony charges are the latest in Johnson’s saga. As part of its bankruptcy, Johnson Dairy filed a complaint in February alleging that New Frontier and several officials set up disguised financing arrangements to bypass regulatory lending limits. It also claims that Johnson was required to purchase about $1 million in New Frontier stock last summer as a condition of loan approval. The bank has roundly denied the allegations.