UPDATED 4:23 p.m.

The defense has rested in the federal fraud case of Ted James Johnson Jr., the former Giles County clerk of circuit court and commissioner of the revenue whose investment companies cost clients millions of dollars.

Prosecutors spent two weeks -- minus a few days off for Columbus Day and for other court business -- presenting dozens of charges linked to securities fraud. Johnson and his partner Frank Graham Farrier Jr. told investors they were making high returns on the futures or commodities markets, but actually were running a Ponzi scheme, using money from new investors to make payments to earlier investors and to pay their own expenses, Farrier testified earlier in the trial.

Johnson's defense took just a day, most of it taken by his own testimony. In more than three hours on the witness stand today, Johnson insisted he never meant to swindle anyone and still wants to pay back the money he took.

He said the money he accepted from clients was in the form of personal loans, and that he recognized that by giving people a promissory note that stated what interest rate he would pay and when he would return the principal. Some clients thought he was investing in stocks or futures or some sort of financial market, but he was not obligated to actually do that as long as he kept up with interest payments, Johnson said.

"I believe those funds were ours to try to develop," he said.

Assistant U.S. Attorney David Bybee repeatedly asked Johnson if he'd told people that in what trading he had done, he lost money every year. Johnson said he told investors nothing of his losses.

"Are you saying these people just gave you money without any explanation of what it was for?" Bybee asked.

"Yes, sir," Johnson replied.

Bybee returned to the question moments later, asking, "They were giving you money to invest, right?"

"I gave them a note and did what I did with the money," Johnson said.

Besides Johnson, there were just two other defense witnesses, one who said Johnson had a strong belief in the importance of paying debts, and Johnson's boss at the janitorial service where he now works, who said he was a good employee.

Closing arguments are scheduled for tomorrow, and the case will then go to the jury.


UPDATED 12:34 p.m.

Ted James Johnson Jr. took the witness stand in his own defense this morning, testifying that he never intended to defraud anyone and that he still intends to repay the millions of dollars he owes.

Johnson, who ran two Giles County investment companies, Mountain Investments and Dogwood Farms, faces dozens of federal charges linked to securities fraud. His former partner, Frank Graham Farrier Jr., pleaded guilty last month and has testified that for more than a decade, he and Johnson ran a Ponzi scheme where they used money from new investors to make payments to earlier investors and maintain the appearance of high rates of return. But though Johnson and Farrier told investors they would trade their money in the markets, little actually was sent to their trading accounts. Instead, most of the money went to earlier investors or to the men's personal expenses.

Speaking smoothly and rapidly, gesturing with his hands and seeming glad to finally have his say, Johnson said he's felt sick these past two weeks as witness after witness has told of giving him money, being promised high returns, receiving payments for a time, then losing their principal and much of the promised interest. Over and over, Johnson said he meant to repay people he referred to as "so-called investors."

"My intention was to always pay every dime," Johnson said.

He said his companies were involved in land development as well as market trading, and that he thought if the trading did not work out, he could repay people by selling more than 200 acres he controlled around the Pearisburg Wal-Mart. He said he also thought a woman from Atlanta who had invested money with him would sell land she owned, and the proceeds would let him settle his accounts with his other clients and develop the Pearisburg land slowly for maximum profit.

Johnson said he did not think the land sales would pay everything he owed, but at least return people's principal. "And then I'd spend the rest of my life" paying off the interest, he said. He entered in evidence a letter he'd prepared, but never sent, to clients as investigators closed in, saying he and Farrier were taking out as much life insurance as possible and listing clients as the beneficiaries.

Johnson said he'd been frustrated by his inability to make money on the markets and continues even now to research computer systems to predict market fluctuations.

He said that for the past two years he has worked with his wife for a custodial service, cleaning commercial offices and buildings at Virginia Tech. "I am a janitor. That's what I do when I'm not down here doing this," he told jurors.

He said his 8,000-square-foot home, which prosecutors have several times flashed pictures of on courtroom monitors, should not be seen as "a palatial mansion implying that I'm up there living a life of luxury." Some of the house's four heat pumps do not work, Johnson said, and to keep warm he cuts wood for a stove his sister gave him. The house has been in foreclosure four times, he said.

Johnson said that as he looks back on the years he ran the investment companies -- Mountain Investments was launched in 1992 and folded, along with Dogwood Farms, in bankruptcy in 2004 -- he thinks, "How foolish. Didn't I know this wouldn't come to pass?"

He said embarassment and fear of humiliating his family kept him from admitting defeat.

A member of the Church of Jesus Christ of Latter-day Saints, Johnson keeps a daily journal as part of his faith. Prosecutors have shown excerpts from the journals thorughout the trial, highlighting entries that show Johnson was taking money but not trading it on the markets.

Johnson said jurors should consider what he said were thousands of entries across years of journal-keeping saying that he wanted to pay people back.

His attorney, Tony Anderson of Roanoke, walked him through a series of entries from  2001, beginning with the January day the Virginia State Corporation Commission notified him and Farrier that they were not licensed to sell commodities.

"We don't have a clue we were not doing what we were supposed to do. We are sick," the journal said.

The next day's entry read: "We want to try to pay these people off and maintain our integrity."

Two days later, he wrote: "We want to pay everything we owe and be honorable. These are the most difficult times of my life -- I have to have help from above -- just can't stand the pressure."

Nine months later, the theme was the same: "I am now pleading with the Lord for mercy and something to trade. I want to pay what I owe."

Cross examination is scheduled to begin after lunch.

POSTED 10:33 a.m.

For two weeks, a parade of witnesses in federal court in Roanoke have told how Ted James Johnson Jr., a county official-turned-investment adviser, cost them their savings. Today it's his turn.
 
Johnson, who was Giles County's commissioner of the revenue and circuit court clerk before he launched a series of financial businesses in 1992, is scheduled to begin his defense against dozens of federal charges tied to securities fraud. Prosecutors say he took millions of dollars from friends, neighbors and people who heard about his companies, Mountain Investments and Dogwood Farms, but failed to invest it as he said he would. Instead, he and his partner, Frank Graham Farrier Jr., operated a Ponzi scheme, using money from new investors to make payments to previous investors to keep up the illusion of returns, while taking much of the money for their personal expenses.

Johnson and Farrier said they were trading in commodities markets and promised returns of 20, 25, even 28 percent -- rates that some witnesses have said were not unreasonable in the market boom of the 1990s. But the pair never had a profitable year with the relatively small amount of money they actually committed to the markets, prosecutors said.
 
In 2004, under pressure from creditors and investigators, Johnson and Farrier filed for bankruptcy, listing debts to investors of more than $8 million. Farrier, who kept the books for Mountain Investments and Dogwood Farms, pleaded guilty last month. He took the witness stand in Johnson's trial to testify that the decade-long partnership was a constant scramble to find new investors and keep up with promised interest payments. For years, Johnson sought a trading system that would let him make the money he told investors he was earning, Farrier said, but he never found it.
 
In cross examinations over the past two weeks, Johnson's attorney has emphasized that Johnson planned to repay investors with the sale of more than 200 acres he controlled around the Pearisburg Wal-Mart. But prosecutors have shown that the deeds of trust -- or deed of trust notes, since some of the deeds were never recorded at the courthouse -- that Johnson issued on the property far outstripped estimates of its value. Johnson's attorney has said that value would have increased substantially if Johnson could have subdivided the land.
 
On Friday, Johnson asked to dismiss his attorneys, Tony Anderson and Melissa Friedman of Roanoke, but U.S. District Judge Samuel Wilson denied the request.