Regular html version with links
Bill Berkowitz
April 30, 2006
State government, Amway-style
Former Amway head Dick DeVos hopes Michigan gubernatorial voters will disregard his company's controversial business model and socially conservative views, and instead buy into his talk of economic revival
In an era where money talks and just about everything else walks, Dick DeVos, the multi-millionaire son of the founder of Amway and the likely Republican Party candidate for governor of Michigan, is hoping to talk his way into the statehouse. As any good political advisor understands, one key to victory is being able to define yourself before your opponents define you, and, define your opponents before they define themselves.
Thus far, DeVos' campaign has spent $2 million on a series of television advertisements that have been blanketing the state's airwaves for several months; it branded current Michigan Governor Jennifer Granholm's stewardship over the state as the road to economic ruination.
The early ad buy seems to have paid off. Results from a recent EPIC/MRA poll showed that DeVos was in a statistical dead heart with Gov. Granholm.
What was surprising about the poll, however, was the finding that DeVos, who had been at the center of state politics when he funded and supported a controversial school voucher initiative called Kids First! Yes! -- an initiative which failed at the polls-- still appears to be relatively unknown to Michigan voters.
DeVos, who was understatedly described as "a wealthy west Michigan businessman" by the Detroit News, "was judged favorably by 28 percent and unfavorably by 25 percent" of the people polled. "One in 10 voters didn't recognize his name."
Other poll responses were also bad news for Gov. Granholm. Michigan voters are in a decidedly pessimistic mood as 63 percent of those polled said that the state's economy "had gotten worse" under the governor's stewardship. While a small majority held a favorable opinion of Granholm personally, an equally small majority felt negatively about her job performance.
While DeVos has saturated the airwaves, Granholm's campaign has yet to roll out any television spots.
DeVos' early ad buy -- which some characterized as revisionist -- is focusing on his civic and economic achievements. According to the Detroit Free Press, the campaign "wants you to think of its candidate as a can-do kind of guy, a businessman that rescued an ailing family enterprise and led the resurgence of [Grand Rapids] west Michigan's biggest city."
The Free Press pointed out that "The ads -- in which DeVos strides purposefully and pulls on suit coats against a backdrop of productivity -- are showing in every media market in the state from Monroe to Ironwood. On a single station in Detroit, WXYZ-TV (Channel 7), the DeVos spots have aired 215 times at a cost of nearly $200,000."
According to a post at Talk To Action, David Brandon was named as the DeVos campaign chair. "Brandon, with plenty of ultra conservative connections himself, is the CEO of Domino's Pizza, which he was appointed to take over from outgoing Thomas Monaghan, founder of Domino's, another major funder of the religious right." Signing Brandon on to his campaign is part of DeVos's plan to construct "the most mammoth political structure anyone has ever seen," DeVos's campaign manager told the Associated Press.
What a candidate doesn't say, however, often speaks volumes. While Democrats will likely focus on DeVos's economic conservatism, his close ties to the policies of Bush Administration and his relationships with the soon-to-be ex-congressman Tom DeLay and uber-lobbyist Jack Abramoff, the elephant in the room is the Amway Corporation, now known in the U.S. as Quixtar.
According to Robert L. FitzPatrick, the author of a comprehensive study of Multi Level Marketing, the overwhelming majority of those that have invested their time, energy and savings in Amway never turned a profit. In many cases, owner/investors lost money.
Will DeVos get away with trumpeting his business acumen when the facts show that most of the participants in his company have gotten the shaft?
The wealthiest candidate in modern Michigan history
According to an early April article in the Detroit Free Press, Dick DeVos "is believed to be the wealthiest candidate to seek statewide office in modern Michigan history." DeVos has at least $500 million in assets, although no specific "figure is available," the newspaper reported.
At the end of March, the DeVos campaign disclosed an impressive list of corporate holdings and ownership interests. (See below for the full listing.)
The son of Richard DeVos, the billionnaire co-founder of Amway, and his wife Helen, Dick DeVos got involved in the family business. According to Wikipedia, "Until 2002, DeVos was the head of Alticor [previously known as Amway, Access Business Group LLC, and Quixtar Inc.], where ... [he] pioneered the nearly $5 billion company's expansion into dozens of markets around the world, a decision that has made Alticor a global powerhouse."
Amway is a controversial company that many charge is a pyramid scheme. According to Wikipedia, the company "has been investigated and cleared by the FTC for suspicion of pyramid scheme violations. Amway is accused by some groups as preying on the poor, others praise them for their charity."
Dick DeVos left the company in 2004.
The DeVos family tree
In 1959, Richard DeVos Sr., and the late Jay Van Andel, two high school friends from Grand Rapids, Michigan, came up with the idea for Amway. In a 1981 report for Mother Jones magazine, Zina Klapper described the operation as a "door-to-door dime store of everything from car cleaners to cosmetics." Amway became an extraordinary financial success, and the DeVos' eventually became deeply involved in conservative philanthropy.
During the past quarter century, the DeVos family has funded and supported just about every major right wing think tank and public policy institute. It is not an exaggeration to say that the DeVos' largesse helped change America's political landscape.
The Richard and Helen DeVos Foundation has supported a panoply of right wing groups including the Federalist Society for Law and Public Policy Studies, the Heritage Foundation, the American Enterprise Institute for Public Policy Research, the Media Research Center, and James Kennedy's Coral Ridge Ministries. Foundation money helped build the State Policy Network, an association of state-based conservative think tanks. In Michigan, the foundation provided funding to the Mackinac Center for Public Policy, which uses its research to propose and promote various policies in Michigan.
DeVos money has also gone to Paul Weyrich's Free Congress Foundation, the man considered as the godfather of the modern conservative movement and a proud purveyor of America's culture wars.
The Dick and Betsy DeVos Foundation provides funding to many of the same organizations as the Richard and Helen DeVos Foundation.
Dick and Betsy DeVos are leaders in the so-called school reform movement. Dick DeVos served on the Michigan Board of Education in the early 1990s and strongly endorsed the use of school vouchers. He and his wife work through organizations such as the Education Freedom Fund, Of the People, the Children's Scholarship Fund, the American Education Reform Council, and the Great Lakes Education Project to privatize public education.
According to a late April report from the Associated Press, the DeVos' had given "the private foundation they run more than $29 million during a recent three-year period and handed out nearly $10 million from the foundation to schools, think tanks and various charities over that time," including nearly $1 million went to the Education freedom Fund.
The DeLay/Abramoff connections
Thus far, in the early days of the campaign, Devos has blanketed the state with $2 million worth of television advertisements that mostly brand Granholm as a governor who has led the state down a rocky economic path.
Opponents of DeVos want voters to know about his connection to the Bush Administration, Tom DeLay and Jack Abramoff. According to a website "paid for with regulated funds by the Michigan Democratic State Central Committee" called "What You Don't Know About Dick", "Dick DeVos was personally offered an Ambassadorship by Karl Rove for his help on the Bush Campaign"; and he "personally allowed Tom DeLay to hold a Republican Majority Issues Committee meeting on his yacht."
And there's this juicy quote from DeLay: "RAD (Restoring American Dream PAC, founded by Dick DeVos) has played an essential role in maintaining Republican control of the House of Representatives in both 1998 and 2000. Dick's commitment to electing men and women of integrity and character is unmatched. I look forward to working closely with RAD in identifying and recruiting conservative candidates for the year 2002."
The Abramoff connection? On July 5, 1999, Business Week reported that DeVos and his wife, then Michigan Republican Party chairwoman Betsy DeVos, had hosted a Potomac River cruise in May "to launch a new fund-raising drive for GOP House conservatives. Many of the guests were heavy hitters from the Religious Right. But when pledge time came, the first to sign up was no churchgoer. It was Jack Abramoff, an Orthodox Jewish lobbyist who is among the right wing's most aggressive fund-raisers."
In March of this year, MichiganDemocrats.com reported that Michigan Democratic Party Chair Mark Brewer surfaced the Abramoff connection: "Brewer demanded that DeVos abide by his own words on accountability and release the photographs of him and Abramoff at that event and from other meetings they had."
"The public needs to know Dick DeVos has had meetings with criminally corrupt GOP lobbyist Jack Abramoff....DeVos' personal relationship with Abramoff adds to the ethical baggage that DeVos brings to the race for governor -- huge soft money contributions, hidden tax breaks for Amway and now dealings with a criminal like Abramoff," said Brewer. "DeVos should release all the photos of him and Abramoff so that the public can judge their relationship for themselves."
Amway/Quixtar: The elephant in the campaign
While Dick DeVos intends to underscore his business acumen and cite his success at Amway, his relationship with the controversial company has the potential to be his undoing.
Eric Scheibler's book, "Merchants of Deception: An Insider's Look at the Worldwide, Systematic, Conspiracy of Lies That is Amway/Quixtar and their Motivational Organization", is a stinging critique of the company's practices.
Scheibler writes that he "was a loyal, trusting IBO [distributor] for almost a decade, building an international Amway Quixtar business to the Founder's Emerald level before discovering and documenting fraud and corruption across near every major line of sponsorship."
He maintains that he "loved the principles that I had been led to believe the business was built upon ... [but that he] was shocked to learn and document [that] almost 100% of distributors recruited into the Motivational Organizations lose money, with many losing tens of thousands of dollars."
"Dick DeVos was President of Amway and allowed distributors to be defrauded of millions of dollars." According to the "Merchants of Deception" website, DeVos "refused to respond to certified mail regarding distributors being defrauded."
In Pyramid Scheme Alert's 2004 report entitled "The Myth of 'Income Opportunity' in Multi Level Marketing," author Robert L. FitzPatrick devotes a special section to the activities of Amway/Quixtar. FitzPatrick points out that overall, "more than 99% of all participants [in MLM] never earn a net profit from rebates, commissions or bonuses." According to its website, the non-profit group "is the first consumer organization to confront the abuses and trickery of pyramid scheme perpetrators."
The section of the report on Amway "is an analysis of the income earned by Amway distributors, using the company's own public data," Robert Fitzpatrick told Media Transparency in a telephone interview. "Millions of people have joined and invested their time and money to become Amway distributors over the years. After all the business costs are factored in, it turns out that 99% of them never earned a profit. In fact, they lost money.
"The other factor to be considered is that only 18 percent of their products are actually resold by their salespeople. The people who are essentially buying the products are the salespeople."
According to Fitzpatrick, "The one distinction between Amway and other companies is that regardless of whether you succeed or fail it is all based on your own money, which then provides the profit for the top one percent. Essentially, the distributor winds up being the customer."
"What is amazing to me is that the governor is fighting off an economic argument from this company," Fitzpatrick pointed out. "If you buy into the mythology that Amway offers genuine viable economic opportunity for the average person, you will be defeated from the start. In a campaign where economic policy is a major issue, what in the Amway business model is indicative of its success? If Dick DeVos is arguing that his business experience should be held up as a model, then people ought to take a closer look at the Amway business."
* Information contained in this Associated Press report was provided by the DeVos campaign.
Companies controlled by DeVos and other family members include:
-MVP Sportsplex-GR LLC - Health club facilities in Grand Rapids, Mich.
-Orlando Magic Ltd. - NBA franchise in Orlando, Fla.
-Orlando Sportsplex Ltd. - Multi-use health club and office facility in Orlando, Fla.
-RDV Corp. - The DeVos family investment management and family office in Grand Rapids, Mich.
-Spout LLC - Online DVD sales and marketing company in Grand Rapids, Mich.
-Windquest Companies Inc. - Manufacturer of organization and storage systems in Holland, Mich.
-Windquest Group Inc. - Investment holding company in Grand Rapids, Mich.
Companies in which Dick and Betsy DeVos, along with other members of the DeVos family, have significant interest but less than full control:
-Alticor Global Holdings Inc. - Ada, Mich.-based parent company of Amway Corp., Quixtar and Access Business Group
-Activa Holdings LLC - Grand Rapids, Mich.-based owner of West Michigan area real estate
-Activa Management LLC - Grand Rapids, Mich.-based operator of travel service, third party benefits provider, and a downtown Grand Rapids hotel franchise
Companies in which Dick and Betsy DeVos have an investment interest but no control:
Ownership interest in privately held companies:
-American Medical Instruments Holdings Inc. - Dartmouth, Mass.-based manufacturer of specialty medical supplies
-Ampac Paper Inc. and Ampac Plastics Inc. - Cincinnati, Ohio-based producers of packaging products
-Cirrus Industries Inc. - Duluth, Minn.-based manufacturer of general aviation aircraft
-CorePharma LLC - Middlesex, N.J.-based manufacturer of generic pharmaceuticals
-DentalCare Partners Inc. - Cleveland, Ohio-based provider of management services to affiliated dental practices
-Focus Doors & Windows Inc. - Longueil, Quebec-based manufacturer of doors and windows
-Hardwoods Unlimited Investors LLC - Grand Rapids, Mich.-based former processor of hardwood lumber products
-Honsador Group LLC - Kapolei, Hawaii-based wholesale building products distributor
-Infiltrator Systems Inc. - Old Saybrook, Conn.-based manufacturer of plastic septic chambers for underground wastewater products
-K12 Inc. - McLean, Va.-based company which offers programs and instructional tools for parents and educators
-Omniflight Inc. - Addison, Texas-based operator of air medical bases specializing in air transportation of patients to medical care facilities
-OSI Group LLC - Aurora, Ill.-headquartered processor of beef, chicken and pork products
-Renaissance Administration LLC - Indianapolis, Ind.-based independent charitable planning service and administration provider
-Ronald Blue & Co. LLC - Atlanta, Ga.-based financial and investment consulting company
-West Michigan Baseball Ltd. Partnership - West Michigan-based minor league baseball team (West Michigan Whitecaps)
Debt holding of a privately held company:
-Epic Development Group LLC - a Grand Rapids, Mich.-based developer of residential real estate
Ownership interest in publicly traded companies:
-Apple Computer Inc. - Cupertino, Calif.-based computer and music related products company
-Berkshire Hathaway Inc. - Omaha, Neb.-based diversified investment holding company
-Centennial Bancorp - Denver, Colo.-based bank holding company
-Fifth Third Bancorp - Cincinnati, Ohio-based bank holding company
-First Community Bancorp - Rancho Santa Fe, Calif.-based bank holding company
-Hanmi Financial Corporation - Los Angeles-based bank holding company
-Opteum Inc. - Paramus, N.J.-based real estate investment trust that invests in residential mortgage-related securities
-State National Bancshares - Fort Worth, Texas-based bank holding company
-White River Capital - Indianapolis, Ind.-based auto finance holding company
Dick and Betsy DeVos have an ownership interest in various real estate properties.
Real estate redevelopment projects in downtown Grand Rapids, Mich., which are managed by unrelated partners:
-Cherry Street JV LLC and CSL West Associates LLC - Cherry Street Landing area
-Michigan Street Development LLC - Michigan Street hospital corridor
Other real estate holdings:
-Ada Holdings LLC - Land in Ada, Mich.
-DBD Properties LLC, Windy Hill LLC, and property held personally - properties in Ada, Mich., Grand Haven, Mich., and Vero Beach, Fla.
-Fountawa LLC - Office building in downtown Grand Rapids, Mich., used by RDV Corp. and unrelated tenants
-Fox Property Holdings LLC, GR Group LP and RDV Cape Eleuthera Ltd. - Resort property under development on Eleuthera Island, Bahamas
-RDV Corp. - Office building in downtown Grand Rapids, Mich., used by RDV Corp., Windquest Group Inc. and unrelated tenants
-Lakeshore Dunes LLC - Land in Arcadia and Laketown Township, Mich.
Residential real estate:
-Primary residence in Ada, Mich.
-Homes in Holland, Mich., Harbor Springs, Mich., and Vero Beach, Fla.
-Partial interest in a home in Snowmass, Colo.