Slimming the Amway

Metro Times, Detroit/October 22, 2006
By Curt Guyette

When News Hits read that Dr. Phil McGraw, the TV shrink who got his big break by being a pal of Oprah, was accused of being part of a scam involving fraudulent diet products, we weren't all that surprised. The guy always struck us as a bit icky, you know. Like, no matter how much he professed to want to help people, there was always the sense that the No. 1 person Dr. Phil wanted to give a boost to was Dr. Phil.

Even so, we here at the Hits wouldn't normally bother calling a story like this to your attention. Sure, there was a class-action lawsuit, and a multimillion-dollar settlement involving Dr. Phil's Shape Up! diet products, but we usually keep our focus on issues closer to home.

As it turns out, however, this little-noticed item has a significant Michigan connection, with Amway — you know, the multilevel marketers of soap and hope that was formerly headed by gubernatorial candidate Dick DeVos and co-founded by his father — playing a key role in the whole shady deal.

The Shape Up! diet supplements Dr. Phil helped promote and peddle — his chrome-domed visage was featured on the packages — were pushed with the claim that the products contained "scientifically researched levels of ingredients that can help you change your behavior to take control of your weight."

The suit against Dr. Phil and the company that actually sold the products, CSA Nutraceuticals of Irving, Texas, alleged fraud and claimed that there was no credible scientific evidence that these products had any effect on a person's behavior.

Here's how scientific the whole thing was: Purchasers of Shape Up! products (How Dr. Phil, don't you think? The commanding tone, the exclamation point!) determined which supplements were right for them by identifying their body types — pear-shaped people took one formula, while those who looked more like apples took another. How could you not believe in a product like that?

News accounts of the $10.5 million settlement didn't mention Amway — the controversial company co-founded by the candidate's father in 1958 — or the umbrella company, Alticor, which Dick created in 2000 when he was running the show there in Ada. Coverage of the class-action lawsuit, filed in Los Angeles, focused mostly on the role played by the bombastic Dr. Phil — who has denied any wrongdoing connected to his promotion of a now-discontinued line of dietary supplements.

What caught some eyes (including those of the tipster who clued us in to all this) were the terms of the settlement: Pears and apples foolish enough to buy Dr. Phil's line could opt to receive Nutrilite vitamins in lieu of cash. Those supplements, it turns out, are manufactured by Amway and its sister company, Quixtar.

Huh?

The answer to that guttural query can be found not in news accounts (at least not any that we saw) but rather the settlement agreement posted on the Web site shapeupsettlement.com. There, it's revealed that neither Dr. Phil nor CSA were the ones ordered to shell out, but rather Amway parent company Alticor.

According to that document, Alticor will provide $4.5 million in cash and $6 million in Nutrilite products to disgruntled users of Shape Up! The product was taken off the market in 2004.

Among the court documents reviewed by News Hits was a particularly interesting e-mail apparently sent by Mike Mohr, Alticor's general counsel, to Dr. Phil and others.

That e-mail, sent in October 2003 — about three months after Shape Up! hit stores — involved reaction to a New York Times reporter who was looking into the venture.

About Amway's involvement, Mohr wrote:

"I think that if any reporter digs we all need to be right up front and proud (without waiving [sic] the Amway flag). The Amway flag is a two edged sword for both of us. We have reputation problems that are common in the direct selling industry. We absolutely do not want that to attach to you in any way. Moreover, the same psychotics (in our business and on the web) that create our reputation problems will use powerful communication tools and undue influence to damage our businesses ..."

DeVos had resigned as president of Alticor less than a year before Shape Up! hit stores. One source familiar with the case says that, considering the size of the deal — worth an estimated $20 million or more to the Michigan-based company — and the lead time required to put something like that together, it's almost certain DeVos would have had to have signed off on it before leaving the company. Devos' handlers didn't return a call seeking comment.

One thing for certain is that Amway sure is a sword that can cut both ways for the candidate. It's made his family fantastically wealthy. Forbes magazine previously reported that the senior DeVos is worth about $3.5 billion, and that the junior Dick's wealth is estimated to be about $500 million. The company's success is, in large part, what allows DD to tout his skills as a businessman as he stumps to become this state's CEO.

But there are also many ardent haters of the company. For a particularly chilling account of the culture of Amway — the culture that spawned our dear Dick — News Hits recommends Merchants of Deception by Eric Scheibeler, a former big-time Amway distributor. You can download the book directly from the Web at merchantsofdeception.com.

If you go to that site, after reading a litany of allegations concerning Amway and its associated companies, you will find this question posed by Scheibeler: "Is this the same leadership that the people of the State of Michigan are now to trust?"

We'll find out the answer to that one in two weeks.