Scandal • Video featuring ex-A.G. used in court; judge finds the firm in violation.
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A Utah company has been fined $110,000 for illegally pitching business opportunities in one instance apparently under the nose of the state's top cop.
In fact, a video of then-Attorney General Mark Shurtleff's 2009 appearance before a meeting of The Green Tea Co. was introduced as evidence in the case brought by state regulators.
The Utah Division of Consumer Protection fined and issued a cease-and-desist order against Green Tea after an administrative law judge determined the Lehi operation failed to comply with state law while selling mall-cart franchises to peddle its products.
Shurtleff was attorney general in 2009 when he appeared at a Green Tea meeting at Salt Lake City's Alta Club one of a string of such get-togethers where the company was pitching attendees on opportunities to sell its green-tea-based nutritional and health products.
Judge Angela Hendricks mentioned the meetings in her ruling that found Green Tea violated a state law requiring companies selling franchises or business opportunities to notify the state that they are complying with federal regulations.
Shurtleff did not respond Monday to messages seeking comment for this story.
The case is one of several that have come to light recently in which Shurtleff appeared before or accepted campaign donations from companies that had regulatory issues or were in industries prone to consumer complaints in which his office potentially could have become involved.
In videos posted on YouTube in 2009, Shurtleff appears before a Green Tea meeting at the Alta Club to tout his new historical novel, Am I Not a Man? The Dred Scott Story. He also takes the opportunity to endorse the company's products and to laud multilevel marketing, a controversial business model involving independent distributors who earn commissions by recruiting others.
"You have to have a really good product, that's key to me in law enforcement, and you do, you've proven that," Shurtleff says in the video. An investigator used the video as evidence to show the company was promoting business opportunities without complying with state law.
Investigator Elizabeth Blaylock said at a March hearing that the Shurtleff video and another of company officials at similar meeting with prospective clients made the point that "selling Green Tea is simple, easy, low cost, low risk.
"A great way to derive income by starting your own business."
An attorney for the company did not return an email and a voice message seeking comment on the ruling.
Although the company's contracts stated it was not selling franchises, the judge determined that its rules and the ways it controlled those who bought the mall carts showed it was offering franchises under federal rules.
Utah law says such companies must register with the state by declaring they are heeding those federal rules.
The ruling tells of several people who bought mall carts only to find they came nowhere close to the earnings potential the company had promoted, including figures given out at Alta Club meetings.
The $110,000 fine stemmed from an assessment set in state law of $2,500 for each of 44 violations, according to Jennifer Bolton, spokeswoman for the Utah Department of Commerce.
"This amount is large," she said Monday. "It is unusual for a franchise to engage in multiple franchise or business-opportunity sales without the appropriate registration."
The company can appeal the ruling.
The Swallow, Shurtleff allegations
Utah Attorney General John Swallow and his predecessor, Mark Shurtleff, have come under scrutiny on a number of fronts:
• Indicted businessman Jeremy Johnson has, at times, accused Swallow of helping to arrange to bribe Senate Majority Leader Harry Reid, D-Nev. Swallow says he only helped Johnson set up a lobbying deal.
• Three Utah businessmen have said Swallow, as a fundraiser for Shurtleff in 2009, suggested that a contribution to Shurtleff's campaign would get them special consideration if there were complaints about their operations to the attorney general's office.
• A complaint has been made to the Utah State Bar by the state's former director of consumer protection, alleging Swallow violated attorney-client rules by discussing a consumer-protection case with a potential donor and suggesting the target meet with Shurtleff.
• The lieutenant governor's office is in the process of hiring a special counsel to investigate a complaint that Swallow concealed business interests on his candidate financial disclosure forms, including a company central to the Johnson deal.
• Convicted businessman Marc Sessions Jenson said Swallow and Shurtleff took posh vacations to his Newport Beach, Calif., villa on Jenson's dime while he was free on a plea deal with the attorney general's office. During the trips, Jenson said they pressed him for fundraising help and other financial deals.
• Businessman Darl McBride provided a recording of a 2009 breakfast meeting in which Shurtleff offered him $2 million to take down a website criticizing Mark Robbins, Jenson's former business partner. Shurtleff said he could get the money from Jenson because of his plea deal. Jenson said he refused.