This is an archived article that was published on sltrib.com in 2017, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Utah Attorney General Sean Reyes is still waiting to hear if he'll be the next chairman of the Federal Trade Commission, but it looks like companies that do business with the FTC are at least covering their bases.
In the seven weeks since word that Reyes was likely one of two top candidates for the job, he has received more than $100,000 in campaign contributions, with notable contributions from companies that have drawn scrutiny from FTC regulators and law firms that represent clients before the commission.
The campaign contributions are rolling in, even though Reyes waltzed to victory in November and won't be up for re-election until the end of 2020.
And some of the big donors are about as unsavory as it gets.
Take the British drug company Mallinckrodt, that donated $3,500 to Reyes at a fundraiser in March. Mallinckrodt is the sole maker of a drug that treats an illness that causes seizures in infants and is used as a last resort in flare-ups of Multiple Sclerosis, rheumatoid arthritis and nephrotic syndrome.
To protect its monopoly, Mallinckrodt outbid competing companies for the rights to a new drug that would have been more affordable, then stifled development of that medication while jacking up the cost of its own drug through the roof — from $40 a vial in 2001 to $1,650 in 2007 to more than $34,000 per vial today.
Let that sink in: Imagine your newborn is having seizures and it will cost you more than $100,000 for a full treatment to stop your child from convulsing, thanks to the good folks at Mallinckrodt.
In January, the FTC slapped Mallinckrodt with $100 million in fines and required the company give the rights to the competing drug to a company approved by the FTC. The sleezeballs will also be monitored for the next 10 years, a job that would fall to Reyes if he is appointed chairman.
These sorts of donations aren't huge, but they matter for two reasons. First, President Donald Trump has promised he will "drain the swamp," but here the federal regulatory agency designed to protect consumers could be led by a guy who has received thousands of dollars from entities that the FTC has punished.
But Reyes has also vowed in the wake of the pay-for-play scandal that drove Attorney General John Swallow from office not to take money from companies he could potentially have to take action against.
Reyes' political adviser, Alan Crooks, said that Mallinckrodt was invited to the fundraiser in October and accepted the invitation in December, before Reyes was mentioned as a possible FTC chairman in January, but the campaign would consider returning the check.
In March, Reyes also received $2,000 from LifeLock, the identity theft protection company that, at the end of 2015 was ordered to repay $100 million to customers because the company continued to make misleading claims about its products, violating an earlier settlement with the agency.
Also in March, Brett Chapman, who until recently was chief legal officer for Utah-based Herbalife, gave Reyes $2,000 at the fundraiser.
In January, Herbalife started sending $200 million in refunds to 350,000 distributors that the commission said were victims of Herbalife's illegal multilevel-marketing scheme that defrauded its members.
In addition to the payouts, Herbalife also agreed to hire an independent compliance auditor to oversee operations on behalf of the FTC.
Crooks said Herbalife is a regular donor to Reyes' campaign and the Chapman contribution was nothing out of the ordinary. LifeLock, Crooks said, has also donated to Reyes' campaign several times because Reyes is "one of the leading attorneys general on child identity protection."
One Reyes donor that has garnered consumer complaints but no enforcement action is Bristlecone Holdings, a Nevada company that arranges puppy leasing.
That is not a joke.
Bristlecone owns Wags Lending, which does financing for customers that want to get a puppy from a dog breeder.
A Bloomberg story last month said customers complained to the FTC when they discovered they were renting, not buying, the new pet and had to pay hundreds of dollars more at the end of the lease or else return the dog.
Bristlecone gave Reyes $5,000 — which is about how much it charges to finance a dog.
Reyes is in a unique situation. In the past, FTC leaders have typically not been politicians and therefore haven't had the fundraising ties that Reyes does.
And, because the scope of the FTC entails basically all commercial businesses, any company he takes money from could potentially present a conflict, creating an obvious conundrum.
For example, the FTC is responsible for labeling on beer and wine and, sure enough, the beer and wine wholesalers each gave Reyes $5,000. Increasingly, the FTC has warned consumers about car-title loans and took its first action against two high-interest lenders in 2015. Three title loan companies gave Reyes a total of $11,000.
Four large law firms that represent clients in front of the FTC gave Reyes a total of $14,000.
These donations are just the most recent potential entanglements, but they are far from isolated. Reyes has also taken money from 1-800 Contacts, which is the subject of FTC action, as well as Facebook, Google and numerous others that have been under scrutiny by the agency.
It's noble for Reyes to want to be the nation's top consumer advocate, but if that is his aim, he needs to divest his campaign account of those contributions and make sure he can take the job with clean hands, unsullied by campaign cash.
Twitter: @RobertGehrke