Editor’s Note: This is the second of a series of reports by award-winning investigative reporter Lynn Packer who covered, among other stories, the Mark Hofmann Bombings, the Bonneville Pacific Fraud, the Olympic Bribery Scandal, the Utah Highway Construction Bribery Scandal, and the Paul H. Dunn/Afco Fraud.
It does not take a seer stone to determine when Utah Republican Attorney General John Swallow, first got caught up in Utah’s web of get-rich-quick schemes whose promoters rely on weak laws and lax enforcement. Fast-buck entrepreneurs need attorneys and people in high places to support Utah’s penny stock, telemarketing, multilevel marketing, door-to-door and dietary supplement ventures.
Fresh out of Brigham Young University Law School in 1990, Swallow joined Salt Lake’s Scalley & Reading law firm. Near the same time two Utah county property speculators, George Evan Bybee and Dennis Gay, were putting together Basic Research LLC to market fat-burning diet pills. It was the precursor to their fight gainst the Food and Drug Administration for the right to make claims like:
No sooner had Basic Research launched its new products than another relatively new Utah company, ShapeRite Concepts LTD sued in 1992, claiming Basic Research had stolen its formula. Ephedra, a stimulant now banned by the FDA, was a key ingredient in both companies’ formulas. (Utah pioneers once drank so-called “Mormon Tea” brewed from an Ephedra species plant native to the Moab area.)
ShapeRite, sold via multilevel marketing, was founded by Utahn Carl Martin and his son, Greg, after the elder Martin had served a prison term for a penny stock swindle where investors were led to believe he could mine gold from beach sand in Costa Rica.
It was the beginning of John Swallow’s connection to the dietary supplement industry and his friendship with George Bybee.
J. Bruce Reading and his relatively new associate, John Swallow, represented Bybee and Gay against ShapeRite. A ShapeRite attorney said Reading and Swallow were always together in court with Swallow “like a little kid tagging along.” Swallow was, after all, a junior associate. “Very nice, pleasant and professional,” is how the opposing attorney described Swallow.
The diet pill case settled in 1994, and both companies quickly escalated their sales into the multimillions of dollars. ShapeRite eventually merged with 4Life Research Ltd. Of Sandy, Utah, which went worldwide and now has sales in more than 50 countries with several hundred thousand distributors.
During his six-year stint with Scally & Reading, Swallow was elected to the Utah State House of Representatives where he served until 2002 when he ran unsuccessfully against Democrat Jim Matheson in Utah’s 2nd congressional district..
In 1998, Swallow left the law firm and went with Basic Research and Bybee full time, joining subsidiary Silver Sage as corporate counsel. There, he took up the banner against the federal government, fighting to keep ephedra in the company’s weight loss pills. The combination of ephedra and caffeine proved to be powerful weight-loss drugs sold by Basic Research and many competitors.
Swallow represented the company with the Ephedra Committee of American Herbal Products Association. In September, 2000, Swallow represented SilverSage at the Second Dietary Supplement symposium in Maryland. There, he spoke as an attorney and member of the Utah House of Representatives in defense of ephedra. He began his speech by telling the story of when he worked on his father’s farm near Ely Nevada:
When growing up we could not keep out calves from breaking through the fence to get hay. We used razor wire and the calves were injured getting the hay. But we finally put the hay on a platform above the heads of the calves in their own pens and none were injured.
He said the FDA was trying to impose unsupported restrictions on ephedra which is like putting razor wire around the fence. “We are only denying consumers an effective way to manage their weight,” he told the symposium. “Ephedra is safe, but does it really work? Yes it works!”
Swallow’s efforts paid off, and during the 1998-2002 time-frame he was Basic Research’s general counsel, the industry was able to keep any ephedra ban at bay.
After Swallow moved on to On International, Inc. (See an upcoming Utah Political Capitol report) the FDA banned ephedra after a rash of illnesses and deaths. The sale of ephedra-containing dietary supplements is now illegal in the United States. Basic Research and its competitors moved on with ephedra-free pills.
In 2006, the Federal Trade Commission fined Basic Research $3 million for making questionable weight-loss and fat-loss claims for skin gels and diet supplements. Two of the many products on the list contained ephedra, which had since been outlawed. One of the pills, PediLean, was marketed to help overweight children lose weight. Basic Research unsuccessfully attempted to defend the ads by listing the names and credentials of those who worked on them, including John Swallow, who was reported to have reviewed the ad copy before it ran.
In 2004, as Swallow was a candidate for Utah’s 2nd Congressional District the US house, The Salt Lake Tribune reported on one of the FDA’s actions:
As an attorney for a major Utah dietary supplement firm, congressional candidate John Swallow approved advertisements for several products that federal regulators say were misleading or deceptive, according to a legal filing by the company.
The Federal Trade Commission has alleged that ads for six products manufactured or marketed by Basic Research and its subsidiaries were false or unsubstantiated, including a cream that “dissolves surface body fat wherever applied.”
In a filing with the FTC, the company states that Swallow “reviewed ad copy” for the products in question.
Swallow said the filing must be a mistake, because in three years as the company’s general counsel he primarily handled contract and human resource matters.
“If they had me reviewing the ads, they would’ve been nuts because I don’t know a thing about that FTC stuff,” he said.
True statement by Swallow?
Two years earlier he spoke in Maryland in great detail about the use of and defense of ephedra. He was not there to talk about human resource matters. Swallow cited several studies and provided legal advice about complying with FDA labeling regulations. He said government overregulation is like razor wire to farm animals. “It will hurt an obese population because it will deny access to the one dietary supplement that really will work for them.”
After leaving Basic Research as general counsel in about 200,1 Swallow continued doing some legal work for the firm and for Bybee personally. Bybee was an ardent Swallow campaign supporter but too much so.
In November 2007 the Federal Election Commission (FEC) leveled $46,750 in fines for illegal contributions to the Swallow for Congress campaign. “The Commission found reason to believe the Swallow committee violated the Act by accepting excessive contributions and failing to disclose itemized contributions adequately on FEC reports,” the FEC Said. “The committee accepted contributions from three partnerships, WinterHawk Enterprises LLC, Winterfox LLC and BMF #1, Ltd., that were attributed to individual members of each partnership.” All were Bybee entities used to disguise the source of the campaign funds.
Swallow, even after joining the Attorney General’s Office, registered as a lobbyist for Bybee, personally, and for several of his companies after Bybee disengaged from day-to-day work at Basic Research: Armored Coatings, Mirage Products, Xyelexin and Winterfox. But he told UPC through a friend that listing himself as a lobbyist “was to make sure that disclosure was made regarding companies he had been involved with. It would be akin to obtaining a fishing license but never going fishing.”
Swallow, Bybee and Basic Research declined comment on this story.
Here’s a copy of the TV commercial in question: