By Robert Gehrke and Lisa Schencker

The Salt Lake Tribune

August 18, 2010 06:07AM

An offer of $140 million in federal money for education and health care is not being met with gratitude by Utah legislative leaders.

Far from it.

Instead, Utah’s Republican leaders are apoplectic that Congress provided the money — aimed at keeping teachers in the classroom and helping with the health care burden of low-income residents — and frustrated that any attempt to reject it may be fruitless.

“I’m truly astonished,” House Speaker David Clark, R-Santa Clara, said Tuesday. “Congress has unequivocally carried out the constitutional responsibilities of this state and this Legislature. … [Congress said] ‘The Utah Constitution doesn’t matter. We’re doing an end-run around this, and we’re going to decide how the money is going to be spent.’ ”

Astonishment! The Republicans are wailing at Obama for not fixing quickly enough the economy they ruined. When he takes action, they cry ‘No.” They block the very solutions necessary because they would rather have the country fail than Obama succeed. We are in a mess, a diabolical mess.

No decision has been made on whether Utah will seek the funds. Legislative leaders are meeting (more…)

By JUDY FAHYS

The Salt Lake Tribune

August 18, 2010 10:41AM

Federal regulators may well have the authority after all to decide how a Utah magnesium plant manages its hazardous waste, under a Denver appeals court’s ruling released Tuesday.

The 10th Circuit Court of Appeals threw out an Oct. 17, 2007, decision by U.S. District Judge Dee Benson that US Magnesium in Tooele County is exempted from the nation’s cradle-to-grave hazardous waste law, the Resource Conservation and Recovery Act (RCRA).

In short, the appeals court said the Environmental Protection Agency can update its “tentative” interpretation of a regulation into a final one without additional public input. It ordered Benson to reconsider the case.

Is it any wonder we are in an environmental quagmire. Action began on this issue in 2001. The  case was eventually decided by Judge Benson in 2007. Three years later the Appeals Court overturns the decision and orders Benson to reconsider the case, thus it is still unresolved. This is a near total failure of the court system. All this delay has been worth millions to Mag Corp and to New York businessman Ira Rennert, and the public be damned.The corporate polluters are benefited by the slow moving court system and the earth and its inhabitants suffer irreparable damage.

The delay in this decision is far more devastating than the long and tedious process of the death penalty. This needs fixed, and who will fix it? Nobody. This is a horrible condemnation of our justice system.

“Even under the case law US Magnesium asks us to follow, the agency is at liberty to adopt without notice and comment a reasonable interpretation of that ambiguous regulation,” said the opinion written by Judge Neil M. Gorsuch and joined by the two other judges on the appeals panel.

Although neither side has said what it will do next, it is possible the ruling will finally settle the two-decade-old (more…)

What consumers should know about buying olive oil

By Kathy Stephenson

The Salt Lake Tribune

August 17, 2010 07:05PM

Two decades ago, the only place to buy a bottle of olive oil was a Greek or Italian specialty market.

Today, bottles of this healthy oil are sold everywhere, from local grocery stores to big-box warehouses. Each year, U.S. consumers spend $700 million on olive oil.

But with more choices has come an array of marketing terms such as “extra-virgin,” “cold-pressed,” “light” and “unfiltered.” Taken together, these labels can seem confusing and inconsistent, as in the past the product hasn’t been regulated by the federal government.

Why would we post an article on olive oil? This article is not only about olive oil, but also about the important role that government plays in labeling of food products. It is a prime example of what happens without government supervision.

Currently none of us know the true quality of olive oil. For years I’ve been buying ‘extra virgin’ because the nutritionists have indicated there is an important difference. Now I discover that ‘extra virgin’ may not be what it claims to be, and one thing is for sure, we cannot depend on the integrity of free enterprise corporations. That is the Law of the Jungle that so around here pray to every day.

From now we will all know to look for the USDA rating label before buying an olive oil.

For the average consumer, it can be difficult to figure out what these terms actually mean, as well as why one bottle of 100 percent extra-virgin olive costs $6, while another costs $20 or more.

The confusion could be ending soon, as the U.S. Department of Agriculture recently adopted a new set of standards. Companies are encouraged to adopt the USDA’s definitions to help consumers differentiate the best oils from the cheap imposters. The federal agency adopted the new regulations in April, and plans to start enforcing (more…)

(This is a blog by Glen Warchol of the Salt Lake Tribune)

The Salt Lake Tribune

August 13, 2010 12:49PM
Utah’s journalism and political communities have been buzzing the last couple weeks with rumors of an impending implosion of the Deseret News. Let me concisely repeat the rumors:

• In the next few weeks, a significant part of the DNews staff will be laid off.

• What remains will leave the Deseret News building in the heart of downtown to be resettled with KSL in the Triad Center.

• The DNews will no longer publish daily, but three days or so a week (it would, of course, continue to exist online with Mormon Times).

The staff at the DNews is so utterly demoralized and terrified that it is impossible to get any of this nailed down on the record. As one DNewser told a Trib colleague: “the stink of fear” permeates the newsroom.

Salt Lake City Weekly’s Josh Loftin, a former DNews editor and reporter, tries to make sense of the weak signal coming from inside the monolith of Mormon Media under new strongman Mark Willes.

Despite the recent de-evolution of the 150-year-old DNews under Editor Joe Cannon (photo above) and Willes from the “Christian Science Monitor of the West” to a LDS faith-promoting publication with a purged political staff, it still remained a player in Utah’s media, particularly in state government coverage.
Newspapers, including The Tribune, have struggled the last few years with declining revenues following the online information revolution, but the DNews also has been buffeted by pressures to publish news with a positive slant and to advance the LDS religion. Such goals are, of course, an anathema to good journalism.

The funny thing is that everyone in the business thought the DNews would outlast the Tribune because of its iconic position in LDS Church history. But all it took was a couple of suits with a management theory.
Full disclosure: Hard to believe, but I was a reporter at the DNews in the 1980s.

By TONY SEMERAD

The Salt Lake Tribune

August 14, 2010 10:26PM

The amount of federal stimulus cash pumped into Utah by the controversial American Recovery and Reinvestment Act has now surpassed the $3 billion mark in spending and as much as another $1.5 billion in tax cuts.

Spending alone — on education, business and student loans, road and infrastructure construction, energy projects, and expansion of existing social welfare programs like jobless assistance and food stamps — has pushed Utah’s benefit from the stimulus to $1,110 per resident, according to data newly compiled by the nonprofit investigative journalism website ProPublica.org.

That puts Utah slightly below the national per capita average of $1,170.

But the Utah stimulus figure is much higher than $3 billion. Almost $1.5 billion more in tax cuts — not part of spending data — has been reaching Utah pocketbooks since 2009, through the stimulus bill’s changes in payroll withholding brackets and relief from the alternative minimum tax for middle-class taxpayers.

So, with a financial boost that large — one likely to be more even than the $3.7 billion the bill originally targeted for Utah — what do taxpayers have to show for the money?

A lot, it turns out.

This is great news—but Republicans will twist it into bad news.Through the eyes of a Republican Obama can do nothing right. Whatever he is doing is wrong. If the stimulus is helping the economy then we are ruining the economy with deficit spending. If the stimulus isn’t working then blame Obama. Whatever the situation — the Party of No can turn it upside down.

“Whenever you get that amount of money infused into the state, it has to have a certain amount of benefit,’’ said John Nixon, budget director for Gov. Gary Herbert, who has helped shape (more…)

Utah to receive $101 million for education, save more than 1,400 teacher jobs

By Joseph M. Dougherty and Elizabeth Stuart

Deseret News

Published: Wednesday, Aug. 11, 2010 12:12 a.m. MDT

WASHINGTON — With President Barack Obama’s signature on the $26 billion stimulus bill for education and Medicaid on Tuesday, Utah stands to nab about $101 million for education for fiscal 2011.

Though that number is just 1 percent of the $10 billion allocated for education funding nationwide, it could save the jobs of 1,400 to 1,500 teachers in Utah, according to state estimates, and up to 1,800 teachers, according to federal estimates.

Republicans are opposed to this good news. It boggles the mind! They would rather give a tax cut to the rich than keep our kids in teachers. Such distorted values!

Both the U.S. House and Senate passed the bill this month, with the House’s vote taking place Tuesday afternoon before a copy of the bill was taken up Pennsylvania Avenue to the White House.

The votes in both houses happened nearly along party lines, with the Democrats supporting the bill (more…)

The AIG Bailout Scandal

William Greider | August 6, 2010

The Nation Magazine

The government’s $182 billion bailout of insurance giant AIG should be seen as the Rosetta Stone for understanding the financial crisis and its costly aftermath. The story of American International Group explains the larger catastrophe not because this was the biggest corporate bailout in history but because AIG’s collapse and subsequent rescue involved nearly all the critical elements, including delusion and deception. These financial dealings are monstrously complicated, but this account focuses on something mere mortals can understand—moral confusion in high places, and the failure of governing institutions to fulfill their obligations to the public.

Three governmental investigative bodies have now pored through the AIG wreckage and turned up disturbing facts—the House Committee on Oversight and Reform; the Financial Crisis Inquiry Commission, which will make its report at year’s end; and the Congressional Oversight Panel (COP), which issued its report on AIG in June.

The five-member COP, chaired by Harvard professor Elizabeth Warren, has produced the most devastating and comprehensive account so far. Unanimously adopted by its bipartisan members, it provides alarming insights that should be fodder for the larger debate many citizens long to hear—why Washington rushed to forgive the very interests that produced this mess, while innocent others were made to suffer the consequences. The Congressional panel’s critique helps explain why bankers and their Washington allies do not want Elizabeth Warren to chair the new Consumer Financial Protection Bureau.

The report concludes that the Federal Reserve Board’s intimate relations with the leading powers of Wall Street—the same banks that benefited most from the government’s massive bailout—influenced its strategic decisions on AIG. The panel accuses the Fed and the Treasury Department of brushing aside alternative approaches that would have saved tens of billions in public funds by making these same banks “share the pain.”

Bailing out AIG effectively meant rescuing Goldman Sachs, Morgan Stanley, Bank of America and Merrill Lynch (as well as a dozens of European banks) from huge losses. Those financial institutions played the derivatives game with AIG, the esoteric practice of placing financial bets on future events. AIG lost its bets, which led to its collapse. But other gamblers—the counterparties in AIG’s derivative deals—were made whole on their bets, paid off 100 cents on the dollar. Taxpayers got stuck with the bill.

“The AIG rescue demonstrated that Treasury and the Federal Reserve would commit taxpayers to pay any price and bear any burden to prevent the collapse of America’s largest financial institutions,” the COP report said. This could have been avoided, the report argues, if the Fed had listened to disinterested advisers with a less parochial understanding of the public interest.

Fed and Treasury officials dismiss this critique as second-guessing of tough decisions they had to make in the fall of 2008, amid the fast-moving global crisis. Yet two years later, those controversial decisions remain highly relevant. Public anger has not abated. It fuels the election turmoil that this year threatens to bring down incumbents in both parties who voted for bank bailouts.

Although the AIG bailout was carried out in the waning days of George W. Bush’s presidency, the popular sense of injustice has deeply scarred Barack Obama, since he too adopted a forgiving approach toward culpable financial interests. Obama came to office intent on restoring public trust in government. His indulgence of the mega-banks led to the opposite result.

More to the point, the AIG story raises real doubts and suspicions (more…)

Editorial: Immigration is about us

Mark H. Willes

Deseret Media Companies

Published: Saturday, Aug. 7, 2010 9:15 p.m. MDT

Over the last few weeks, we have run a series of special reports on immigration in print, on television and radio, and on our multiple websites. We have tried hard to fairly represent all points of view. We have also tried to separate fact from fiction, hyperbole from reality.

This is a nice start on a very difficult and complex issue. The editorial serves one important purpose; to slow down the hot heads and put rational thinking on the front burner. The editorial offers few concrete suggestions—except a thoughtful and caring approach to all decisions. While some will be bothered by its lack of specific solutions it does bring us back to the proper starting place—-rational thinking.

We are pleased that many have told us they are now thinking more deeply about the complex issues involved. We, too, have found ourselves struggling to know exactly what to do. Lives, jobs, safety and much more are at stake. In fact, the very core of what kind of people we are, and what kind of state we want to have, will be reflected in and strongly influenced by how we deal with immigration.

Common threads

Several common threads have emerged from our reporting on immigration:

People on all sides of the issue have uncommon courage. The debate has become so heated, the rancor so great, that anyone who takes a strong stand has been subject to withering criticism. We greatly admire all those who have added to the public dialogue by sharing their views, no matter the personal cost.

Virtually everyone agrees that current circumstances surrounding immigration must be fixed. While areas of emphasis differ, almost no one is happy with the way things are.

Almost everyone also agrees that illegal immigrants who are felons should be caught, prosecuted and sent out of the country.

There is also consensus that to be effective, there must be a national solution to the challenges of immigration. Utahns of all points of view eagerly seek national leadership to find effective, workable solutions, sooner rather than later.

Finally, there seems to be a broadly held view that Utah, like Arizona, should do something, if only to help speed up federal action.

No easy solutions

The problem, of course, is that complex problems do not lend themselves to easy solutions: (more…)

By DON LEE

McClatchy Newspapers

August 1, 2010 12:01AM

Washington • A recent White House prediction that the deficit would hit a record $1.47 trillion this year poured new fuel on the fiery argument over whether the government should begin cutting back to avoid future inflation or instead keep stimulating the economy to help the still-sputtering recovery.

But increasingly, economists and other analysts are expressing concern that the United States could be edging closer to a different problem — the kind of deflationary trap that cost Japan more than a decade of growth and economic progress.

And as Tokyo’s experience suggests, deflation can be at least as tough a problem as the soaring prices of inflation or the financial pain of a traditional recession.

When deflation begins, prices fall. At first that seems like a good thing.

But soon, lower prices cut into business profits, and managers begin to trim payrolls. That in turn undermines consumers’ buying power, leading to more pressure on profits, jobs and wages — as well as cutbacks in expansion and in the purchase of new plants and equipment.

Also, consumers who are financially able to buy often wait for still lower prices, adding to the deflationary trend.

All these factors feed on one another, setting off a downward spiral that can be as hard to escape from as a stall in an airplane.

For now, the dominant theme of the nation’s economic policy debate remains centered on the comparative dangers of deficits and inflation. However, economists across the political spectrum — here and abroad — are talking more often about the potential for deflation.

So how likely is the problem?

The latest U.S. data are sobering. Consumer prices overall (more…)

Audit: U.S. cannot account for $8.7B in Iraqi funds

Audit accuses Pentagon of lax oversight, weak controls over spending

By Tarek El-Tablawy

Associated Press

Published: Wednesday, July 28, 2010 12:32 a.m. MDT

BAGHDAD — A U.S. audit has found that the Pentagon cannot account for over 95 percent of $9.1 billion in Iraq reconstruction money, spotlighting Iraqi complaints that there is little to show for the massive funds pumped into their cash-strapped, war-ravaged nation.

The $8.7 billion in question was Iraqi money managed by the Pentagon, not part of the $53 billion that Congress has allocated for rebuilding. It’s cash that Iraq, which relies on volatile oil revenues to fuel its spending, can ill afford to lose.

“Iraq should take legal action to get back this huge amount of money,” said Sabah al-Saedi, chairman of the Parliamentary Integrity Committee. The money “should be spent for rebuilding the country and providing services for this poor nation.”

The report by the Special Inspector General for Iraq Reconstruction accused the Defense Department of lax oversight and weak controls, though not fraud.

The only surprise is that the public is being made vaguely aware of it. The Defense Department is managed just like Wall Street.

“The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss,” the audit said.

The Pentagon has repeatedly come under fire for apparent mismanagement of the reconstruction effort — as have Iraqi officials themselves.

Seven years after the U.S.-led invasion, electricity service is spotty, with generation capacity falling far short of demand. Fuel shortages are common and unemployment remains high, a testament to the country’s inability to create new jobs or attract foreign investors.

Complaints surfaced from the start of the war in 2003, when soldiers failed (more…)

By John Boudreau

San Jose Mercury News

Updated: 06/10/2010 02:15:29 PM MDT

As tens of millions of people across the developing world migrate from the countryside to new cities, Cisco Systems is helping build a prototype for what one developer describes as an instant “city in a box.” Cisco is wiring every tech nook and cranny of the new city, making it one of the most technologically sophisticated urban centers on the planet.

Delegations of Chinese government officials looking to purchase their own cities of the future are descending on New Songdo City, a soon-to-be-completed metropolis about the size of downtown Boston that serves as a showroom model for what is expected to be the first of many assembly-line cities. In addition to state-of-the-art information technology, Songdo will emit just one-third of the greenhouse gasses of a typical city of similar size.

Cities of a million-plus population are popping up across the developing world, but the foremost market for the prototype is China, where a massive demographic shift from rural to urban already is under way, requiring hundreds of new cities.

“They come in here and say, ‘I’ll take one of these,’ ” said Richard Warmington, the former head of Hewlett-Packard’s Korea operation who is president of Chadwick International School, which is setting up a campus in Songdo.

The potential is so big that executives at Cisco, the key tech partner for the development, get giddy talking about what could be a $30 billion business over coming years for the San Jose, Calif., networking giant. Just a year ago, usually buttoned-down Cisco CEO John Chambers engaged in a night of “love shots” — locked-elbow drinking toasts — with President Lee Myung-bak to seal the Songdo deal Korean-style.

It’s easy to see why Cisco is intoxicated with the possibilities. According to a study by investment bank CIBC World Markets, governments are expected to spend $35 trillion in public works projects during the next 20 years. In Songdo alone, Cisco sold 20,000 units of its advanced video conferencing system called Telepresence — a billion-dollar order — almost before the ink had dried on the contract, said developer Stan Gale, the chief visionary of the project.

“Everything will be connected — buildings, cars, energy — everything,” said Wim Elfrink, Cisco’s Bangalore-based chief globalization officer. “This is the tipping point. When we start building cities (more…)

By Tom Harvey

Salt Lake Tribune

As Aaron Garrity tells it, a decade ago the multilevel marketing industry in Utah was like a tired old man that not even mega-doses of its various nutritional supplements could revitalize.

Then in 2002 came the call from Malaysia — Joe Morton on the line about a fruit he had been served at a restaurant. Its name was mangosteen, and because of it the nutritional supplements industry in this state has never been quite the same.

XanGo, the company Garrity, Morton and others created, has enjoyed phenomenal success, peddling juice and other products based on mangosteen. Garrity’s branding vision has enabled the company to sell a bottle of fruit juice less than a quart in size for $25. Millions have been sold.

The success has brought Garrity and other founders great riches, and him a singular amount of acclaim. It also has given rise to detractors.

During the heady times of 2005 and 2006, Garrity received almost $6.5 million in profits in one year. Along the way, some allege that the mostly 30-something founders also engaged in an orgy of consumption at their company’s expense. Lawsuits filed by XanGo investors maintain they received $6,000 per month vehicle allowances and spent lavishly on themselves and their families for luxuries ranging from chartered plane rides to shopping in New York’s finest stores to buying grand pianos to vacationing in Hawaii.

Attorneys representing the company dismiss the allegations as a veiled attempt at extortion, even as Garrity and Lehi-based XanGo march on.

–

Honors and recognition » At 41, Garrity has become chairman of the XanGo board after years as its CEO. For his role in founding and building the company, he has been recognized by numerous organizations:

» Ernst & Young’s entrepreneur of the year for Utah and a finalist for a national honor.

» Named one of the top seven most influential people in multilevel marketing by DirectSellingLive.com, which follows the industry.

» Included in a study of the characteristics of highly innovative corporate managers published in Harvard Business Review that included Jeff Bezos of Amazon.com and Michael Dell of Dell Computers.

Jeff Dyer, one of the study’s authors and chairman of organizational leadership and strategy at Brigham Young University, said Garrity’s particular strengths are in branding and marketing.

“I also think he’s really someone who likes to challenge the status quo and make [things] better,” said Dyer, who is turning the study into a book.

DirectSellingLive CEO Keeper Catran-Whitney speaks to the company’s appeal. “What XanGo has done, primarily because of Aaron, is they believe in being everywhere at once, We’re seeing a lot of people flocking to what XanGo is all about.”

Several themes are big with Garrity when he talks about XanGo. One is building the company as a brand, not just a producer of products. Another is running a company in which leadership is rewarded at every level. He also talks is about seizing opportunity.

It is the latter that takes Garrity back to his childhood in the Los Angeles area, which was marked by his parents’ divorce when he was only 1. His mother raised three kids on her own before remarrying when Garrity was 13. As a single mother, at times she worked three jobs.

“I never knew we were poor growing up,” Garrity said in a recent interview. “So when I saw opportunity I went after it because I never knew any better.”

Garrity delivered newspapers before landing a job at 16 at Nordstrom, the department store known for its customer service. That gave him his first lesson in what it means for a business to create an image through marketing. He also worked for Giorgio of Beverly Hills, Liz Claiborne and Jessica McClintock, companies where “brand is everything.”

After high school, Garrity went on a Mormon mission to France and entered Brigham Young University in 1986, earning degrees in 1993 in marketing and French. He stayed in school to earn an MBA and a law degree.

–

Multilevel marketing » He married, and during his BYU days Garrity’s wife began working at Enrich International, one of the many multilevel marketing companies based in Utah that sell nutritional products such as herbs, vitamins, minerals and personal-care products to networks of independent distributors.

Some critics label such business strategies as pyramid schemes, which instead of focusing on retail sales rely on recruiting distributors to whom products are sold. Commissions from those sales filter up through the levels to the top. For the companies, multilevel marketing provides distinct advantages such as getting the word out about a product through distributors (rather than employing a sales force) and building a name without huge marketing expenses.

MLMs also can generate a spigot of cash.

Garrity got a marketing job at Enrich International, “and I absolutely fell in love with the industry.” Gary Hollister later was named CEO and began his reign by asking employees to assess its operations.

When it was his turn, Garrity poured out his frustrations. Forty-five minutes later, Garrity asked Hollister what he thought. “He said, ‘Well I think you’re one of the most negative individuals I’ve ever met.’ ” Garrity thought his time was over, but Hollister saw something else. “I lectured him a little bit about ‘Bring me a problem, bring me a solution,’ ” Hollister said in a recent interview. “It was evident this man had a grasp of the problems but he also had a way of solving them.”

For his part, Garrity said “I decided that night I was going to be part of the solution and not the problem, and I’ve never looked back.” Hollister mentored Garrity and later joined him as a XanGo founder.

–

On the lookout for opportunity » It also was at Enrich where Garrity met Joe and Gordon Morton. Originally from Canada, the brothers had grown up with herbal supplements. Their mother owned a botanicals store and their father managed Nature’s Sunshine, one of the earliest of Utah’s nutritional products companies.

Like Garrity, they were young and on the lookout for opportunities. But in Utah they saw only a moribund industry wedded to old ways of doing business.

“Gordon Morton said it was very apparent this industry needed an enema to get it moving again,” said Garrity, who came to realize that no one in the multilevel marketing of nutritional products had a commitment to building a brand.

“Companies would spend on the contents of products and pay less attention to the brand because in their minds the distributors took care of that.”

After seven or so years at Enrich, Garrity went to work for Morinda Holdings, which operates Tahitian Noni International, a seller of a juice based on the noni plant from French Polynesia.

Morinda would sue Garrity and the five other founders the year after they formed XanGo, claiming that the concept for a juice based on mangosteen was stolen from it. XanGo countersued, and the case was settled out of court in 2006 , its contents sealed.

Garrity’s story is that the idea for mangosteen sprang from Joe Morton’s Malaysian call in 2002 during which Morton said the fruit had been consumed for centuries for its medicinal qualities. There also reportedly were scientific studies demonstrating the health benefits of the fruit.

“So it was kind of there that it clicked,”said Garrity, then 34. “So now it was do or die,” and that meant creating a brand.

From XanGo’s beginnings in 2002, Garrity set about building an image — the zippy name, the distinctively-shaped glass juice bottle, the promise of a 50 percent return on revenues to distributors and an emphasis on customer service. He also created a charitable arm in which the company’s 1.5 million distributors in more than 30 countries could participate in worthy projects such as Operation Smile, which provides free surgeries to repair clef lip and other deformities for children around the world.

XanGo, which employs more than 400 people in Utah, took advantage of technology to create the industry’s first TV channel online and blogs, while also relying on other forms of social media.

“XanGo was probably the first company to create a social media space for its distributors,” said Catran-Whitney of DirectSellingLive.com. “All the others have pushed back against it.”

–

Unwanted attention » As with many companies that enjoy outsized success, there was push back of another kind. While Garrity and his team were making millions, their actions drew attention that wasn’t always desired.

Documents from court files that are part of several lawsuits against XanGo show that in 2005, Garrity received a taxable distribution from company profits of $6.64 million. Extrapolating that amount using Garrity’s 17.1 percent ownership share shows that the company had taxable income of $38.69 million for distribution to its owners.

For tax purposes in 2006, Garrity’s share of XanGo’s profits was $6.3 million, with the company showing taxable income of $36.7 million.

Company credit card statements that show that on just one monthly bill, dated Jan. 2, 2008, Garrity rang up $172,437. Lawsuits from minority investors allege Garrity and others made numerous personal purchases with company credit cards from New York stores such as Saks Fifth Avenue and Cartier, and spent $25,000 on home furnishings, while also buying Father’s Day and Mother’s Day presents.

The lawsuits also allege the founders gave each other expensive gifts, while also buying clothing for their wives.

“Our clients’ perspective is the company was recklessly run,” said Mary Anne Wood, attorney for Angels Investors LLC, which owns about 1 percent of the company and claims it was financially damaged by improper conduct. “There were no accounting controls over the use of personal credit cards.”

The company denies the allegations, while also alleging that the investors are suing to try to force XanGo to “buy out Angel’s interest at an exorbitant price just to avoid further harassment.”

Further, the company claims in court documents that two members of the Angels group have ties to rival juice company MonaVie of South Jordan, one of the nutritional supplements companies that sprung up after XanGo.

“The founders have created an enormously successful business and have been responsible and fair with investors,” said Salt Lake attorney Robert S. Clark, who represents XanGo in the lawsuits. “Investors have received their full share of distributions and made an enormous profit.”

He said the lawsuits “show expenses without contexts” and that noncash bonuses and incentives are common in the industry.

“To the best of the company’s knowledge, all personal expenses are properly accounted for taxes,” he said. “XanGo has continued to upgrade its record-keeping in scale with its astounding global growth.”

Lawsuits aside, the success and branding go on.

In a first-of-its kind marketing effort in U.S. professional sports in November 2006, the XanGo name was emblazoned across the jersey fronts of the Real Salt Lake soccer team.

Garrity said the deal associates the company with the most popular sport in the world. It was another first for XanGo, soon followed by other companies, including a California multilevel seller of nutritional supplements called Herbalife, which put is name on the jerseys of the Los Angeles Galaxy.

Last November, Real Salt Lake and the Galaxy met in Seattle for the championship of Major League Soccer — XanGo versus Herbalife.

XanGo won.

tharvey@sltrib.com

What’s in the juice?

A broad vision of branding guides XanGo’s success, but it also sells actual products, such as its mangosteen juice.

Since its founding, XanGo has branched out from selling juice to include vitamin capsules and skin and body care products.

Still, it’s the juice that drives the company.

XanGo refuses to disclose what percentage of its juice is mangosteen, the nutrient-laden fruit from Southeast Asia.

Apple juice is the second ingredient listed on the XanGo bottle after “Whole Mangosteen Purée.” Other juices are pear, grape, blueberry, raspberry, strawberry, cranberry and cherry, and pear purée also is an ingredient.

It appears that the ground up pulp and skin of the mangosteen, where the healthy nutrients reside, are no more than around 20 percent of the 25.35 ounce bottles. That would mean that most of the bottle that sells for $25 to independent distributors is made up of other juices.

By Bernard Condon

The Associated Press

Updated: 06/12/2010 11:47:24 PM MDT

New York » Jonis Assmann doesn’t know how derivatives work, but he’s counting on them to help bring in next year’s soybean harvest in Brazil.

Assmann is not alone in his confusion, even though trade in many items we buy every day would slow or even stop without derivatives. The financial instrument even touches the outcomes of Utah Jazz basketball games.

But they also got much of the blame for the financial meltdown, so it’s no wonder they’re the target of a regulatory overhaul that a congressional conference committee took up last week.

The legislation could affect everything from a cup of coffee to the gas in your car. Here’s the story of one derivative.

–

Hedging bets » Assmann is perpetually worried he will run short of cash if prices for his crops fall. So he tries to pay for some of his supplies at the start of the growing season with a fixed amount of soybeans that will be collected at the end.

His suppliers don’t want to take on the risk of falling prices, either. But last month Philadelphia chemical maker FMC Corp. agreed to send Assmann all the insecticides and herbicides he needed in exchange for a third of his expected harvest.

Making the barter possible was a separate derivative that FMC, without Assmann’s knowledge, got a bank to design. That side bet is designed to make sure FMC won’t lose a penny if soybean prices fall.

“They seem very complicated,” Assmann, 39, said when told about the derivative. “A poultry company here lost a lot of money in derivatives. I don’t fully understand them.”

Derivatives are private bets between two parties on how the value of assets such as crops or measures such as interest rates will change in the future. Most aren’t traded on exchanges, and (more…)

by Justin Pritchard

Associated Press

Los Angeles » The federal agency responsible for ensuring that the Deepwater Horizon was operating safely before it exploded last month fell well short of its own policy that the rig be inspected at least once per month, an Associated Press investigation shows.

In fact, the agency’s inspection frequency on the Deepwater Horizon fell dramatically over the past five years, according to federal Minerals Management Service records. The rig blew up April 20, killing 11 people before sinking and triggering a massive oil spill in the Gulf of Mexico.

Since January 2005, inspectors issued just one minor infraction for the rig. That strong track record led the agency last year to herald the Deepwater Horizon as an industry model for safety.

The inspection gaps are the latest in a series of questions raised about the agency’s oversight of the oil drilling industry. Members of Congress and President Barack Obama have criticized what they call the cozy relationship between regulators and oil companies and vowed to reform MMS, which both regulates the industry and collects billions in royalties from it.

We arrive once again at the core of most of our current problems—the federal government has failed to do its job of regulating the various industries that must be closely supervised for the benefit of all Americans.

The Bush Administration and the anti-government Republican Party are responsible for most of this failure of regulation. They simply don’t believe (more…)

By Dennis Cauchon, USA TODAY

Amid complaints about high taxes and calls for a smaller government, Americans paid their lowest level of taxes last year since Harry Truman’s presidency, a USA TODAY analysis of federal data found. Some conservative political movements such as the “Tea Party” have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels.

The Tea Party is misnamed. It’s a party of beer and noisemakers, not tea. There’s a helluva lot more yellin’ than thinkin’.

Federal, state and local taxes — including income, property, sales and other taxes — consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.
“The idea that taxes are high right now is pretty much nuts,” says Michael Ettlinger, head of economic policy (more…)

By Gail Collins

The New York Times

This is a very interesting article, worthy of your time. That we can’t teach about birth control in the school system in 2010 is a decimating condemnation of the unrelenting influence of religious dogma.

A thousand years ago, popular birth control methods in the Western world included spitting into the mouth of a frog, eating bees and wearing the testicles of a weasel. In Cordoba, Spain, which was supposed to be on the scientific cutting edge, women were told to leap up and down vigorously after sex, and then jump backward nine times.

This is by way of saying that Sunday we celebrated the 50th anniversary of the birth control pill. We live in troubled times. But let’s give thanks that we avoided the era of the weasel testicles.

This is a story about science, and obviously sex. But it’s also a saga about getting information.

American women had been limiting the size of their families long before the pill came along. In the 19th century, the fertility rate was plummeting, and ads for everything from condoms to douching (more…)

Desert Derangement Syndrome

PHOENIX – Driving south from the high, age-worn plateau of northern Arizona, where the earth seems to have turned itself inside-out, I pulled over to take in the full sweep and wonder of this place during one of its better moments. The infinity of sky, the open gallery of sandstone masterpieces – it never fails to amaze.

Arizona is full of ancient communities – the Hopi, the Papago, the Havasupai, the Navajo – and outsized geology, with the Painted Desert, the Superstition Mountains and the big slit of the Grand Canyon .

From Show Low to Tombstone , from Snowflake to Casa Grande, from the tiny Indian village at the bottom of the canyon to the Colorado River town that reassembled the old London Bridge on its desert edge, this is the American West of singular scenery and goofy glory.

But for all its diversity of land and people, Arizona is also a lunatic magnet. As I drove, I listened to the radio blather of a state in mob-rule frenzy of cranky old men. Once in Phoenix , I saw on television that sign in a car’s rear window, the new image of Arizona to the rest of the world: “I’m Mexican. Pull me over.”

Thank you Arizona—for taking Utah out of the spotlight, but don’t let up. Our guys and gal (Ruzicka) don’t like to be upstaged. We’ve got the loosest gun laws in the country and other states are starting to boycott us too.  Remember, Evan Mecham was more ours that yours, and we’ve adopted Glenn Beck and he’s adopted us. So don’t get too fancy pants  with us, and Sean Hannity is on our church owned radio station three hours a day, six days a week, and on Sunday we go to church to get the message validated from the pulpit, and furthermore we’re going to condemn federal property and take it for our own use. Try that one on for size.

This week, Jon Stewart called Arizona the “the meth lab of democracy.” A few days ago, the governor signed the instantly infamous “show me your papers” law, allowing authorities to stop and question anyone who looks Hispanic. Another new measure lets people carry concealed weapons without a permit, following on the heels of the new-found freedom to pack heat in bars and restaurants, something that was outlawed in much of the Old West and the state house has just approved a bill that would require candidates for high office to show a birth certificate.

The birther bill is a sop to the flat-earthers (more…)

By Marcy Gordon

The Associated Press

Updated: 04/16/2010 10:41:01 AM MDT

Washington » The government has accused Goldman Sachs & Co. of defrauding investors by failing to disclose conflicts of interest in mortgage investments it sold as the housing market was faltering.

The Securities and Exchange Commission announced Friday civil fraud charges against the Wall Street powerhouse and one of its vice presidents. The agency alleges Goldman failed to disclose that one of its clients helped create — and then bet against — subprime mortgage securities that Goldman sold to investors.

This is good news—and bad news.  It’s about time that someone felt the sting of the corruptness on Wall Street and so it’s nice to see the SEC (dormant during the Bush years) returning to some form of enforcement. The bad news—-it’s business as usual in that no criminal charges have been filed. The SEC still doesn’t have the guts to bring criminal charges against the ‘biggies.’ This kind of conduct on Main Street would result in criminal charges and jail time—but not on Wall Street. This is a huge problem on Wall Street, and until the big bank presidents spend time in prison there will be no justice.

Who trusts anyone on Wall Street? Nobody. Zippo! No credibility. They don’t even trust themselves. However, they are all dealing with one another knowing full that all their profits come from the same source—-the impotent public, which is totally helpless because of a government that has been purchased lock, stock, and barrel by Wall Street and the insurance companies.

Investors in the mortgage securities are alleged to have lost more than $1 billion, the SEC noted. The agency is seeking to recoup profits reaped on the deal.

The Goldman client implicated in the fraud is one of the world’s largest hedge funds, Paulson & Co., which paid Goldman roughly $15 million for structuring the deals in 2007.

Goldman Sachs shares fell more than 12 percent after the SEC announcement, which also caused shares of other financial companies to sink. The Dow Jones industrial average fell more than 120 points in midday trading.

The civil lawsuit filed by the SEC in federal court in Manhattan was the government’s most significant legal action related to the mortgage meltdown that ignited the financial crisis and helped plunge the country into recession. The SEC’s enforcement chief said the agency is investigating a wide range of practices related to the crisis.

A Goldman Sachs spokesman didn’t immediately return a call seeking comment.

The agency also charged a Goldman vice president, Fabrice Tourre, 31, who it said was principally responsible for devising the deal and marketing the securities.

The SEC is seeking unspecified fines and restitution from Goldman Sachs and Tourre.

Goldman told investors that a third party, ACA Management LLC, had selected the underlying mortgages in the investment. But, the SEC alleges, Goldman misled investors by failing (more…)

by Los Angeles Times

Washington » Two former top executives of Citigroup Inc. on Thursday publicly apologized for the financial crisis and the near collapse of the giant firm that required a taxpayer bailout of $45 billion.

“Let me start by saying I’m sorry. I’m sorry the financial crisis has had such a devastating impact on our country,” former chief executive Chuck Prince told the federal commission investigating the causes of the financial crisis. “I’m sorry that our management team, starting with me, like so many others, did not see the unprecedented market collapse that lay before us.”

Citigroup, like every major bank in America, is unethical from top to bottom. The banking industry has gradually evolved from being the most respected institution in America to the most despised. In the old days the bank president was the most important and most respected person in town. Now there are no bank presidents in town. The big banks have bought up all the small banks and the presidents are officed on Wall Street and spend their days on Pebble Beach, checking their emails to make sure that the underlings are properly ripping off the American people with immoral overdraft charges and usurious interest rates and fees. The banking industry is an American nightmare, the result of unregulated, free market, ideology that has no place in the banking system. Being in the banking business used to be a privilege and required the founders of any bank to have impeccable reputations before being licensed. Now if you work for a bank the first thing you should to do when you go home is to take a shower and get all the dirt off.

Prince’s mea culpa came on the second of three days of hearings by the Financial Crisis Inquiry Commission into the subprime mortgage meltdown. He was followed by former Citi board chairman, Robert Rubin, who expressed regret for the failure of the firm and others to see the approaching financial turmoil.

“Almost all of us in the financial system, including financial firms, regulators, rating agencies, analysts and commentators, missed the powerful combination of forces at work and the serious possibility of a massive crisis,” said Rubin, who served as Treasury secretary under President Bill Clinton. “We all bear responsibility for not recognizing this, and I deeply regret that.”

Citigroup has been the most contrite of the firms that received a major bailout, and because of the large amount of assistance it received, has been a major focus of lawmakers and the panel investigating the crisis.

Last month, Citi’s current chief executive, Vikram Pandit, publicly thanked taxpayers (more…)

Washington » Former Federal Reserve Chairman Alan Greenspan defended his legacy Wednesday, telling a special panel that’s looking into the origins of the financial crisis that insufficient bank capital and poor business decisions brought the nation to the brink of ruin, and it wasn’t his fault.

Greenspan’s appearance before the congressionally created Financial Crisis Inquiry Commission was much anticipated and didn’t disappoint. It included revelations that the Fed’s own internal reviews had found insufficient policing of Citigroup, which taxpayers later rescued. A regulator whom Greenspan had silenced also grilled him mercilessly.

A former regulator who had been previously silenced by Alan Greenspan got HER chance to speak at the Financial Crisis Inquiry Commission hearing and she didn’t mince any words. Good for her. It may take a woman to break up the ‘good ol’ boys network’ that continually lines their own pockets at the expense of the hard working American people who abide by the rules and get sheared.

“The Fed utterly failed to prevent the financial crisis,” Brooksley Born told Greenspan, after reeling off a litany of what she called failures by the central bank that helped bring about what Greenspan himself now labels the worst financial crisis ever.

Born was the chairman of the Commodity Futures Trading Commission in the late 1990s, and her unheeded warnings to Greenspan and other top Clinton administration officials came back to haunt the nation.

On Wednesday, she tried in vain to get Greenspan to acknowledge deregulating the markets in 2000 allowed for an explosion of complex insurance-like products called credit-default swaps, which helped spark the collapse and rescue of insurer American International Group.

Greenspan said those products weren’t an issue at the time of deregulation, but Born reminded him they became one of the principal causes of the financial meltdown in September 2008.

“Are you aware that the collapse of AIG was (more…)