The Daily Herald recently ran a story written by Grace Leong where the writer noted that the 10th U.S. Circuit Court of Appeals upheld the income tax fraud and tax evasion convictions of Neways’ founders, Thomas and Leslie DeeAnn Mower, and their former corporate lawyer, James Thompson.
The article goes on to point out that “Thomas Mower Sr. and his ex-wife, Leslie DeeAnn, founders of the Springville-based direct seller of supplements and personal care products, along with Thompson, an Orem attorney who was disbarred in September 1999, claimed, among other things, that they were convicted on insufficient evidence. But their appeal, which included sentencing issues and trial errors, was rejected by the Denver-based appellate court, according to a 75-page ruling.”
The Mowers, who divorced in July 2000, were indicted in 2003 for failing to pay personal income tax on about $3.2 million, which federal prosecutors say came from their companies Neways U.S., Neways Australia and Neways Malaysia from 1992 through 1997. They were also accused of failing to report another $1.26 million in income they received from their companies during that period.
“A federal jury in 2005 found the Mowers guilty of six counts of income tax evasion and one count of conspiracy to defraud the Internal Revenue Service. Mower began serving his 33-month sentence in federal prison in November 2006, and will also serve 36 months of supervised release and pay a fine of more than $75,000. Leslie was sentenced to 27 months in federal prison, which she began serving also in November 2006, as well as a $60,000 fine and 36 months of supervised release.
Thompson, who was found guilty of one count of conspiracy to defraud the IRS and one count of corruptly interfering with the administration of tax laws, was sentenced to spend 12 months and a day in prison and 24 months of supervised release.
The 10th Circuit Court cited the IRS investigation of the Mowers, which found the couple “frequently opened bank accounts under incorrect Social Security or employer identification numbers.” The ruling said Thomas Mower tried to avoid paying taxes on cash he brought into Neways US from Neways Australia by recording these monies either as “prepayment” for product that it later sent to Neways Australia, or as loans.”
In May 2007, the same federal court ordered Sisel, its owner Thomas Mower, Sr., and several of its employees to return all copies of Neways’ product formulas, vendor lists, and distributor lists, and prohibited them from continuing to use that information. Two months later, a Utah state court entered an order against Sisel distributors Jef and Patricia Welch restraining them from recruiting any present Neways distributor to participate in another multi-level marketing company. As a result of the federal court’s recent ruling, a similar restraint is now in place against Mr. Yamomoto, Ms. Matsumoto, and Mr. Egashira.
Neways is no stranger to negative press - primarily when the Mowers were running it. Back in October, 2003, the company pleaded guilty to a felony count of illegally distributing a product containing human growth hormone. The product, called BioGevity, was was touted as having a rejuvenating effect, including having the ability to “lower cholesterol, lower triglycerides, increase IGF-1 levels [insulin-like growth factors], improve sexual frequency, decrease wrinkle appearance, [and] increase body fat loss.” Neways’ promotional material also claimed that its oral spray was the equivalent of injectable HGH.
In 2002, Neways founders and owners Thomas and Leslie DeeAnn Mowers surrendered executive control of the company after being charged with tax evasion and conspiracy for allegedly failing to report $3 million in commissions on overseas sales of cosmetics and health supplements. A subsequent indictment charged former Neways corporate attorney James Thompson of Chandler, Arizona, with conspiracy and obstructing an IRS investigation and lodged a second conspiracy charge against the Mowers, saying all three tried to conceal an additional $1 million in Neways sales.
The Mowers sold Neways to Golden Gate Capital, a $3B San Francisco private equity firm, five days before they began their prison sentences on Nov. 13, 2006.
As you may know, the Mower’s latest venture Sisel is run by Tom Mower. This company seems to spend more time in the court room than developing products. Even their corporate website is very unusual in that it contains links to some very odd sites (which may be ads) but who knows.
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We have prepared our own list of companies to watch for 2008:
“Through SISEL, we are launching a family of health and personal care products that meet the highest standards for safety and efficacy,” said President Darick Mower. “Our products are aligned with consumers’ growing demand for breakthrough products that regenerate, build and protect the body to provide the highest possible quality of life.”
