Now we turn our attention to Frank L. VanderSloot, the billionaire businessman whose privately-held company, Idaho Falls-based Melaleuca, is one of the biggest donors to the super PAC backing Mitt Romney (Restore Our Future). He's also national finance co-chair of the former Massachusetts governor's campaign (somehow avoiding the legal barriers that are intended to keep super PACs separate from candidates' campaigns).
Writing about VanderSloot is a riskier endeavor than covering Adelson or Friess: As Glenn Greenwald of Salon.com has explained, VanderSloot is in the habit of threatening to sue just about anyone who puts his name in print, from local bloggers to Forbes magazine. Like Greenwald, we at DailyFinance won't be deterred.
Turning Aussie Trees into a Healthy Pyramid
In 1985, VanderSloot, at the time a regional vice president at Cox Communications, "took over what was then a small and poorly managed company" selling "a handful of products tied to the melaleuca" -- an Australian shrub known for the antiseptic and analgesic properties of its leaves, from which tea tree oil is extracted. According to Forbes, VanderSloot's colleagues at Cox "were so skeptical of his move that as a parting gesture they set up a tree and strung tea bags from it."
Their skepticism was well founded: VanderSloot found the company in worse shape than he'd probably imagined. Instead of owning 80% of the tea trees in Australia, it owned closer to 5%. More troubling, the health value of the plants' oil -- the whole basis of the business -- was itself questionable. Inventory was accumulating in distributors' depots; something drastic had to be done.
So VanderSloot changed everything. He bought all the inventory, trademarks and product formulas; he gave the company its current name; and he hired a research and development department tasked with cooking up new recipes. They eventually garnered nine U.S. patents in the process of providing VanderSloot with products like an energy bar that is said to inhibit a fat-burning-prevention enzyme, and benzophenone-infused shampoo that is supposed to prevent sun damage to hair.
To sell these wares -- and "350 other household and 'health' products" -- VanderSloot relies on what Forbes describes as "an army of part-time hucksters." For Melaleuca is essentially a pyramid scheme -- or, more politely, a "multilevel marketing firm," like Amway or Herbalife (HLF) -- in which so-called independent marketing executives make money by peddling the company's dietary supplements and cleaning products, as well as recruiting more salespeople (the newer recruits being on the lower levels of the pyramid).
This business model has been spectacularly successful for VanderSloot (who stands, of course, at the pyramid's apex). Melaleuca had $1 billion in revenue last year, according to Mother Jones, which points out the glaring disparity between the earnings potential advertised for would-be salespeople and the real income those "marketing executives" derive.
On the its website, "Melaleuca pitches itself as a means to gain the economic freedom to live your dream life -- all while working flexible hours at home." A video shows several women who "claim to have made six-figure incomes through Melaleuca," Mother Jones reports. "One says she's earned more than $500,000."
The actual annual average earnings of a Melaleuca salesperson: a paltry $85 a year.
But VanderSloot himself was upfront when he spoke with Forbes. "This is not a get-rich-quick scheme," he said of work as a "marketing executive." Still, he insisted that the money earned by an industrious member of his sales force could "make a real difference to a family earning $30,000." VanderSloot takes thriftiness seriously, insisting that his salespeople stress the economy of using Melaleuca's laundry detergent (16 cents per load, as compared to Tide's 28 cents) and making his 14 children sign contracts in which they agree to work during the school year and summer.
His Start in Politics: Fighting TV That Could Turn Kids Gay
"Family values" rank high among VanderSloot's priorities, and seem to have fueled his involvement in politics, which began in 1999. That year, VanderSloot helped to underwrite an Iowa-wide billboard campaign protesting a documentary that was to be broadcast on public television, that tried "to show how teachers are dealing with homosexual issues that may come up in class or on the playground," in the words of the Spokane, Wash.,-based Spokesman-Review. "Proponents hope greater awareness will promote greater tolerance and decrease hostile incidents against homosexuals," the paper reported.
To VanderSloot, the program threatened to turn children gay.
Two years later, Forbes reports, VanderSloot "supported radio and TV spots knocking Morgan Stanley (MS) Dean Witter's Idaho Falls office because its New York headquarters had invited former President Clinton to speak at its bond conference." In 2002, one of VanderSloot's favorite causes, Concerned Citizens for Family Values, bought ads against a candidate for state attorney general, a trial lawyer whom VanderSloot called "a liberal's liberal." When Idaho's Republican Senator Larry Craig had to step down -- after being caught in a "wide stance" during an airport men's room sting -- VanderSloot rented his LearJet to Lt. Governor Jim Risch as the latter campaigned for the vacant seat. Risch won. And in 2008, VanderSloot's wife gave $100,000 to the cause of passing Proposition 8, California's ballot initiative banning same-sex marriage (which the Ninth Circuit Court of Appeals recently found unconstitutional).
Earlier this month, a writer for The Sacramento Bee described VanderSloot as "perhaps the single most influential campaign donor" in Idaho: "Over the years, he has helped fund an array of candidates, including governors and Idaho Supreme Court justices, and has taken on varied causes, challenging rules restricting the sale of raw milk and attacking public school teachers unions." Now, however, VanderSloot has become a financial figure of national significance -- because of Citizens United, and Willard Mitt Romney.
Why VanderSloot Backs Romney
Not only is VanderSloot national finance co-chair of the Romney campaign, his company and its subsidiaries have donated $1 million to the super PAC backing the candidate. VanderSloot personally gave the Romney campaign $2,500 -- the nominal sum that remains the maximum direct donation to a candidate -- and hosted fundraisers during the current contest and the 2008 race.
So why is the former Massachusetts governor VanderSloot's candidate? There is biographical commonality between them -- both are Mormons and attended Brigham Young University in Utah -- but the choice seems somewhat paradoxical, given VanderSloot's passion for social conservatism, and Romney's inconsistent record on related issues. Remember Romney's claim, made in a letter to the Log Cabin Republicans during his 1994 Senate bid, "that he would be a stronger advocate for gay rights" than his opponent in the race, Ted Kennedy? "We must make equality for gays and lesbians a mainstream concern," Romney wrote to the gay Republican group. He later reversed himself, opposing both gay marriage and civil unions in his run for governor.
According to VanderSloot -- who said in a recent statement responding to Greenwald's scrutiny, "I have never spoken out against gays or against gay rights" -- his support for Romney is all about business. "Gov. Romney's track record demonstrates his acumen in creating jobs and providing the leadership America needs," he has said. The admiration is mutual: On the occasion of Melaleuca's twenty-fifth anniversary, the governor made the following remarks:
Not everyone has been so admiring of Melaleuca's business practices: The "wellness company" has been targeted by Michigan regulators, the Idaho attorney general's office, and the Food and Drug Administration for various marketing violations.Under the leadership of Frank VanderSloot, Melaleuca has delivered on its promise of enhancing the lives of people. Frank's vision and sense of social responsibility is second to none and he never ceases to amaze me. Congratulations on 25 years. I can't wait to see what Melaleuca accomplishes over the next 25 years.