Mimi’s Cafe in Sandy isn’t exactly a biker bar, but in April 2012, the family-friendly diner did play host to a crowd that might’ve been a little rougher around the edges than usual. While not decked out in leathers or sporting face tattoos, the crew that showed up that morning for breakfast was involved in an industry that’s been the subject of increasing state and federal scrutiny.
These were men of the Online Business Opportunity (OBO) industry, a business community of telemarketers who pitch consumers across the country on what critics call too-good-to-be-true programs. These programs promise to teach people how to set up their own websites or build their own businesses, but often leave customers with nothing to show but maxed-out credit cards.
At this particular confab, OBO leaders met over omelets and coffee to get to know the man who some of them hoped would be the new leader of their pack: John Swallow, then a candidate for Utah attorney general.
The Mimi’s breakfast was one of two Swallow fundraisers hosted and emceed by Robert Montgomery, a call-center owner with a checkered criminal past who got his start in the OBO industry as a salesman for IWorks, a St. George-based company whose founder, Jeremy Johnson, is currently under indictment for allegedly having defrauded thousands of Americans out of $275 million.
City Weekly has been reporting on companies like IWorks and their connections with the Utah Attorney General’s Office since 2008. Members of the industry have donated heavily to Shurtleff’s and Swallow’s campaigns for various offices. The Attorney General’s Office is tasked with prosecuting those same companies for consumer fraud if complaints are brought forward by the Utah Division of Consumer Protection. But the media and the public are left in the dark about a potential conflict of interest if a donation is never reported in the first place.
Companies that were invited to attend the fundraisers donated at least $27,750 to Swallow’s campaign coffers, as noted on Swallow’s campaign-disclosure documents. Montgomery says he paid for the costs of the fundraisers, including meals and raffle prizes. According to a former employee of Montgomery’s business, Emmediate Credit Solutions, Montgomery spent roughly $2,000 on the fundraisers. But neither Montgomery nor Emmediate Credit Solutions (ECS) was reported on Swallow’s official campaign records.
The purpose of campaign-finance disclosures is to give the public the chance to see how much a special interest gives a politician and decide for themselves whether the donation represents a show of support or a down payment on future back-scratching. The public can’t make those determinations for themselves when donations aren’t reported.
Swallow’s campaign manager, Jason Powers, wrote via e-mail to City Weekly that “Attorney General John Swallow and his campaign are unaware of any political contribution, monetary or in-kind, received from Mr. Montgomery.”
The mystery donation raises questions about Swallow’s conduct while running for office. Swallow is already facing investigations from almost every level of government. Federal officials are investigating IWorks founder Jeremy Johnson’s claim that Swallow helped facilitate a bribe of Sen. Harry Reid, D-Nev., to derail a Federal Trade Commission investigation into Johnson’s company. Swallow is being probed by state investigators for the Johnson connection, as well as for receiving gifts from convicted white-collar criminal Marc Jenson. The Legislature has officially deputized a panel to investigate whether Swallow is fit to be a public servant. He’s also being scrutinized by an outside law firm, contracted by the Lieutenant Governor’s Office, to look into a complaint filed by progressive group Alliance for a Better Utah that says documents were inappropriately changed on Swallow’s official conflict-of-interest records.
According to former employees, Montgomery and Swallow often met behind closed doors. During an ECS company meeting, Montgomery announced that Swallow would be able to keep federal regulators off his back.
Montgomery says that there was nothing nefarious in his relationship with Swallow. Montgomery says that Swallow asked him to introduce him to his associates in the industry, and his perhaps naïve vision was simply to support the right candidate for office.
“I just hoped too high is all,” Montgomery says. “I wanted to build relationships in government to change the world and change the way our country and state is run ... all of it.”
Desperate Circumstances
According to Montgomery’s LinkedIn profile, he got his start in the OBO world at IWorks in St. George, working for Jeremy Johnson. Johnson was indicted in 2011 for allegedly having defrauded hundreds of thousands of Americans out of $275 million through IWorks by tacking hidden charges onto consumers’ credit cards after they purchased a program from the company on how to apply for government grants.
The OBO industry markets itself as a kind of do-it-yourself resource—helping people who are in dire straits to help themselves by making money on the side, perhaps selling goods on eBay or launching their own Internet business. The bread and butter of the industry, critics say, are desperate people.
Gina DeMaria and her fiance, Carley Smith, were in desperate circumstances in 2012 after having their credit pummeled as Smith battled in court with his former employer over a disability lawsuit.
Smith had worked cleaning up electric trains in Sacramento, Calif. He’d replace ruined seats and move heavy “vandal windows”—window shields that could be easily replaced if marred by graffiti—off the trains nearly every day. One day, while removing an engineer’s seat from a train, he suffered a debilitating back injury. Smith couldn’t afford to stop working, though, so for the next three years, he fought through the pain, using his upper body instead of his injured back.
“After three years of doing that, my arms just went numb,” Smith says. “It got so bad, I couldn’t even hold my arms on the steering wheel of my car.”
A co-worker encouraged Smith to take his employer to court, which he did. After five years of expensive litigation, Smith got 100 percent disability and a sizable settlement from his former employer. But being unable to work during that time destroyed his credit and DeMaria’s.
In summer 2012, several months after Smith won his settlement, the couple decided to buy a house but realized they needed to do something about their credit. They clicked on FHAHomeMortgages.com, which they thought was an official government website, and filled out a survey about their credit. They wouldn’t find out until later that the site was a private website operated by something known in the OBO industry as a lead provider. Lead providers collect personal information to sell to companies like Robert Montgomery’s Emmediate Credit Solutions, based in Murray.
DeMaria and Smith say that representatives from Emmediate Credit Solutions were soon calling and informing the couple that they would need to have their credit repaired before they could qualify for a federal home loan. DeMaria says they thought that they were speaking with a representative of the government at the time. They signed up for ECS’s credit-repair program and, after paying roughly $100 in upfront fees, started having $59 deducted every month from their bank cards.
The company kept charging the couple for months while, they say, they saw no improvement in their credit score. When they complained to ECS, they say, the fees got knocked down to $39 and then $29 a month. ECS ultimately took $748 total from the couple before the couple terminated their relationship with ECS.
No one from ECS, the couple says, could show them that any work had been done to repair their credit.
“They say they’ll do anything to fix our credit,” DeMaria says. “But they just took our money.”
Montgomery didn’t recall the specifics of that case but says the number of complaints has gone down recently since the company created an online system for following the progress staff makes on clients’ cases.
“Usually, if our clients are unhappy, we will refund them their money,” Montgomery says. “We have a pretty liberal refund policy.”
The couple did eventually get a full refund from ECS, but they say it didn’t happen until after they told the company that a City Weekly reporter was asking about their experience.
A Business in the Shadows
According to former employees of ECS, the company had a history of doing well at signing clients up and billing them, but would regularly neglect to do any work on their behalf.
One former ECS employee, Rena Andrus, says the ECS business model was to sign clients up and then mail dispute letters to their creditors to challenge negative credit reports. But she says that through at least the first half of 2012, boxes of dispute letters would pile up and sit unmailed until Rob Montgomery would instruct staff to toss them in the garbage. According to Andrus and other former employees, the company kept billing clients even though they weren’t doing work for them.
Montgomery says this never happened.
Employee X, who worked with Montgomery at Emmediate Credit Solutions and has asked to not be named for fear of reprisal from Montgomery, says it was practices like the unworked files that motivated Montgomery to become friendly with Swallow, who was then running for attorney general.
“Rob [Montgomery] was worried every day about the FTC coming and knocking on his door,” Employee X says.
