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Major donor in AG campaigns settles fraud complaint

Published June 24, 2014 7:29 pm

This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A Utah-born company — and major campaign donor to former attorneys general Mark Shurtleff and John Swallow — that had been accused of scamming customers out of more than $220 million has agreed to settle a federal complaint, returning more than $15 million to customers.

The Federal Trade Commission took action against The Tax Club in January 2013, alleging the company promised customers valuable tax strategies and individualized business planning, but instead gave them generic, nearly worthless boilerplate and pressured them to buy more and more products.

The Tax Club, which got its start in St. George, was just one in a long list of coaching and business opportunity — or BizOps — companies that gave generously to the Shurtleff and Swallow campaigns, only to later be accused by federal regulators of running scams bilking customers out of hundreds of millions of dollars.

The Tax Club and its various associated businesses contributed more than $165,000 to Shurtleff since 2008, campaign finance records show. Swallow brought in another $30,000 from The Tax Club's network when he ran for attorney general in 2012.

The problems in the industry have become so rampant that Sen. Curt Bramble, R-Provo, is working on legislation to give state regulators significantly expanded oversight of coaching and BizOps companies.

Under the settlement agreement, the Tax Club is required to surrender assets valued at more than $15 million. The various companies and its executives — Edward Johnson, Brendon Pack and Michael Savage — are banned from selling credit development services. Johnson cannot sell business planning or merchant account processing services. Pack and Savage are banned from most telemarketing.

If they fail to abide by the terms of the agreement, they could be liable for a judgment of more than $250 million.

"As a result of this settlement, former Tax Club executives will be giving up a substantial chunk of their personal assets," said New York Attorney General Eric Schneiderman, who filed the lawsuit against The Tax Club, along with the FTC and Florida Attorney General Pam Bondi.

gehrke@sltrib.com

Twitter: @RobertGehrke