9/17/2006

Neways Founder Sent to Prison
Tom and Dee Mower Sentenced For Tax Evasion


A U.S. District judge in Utah has sentenced Tom Mower to 33 months in prison for failing to pay taxes on over $1 million in sales from Neways Australia and on $3.2 million in commissions the couple earned from highly positioned distributorships they held in the their U.S., Australian and Malaysian operations. Tom Mower was also fined $75,000 and ordered to pay $200,000 in back taxes. Dee Mower was fined $60,000 and ordered to pay $89,000 in back taxes. They are jointly liable for the $14,255 cost of the jury trial. The couple is now free on their own recognizance until their prison term begins on November 13th.

Also sentenced to prison (for one year) was James Thompson who served as counsel for Neways from 1995 to 1997. Thompson was found guilty of conspiracy in his efforts to assist the Mowers in defrauding the IRS. The Mowers contended that the income was actually loans from Neways Australia to Neways USA, and that they did not personally benefit from the funds. Thompson was accused of manufacturing a fake loan document to support the Mowers' claims.

The Mowers, who have been divorced for six years, are in the process of selling the company and have not been actively involved in its day-to-day operations for several years. They were originally indicted in December of 2002 and convicted in February of 2005. The maximum penalty they could have received was 5 years in prison and $250,000 in fines.

To read local news reports view these links:

http://www.heraldextra.com/content/view/193206/4/

http://kutv.com/local/local_story_257111513.html

http://deseretnews.com/dn/view/0,1249,600119681,00.html

http://www.sltrib.com/business/ci_4336239

Commentary:

Images & Attitude was the original name of Neways Inc., although it was routinely referred to as simply "Images". The company changed its name claiming a trademark conflict with another non-MLM company called Images & Attitudes. However, in September of 2002 they purchased the assets of Images & Attitudes, so it was never completely clear as to why the name was changed to Neways at about that same time, nor why Images had to be completely closed down and an entirely new corporation needed to be formed to accomplish this. My theory? By doing this the company, which was actually almost five years old, could now claim to be a "ground floor, start up" opportunity again – and could require all existing distributors to purchase all new marketing materials and newly labeled product inventory (although the new distributor kit was not a required purchase, just a necessary one, all Images reps were required to reenroll into Neways). This is a fairly common tactic for stalled MLM companies trying to reignite growth, and historically it often works. For example, Emprise International was floundering until they morphed into Mannatech (which is now one of the largest MLM companies in the U.S.). VitaCube reignited growth after turning into Xelr8. Monarch Health Sciences took off after shifting to Monavie. And sure enough, it worked for Images International as well. It took them five years to reach annual sales of $9 million worldwide. After relaunching as Neways sales rose to $20 million in 1993, $49 million in 1995 and then $144 million in 1996.

Back in March 1992 I was sent an internal report showing the top 200 or so commission checks issues by Images for the previous February pay period (from an inside source). Three of the only 37 checks of over $1,000 were issued to a Mower. The second highest check, for $11,660, was issued to Thomas E. Mower.

I don't really have a problem with corporate heads or company founders having positions at the top of the tree. I kind of like the idea of their income being, at least in part, based on the same pay plan as their distributors (in fact, in the MLM company I once owned and operated these top commission earning positions were the only way I was compensated!). But it does go to show that a significant portion of distributor commissions, at least back then, was in fact going to Tom Mower.

When I reviewed both Images and Neways for my MarketWave newsletter back in 90s (when I used to do Consumer Report style reviews of MLM programs) I interviewed several current and ex-employees of the company, and was hard pressed to find one that had anything positive to say about Mr. Mower. Most of the negative opinions, which were sometimes extreme, generally related to ethics and trust issues. However, I had the opportunity to speak with Mower on two occasions and found him to be likable and forthcoming. The only challenge I personally had with him was his company's bogus, and completely unnecessary "harmful ingredients" campaign. This scare-tactic propaganda concerning the dangers of various ingredients in personal care products (Sodium Laurel Sulfate, Propylene Glycol, etc.) was disingenuous at best, and in the opinion of many (including me) completely fraudulent at worst (if you are one of the believers of this hogwash, I only ask that before you flame me that you please read the exposé I wrote on this subject HERE).

It should also be noted that the Mowers have been very generous and philanthropic with their funds over the years, including the support of an orphanage in Costa Rica and a school for the disabled in Russia.

But it's of no matter when those funds were supposed to go to the IRS.

Len Clements
MarketWave, Inc.


 

  Since 1989, Leonard Clements has concentrated his full-time efforts on researching and analyzing all aspects of Network Marketing. He is a professional speaker and trainer, and currently conducts "Inside Network Marketing" seminars throughout the world. Len is the author of the controversial book "Inside Network Marketing" (Random House) and the best selling cassette tapes "Case Closed! The Whole Truth About Network Marketing" and "The Coming Network Marketing Boom." He is a court recognized expert in the field of network marketing.

  To receive additional information about MarketWave and its products, please call 1-800-688-4766, or write to MarketWave, Inc., 1572 Rock Island Lane., Las Vegas, NV 89110, or visit
www.marketwaveinc.com.