Canada has reportedly asked the U.S. government to extradite the founders of Amway Corp. and two other top company officials on charges they defrauded Canada of more than $23 million in customs duties.
The extradition request, reported over the weekend in news accounts, follows a year-long battle between Canadian officials and Amway, which sells personal products through a network of neighborhood distributors.
"The ball is in the State Department's court now, it's not in Canada anymore," Giles Favreau, head of Royal Canadian Mounted Police investigation in Ottawa said, in wire service reports Saturday.
The exact status of the dispute was not clear. There was no comment by either the State Department or Justice Department, both of which would have to act on such a request. And Amway spokesman Casey Wondergem said yesterday that the company has not been told of an extradition move. "We haven't heard from Canadian authorities since November," Wondergem said.
Canadian authorities contend that Amway created a system of false invoices and price lists that were intended to conceal the true prices of Amway products shipped to Canada between 1965 and 1980, according to a criminal fraud suit filed last November.
The fraud suit also accused Amway founders Jay Van Andel, chairman, and Richard DeVos, president, along with vice presidents C. Dale Discher and William J. Halliday. In a related civil suit, officials of Revenue Canada are trying to recover $118 million in customs duties, taxes and penalties, which it says are owed by Amway.
Amway, the second-largest direct sales company in the United States, after Avon Products Inc., has denied wrongdoing.
The four executives refused to appear voluntarily before the Canadian court hearing the criminal fraud charges last November, as DeVos said he didn't believe they could get a fair trial in Canada. Instead, Amway launched a $225,000 "truth campaign" using newspaper advertisements to attack Canadian authorities.
But Amway last month dropped another campaign to defend its name, giving up its threat to file a $500 million libel suit against the Detroit Free Press. A Free Press story on Aug. 22, 1982, first raised the issue of alleged fraud by Amway, saying that company officials had fabricated invoices and other documents in order to cheat Canada out of millions of dollars in duties and import fees.
Amway had one year from the date the story appeared to file its suit, but let the deadline pass. "The fact that Amway Corp.'s tariff dispute with Revenue Canada is still unresolved in the courts means that Amway cannot fully air the facts in this libel suit with the Free Press," Wondergem said in a statement last month.
Free Press Executive Editor David Lawrence Jr. said, "We thought all along that we had taken every effort to make sure the story was truthful, fair and full . . . ."
Amway reported sales of $1.2 billion for the fiscal year ending last September, with about $100 million of that from Canada.
Its products--soaps, cosmetics and other home products--are sold through some one million distributors worldwide, who buy the goods from Amway and then resell them. Amway distributors are encouraged to enlist new distributors and receive payments based on the sales of these recruits.
The Canadian authorities charge that Amway transferred its goods to U.S. warehouses at artificially low prices--below what Amway distributors in Canada would pay for the goods. This lowered the basis for Canadian duties.