The Southwestern Company - Part 1: Walks Like a Duck, Quacks Like a Duck, Duck

The group operates a web of companies and employs hundreds of independent contractors who are used to disguise their criminal activities.

The multi-million dollar McMansion in Nashville, owned by Spencer Hays, a major owner of the Southwestern Company, who is reputed by Forbes to have a net worth of $400 million. Courtesy: Google Maps

(EUGENE, Ore.) - This is a story about The Southwestern Company. It is based on months of observation of Southwestern Company workers, interviews with many workers, and extensive research into the Southwestern Company, the web of companies related to it, its executives and owners, and their campaign contributions and extensive connections to leading Republican politicians.

The Southwestern Company hires independent contractors to go door-to-door selling educational books across the United States, in Oregon, and in Salem. The individuals who sell books for the company, who are mostly college students, stay with host families during the summer, while they are selling books. The Southwestern Company, through various subsidiaries, also does school fundraising, sells natural foods and cook books, and operates an investment company.

The Southwestern Company is and has been engaged in a highly organized criminal operation that includes tax evasion, money laundering, illegal immigration violations, labor law violations, and ruthless exploitation of workers. The mother of a Salem family that has hosted Southwestern Company employees for several years had this to say: “They are all here to make money. They will take whatever they can.”

A Southwestern employee, who worked in Texas for three weeks, told a story of being thrust into a foreign environment. He arrived in Texas with nowhere to stay, and had to go door-to-door, asking people for a room. After three weeks of walking around in the hot sun, begging strangers for their kindness, he was sufficiently traumatized to pack his bags and go home. He said it was the worst experience of his life.

The Southwestern Company tells its independent contractors that they should work 12 hours a day, six days a week. On the seventh day of the week they are required to spend 8 hours in group activities with their fellow workers. The Company provides them with nothing. No housing, no pay, no support. Only rules that they should follow and a script for the products they are supposed to sell.

The Southwestern Company’s rules include taking cold showers in the morning to compensate for sleep deprivation. No cell phones and limited contact with family and friends, in order to maintain focus. No eating meals at their host family’s home, or returning to their temporary home during working hours.

These “rules,” which are illegal to impose on independent contractors, are described by the company as “suggestions.” They are enforced by “team leaders,” who are independent contractors who have already finished a year working for the company, and get a percentage of the sales from their new underlings.

Independent contractors working for the Southwestern Company have no source of income other than the sales they make. If they do not make their sales, they cannot pay their rent, or eat. Since the Southwestern Company makes a point of moving its sales agents away from their homes and isolating them from their family and friends, this provides a powerful incentive to maintain the company’s “recommended” 80 hour working week.

The Southwestern Company was built over decades using an all American workforce, but more recently they have shifted their recruiting to focus on Eastern European countries.

Foreign employees of the Southwestern Company pay for their own tickets to the U.S. and their own Visas. In some cases, their recruiters hold their return tickets until they complete their work duties. The Southwestern Company requires foreign employees to work after their Visas have expired, exposing them to charges for Federal immigration violations. Employees are also required to open their own bank accounts in order to process payments, potentially exposing them to State and Federal money laundering and tax evasion charges.

Bedford Estate in Franklin, Tennessee.

According to the Southwestern Company, these business practices are designed to “build people” by helping them “develop character,” “fostering respect,” “developing aspirations,” and “expecting excellence.”

The Southwestern Company CEO, Henry Bedford, Lives on a multi-acre estate in Franklin, Tennessee, on the outskirts of Nashville. His massive home, surrounded by woods, overlooks a man made private lake.

Spencer Hays, a major owner of the Southwestern Company, is reputed by Forbes to have a net worth of $400 million. He owns a multi-million dollar McMansion in Nashville, along with an apartment at 778 Park Avenue in New York, where units sell for $25 million.

The Southwestern Company operates a web of companies and employs hundreds of independent contractors who are used to disguise their criminal activities. The owners, executives, and former executives of the company, whose collective worth runs into the hundreds of millions of dollars, run even more companies outside of Southwestern’s corporate sphere.

The Southwestern Company donates heavily to the Republican Party. Their executives have given thousands to the likes of John McCain, Mitch McConnell, and Lamar Alexander: some of the most influential Republican politicians of the last two decades.

Former Southwestern Company employees include Jeff Sessions, U.S. Senator from Alabama; Marsha Blackburn, U.S. Congresswoman from Tennessee; Rick Perry, Governor of Texas; and Ken Starr, the infamous “Whitewater Investigator” of Bill Clinton.

The Southwestern Company is headquartered in Nashville, Tennessee. The company started out selling Bibles door-to-door. The connections of their executives and employees to evangelic Christian organizations remain strong. The connections they share are largely the same as those of their Republican politician friends.

In Part 2 of this series, “A RICO Case,” I will lay out the evidence and arguments that demonstrate a widespread and ongoing pattern of racketeering activity by the Southwestern Company that includes multiple levels of tax evasion, money laundering, and false income tax reporting. In addition, I will provide evidence of organized and intentional violations of U.S. immigration laws.

In Part 3 of this series, “Web of Deceit,” I will connect the dots between the dozens of shell companies, political action groups, multi-millionaires, Republican politicians, and evangelical Christian groups that make up the web through which the Southwestern Company asserts its influence and extracts its illegally gained profits.

Editor's note: This story was modified on 24 Feb. 2010 with various changes to meet the needs of a retraction demand from this company. To learn more visit: Retraction: The Southwestern Company - Part 1: Corporate Mafia

Ersun describes his writing as being "in the language of the boardroom from the perspective of the shop floor." He adds that "he has no education in journalism other than reading Hunter S. Thompson." But along with life comes the real experience that indeed creates quality writers. Right now, every detail that can help the general public get ahead in life financially, is of paramount importance.

You can write to Ersun at: warncke@comcast.net

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Well it sounds like running a business, which if you ever have you start from the group and and work a lot of hours to have a better income than the average job or in this case summer job. I have a good handful of friends who have done well and paid for school this way. They definitely came back more responsible.

This company is very manipulative and makes you believe that you can go out there and get your own housing from strangers. The only problem is, is that there is no back up plan. It is what it is. Its a huge set up for failure if you don't have the financial backing to support yourself. I spent my first 8 weeks in hotels. Not any hotels but ones with drugs and hookers all around us, because it was cheapest. The money I saved up for a new car went to that. I know a lot of friends who wished they never had been "recruited." I myself wish I never spent a summer of my life with them. I ended up using a lot of my sales for all my living expenses and trust me it wasn't luxurious. They insist you spend $20 a week on food. I was eating peanut butter and jelly sandwiches for breakfast, lunch and dinner. Southwestern is not helping anyone out but themselves. Don't be fooled students. I feel bad for the foreign student the most.

please tell me this is a joke. I spent my college years selling books. for sw. Since college i have started and sold several successful companies. Many of the things I learned from my summers at sw were the very things that helped me to thrive at those endeavors.

Almost every summer I have purchased books from this company. Not because they are so wonderful, but mostly because I want to help out the foreign exchange students. In fact, my kids rarely even open these books. Last summer I again agreed to buy some more books. However, I was very clear I did not want to make any other purchases and I did not want to be signed up for any additional books. Five months later a book arrives which I did not order. I returned the book and requested not to be sent anything else. Now I find out they have started charging my credit card $19.95 a month for some kind of on-line service I never ordered! This company is extremely deceitful and is using very aggressive and in my opinion fraudulent sales tactics. I would caution people to stay away from this company and do not make any purchases with them. They are like a nasty virus you can’t get rid of!!!!

So, apparently, hard-working college students are now a bad thing??? No one forces these kids to work the whole summer and no one forces the parents to buy these education books for their kids. The students are out there making a living for themselves; this is the American dream playing itself out. Why is that a bad things? It's sales. It's not the critic who counts, Ersun. Awful article.

Thanks for this article. I got a suspicious phone call yesterday that said someone within the Marketing dept. at the University (which I'm a student in) "referred" me. So, I went to an info session and they told me how great it is and that I would only have to work 80 hours a week and it's a super selective process in which the choose "only the best candidates". I have an interview with them on Wednesday and they told me I would be leaving the day after graduation if they liked me. I've been approached before by Amway people and I got that same feeling. After typing in "Southwestern textbook review" and many a similar page came up (including this one) I think I know my answer to their offer. Thank you so much for providing a lost and confused upcoming graduate with some insight into the background of this company.

FYI - Rick Perry is not the "former" governor of Texas. He is the "current" governor of Texas.

Editor: Your help is appreciated, that change has been made, thank you.

Great job, Ersun; exposing fraud is always a good thing. Your descriptions of this organization's "business practices" are remeniscent of many a fanatical cult, in that its "members" are required to give up nearly everything they have to benefit the leadership. Very scary stuff, but I get the feeling there's a lot more of this going on than anyone is aware of. The use (abuse, really) of immigrants for these types of scams is particularly egregious, as these people are more susceptible to coercion and bribery to maintain their immigrant status. I'll be looking forward to your follow-up and finale.

Second rate bible thumping pigs. Most foul swine, ripe for a liberating story of defeat against them. I see their satanic blood-red-and-black eyeballs quivering with a murderlust against their own church quire. (okay I think I was channeling Hunter S Thompson for a second...)

Marsha Blackburn Voted FOR: Omnibus Appropriations, Special Education, Global AIDS Initiative, Job Training, Unemployment Benefits, Labor-HHS-Education Appropriations, Agriculture Appropriations, U.S.-Singapore Trade, U.S.-Chile Trade, Supplemental Spending for Iraq and Afghanistan, Prescription Drug Benefit, Child Nutrition Programs, Surface Transportation, Job Training and Worker Services, Agriculture Appropriations, Foreign Aid, Vocational/Technical Training, Supplemental Appropriations, UN “Reforms.” Patriot Act Reauthorization, CAFTA, Katrina Hurricane-relief Appropriations, Head Start Funding, Line-item Rescission, Oman Trade Agreement, Military Tribunals, Electronic Surveillance, Head Start Funding, COPS Funding, Funding the REAL ID Act (National ID), Foreign Intelligence Surveillance, Thought Crimes “Violent Radicalization and Homegrown Terrorism Prevention Act, Peru Free Trade Agreement, Economic Stimulus, Farm Bill (Veto Override), Warrantless Searches, Employee Verification Program, Body Imaging Screening. Marsha Blackburn Voted AGAINST: Ban on UN Contributions, eliminate Millennium Challenge Account, WTO Withdrawal, UN Dues Decrease, Defunding the NAIS, Iran Military Operations defunding Iraq Troop Withdrawal, congress authorization of Iran Military Operations. Marsha Blackburn is my Congressman. See her unconstitutional votes at : http://tinyurl.com/qhayna Mickey

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