Sorrell’s consumer protection division wins $7.1M in penalties from settlements with businesses

William Sorrell. Photo by Alec Jacobsen

Attorney General Bill Sorrell has a remarkably solid consumer protection track record, according to a VTDigger.org review of state legal records.

An analysis of about 300 documents from the Attorney General’s Office reveals that Sorell has pursued health care, financial, and telecommunications cases most often, with violations of Vermont’s lead law the fourth most common.

“It’s a noteworthy record of accomplishment, one I’m proud of,” said Sorrell, who highlighted cases of telephone billing fraud and investigations of pharmaceuticals. “It’s consumer protection that directly affects the lives of more Vermonters than probably anything else we do.”

Sorrell couldn’t comment directly on whether his consumer protection record is his strongest campaign asset or the work he’s most proud of. Opponent TJ Donovan’s campaign declined to comment for this story.

Although there is no official tally of how much the consumer protection division has won in civil penalties, expenses, and consumer recoveries over Sorrell’s tenure, a partial VTDigger.org analysis shows that under Sorrell the division has won at least $7.1 million in penalties from settlements handled by Vermont alone, without the participation of other states.

This does not include either the well-known tobacco settlement, which draws in about $25 million annually, or multistate settlements, worth vastly more than most single state settlements, from which Vermont receives sizeable shares. The $7.1 million figure also doesn’t include what the office recovers for consumers, either through refunds or donations to community groups if consumers can’t be found.

Sorrell has been criticized for expenses associated with the IMS prescription drug case, which went to the Supreme Court. His office lost the case and had to pay the company $2.2 million in legal fees. The attorney general has spent $400,000 defending the state against Entergy Corp. The annual budget for the Vermont Attorney General’s office is $8.2 million.

Wendy Morgan, chief of the public protection division, explained that there is no formula for calculating how much Vermont receives from any given multistate settlement on average. According to official figures, in fiscal years 2010 to 2013 the division won $13.4 million for the state in penalties, and also recovered $7.6 million for consumers from July 2009 to July 2012.

Julie Brill and Elliot Burg, two lead attorneys in dozens of cases under Sorrell, say the division has a very impressive standing despite its small size. Brill, now a commissioner at the Federal Trade Commission, described the division as the “absolute best” and “premier” consumer protection unit nationwide.

Sources interviewed for this story listed a handful of reasons for success under Sorrell: leadership, Vermont’s progressive state Legislature, excellent staff attorneys, and an aggressive enforcement style. Brill and Sorrell referenced Sorrell’s “giant-slayer” nickname.

Asked if there were any weaknesses in Vermont’s consumer protection advocacy, Sorrell said, “I’m not aware of any glaring weaknesses right now.” Asked the same question, Brill thought for a moment, then said, “The honest truth is, no.”

Some private attorneys and industry lobbyists, who represent companies in settlements with the AG, declined to comment on what it’s like to negotiate with Sorrell’s consumer protection unit, citing sensitive ongoing litigation.

Lawyer Robert Hemley, who has worked on cases against the unit, said carefully that while Vermont assistant attorneys general are “clearly committed to their points of view, they’re not unwilling to listen to other points of view.”

“Whether they overdo it is not a judgment I can easily make, because I’m an advocate, and I represent people who are on the other side of negotiations,” said Hemley. He added that while it isn’t uncommon for the unit to make initial settlement demands which his clients can’t accept, balances are usually struck through negotiations with the state’s attorneys, whom he praised as professional and courteous.

Former AG and attorney Jerry Diamond described the unit as “pretty tough.” He also said that the business community could have cooler views about the aggressive work of the consumer protection unit, pointing out that few businesses are likely to donate to Sorrell’s political campaign.

“Some may have contributed to Donovan, in the hopes of just sending a message to Bill Sorrell,” said Diamond, who said that from a public policy standpoint, Sorrell is rightly independent from businesses.

VPIRG executive director Paul Burns had a different take. He underscored Vermont’s leading role in pushing for more protective and stringent consumer protection laws, in issues like lead poisoning prevention and phone billing fraud. Burns said Sorrell deserves credit for being pro-active in consumer protection legislation.

Some example consumer scams

The hundreds of pages of legal documents also paint a lively picture of the consumer fraudsters themselves. While household brands like Sony BMG Music Entertainment, Nestle, or Pfizer often are featured in multistate settlements, more quirky enterprises like StuffYourOwn.com or Sisters and Brothers Investment Group LLP have been targeted by Vermont alone.

StuffYourOwn.com paid a $3,000 fine in 2010 for selling tobacco online. The “investment group” turned out to be a local landlord, fined $10,000 for failing to uphold lead poisoning standards. Hypnosis groups like the separate Gorayeb Seminars and Goen Seminars, or the Positive Changes Hypnosis Corp., falsely advertised hypnosis as a short and sure way to lose weight and quit smoking.

According to court documents, a Montpelier branch of the latter group placed newspaper ads at least 80 times within three months in the summer of 2000, with testimonials like: “I quit smoking after my first hypnosis session. My weight loss was easy, too. No stress. No fuss!”

In more serious matters, research groups are accused of asking educators for personal information about their students, and financial institutions are alleged to have allowed faulty lending practices.

Some groups who are party to the settlements may come as a surprise. Charities have been targeted for failing to adhere to fundraising laws, while small Vermont landlords often receive the standard $5,000 fines for violating lead laws. If these small-time landlords sometimes can’t pay the fine because of financial hardship, it can be waived.

In 2008, Bove’s of Vermont had to donate a full $50,000 worth of pasta sauces and frozen pizzas to Vermont Foodbank for insinuating that their products were made in Vermont, instead of in Rochester, N.Y., where their sauces are actually produced.

Sandi Everitt, former director of the Consumer Assistance Program, which handles informal consumer complaints, said that her office is usually the first to hear about popular and trending consumer fraud schemes on the ground.

Her office, staffed by two employees and many students, receives thousands of calls a year – about 6,500 in 2010 and 8,600 in 2011 – sometimes from callers who are “almost screaming” with frustration over their problems.

Everitt sees her work as helping average Vermonters, often senior citizens, youth tricked in online purchases, and small businesses. She relates the saddest anecdote she remembers, about one “elderly gentleman” in late 2010, tricked into submitting most of his life savings in false taxes and fees, to win a sweepstakes prize that didn’t exist.

He was “wiring them at $2,500 a shot, repeatedly, for seven or eight days,” said Everitt. “People think it’s so obvious; but we can’t stress enough how smooth these people were, how good they were at getting money out of people.”

These “insidious” scam artists, said Everitt, then called the victim, posing as law enforcement and offering to take on his case for a fee. The man lost about $40,000 all told, continued Everitt.

Her office only managed to trace the scam, through a money trail, as far back as Florida: but after that, the trail disappeared. They never solved his case.

Editor’s note: This story was updated with information about costs associated with the IMS and Yankee cases at 2:12 p.m. on Aug. 14, 2012.

Follow Nat on Twitter @natrudy

Nat RudarakanchanaNat Rudarakanchana

Comments

  1. Bob Stannard :

    For those who are still on the fence as to whether or not Bill Sorrell deserves your support as Vermont’s Attorney General in the Democratic Primary August 28, this story should help to understand the good job he has been doing.

  2. Michael Gardner :

    $7.1 million. WOW that is less than 500k per year, and in total won’t even cover the penalties and fines that Vermonters were stuck with under his watch. The legal bill that we’re going to have to eat for VT Yankee will choke a horse

  3. Sean Hurley :

    Looking forward to seeing the balancing piece re TJ Donovan.

  4. Thanks Vermont Digger.
    Your story points out an important liability that Bill Sorrell carries into this primary election. He has a 15 year history as Vermont’s Chief Law Enforcement Officer. Law enforcement is not so popular with those against whom the law is enforced.
    Both Sorrell and Donovan enforce the criminal law. But defendants in criminal cases get little public sympathy and are typically in no position to play a political role.
    But as Attorney General, Sorrell has had a much broader law enforcement role than Donovan, whose law enforcement work is nearly entirely in criminal cases.
    As Attorney General, Bill Sorrell has had the obligation to enforce the law in other areas. Your story highlights one such area: consumer protection. Enforcing the consumer protection laws has brought in money for the state, and recovered money for victims of consumer fraud. It has also made some powerful enemies for Sorrell among businesses that have been required to conform to the law. Not surprisingly, some of them support Donovan.
    But this dynamic, has not been confined to consumer protection. Enforcing Vermont’s the environmental laws has protected our quality of life, and earned Sorrell another set of enemies.
    The same is true of our civil right laws. In enforcing them, Bill Sorrell has protected the right of Vermonters to be free of invidious employment discrimination based on race, color, religion, national origin, sex, sexual orientation, gender identity, ancestry, place of birth, age, or physical or mental condition. Often there is no one else to stand up for such people. That’s earned him enemies among business owners and managers who have been called upon to account for their conduct.
    If, as Oscar Wilde wrote, “You can always judge a man by the quality of his enemies,” primary voters should understand that Bill Sorrell’s enemies have been earned by defending the rights of ordinary Vermonters.

  5. Ryan Kriger :

    I am an assistant attorney general in the Public Protection division, and just wanted to note that while we are proud of the $7.1 million number, that is only from cases in which Vermont was the only state involved in the case. A lot of what we do in the division involves multi-state investigations. Vermont is often on the Executive Committee (EC) of these investigations, and in fact is known nationally for taking a strong hand in these cases. The EC drives the investigation which involves multiple year, extensive involvement. For example, in March 2011 I was on an EC that settled with AstraZeneca for off-label marketing of Seroquel, which brought this state $1.4 million. This amount, one of many, is not reflected in the $7.1 million number.

    Further, that number excludes the $25 million/year in tobacco money, which Public Protection has multiple attorneys working on to make sure that we continue to receive the money year after year — it is not something that is automatic, by any means.

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