continued When that news hit, Stickel says he went to his attorney "to make sure everything was right" with Bradley's investment in Virtual. He was satisfied that it was. Had he known about the affidavit when he took Bradley's investment, he still would have gone ahead. "I am not anti-Bob Bradley," says Stickel. "He hasn't been charged and convicted. If he gets that, I will have a different opinion." Both he and Littlejohn say Bradley is a passive investor who doesn't participate in meetings or telephone strategy sessions.
Overall for Virtual, "There are a certain set of investment goals we have not been able to reach at this point," says Littlejohn, a scientist and venture capitalist, pointing to "a dribble of success."
"It's a very good idea, but ideas take time to develop," says Vance, who has left Virtual to join the San Diego office of Avondale Partners, an investment-banking firm.
Virtual is now pushing one idea: a device that can run over a bridge "and, like an X-ray, tell if there are structural problems," says Stickel. It was developed at U-Cal's Lawrence Livermore National Laboratory.
Virtual's scorecard since 2000: "Investors haven't made or lost anything," says Stickel.
According to the statement of economic interest that Sanders filed upon becoming a candidate, his Virtual stake is worth between $10,000 and $100,000, and he received less than $500 from the venture during the last year.
It's been more of a roller coaster ride for Bradley, Ellis, and Blevins.
Last year Ellis and Metabolife were indicted for making false statements to the Food and Drug Administration in attempting to cover up 14,000 complaints (including heart attacks, strokes, seizures, and deaths) between 1997 and 2002. The next court hearing is in September. The food and drug agency banned ephedra last year, but a federal judge in Utah overturned the ban this April. That matter is up in the air.
Metabolife, selling its products through multilevel marketing -- a variation on a pyramid scheme -- chalked up $1 billion in sales in 1999 but is now down to a shadow of its former self as it fights civil lawsuits that could break it. According to papers on file in Bradley's pending divorce, his second, Metabolife could be sold.
The Metabolife saga began in the fall of 1988. "On or about June 30, 1988, an anonymous caller advised that Mike Blevins, who is believed to have been involved with Colombian cocaine traffickers, has recently moved to San Diego from the San Francisco area and is currently living with Mike Ellis" in a San Diego-area condo, Federal Bureau of Investigation agent Peter Shepp wrote in an affidavit dated October 27, 1988.
Soon, the FBI swooped down and busted Blevins and Ellis on charges of conspiracy to manufacture methamphetamine. The agents said they found lab equipment and chemicals capable of manufacturing 50 pounds of meth.
Internal Revenue Service agent Thomas Fox reported that during a search of a home that Ellis and Blevins had rented, there was an address book with phone numbers of drug figures including that of Chicago mobster Sam Sarcinelli.
Once behind bars, Blevins began to help the feds, using his extensive knowledge of the West Coast's drug underground. "Mr. Blevins has been very cooperative with law enforcement since his first arrest," wrote U.S. Marshall James J. Molinari in a November 1995 pitch for clemency on Blevins's behalf.
"I came in contact with Blevins in 1989 while commanding the Narcotics Division of the San Francisco Police Department," wrote Molinari. "Mr. Blevins provided information and assistance that led to the dismantling of a major drug-trafficking network operating in the San Francisco Bay Area."
After Blevins got out of prison and Ellis completed his probation, a federal judge in San Diego allowed them to resume working together and agreed to seal their records. The result was the new Metabolife miracle pill.
Millions of dollars poured into the company as desperate dieters lined up at mall kiosks across the country to plunk down $50 or more for the ephedra-laden elixir. According to the divorce papers, Bradley was making $30 million a year.
In San Diego, Padres announcer Ted Leitner extolled Metabolife's virtues over the airwaves. The company courted the Beautiful People: on July 25, 2000 -- 14 months after news of the founders' criminal pasts had surfaced -- Metabolife, Qualcomm, Wells Fargo, John and Becky Moores, the Padres, and Alliance Pharmaceuticals sponsored a charity dinner at the Hyatt Regency that a Union-Tribune society writer called "a love-fest." Bradley was a celebrity guest.
The company also gave to politicians. But complaints of ill effects piled up. The Food and Drug Administration began looking into ephedra's safety. Metabolife was hit with lawsuits. On July 2, 2002, agents of the Internal Revenue Service raided the office of a former Metabolife outside accountant, Michael Compton. They raided Blevins's Rancho Santa Fe home.
An affidavit filed three days later by IRS agent Thomas Martinez charged that Bradley, Ellis, and Blevins were siphoning money out of Metabolife and evading taxes through offshore trusts. Bradley appeared to be the main helmsman steering the money headed offshore, according to the affidavit, which charged that Metabolife failed to account for $93.7 million in deposits between 1996 and 1999 in its corporate tax returns.
According to the affidavit, former employees, including a chief financial officer, charged that during 1997 and 1998, "Ellis, Bradley, and Blevins were skimming large amounts of cash from the operations [before the cash receipts were deposited into the corporation's bank accounts]. [The former CFO] explained that the three principals were able to siphon off the cash because the company's accounting was closely controlled by Bradley."
Jeff Anderman, the former CFO, "added that Bradley had bragged about setting up a bank account in Switzerland to hide the cash skimmed from the corporation." Anderman "stated that Ellis, Bradley, and Blevins believed they could make money untraceable by using a web of limited liability corporations set up by the owners."
A footnote added, "Amazingly, Metabolife's banking statements were sent not to corporate headquarters but directly to Bradley's personal residence. This practice continued up to and including January 1999. Subsequently, the statements were sent to Metabolife corporate headquarters."