An update on the infamous Bill Farley:
Ex-Fruit of the Loom CEO promoting fruit drink
By Ameet Sachdev
Tribune staff reporter
January 13, 2008
Bill Farley celebrated his 65th birthday in November by inviting about 100 friends to dinner at Terragusto, a North Side Italian restaurant.
At the end of the night, he had an unusual parting gift for his guests: a sample of a fruit-juice drink he has launched that claims to promote health and nutrition.
Such a marketing ploy was vintage Farley. The former chief executive of Fruit of the Loom once donned underwear in a television commercial to advertise the brand. Eight years after he was forced out of the underwear company after its bankruptcy, Farley, who resides in Chicago, is back in the public eye with a new business venture.
Internet videos and other marketing materials describe Farley as a visionary entrepreneur and portrait of success, rubbing shoulders with the rich and powerful and living the high life. The handsome physical-fitness buff is doing more than selling a beverage. He's pitching people on becoming at-home distributors, a business model similar to Mary Kay or Amway.
But the picture is incomplete. For example, the marketing materials tout how Farley helped turn Fruit of the Loom into a billion-dollar brand. That's true, but he also is blamed for steering the company toward disaster. Another video promotes his connection to the Chicago White Sox. He was a part-owner of the team but has not been an investor for at least five years, according to team officials.
Farley declined to comment on the marketing or any other matter for this article. He said to speak would be premature because his company is privately held and still in its start-up phase.
Some people in the Chicago business community defend Farley's business track record. Bill Smithburg, the former CEO of the Quaker Oats food company who knows something about beverages, also invested in Farley's start-up company.
"You just don't invest in something because the guy's a friend," said Smithburg, who while at Quaker built Gatorade into a megabrand. "Bill's a talented and experienced entrepreneur. He's very motivating."
John Ray, the former general counsel at Fruit of the Loom, only said, "Bill's a clever guy and certainly no stranger to risk." Several others who have had business dealings with Farley declined to comment.
Health conscious
Farley aims to capitalize on growing consumer interest in healthier foods. The market for both organic and natural products is booming. Between 2004 and 2006, sales of natural food and beverages -- including organics -- increased 33 percent, according to a report last fall by Mintel International, a consumer research outfit.
Farley's interest in diet and health is not just motivated by profit. He has always taken great care of his body by eating a low-fat diet and exercising regularly.
"Even when he was traveling, he'd find a [fitness] facility someplace and work out for an hour and a half a day," said Jack Albertine, the former vice chairman of Fruit of the Loom.
His fitness obsession extended to Fruit of the Loom and other firms in his private holding company, Farley Industries. He installed exercise facilities at factories. He lectured managers on healthy lifestyles and sometimes led them in aerobics.
He acquired Fruit of the Loom as part of a leveraged buyout of Chicago-based Northwest Industries in 1985. The $1.4 billion transaction represented the peak of Farley's rapid transformation from encyclopedia salesman to investment banker to captain of industry.
In 1985, Forbes magazine listed him as one of the richest Americans, no small achievement for the son of a postal worker from Pawtucket, R.I., who bought his first company in 1976. At his zenith he owned homes in Aspen, Colo., and Kennebunkport, Maine, in addition to his lavish apartment on Lake Shore Drive, where he hosted parties for celebrities, athletes and politicians, including President Bill Clinton. Farley even entertained White House ambitions of his own.
Empire unraveled
But his business empire began unraveling in the 1990s as Fruit of the Loom botched a move to shift production offshore. Already heavily leveraged, the company began piling on hundreds of millions of dollars in losses. In August 1999, the board fired Farley as CEO, though he still controlled 30 percent of the company's voting stock. Four months later, Fruit of the Loom filed for bankruptcy.
Legendary investor Warren Buffett, who bought Fruit of the Loom out of bankruptcy, said in his 2002 annual letter to shareholders of Berkshire Hathaway Inc. that the underwear company was "a victim both of too much debt and poor management."
During the bankruptcy proceedings, Fruit of the Loom sued Farley in connection with several multimillion-dollar loans the company had secured for him. Ray oversaw the litigation against Farley. Farley later defaulted on a settlement of the dispute, in which he had agreed to a number of payments and other remedies, including the delivery of a $2 million promissory note, according to court documents.
Fruit of the Loom's financial woes also hit other entities in Farley's holding company, now called Liam Ventures Inc.
In 2005, the Pension Benefit Guaranty Corp. assumed responsibility for the underfunded pension fund sponsored by Liam Ventures, which covered about 4,400 workers and retirees at metals companies controlled by the holding company. The pension agency said at the time that the retirement plan was only 22 percent funded, suffering a shortfall of $136 million. Liam Ventures also had failed to make more than $31 million in legally required contributions.
Farley's failures have not stopped him from making more deals. In late 2004, he acquired Body Wise International Inc., a troubled vitamin seller in Southern California. Its products are sold by independent distributors who receive commissions on purchases by those they recruit into the network. The business model is also known as multilevel marketing.
In January 2005, Body Wise settled charges brought by the Federal Trade Commission that the company made deceptive claims for a dietary supplement. The company agreed to pay a $2 million civil penalty and $1.58 million to the State of California.
The FTC began its investigation long before Farley took over Body Wise. Soon after his acquisition, he began looking for other products he could sell through Body Wise's sales network.
Enter Chopra
Farley turned to longtime friend Deepak Chopra, the alternative-health guru and author. Chopra introduced him to amalaki, a berrylike fruit grown in India that contains high concentrations of Vitamin C.
With the help of the Chopra Center for Wellbeing, Farley developed the formula for his juice blend, which contains amalaki and herbs and spices such as tumeric and ginger. The beverage has a new-age sounding name, Zrii (pronounced zree), a Sanskrit word that means light, luster, splendor, prosperity and good fortune, according to a Zrii brochure.
The Chopra Center has endorsed Zrii and sells it on its Web site. A 25-ounce bottle sells for $35. Zrii is meant to be drunk a few ounces at a time.
Officials at the Chopra Center did not respond to several requests for interviews.
Patrick Arbor, former chairman of the Chicago Board of Trade and a friend of Farley's, has tried the drink and said he liked the taste. Smithburg says he puts a shot of Zrii in his daily fruit smoothies.
"We'll see what happens," Smithburg said. "There's no guarantees, but Bill's a high-energy, driven, persuasive guy."
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asachdev@tribune.com
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