The Real Deihl

How a Paradise Valley snake-oil salesman sprayed his way to success

"It was like some huge piece of bling you'd see on the toughest rapper," Dembow says of the necklace. "It was amazingly over-the-top."

After the presentation, Karemor sales associates were given opportunities to buy costume-jewelry replicas of Sari's new necklace.

About the same time, the Deihls started a company called "Spoiled Brat, Ltd.," which meant the necklace could be written off as part of the new company's advertising budget.

Sari and Joe Deihl, the "darlings of Valley high society."
Sari and Joe Deihl, the "darlings of Valley high society."
The Sari Collection of skin-care products, named after Sari Deihl.
The Sari Collection of skin-care products, named after Sari Deihl.

In 1998, Dembow's company made 50,000 units of each product in the Sari line. The total bill to Joe Deihl was $326,250.

It's interesting to Dembow that the products he made are still being sold by the Deihls.

"Those products have been sitting around in a warehouse for six years," he says. "Our guarantee on them is only two years under proper conditions. It's anybody's guess what that product is like now."

The Sari Collection probably isn't dangerous, Dembow says, just very likely useless.

The real legacy of the Sari Collection, Dembow says, is that it exposed how Joe Deihl does business. When Deihl didn't pay the final $106,000 he owed Dembow, Dembow sued. By the time he filed the suit, Dembow knew Deihl had a history of making lawsuits very expensive for his opponents, so expensive that most of his creditors give up and settle cheap. But Dembow refused to let money keep him from taking Deihl to court.

"Somebody had to stand up to this guy," he says. "It pretty quickly wasn't about the money. It was about doing the right thing."

Paul Dembow still curses himself for not checking Joe Deihl's business record before agreeing to do business with him.

If he had, he would have seen an amazing litany of litigation against Deihl, his family and his companies.

The Deihls have been sued at least once a year since 1988. In 1999 alone, they were sued 17 times.

They've been sued by the State of Arizona and Maricopa County for unpaid taxes. Hilton and Radisson hotels have both sued them for non-payment of convention bills.

They've been sued by several printing companies, several charter airline companies, several health product companies and several shipping companies, including Federal Express and Airborne Freight Corp.

"I know, I know, I was stupid," Dembow says in the offices of the sprawling Arizona Natural Resources plant in north Phoenix. "But he looks so good in the beginning. He's suckered some of the best with the way he does it."

"He does it" with a ton of cash up front, his creditors say, in lawsuit after lawsuit. Then the last few payments never show up. When you complain, Deihl says something was wrong with the service or the product. The only recourse is civil court, where such non-payment v. faulty-product arguments are always messy and drawn out.

For example, Deihl went to Southwest Jet Aviation in Scottsdale to charter several flights. Deihl promptly paid for the first few flights, says Scott Gibney, the company's chief financial officer.

Then Deihl set up a slew of flights in one month. For one of the flights, Deihl chartered a giant Gulfstream jet for a nine-hour flight around the country.

"He said he needed a bigger cabin," Gibney says. "So we went out and got him Merv Griffin's Gulfstream."

The final bill: $70,000.

Deihl didn't pay. He claimed he was charged for catering he didn't order.

The catering, standard for such flights, was $500, a fraction of the total bill.

Southwest spent $7,000 on legal fees to get Deihl to pay his bill. Since Southwest makes only a 5 percent broker fee on such flights, the company ultimately paid $7,000 to get back $4,000 owed to it.

"His games cost us a month's payroll at the time," Gibney says. "It really hurt us."

Amazingly, Gibney says Joe Deihl recently called him trying to book another charter flight.

"I told him to bring a cashier's check and I'd consider it," Gibney says.

Deihl came to Dembow in much the same fashion. It was early 1998 when Deihl showed up at the offices of Arizona Natural Resources in a fine Italian suit and a flagship Mercedes carrying a $100,000 check, Dembow recalls.

Deihl wanted Dembow to make a collection of skin products named after his wife.

"That kind of money up front gets your attention," Dembow says. "We took the job."

Dembow sent products. Another check came. Dembow sent more products. Another check came.

Then Dembow sent the final shipment, the largest of the bunch. The final $106,000 check never came.

Dembow called. No return call. He called again. No return call.

Finally, he received a letter from Deihl's company saying they believed Dembow had shorted them in the last shipment. Dembow knew that argument was ludicrous. He had numerous employees take accountings of the load. Deihl also claimed Dembow violated an exclusivity clause in a contract that Dembow later proved didn't exist.

But Deihl and Karemor employees stuck by their story. So Dembow sued.

The court records from that 1998 lawsuit, Arizona Natural Resources versus Karemor International, provide a detailed look at Joe Deihl's business and legal strategies.

In initial arguments, Deihl's attorneys promised to provide employees who could confirm that Dembow hadn't sent the promised amount of skin-care products.

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