The Real Deihl

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

So Dembow's attorneys began the lengthy and expensive process of deposing those employees.

Deihl's attorneys said Joe Deihl II, Deihl's son, had the information. They deposed. He said he didn't know anything. Dembow's attorneys asked for Karemor's documentation of the shortage. Deihl's attorneys promised to provide those documents. They never did.

Another executive knew the facts, Deihl's attorneys then said. That person was deposed. She didn't know anything. Bill Deihl, Joe's other son, was deposed. He knew nothing.

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.

Well, actually, it was another employee who knew, Deihl's attorneys then said. That employee was deposed. He knew nothing.

Joe Deihl himself was finally deposed. He said he had heard from somebody at his company that the boxes of skin-care products had been stacked in his warehouse in a way that made a proper count difficult. He basically accused Dembow's shippers of stacking boxes in a way that hid the fact that all the boxes weren't there -- a sort of shipping optical illusion. But he provided no proof. Nobody at the company ever did.

"It was just weird," Dembow says. "They were clearly just stalling and stalling to run up attorney fees on us so we would give up."

In the deposition, Deihl related few details of his past. He said he had "various sales positions" before starting an insurance company in Tampa, Florida, in the 1970s. He said he came to Arizona and started his tear gas company in the early 1980s. He said he had only "a grade school education" and likes to make contracts verbally.

"It has not been a practice [to make written contracts] because of my inability to spell and I have difficulty reading. I am dyslexic so, therefore, it's embarrassing to me to have to sit and read something or it takes me an extended period of time to read something."

In 2000, Joe Deihl asked to meet Dembow at the Ritz-Carlton on Camelback Road to discuss a settlement. Deihl offered pennies on the dollar. Dembow refused.

"Then he says to me, 'You know, Paul, it's just business,'" Dembow says. "That's just burned me. Business? Yeah, it's business when you have no honor."

In late 2000, the litigants received a judgment from Judge Cari Harrison. It was a searing indictment of Deihl's behavior in the case.

Besides paying the $106,000, Deihl also had to pay all of Dembow's attorneys fees because, the judge said, Deihl and his attorney, Robert Hartmann, "defended this lawsuit without substantial justification and for the sole purpose of harassing Arizona Natural Resources and delaying the proceedings."

Judge Harrison lambasted Deihl and his attorney for stonewalling and their "obstreperous refusal" to provide proof of their claims.

"Throughout the course of this litigation," the judge wrote, "defendants repeatedly and recklessly disclosed witnesses without making any effort to ascertain whether a particular individual possessed any relevant knowledge in the area in which he or she was designated to testify."

Harrison railed on for 15 pages in her judgment.

It appeared clear she was sending a message from the judges of the Maricopa County Superior Court. They were sick of Joe Deihl wasting their precious docket time, and taxpayer money, in attempts to avoid paying his bills.

So Dembow got his vindication in court. It would be another four years before he got all of his money. Deihl claimed he didn't have the cash. After more than $100,000 in attorneys fees and other legal fees, Dembow's attorneys and private investigators proved that he did. The case eventually cost Deihl $333,000. Dembow received the final payment from Deihl earlier this year.

For Dembow's private investigator, respected financial investigator Burke Files, the job was a fascinating look into one of the cloudiest corporate structures he's ever seen.

"What guys like Deihl bet on is the dark side of actuarial advantage," says Files, who has written several books on financial fraud. "They create this mess of businesses and get lawyers for shields and then bet that it will cost you more money than it's worth to find the money they owe you. It's just a ruthless way of doing business. And when you get tied up with one of these guys, you're screwed."

As the Deihls continue to be lambasted by customers, creditors and government agencies around the country, they remain darlings of Valley high society.

Sari, by all accounts, has been a dedicated organizer of numerous big-dollar charity fund raisers in the Valley. Among others, she has organized large fund raisers for the March of Dimes, the American Heart Association and the Phoenix Theatre. Last year, she co-chaired an event that raised $500,000 for the Crisis Nursery, which helps children from broken homes.

And then there are the parties at the Deihl house.

"Philanthropists Joe and Sari Deihl are known for throwing posh and creative parties," Scottsdale Republic society columnist Kathy Shayna Shocket wrote early this year about the Deihls' Jams and Jewels party for the Phoenix Theatre.

"They throw amazing parties," confirms Paul Dembow, who attended the Deihls' annual Halloween party in 1998 before their deal went bad. "That was the most extravagant layout I've ever seen at a house."

That year, Joe and Sari greeted guests dressed as a king and queen. Other family members were also dressed as royalty.

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