Doug Ducey: Emperor of Ice Cream or as Sleazy as They Come? | News | Phoenix | Phoenix New Times | The Leading Independent News Source in Phoenix, Arizona

Doug Ducey: Emperor of Ice Cream or as Sleazy as They Come?

DUCEY DISASTER You've got to wonder what was going through editorial board noggins at the Arizona Republic when they decided to give their endorsement in the Republican primary for state treasurer to Doug Ducey. The former CEO of pricey ice cream peddler Cold Stone Creamery is the favorite to take...
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You've got to wonder what was going through editorial board noggins at the Arizona Republic when they decided to give their endorsement in the Republican primary for state treasurer to Doug Ducey.

The former CEO of pricey ice cream peddler Cold Stone Creamery is the favorite to take the Republican nod in the race and has raised hundreds of thousands of dollars more than that of his next-closest GOP rival, state Senator Barbara Leff.

Local TV stations have been flooded with Ducey ads that tout him as one of "Arizona's most honored businessmen, with a record of creating jobs."

The Republic seemed to swallow this load whole cone, stating in its endorsement that "the best fit" for the treasurer's job "comes from the business world."

This, even though Ducey's under withering fire from the Democratic Party over the allegation that he has yet to fully disclose his assets.

Ducey, for instance, lists in his financial disclosure form a trust in the name of him and his wife as his primary investment but not what's in the trust itself.

(Matt Benson, a spokesman for the Secretary of State's Office, tells me that at least the trust part of Ducey's filing — spare though it may be — is lawful.)

Follow that up with what must be an embarrassment for the editorial board: the revelation, after its endorsement, by one of the Rep's own reporters that Ducey was late paying 2006, 2008, and 2009 taxes on his million-dollar-plus Paradise Valley abode.

The stalled payments for '08 and '09 earned him a lien on his home, and he finally paid up — in May of this year.

Okay, maybe the Rep's satraps didn't know about Ducey's tax problems — I'll give them that. But if they'd bothered to stick Ducey's name into Google, they would have been inundated with testimonies betraying Ducey's representation of himself as a hotshot jobs creator and über-businessman.

Blogs about Ducey and Cold Stone, acquired in a 2007 merger by the Scottsdale-based Kahala Corporation, abound.

One of them, titled "Doug Ducey Is Sleazy," blasts Ducey as a "sleaze bag and con artist." A GOP blog called "Grow Our Party" alleges that Ducey "left a trail of devastation and bankruptcies for those who invested in his business escapades."

Scratch the surface and you find there's more to these allegations than just the usual blogosphere rants.

Indeed, many former franchisees who got into Cold Stone during the Ducey years — from 1995 to 2007 — have similar complaints about Cold Stone and what they refer to, over and over again, as a failed business model.

They say this business model encouraged expansion at all costs and hobbled them with high-priced goods they were obligated to purchase from Cold Stone-approved vendors. And they complain about Cold Stone's erstwhile two-for-one coupons, with the franchisee picking up the tab on the freebie, and the fact that stores were located too close together, thus diluting sales.

This year, in a review of the 10 most-popular franchises, noted that Cold Stone franchisees have a 31 percent failure rate.

"The product is sweet, but the financials can be bitter," notes the article. "In the last 10 years, almost one in three [Small Business Administration]-backed franchisees defaulted on [its] loan. It's an expensive shop to start, too: The initial franchise fee is $42,000."

Far more devastating was a June 2008 piece by Richard Gibson in the Wall Street Journal that detailed the plights of ex-franchisees, some of whom had gone bankrupt, losing homes and life savings in the process.

Cold Stone boasts "more than 1,400 stores in the U.S. and worldwide," says Kahala's Web site. Cold Stone began as one store in Tempe in 1988 and opened its first franchise in '95, in Tucson.

Cold Stone's rapid expansion occurred during Ducey's reign, and Ducey is not shy about taking credit for that expansion on his campaign Web site. Indeed, that growth was one of the reasons cited by the Republic in its endorsement of the businessman.

But the Journal took that ice-cream bubble to task, noting that as of the date of the article, 20 percent of Cold Stone's franchises were up for sale. Ducey once called the ice cream biz "recession proof," but critics in the Journal article called the ice cream — up to $4 a scoop — "a pricey indulgence" in a down economy.

As for the over-expansion, the Journal quotes Michael Goldman, then a franchisee with seven stores and a member of Cold Stone's National Advisory Board, as stating that Cold Stone "did overbuild across the country, no question about it."

Goldman argued that store sales were decimated in the process.

"I'm sure there are sites that should never have been picked and franchisees that should never have been picked," Goldman told the Journal.

After Kahala took over Cold Stone, it eventually cut Ducey loose. In the Journal piece, a Kahala exec claims that the company ended at least one of the business practices that were the ire of franchisees under the Ducey regime: the 2-for-1 coupons.

Kahala declined to comment for this column. And Ducey did not return my call to his office, asking for answers to franchisee claims.

But it's clear after speaking with several former and current Cold Stone storeowners, that they blame Ducey for Cold Stone's reversal of fortune.

None of those who now operate Cold Stone franchises wanted to go on the record. But the ex-franchisees were openly disgusted with Ducey's candidacy and with his TV ads.

Litchfield Park resident Kenneth Gornall, quoted in the Journal piece, closed his Glendale store in 2007 and filed for bankruptcy. He tells me he lost about $350,000 as a result of what he calls the "Cold Stone fiasco." He also lost a house and says his health has suffered.

Gornall, 63, called Ducey's ads a "travesty," and said he had recently re-registered as a Republican so he could vote against Ducey in the upcoming primary.

"I believe it's a misrepresentation of his career and what he's claiming to have done," Gornall said of the TV spots. "He created a lot of jobs for teenagers — minimum wage, part time. And made indigents out of the owners."

Nayana Patel of Phoenix said she owned three franchises in the Valley and estimates that she lost about $300K. She said she got out of Cold Stone and was able to sell her stores, but she knows many fellow franchisees who "lost their shirts."

The 51-year-old Patel claimed Cold Stone "painted a rosy picture" of the profitability to be had as a franchisee, a profitability that she said was difficult to come by. She said she was "shocked" when she learned Ducey was running for state treasurer.

"He got paid big bucks, went into something else," she said. "Now he's running for treasurer. What? Is he trying to get money out of this now?"

Cecil Rolle of Florida is another franchisee cited in the Journal article. He lost his three stores in litigation with the company, and claims that Cold Stone received "kickbacks" from the company's handpicked suppliers, which the franchisees had to buy from.

Rolle sent me a 2008 deposition from a then-executive at Cold Stone to back up his claim. In it, the exec admits that Cold Stone received "remuneration" from suppliers as part of their deals with the company.

One of Cold Stone's most outspoken critics, Rolle says he now advises many former and current franchisees on their dealings with the company. Some are suicidal, he told me, and he's had to talk them "off the ledge." He lays much of the blame at Ducey's feet.

"He has no business being anybody's treasurer," Rolle insisted when we spoke. "I just think that he's hypocritical [and] patently dishonest."

I should point out that the state treasurer doesn't have anything to do with job creation, per se. Rather, the treasurer's duties are all about managing the state's $10 billion portfolio of investments.

Andrei Cherny is the only Democrat vying for the state treasurer post. A former Arizona assistant attorney general and adviser to President Bill Clinton, he's raised even more money than Ducey and is eager to take him on, should Ducey be the GOP nominee.

Needless to say, he regards Ducey's business record as troubling.

"My background is as a prosecutor who went after people who were running Ponzi schemes and committing financial fraud," he says. "And frankly, it's pretty scary to think somebody like that would have his hands on the public purse."

One thing's for sure, Cherny could produce one hell of an attack ad if he pulls together all the former franchisees who're ticked at Ducey and puts them on camera. The Rep's endorsement aside, GOP voters would be foolhardy to put forth Ducey as their pick, as many of Ducey's detractors are themselves registered Republicans.


There's nothing subtle about protest art, so it's no surprise that subtlety is lacking in the current exhibit of anti-SB 1070-themed work in the ongoing "FootPrints" show at the Bragg's Pie Factory gallery at 1301 Grand Avenue in downtown Phoenix.

Still, as the immigration debate here in Sand Land is about as nuanced as a steel beam to the skull, the in-your-face 'tude of the art on display seems justified, even if it's sometimes a little too heavy-handed on imagery that's straight out of Germany, circa WWII.

Although I understand an artist's use of Nazi symbols to make a point, and I would never argue for censoring such work, sometimes I wish the artists themselves would adopt a moratorium on all Third Reich symbols 'til the end of time. The stuff is just a little too easy to fall back on.

Certainly, some artists used such imagery brilliantly. But most of the best pieces in the show eschewed the use of Adolf Hitler and swastikas. I'm thinking of the poster art of Ernesto Yerena, Favianna Rodriguez, and the collaboration between photographer Diane Ovalle and artist Jesus Barraza on the famous "We Will Not Comply" poster.

My Feathered Bastard blog item on the show has some examples from the exhibit, which was curated by the Calaca Cultural Center. Included is a painting of Sheriff Joe Arpaio as Adolf Hitler.

Unfair? Sure, even though Arpaio once referred to Tent City as his "concentration camp," last time I checked he hadn't slaughtered 6 million Jews — or Hispanics, for that matter.

But, then, the piece also is unfair to ol' Adolf, who despite all of his evil, was smarter than Sheriff Joe on the codger's best day. You know the decades-dead dictator must be rolling over in Hell's darkest ditch after getting likened to a petty, tin-pot tyrant like Joe.

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