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POLITICS

Meet the Shady Corporation That Allied With Romney While Scamming Customers

Mitt Romney points to a home-alarm business as a model for American capitalism. Just don’t tell the customers it ripped off.

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Romney attends a ribbon cutting ceremony at APX in 2009.(.)

Correction: An earlier version of this story misspelled the name of Lucas Fernandes.

 

Every company hopes for the kind of ribbon-cutting that APX Alarm organized on a clear and cold December day in Provo, Utah, when it opened its new headquarters. It was only 2009, but Mitt Romney—already the GOP presidential front-runner—was treating the ceremony like a campaign event. “This,” he told the assembled crowd and local reporters about the home-alarm company, “is the kind of stimulus that makes the country great.”

That day, President Obama had convened a jobs summit in Washington, but Romney wanted the people of Provo to know that conclaves don’t create jobs. “A lot of politicians and economists, professors and so forth, will come together” in Washington, he complained. “I wish they were here instead seeing how jobs are actually created—not just talking about it, not just wondering how government can make things better, but instead seeing how jobs in this economy are actually created in the private sector, with real businesses.” This paean to industry eventually found its way into his stump speech.

Romney was truly in his comfort zone. Here was a successful start-up business, in a state where he has deep roots, run by Mormons he knew and trusted who had given generously to his campaign. Its C-Suite included a former adviser to the Massachusetts governor and future fundraisers. CEO Todd Pedersen and COO Alex Dunn, together with their wives, had personally contributed more than $15,000 to Romney’s 2012 presidential ambitions thus far and would give another $300,000 in the coming years, according to the Center for Responsive Politics, which compiles FEC filings.

 

But there was a problem. APX, which rebranded itself as Vivint in 2011, had received an “F” rating from the Utah Better Business Bureau, and the national organization had logged hundreds of complaints about the company. It had been the subject of government action in at least seven states (the total is now at least 11) for alleged sins that ranged from deceptive sales practices to operating without a license. Disgruntled people, often seniors, were pressured to buy the company’s alarm system and then forced to pay much higher costs than they had expected, according to their complaints to police, state investigators, and local reporters. Vivint has never admitted wrongdoing and did not return many calls for comment over two months.

Presidential candidates scrupulously manage their public images, so it is rare for a candidate to embrace a business with such obvious problems. After all, “when a candidate praises a donor or a donor’s business enterprise, the candidate is linking himself or herself to that entity,” says David Magleby, a professor of political science at Brigham Young University who specializes in campaign finance.

Romney apparently never knew about APX’s record, because he probably failed to vet it. (His campaign did not respond to several requests for comment on his relationship to the firm.) And what campaign wants to investigate its top donors? But Romney’s ribbon-cutting conveyed his imprimatur. In return, Vivint provided another reminder—there are several every campaign season—that the pressures of fast-paced fund­raising force pols to trust close allies with money.

TOUGH TACTICS

On a spring afternoon in 2008, Scott Harris of Little Rock, Ark., answered a knock at his front door. A clean-cut young man was selling home-security systems, and Harris invited him in. The salesman, who looked like a college student, told Harris that he worked for APX and that, like with televisions, all alarm systems would be digital within five years. A married man himself, he said, he pressed Harris repeatedly on the perils he and his wife faced: A determined thief could easily thwart their old analog alarm system by cutting the couple’s phone line.

 

Then the salesman began ticking off the features of APX’s system. It used a cellular network, so a thief couldn’t disable it by cutting a hard line; the company would install up to 10 sensors for free, and installation would take only 45 minutes; several area businesses, including the pizza place up the street, Damgoode Pies, were switching to it. Harris, 48, agreed to give it a try. “It sounded too good to be true,” he recalls.

It was.

The next week, while Harris—who travels frequently for his job—was away, the salesman dropped by the house twice to chat up Harris’s then-wife, Dana. She put him off, but he was back soon after Harris returned, arriving to formalize the contract and promising to install the APX system that day. But now some sensors would carry a fee (Harris doesn’t remember how much). And when the technicians arrived, they showed an unusual interest in Harris’s 6-year-old daughter, talking to her at length and asking her parents about her. The installation took three hours, preventing Harris from putting her to bed. Dana was frightened enough to take their license-plate numbers.

Mitt Romney Speaking at APX Headquarters

This article appears in the October 13, 2012 edition of National Journal Magazine.

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