Inside the epic unraveling of the Longaberger Company

If you're charitable, you might describe Dresden's Main Street as a neighborhood in transition. If you're blunt, you call it a ghost town. Dave Mathew, a gravel-voiced retired construction manager who has served as the Muskingum County village's mayor for the past six years, doesn't mince words. When asked how Dresden is handling the decline of its long-standing corporate benefactor, the Longaberger Company, Mathew responds with just one word: “Poorly.”

The evidence is all along Main Street. As Mathew walks past each vacant lot, shuttered business and abandoned building, he tells its tale of woe, a depressing litany of fire, failure and foreclosure. A poster for a semipro wrestling show is plastered on the window of an empty storefront, a Huntington bank branch until about a year ago. Across the street is a closed home-furnishing business with a for-sale sign in the window asking for $39,900 for the small one-story building. Mathew says the owner paid nearly $330,000 for the property during Dresden's boom years, when some 50 commercial businesses were in the village. Today, that number is down to about 15.

At Fifth and Main, Mathew arrives at what once was considered ground zero for the hordes of Longaberger basket fans who flocked to Dresden, dropping off as many as 60 busloads a day during the peak season. The “World's Largest Basket” is still on the southeast corner of the intersection, though the attraction has seen better days. Scraps of laminate have fallen off the 23-foot-tall structure, and its wooden deck is rotting away. Lost to history are two other landmarks that used to be at the intersection: the Longaberger Museum, a former bakery where visitors watched basket-weaving demonstrations, and Popeye's, the iconic restaurant that was owned by the Longaberger family (not to be confused with the fast-food chain of the same name). On this chilly mid-February morning, Mathew can't help but think about the man who put Dresden on the map, Dave Longaberger, or “Popeye,” as everyone in town called him. “Dave's theory was go big or go home,” Mathew says. “He was a dreamer.”

His dream, the Longaberger Company, was like an Appalachian fairy tale, a poor kid in a dying eastern Ohio town who turned a crazy idea—selling handmade wooden baskets—into a sprawling $1 billion business empire that included a golf club, a hotel, restaurants, a 1.2-million-square-foot manufacturing campus and a seven-story headquarters built in the shape of a picnic basket. Beloved for his generosity, his improbable success and his quirky personality, Longaberger seemingly could do no wrong.

But all dreams end. And sometimes they become nightmares. Following Longaberger's death in 1999 from kidney cancer, the basket business began to unravel, failing to adapt to changing tastes, technology and market forces. It cut jobs, unloaded assets (a hotel in Newark, the Longaberger Golf Club in Nashport and its restaurants and other properties in Dresden) and churned through presidents. The collapse culminated last year with the decision to put its iconic Big Basket headquarters on the market and consolidate all remaining employees (about 200, down from more than 8,000 shortly after Dave Longaberger's death) at its manufacturing facility outside of Dresden. “I tell people that Longaberger, at its height, was like visiting Disney World or Cedar Point on July Fourth weekend,” says Jay Hottinger, a longtime state legislator from Newark. “Now it's more like Chevy Chase visiting Wally World.”

What's more, Tami Longaberger, who served as the Longaberger Company's CEO for 17 years, is now locked in a scorched-earth legal battle with JRJR Networks, the publicly traded corporation that bought Longaberger in 2013. Dave Longaberger's oldest daughter wants JRJR to repay a $1 million personal loan she gave the company to help it through a financial crisis in 2014. JRJR, meanwhile, accuses her of a slew of misdeeds, from failing to disclose a significant tax debt that the Longaberger Company owed the city of Newark, to having an inappropriate relationship with a subordinate executive. Tami's sister, Rachel Longaberger Stukey, the former head of the Longaberger Foundation, also has sued JRJR for the $4 million she says the company promised her at the time of the sale in 2013.

The soap opera—“As the Basket Turns,” as one former employee called it—has left emotions raw. Before Mayor Mathew takes me on the tour of the village, we meet in his bare-bones office at the municipal building on Ninth Street. When I arrive, I'm surprised to find Gary Longaberger, Dave's younger brother, sitting at a conference table. Mathew has invited him to join us. Gary, one of Dave Longaberger's 11 siblings, worked for his brother and later served as a roving brand ambassador, greeting Longaberger enthusiasts in Dresden and signing baskets at company events.

These days, however, he's not so fond of the company that still bears his family's name. Before we start the interview, Gary asks me a question: Do you intend to speak to anyone at the Longaberger Company? When I answer yes, he tells me, “Then I can't talk to you,” and walks out of the room.

“He's a guy who's genuine and cares,” Mathew says after his friend leaves. “That's part of what's going on now. It's about family. It's unfortunate.”

The 1999 death of her father devastated Tami Longaberger. In her 2010 book, “Weaving Dreams,” she wrote about her sorrow, an emotionally wrenching experience made worse by the simultaneous breakup of her marriage. “I could barely find my footing, much less think like the ‘visionary' Longaberger needed me to be as we embarked on this new chapter in our short history,” she wrote. “All the while, the line of employees with questions and concerns and deadlines lined the hallway outside my office door like dominoes waiting to fall. And all the while, I was dying inside. Unable to grieve. Unable to fill my lungs with enough air. Unable to sit in the stillness and let my eyes cough up torrents of tears and heartbreak.”

Robert Shook witnessed her devastation up close. In 1998 and 1999, the Bexley author, who'd previously ghostwritten a best-selling autobiography of makeup tycoon Mary Kay Ash, spent countless hours interviewing Dave Longaberger (despite his declining health) for a book about his life and business. “Longaberger: An American Success Story” came out in 2001 and vaulted to the top of the New York Times' best-seller list. “He loved those girls, and they loved him,” Shook says. “In fact, after he died, for six months, I couldn't even talk to Tami or Rachel. I said, ‘What about the book?' Dave wanted this book to come out. I finished it. It took six months before they could even talk about the book. Tami said, ‘I couldn't even read what you wrote. … I was so distraught.'”

Shook is an expert on direct-selling companies like Avon, Tupperware, Mary Kay and the Longaberger Company. He says these firms—which sell their products through independent home-based consultants rather than traditional stores—live and die on the charisma of their founders, whose dynamic personalities inspire a cult-like following. The Longaberger Company was no exception, Shook says, and he's not surprised it's struggled without Dave Longaberger at its helm. “Maybe it wasn't that [Tami] was so bad,” says Shook. “He was just so good at that role, and he wasn't replaceable.” Adds New Albany developer Jack Kessler, a friend of Dave Longaberger: “It was a tough burden to put on [Tami]. I think times were going against her a little bit.”

Indeed, Tami Longaberger faced challenges beyond her control. The economy tanked after the 9/11 terrorist attack, debilitating the market for discretionary items like handmade wooden baskets. The internet also changed how people shopped, while the Longaberger Company struggled to tap into a younger demographic less enthused with country décor and living-room basket parties. Would Dave Longaberger have been any better suited to overcome these obstacles? Hard to say. “The two daughters get a disproportionate, unfair amount of the blame,” says Hottinger, the state senator from Newark. “I think it was much more cyclical. [The business] had run its course, and whether Dave had survived or not, I don't think the outcome would've been dramatically different.”

Still, Tami Longaberger isn't without blame. She shepherded a change in the company's compensation plan that angered top-selling consultants and cut into revenues, insiders say. Under her watch, the company also compromised its core made-in-America values with a pottery line made overseas. Overall, the company seemed to careen from one idea to the next with little consistency or focus. Executive turnover was partially to blame. While Tami Longaberger was a fixture at the top of the organization, she never had a reliable second-in-command, going through four presidents in five years at one point, with each executive trying to put his or her stamp on the company. A former employee recalls Tami spending much of her time in the early 2000s buying property and focusing on the Homestead, a Longaberger-owned, old-fashioned shopping district outside of Dresden that her father hoped would grow into a Disneyland-like attraction, when she probably should have concentrated on the core business. “She had the potential to be a good leader, but she had a lot of things going on around her that distracted her,” the former employee recalls.

Then there was her 57,000-square-foot mansion. In 2001, crews finished building the house—one of the biggest homes in Ohio. The timing wasn't great. Just as she moved into her 200-acre Nashport estate with a pool, horse barn, helicopter pad and six-car garage, her company began laying off employees. Even though the home was used for company events and cultivated Tami's image as a successful and glamorous direct-selling icon, “The optics around that weren't good,” says the former employee. (She sold the estate in 2013 to venture capitalist Mark Kvamme for $6 million, significantly below her original asking price of $15 million.)

Over time, the company appeared to de-emphasize Dave Longaberger and lift up his daughter as its central inspirational figure. She even stole a page out of her father's playbook by writing her own memoir with the help of a co-author. That shift is a tough one to pull off, and some direct sellers don't even attempt it. Mary Kay Ash remains at the core of her eponymous cosmetic company today, even though she died in 2001. Shook, the Bexley author, says Mary Kay officials still buy a significant number of copies of her ghostwritten autobiography every year to pass out to consultants. When Shook asked her son, Richard Rogers, who co-founded the company with his mother, why they do that, he replied, “We kill the Mary Kay legacy, we're out of business.”

It takes a unique person to make a fortune on baskets, and Dave Longaberger fit the bill. Stories abound about his idiosyncrasies: his cane that he claimed was made out of a bull penis; the time he dropped his pants (exposing a pair of heart-covered boxers) at a roast in his honor; his aversion to shaking hands. “He'd say, ‘Jack, why do you always shake my hand?'” Kessler recalls. “‘You shake hands once. Now you know me, you don't have to shake it again.' I said, ‘David, that's what we do. It's like saying hello.' He said, ‘It seems silly.'”

“He had that personality, which was very quirky,” says Lee Peterson, executive vice president for the Dublin retail consultant WD Partners. “The brand was kind of in his head and how it worked and how it got translated. And the way he would translate it was probably different than somebody who took over, regardless even if they're blood. He just thought about things completely different.”

By 2013, the Longaberger Company needed help after years of dipping sales. Meanwhile, John Rochon, a former Mary Kay executive known as a direct-selling turnaround specialist, was looking for assets to buy for his new holding company, CVSL. The two sides saw it as an ideal marriage. CVSL (later renamed JRJR Networks) absorbed the Longaberger Company, vowing to honor the former owners, whom Rochon had known for decades. “Longaberger will forever be Longaberger,” Rochon told the Dispatch in April 2013. “Tami is the leader, and her daughter will lead it next.” Claire Longaberger Kaido had joined the company in 2012 after graduating from Ohio State University.

Two years later, however, Tami Longaberger left the company under confusing circumstances (SEC filings indicate she was fired after she attempted to resign). Her daughter followed her, while Rachel Longaberger Stukey, the head of the Longaberger Foundation, left in 2013. Within a few months, JRJR and the Longaberger family were fighting with each other in courts in Columbus and Dallas, where JRJR is based. “Tami tried,” says John Rochon Jr., the JRJR chairman's son who replaced Tami Longaberger as CEO. “We tried. It didn't work, and someone had to step in and make sure that the sales force was taken care of.”

Rochon Jr. speculates that Tami Longaberger was tired. “It's a tough thing when you really get into one of these businesses,” he says. “You stay at people's homes as a guest. You wake up and have coffee with your top sales people in their houses. You live with them, go to shows with them and then you have to watch this wonderful gem of a company continue to slide. It takes a special person to put it on their shoulders and lift it back up again.” (Neither Tami nor Rachel Longaberger responded to messages seeking comment.)

Despite the unflattering publicity surrounding the litigation and the emptying of the Big Basket building, Rochon Jr. says the Longaberger Company is poised for a turnaround. He says the company has improved its products and strengthened ties with its sales consultants. It also plans to expand beyond Longaberger's core Midwestern base, both in the U.S. and abroad. He predicts the company will become a $1 billion business again in five years. “This is a brand that should be in every corner of the Earth,” Rochon Jr. says. “It will be in every corner of the Earth.”

That's a mighty ambitious target, obviously. JRJR doesn't release sales figures for Longaberger, one of nine direct-selling businesses it owns, but the entire corporation reports $155.2 million in annual revenue. And Rochon Jr. will have to hit his goal not only without any participation from the first family of wooden baskets, he'll also have to do it while openly feuding with the daughters of the company's still-beloved founder. He doesn't seem concerned. “The greatest mistake that people make in this industry is they think it's a name and it's a family that's going to carry you to the next level,” he says. “It's not. It's the sales force.”

Paula Brose has spent 20 years with Longaberger, rising to supervise a team of about 20 other independent sales consultants. She says recent publicity—especially the emptying of the Big Basket building—has confused people into thinking that Longaberger no longer exists. “I can't tell you how many times I set up at a multivendor event, and people walk up and say, ‘I didn't know you were still in business,'” says Brose, a Westerville-area resident. She says her business has grown despite the recent corporate turmoil and praises the new owners. But she's also realistic about whether the company can ever return to the era when thousands descended on Nationwide Arena in Columbus to attend the Longaberger Bee, the company's annual sales conference/pep rally that relocated to Tri-Valley High School in Dresden two years ago. “Will it ever be the same? I don't know,” she says. “Hopefully it will. But I also know sometimes you can't go back. You can only move forward and make it successful in a new way.”

Mathew, the Dresden mayor, and Billy Whyde, a village employee, are both admiring an artifact from another era: a Monopoly-style board game set in Dresden circa 1994. Sketches of the World's Largest Basket and other local landmarks are in the middle of the rectangular board, while local businesses occupy the squares that line the edges. Many of those businesses are gone, though not all.

“This one is still there,” Mathew says.

“So is this one,” Whyde says. “Is that one still there?”

Whyde, who unearthed the game, started working for the village after leaving the Longaberger Company in August, after 27 years with his hometown's famous employer. He started at Longaberger as a security guard and moved into many other roles, from making special-order baskets to working in research and development. Dave Longaberger hired Whyde when he was 15 years old. “The second-best guy I ever worked for,” says Whyde, 49, grinning at his current boss.

Whyde blames the Longaberger Company's decline on the economy and the death of Dave Longaberger. “A lot of people may not want to hear that, but that's my opinion.” He mentions a 20-page letter Dave wrote just before he died in which he outlined a plan to transform the company, moving beyond baskets. “His plan was we would be giving baskets away to people who we'd build a house for, [who] we'd build furniture for,” Whyde says. “Baskets would kind of fade out, as far as selling them in the market. I don't know how he knew that, but he knew it.”

Later, in a diner on the outskirts of town, Mathew introduces his wife, Donna, and his 81-year-old mother-in-law, Jean Kimberlin. A farmer all her life, Kimberlin started working for the Longaberger Company in the 1980s after watching so many other family members and friends get jobs with the growing business. “I just decided that milking cows wasn't giving us enough money,” says Kimberlin, in between bites of chicken fingers dipped in barbecue sauce.

Kimberlin thrived as a basket weaver. The company chose her to join the traveling team, the group of weavers who went all over the country demonstrating to Longaberger consultants how baskets are made. It was pretty heady stuff for a shy woman who'd seen little of the world beyond her farm in eastern Ohio.

About 10 years ago, however, the company laid her off. Since then, she's held various minimum-wage, part-time jobs through a nonprofit called Experience Works that helps low-income seniors. She says she's managed OK financially, but many of her fellow former Longaberger employees haven't been so lucky. Some have gone bankrupt. Others have descended into drug addiction. Like many other places in Ohio, this region of the state has been hit hard by the opioid epidemic.

Kimberlin and other ex-Longaberger employees get wistful for what they lost: good pay, comprehensive benefits, unique perks like the Longaberger Family Center, which offered on-site childcare for employees of the manufacturing campus.

But those jobs and benefits aren't coming back, at least not any time soon. With so much unneeded space after years of downsizing, the Longaberger Company converted its sprawling manufacturing facility into a business park and is leasing empty buildings. Last year, a nonprofit announced plans to move into the shuttered family center. The new tenant? A drug rehab center.

A Basket of Problems

Central Ohio's oddest building needs a helping hand. The Big Basket, as the iconic former headquarters of the Longaberger Company is known, is looking for a buyer. And while Licking County folks have plenty of ideas for the seven-story basket-shaped building—a hotel, a business incubator, a government office, to name a few—no savior has emerged.

The Longaberger Company put the 180,000-square-foot structure in Newark up for sale after moving all its employees to the company's manufacturing campus outside of Dresden last year. With the company shrinking from more than 8,000 employees in 2000 to about 200 today, it no longer needed such a large corporate headquarters—iconic or otherwise.

Soon, it appears Licking County officials will inherit the headache. Longaberger owes more than $700,000 in delinquent taxes, says Licking County Treasurer Olivia Parkinson. Much of that outstanding debt is wrapped up in a legal dispute between the company and its former CEO, Tami Longaberger. The company's parent, Texas-based JRJR Networks, accuses Tami Longaberger in a lawsuit filed in Dallas of failing to disclose the details of a tax-increment financing agreement with Newark when the Longaberger Company was purchased in 2013.

Licking County Prosecutor Bill Hayes was preparing in early March to foreclose on the building. “It's imminent,” he says. If that occurs, then the next step most likely would be to sell the property in a sheriff's sale, starting with a minimum bid that covers the outstanding taxes. “We certainly want to work for what's best for this community with that building,” Hayes says. “It's a dandy. It's very unique.”

There's a lot of love for the building; nearly 2,000 people have joined a Facebook page started by former Longaberger President Jim Klein dedicated to preserving the Big Basket. But its size and location make it difficult to find a suitable tenant and use. “If it was a small basket building or it was a large conventional building, it would be a little easier,” says Newark Mayor Jeff Hall.

The odd design was the brainchild of Dave Longaberger. Robert Shook, a Bexley writer who co-authored a book with Longaberger, once asked him about the building's prospects if the company ever left it or went under. “He says, ‘That won't be my problem; that'll be their problem,'” Shook says. “It turned out to be somebody's problem.”