A bitter dispute among octogenarian business partners could put one of Arizona's largest private companies in the legal limelight.

The dispute centers around prices charged by a unit of Forever Living Products, a Scottsdale-based multilevel-marketing business, to its affiliated company in Japan that is owned by two Americans.

The lawsuit also contends that the unit, Aloe Vera of America, engaged in smuggling and bribery of foreign customs officials and other infractions, although it doesn't cite any law-enforcement investigations on those counts.

As a privately held company, Forever Living Products, located at 7501 E. McCormick Parkway, doesn't disclose financial details.

The lawsuit filed July 28 in Maricopa County Superior Court, describes it as one of the largest privately held businesses in Arizona, with more than 4,000 global employees, 9.3 million distributors and annual revenue of more than $2.6 billion. Its founder and CEO, Rex Maughan, previously was listed among the wealthiest Arizonans by Forbes magazine.

Forever Living Products and its affiliated businesses make and market nutritional supplements, other food items, lotions, creams, cosmetics and more, primarily using aloe vera and bee products. The enterprises own two aloe vera plantations, with marketing efforts that span the globe.

Geoffrey Kercsmar, a Scottsdale attorney representing Forever Living and its employees in the matter, issued a statement rejecting allegations made by the plaintiffs, Gene Yamagata and his Yamagata Holdings.

"These issues are already contested in a pending and confidential arbitration between Forever Living and Mr. Yamagata, and it is disappointing (but not unexpected) to see Mr. Yamagata repeat his false and heinous allegations in a public forum," Kercsmar said in a statement to The Republic.

"Rex Maughan, his companies and their employees have always conducted themselves in an ethical and honorable way. In over 40 years of business, their conduct has never been subject to these types of attacks," said Kercsmar, adding that Maughan and Forever Living expect to be awarded damages and attorney fees "when those claims are defeated."

Longtime business partners feuding again

Forever Living Products distributors or independent contractors can earn money by selling items directly to customers and by receiving a percentage of sales generated by distributors whom they recruited.

The heart of the complaint involves alleged overcharging for aloe vera, bee pollen and other items sold by Aloe Vera of America to Forever Living Projects Japan.

The lawsuit said the Japanese entity is jointly and equally owned by Maughan and Yamagata, a Japanese-American who served as a Mormon missionary in Japan, then ran English-language training schools and other businesses.

Yamagata and Maughan are longtime business partners. Yamagata signed on as a Forever Living Products distributor in 1979, shortly after the company was founded.

The lawsuit describes the Japanese entity as the largest and most profitable company in the Forever Living Products group.

The suit alleges the theft of hundreds of millions of dollars owed to Yamagata, who lives in Las Vegas, by Maughan. However, it names two other Forever Living officials and their spouses as defendants. They are Valley residents Rjay Lloyd and Gregg Maughan, Rex's son. Under Arizona law, both spouses must be named to obtain a judgment against community property in Arizona.

The complaint didn't say why Rex Maughan wasn't named as a defendant. Yamagata's attorneys declined to elaborate.

The lawsuit alleges that Aloe Vera of America charged inflated prices to the Japanese unit on various products. It asserts, for example, that aloe vera gel was sold to the Japanese entity for about $50 a case, compared with as little as $4 a case to affiliates in other Asian nations.

Aloe Vera of America and most FLP entities are owned by Rex Maughan, with control shared by Lloyd and Gregg Maughan, according to the lawsuit.

The lawsuit describes a contentious relationship between Yamagata and the senior Maughan, both now 80 years old, almost from the start. It said the two met in 1980. Ten years later, in 1990, Yamagata sued Maughan and other senior colleagues. That earlier suit, in Arizona state court, alleged fraud and breach of contract based on grossly inflated prices and a substandard quality of aloe vera products sold to the Japanese affiliate.

The parties reached a settlement in 1990, but Rex Maughan and his companies continued to "rapaciously and parasitically feed off FLP Japan" ever since, according to the latest lawsuit.

Among the wealthiest Arizonans

Rex Maughan grew up on an Idaho ranch and attended Brigham Young University before graduating from Arizona State University with a degree in accounting in 1962. He also served as a Mormon missionary in Western Samoa.

Before founding Forever Living Products in 1978, Maughan worked as an executive at Del E. Webb Corp.

Up until about a decade ago, he was listed among the wealthiest Arizonans by Forbes, which also previously listed Forever Living Products among the nation's most valuable private companies. Maughan's real-estate ventures include the purchase of Southfork Ranch, made famous by the "Dallas" television series, in 1992.

Reach the reporter at russ.wiles@arizonarepublic.com or 602-444-8616.