Top Cop's Problem Pal

— Gerald R. "Jerry" Sanders and William Robert "Bob" Bradley are friends and business associates. Each faces problems. Sanders's potential woes are voluntary: he wants to be mayor of a financially ailing city, San Diego. Bradley's are involuntary: he is fighting charges that he skimmed money from a troubled company he co-founded, Metabolife International, and stashed the loot in offshore tax havens.

Both Sanders, San Diego's ex-chief of police, and Bradley, a onetime tow-truck operator, own 10 percent of a small venture capital firm, Virtual Capital of California. Until he went on leave to run for mayor last month, Sanders was president of Virtual.

Sanders's campaign website advertises that he has honed his executive skills in the private sector by nurturing high-tech startups and developing homeland security technology. He has boasted of his positions as president and chief operating officer of Virtual, such as when he is listed with Chargers Champions, a so-called leadership team for the footballers, including the San Diego Regional Chamber of Commerce's Jessie J. Knight Jr., former schools superintendent Alan Bersin, Economic Development Corp. president Julie Meier-Wright, and the team's Dean Spanos.

Headquartered in downtown's Symphony Towers, the firm was set up in 2000 to search for promising technologies to license and commercialize. But reality has fallen far short of the promise: more than five years after it was founded, Virtual has yet to close one single licensing deal and has never made money.

If that's not bad enough news for Sanders, being remotely connected with a player in one of San Diego's juiciest drug, tax, and business scandals can't be helpful to a politician who would be mayor. Although he blasts city hall's "culture of secrecy" and calls for "increased accountability" and "transparent government," Sanders refused to be interviewed for this story.

For his part, Bradley has maintained a low profile. "I've heard through the grapevine that Bob isn't happy with the investment," says local banker and entrepreneur Tom Stickel, Virtual's founder and Sanders's best friend. Stickel says he doesn't even have a current phone number or address for Bradley who by all accounts made a massive fortune from his role in Metabolife.

After initially prospering, Metabolife later got in legal hot water for selling a diet pill containing ephedra and then allegedly lying about the number of complaints the company had received about the drug's dangerous side effects.

The troubles go back decades, rooted in the criminal drug-making histories of Metabolife's other two founders. In late 1988, Mike Ellis, an ex-National City cop, and Mike Blevins had been busted for making methamphetamine at a Rancho Santa Fe residence.

Blevins, who had a criminal record including drug offenses and battery against a police officer in 1973, was sentenced to five and a half years in prison. Because he cooperated with authorities, Ellis got five years of probation.

The company and its product went through several permutations, and in 1995, Metabolife began selling a diet pill containing ephedra and caffeine. Ellis was president, Blevins vice president, and Bradley chief executive officer.

Stickel, who says he raised the money to finance Virtual, says he met Bradley through Sheriff Bill Kolender, former police chief and now a backer of Sanders's mayoral bid. According to Stickel, Sanders became friendly with Bradley from his days as a cop. One reason for the chumminess is that Bradley formerly owned Bradley's Towing, says Stickel. Police get to know towing companies.

Contacted by telephone late last week, Kolender declined to be interviewed but sent word through Glenn Revell, a captain in the sheriff's department, that he can't remember introducing Stickel to Bradley, although he does recall meeting Bradley at a social function several years ago, and he knew his father when he ran Bradley's Towing.

Kolender doesn't know anything about Virtual Capital and can't specifically remember meeting Blevins and Ellis, though he is aware of Metabolife's problems, according to Revell.

Stickel launched Virtual in 2000. Torrey Pines-based Titan Corp., then calling itself an incubator of high-tech firms, "wanted access to technology information being developed by the University of California," says Stickel. Titan chipped in some of its stock for 10 percent of Virtual's original capitalization.

Stickel used that as collateral for loans and set out to have a venture capital fund that would exploit U-Cal-developed technologies. He brought in investors such as Dr. John Littlejohn of Colorado Springs (10 percent), Richard Torykian of Wall Street's Lazard Freres (20 percent), Irvine's Les P. Barkley (5 percent), and V. Wayne Kennedy, retired senior vice president of business and finance of the U-Cal system (10 percent). Stickel has 25 percent, and Jonathon Vance, former chief financial officer, has 1 percent.

But shortly after Virtual got off the ground, the dot-com and NASDAQ bubbles burst. With a war looming and tech no longer titillating Wall Street, Titan went back to being almost entirely in the defense business. "Titan lost interest but is still an investor," says Stickel.

In August of 2002, Sanders resigned as chief executive officer of United Way of San Diego and joined Virtual as president with ten percent ownership. Two months later, Bradley put his money in the pot through a Las Vegas real estate transaction.

As his investment, Bradley put up a piece of property in Las Vegas. "I looked at the property; it was a great piece of property," says Stickel, who believes Bradley had paid $2.2 million for it. Stickel tried to borrow against the land unsuccessfully and later sold it for $1.8 million in cash.

Bradley's investment came three years after word of Metabolife's founders' criminal pasts hit the headlines but preceded the November 23, 2003, Reader revelation that an Internal Revenue Service investigator filed an affidavit charging that Bradley had skimmed money from both Metabolife and the towing company, had stashed money in offshore tax havens, had kept two "off-the-books" accounts at a bank, cheated on his taxes, kept a million bucks in cash in his home, and took kickbacks from Metabolife's ad agency, among other things. According to the affidavit, Ellis and Blevins participated in similar activity.

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