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Savings Experiment: Snow RemovalOn Thursday, BloggingStocks writer Kevin Kelly wrote about former stock fraudster turned private investigator, Barry Minkow's scathing report on USANA Health Sciences, a multi-level marketing company. When the Wall Street Journal picked up Minkow's research, the stock tumbled 15% in one day. At 9:03 that night, USANA Health Sciences (NASDAQ: USNA) reported that it had filed a lawsuit against Barry Minkow and his Fraud Discovery Institute, accusing him of defamation. The company issued a statement that begins:
"USANA believes Mr. Minkow's statements are part of a coordinated public relations program financed by a paying client and from which Mr. Minkow will profit personally. According to reporting in the March 15, 2007 edition of The Wall Street Journal, Mr. Minkow , '...has bought 'put' options on USANA's shares in a bet the price will fall.' Mr. Minkow admits that he has been paid to conduct his 'investigation' against USANA. Further, he has engaged a public relations firm to propagate his false and misleading statements about USANA to the media."
The company goes on to point out in its statement:
"USANA believes this is a campaign to manipulate USANA's stock price that is being orchestrated by an individual who served 7 years in prison for stock fraud. In 1998, Mr. Minkow was convicted on 57 counts of fraud and conspiracy related to his carpet cleaning business, ZZZZ Best. He was also ordered to pay his customers $26 million in restitution."
First of all, Minkow was convicted in 1988, so I think USANA should put out a press release to correct this mistake. Secondly, anyone who has followed Barry Minkow knows that he is extremely open about this chapter in his life. He has since helped federal agencies to uncover roughly one billion dollars in fraud, and has received widespread commendation from federal agencies and the media. When I asked him about his purchase of put options and the company's allegations, he responded with this:
"We disclosed to 4 law enforcement agencies in writing back in February when we submitted the report our put option positions and we also disclosed our put option positions to Usana directly as well as the Wall Street Journal. Meaning we made full disclosure up front. We have never charged a victim of fraud a fee to uncover their case nor are we paid by the government. However, this case involved so much time and effort and lab reports and experts that we had to off set these expenses. But it means nothing if our information is wrong. The Wall Street Journal does not print a thing if they do not first corroborate everything we write -- and they did for several weeks. I can short any company I want to and if they are legit, they will Bury me with reasoned answers. Usana cannot, so they attack the person and ignore the arguments. I offered to forfeit any profit from put options to the FBI and I was told no. ZZZZ Best is not the unforgivable sin and conveniently forgotten is the 17 cases we have successfully uncovered for 100's of millions for free. The point is that people can change and Barry Minkow really is allowed to earn income...We will answer these "complaints" of Usana, including the put option complaint, very, very shortly, with even further evidence that we have secured." So whom should we believe in this truth-telling contest between a convicted felon turned investigator and the company he is criticizing? In the face of Mr. Minkow's overwhelming report, and the lack of a substantive defense from USANA management, I am inclined to believe Barry Minkow. We will continue to follow this story, and expect that there will be a lot more to come.
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Reader Comments (Page 1 of 1)
3-18-2007 @ 5:05PM
Tracy Lund said...
Hmm, dig deeper then. I found Minkow's manifesto to be pretty week the more digging I did. Ask him about the Labs he used to conduct his studies on the actual products, also, why is he pushing a product called Animal Pak so hard...hmmm...
3-18-2007 @ 5:05PM
Tracy Lund said...
Addendum: I believe he still owes millions to his victims, he could very well be motivated to get that chunk of change out of his life for good...
3-19-2007 @ 2:10PM
annon said...
I found it most interesting that Usana simultaneously told the FTC that the FTCs proposal that MLMs disclose distributer failure rates would ruin them and told the SEC that the proposal would cause minor changes in their marketing methods. As I understand both these filings were made under oath. If the feds follow through it sounds like someone is going to jail.
3-19-2007 @ 9:02PM
Jason said...
Way to go Barry! Finally someone standing up to these ridiculous MLM companies puming out of Utah. The only good MLM related thing coming out of Utah is the movie Believe. It's a comedy that's coming out April 20 and I hope every Utahn sees it.
the website is www.believethemovie.com
check out the video clips!
3-19-2007 @ 10:16PM
Jason said...
Way to go Barry! Finally someone standing up to these ridiculous MLM companies puming out of Utah. The only good MLM related thing coming out of Utah is the movie Believe. It's a comedy that's coming out April 20 and I hope every Utahn sees it.
the website is www.believethemovie.com
check out the video clips!
3-21-2007 @ 4:48AM
Customer said...
Usana has done a great deal in changing many people's lives. My father suffered through type II diabetes, with high cholesterol, high blood pressure, high blood sugars. Being on these wonderful products changed his levels to normal. After many years being on medication from doctors, his levels remained high. The excitement of belief through these optimal products made his health so unbelievable. Why target the good people making a difference in peoples lives?
3-25-2007 @ 10:14AM
susan said...
Im sure we are all responsible for our own choices in life,this is a health company we are talking about and whether distributors are making money or not is solely up to the individual involved,like any company you work for its simply freedom of choice quit and do something else,which brings me to the point,whos to say the products are overpriced?if people are getting great health results from using these products well that got to be something,after all thats what the company seems to be about we can see a list of figures given by minkow on distributors worldwide I have to say its a lot of people in this organisation,how about asking the recruits themselves what they feel after all they are the business.
Minkow may or may not have some valid points either way hes the one so far with the criminal convictions.
3-26-2007 @ 9:25PM
jon taylor said...
Usana was part of a tax study in Utah that showed that it is rare for participants in MLM companies like Usana to ever report a profit on their taxes. While investorts in Usana stock may have been hurt, investors in Usana's bogus "business opportunity" have in the aggregate been hurt much more! For details on the tax study (Item #2) and other MLM research , go to -
http://www.mlm-thetruth.com/mlm_research.htm
Dr. Taylor
3-28-2007 @ 4:29PM
cynthia said...
I'm a Usana Associate...
thank heavens somebody finally took a serious look at this company. It's incredidibly frustrating to work hard and receive nothing, while being told that you just need to work harder to turn a profit. I'm quite tired of being 'the worker bee' supporting the Queen Bee - Myron Wentz.
4-22-2007 @ 5:09PM
Lisa Zeise said...
I am also a Usana Associate:
1. To ‘Cynthia (?)’ who posted on 28Mar07: Network Marketing (MLM or Multi Level Marketing) is apparently not for you. Please get the help you need to be successful or discontinue the business. Contact me and I can help you: lzeise@new.rr.com.
2. I encourage everyone to apply the due diligence necessary to check out anything we attach our names to or get information from; including the companies we work for and with, personal and professional relationships and all business endeavors. My own personal experience and individual research has allowed me to say that I am proud to be associated with Usana Health Sciences and will continue to do so. Lisa Zeise
4-22-2007 @ 5:09PM
Lisa Zeise said...
Just a quick note to say that I tried to contact Dr Jon Taylor (see comment above from 28Mar07) but the email address given on his website is no longer valid.
Lisa Zeise
5-16-2007 @ 12:55AM
Peter J. Gale said...
If ONE gets Off their bum they would find that Usana Health Sciences offers the/one of the finest opportunities on the planet for true health and financial freedom. Usana family, all Minkow and his fellow sceptics need is a packet of Essentials.
( They will probably become associates!) Just sour grapes. Which reminds me, I must go and ingest my proflavanol. Bush and mates, send Usana products to Iraq,and they will bow to you..Dr Myron Wentz, one of the finest humans on the planet.And his amazing team/ family. Iam deeply humbled. http://fitminer.ws Please to keep fit and healthy, yours in all sincerety, Peter J.Gale, Norseman, Western Australia.