Last week, I wrote about ex-con Barry Minkow's battle with Usana Health Sciences, a nutritional supplement company which distributes its products using a controversial multi-level marketing model. Minkow and his Fraud Discovery Institute released a huge report accusing the company of being a pyramid scheme, selling overpriced products, and making a profit on the backs of it's distributors, a huge percentage of whom did not make money. He also talked about the CEO's decision to renounce his U.S. citizenship for tax advantages, a fact which the company had not previously disclosed. As the war of words has heated up, Mr. Minkow released a video on YouTube, where he continued to attack the company. In the accompanying press release, Minkow wrote that:
Since their lawsuit specifically accuses me of 'publicizing my findings, I thought, 'what better way to publicize our findings in the clearest, most compelling and concise manner, than in an easy- to-access video forum like that of YouTube.com and our own website, http://www.frauddiscovery.net?'" Fraud Discovery Institute will be producing multiple segments outlining in exquisitely clear detail what our research concluded about the un-tenability of the Usana Health Sciences, Inc. business model and then placing those segments online...
Mr. Minkow's decision to take his fight to YouTube provides another interesting case of YouTube being utilized to influence investors.. Back in February, I wrote about mPhase Technologies, a small company that appeared to be using YouTube to promote its stock (The stock plunged shortly after the hype of the video.).
Minkow also appeared on TheStreet.com's Wall Street Confidential to discuss Usana.











Reader Comments (Page 1 of 1)
3-29-2007 @ 8:58AM
steve said...
I saw Mr. Minkow's Academy Award winning performance on Youtube.com Does it make any difference that it was laced with lies, or is it just another case of to heck with the truth, anything goes?
3-29-2007 @ 11:31AM
once a crook said...
Same old anti-mlm. This guy needs a valium.
3-29-2007 @ 9:10PM
annon said...
So, what were the lies? Did he lie when he said that 3% of the distributors rake in 70% of the profit? Did he lie when he said that the founder renounced his US citizenship? You think he should be pro-mlm? I've friends that, 30 years later, are still usin Amway out of their garage.
4-06-2007 @ 11:27PM
Lisa said...
I'm sorry your friend is still using Amway product out of their garage, but does that really mean the whole MLM industry is bad or maybe just that company??
So are the things he says lies? Let's see...
#1. Minow says 70% of asociates don't make money. The number of total associates in the company is artificially inflated because many would-be customers sign up as distributors instead (only $20 one time fee), so they may earn a check here or there if they refer people. These people aren't active business builders. My dad and my mother-in-law are examples.
USANA conducted a survey of 43,000 associates 2 years ago and over 75% of them said they joined primarily for the heath benefits. Only 25% said they joined primarily for the financial benefits. Minkow throws around numbers like 70% don't make money without providing the context. Statistics can say anything you want when you take them out of context!!
#2. Dr Wentz gave up his American citizenship. That's NOT illegal. He doesn't live in the US. He lives in France. Why should he continue to pay US taxes? I guarantee if you had as much money as he did and you lived out of the country, you wouldn't be too happy giving 1/3 of your money to the IRS. Give me a break. Minkow is what's called "muddying the waters". He's trying to make Dr Wentz look bad, even though in reality he is doing NOTHING ILLEGAL. So why bring it up? Because Minkow is hoping it will look like he IS doing something illegal and it will cast doubt on the rest of USANA's business.
Read people: Minkow is the FRAUD here. His whole report is misrepresentations and statistics taken out of context. He seems to make sense if you know nothing about USANA and don't look any further than his report. But if you even dig a little bit below the surface you see the tricks this guy is pulling.
Example #1. Minkow claims that "in the case of N-Acetyl-L-Cysteine—none existed at all" in the products. This is FALSE. The lab said they were unable to test for it. That is a huge difference from "none existed at all."
Example #2. Minkow compares the price of USANA's product to brands he bought at the store. The Comparative Guide to Nutritional Supplements rates vitamins based on quality (of manufactuing, of ingredients, etc) and on formula. In 3rd ed, USANA Essentials were #1. They cost $40. Douglas Labs Ultra Preventative X was #2. It costs $57 and is not a network marketing company. BTW, My mother-in-law's Dr. recommended Douglas Labs to her. That's the kind of quality USANA should be compared against. Not some brand of unknown quality from the store.
The quality of ingredients hugely affects the price of the product. There are different forms of some vitamins and minerals, which affects things like whether it is absorbed by your body. Many times the cheaper forms of the ingredient are the least effective. You get what you pay for. USANA uses the highest quality ingredients to produce the most effective product, that's why their product is more expensive than lesser quality products. When USANA is compared to equal quality products, they are the same price or LESS.
But you see, Minkow is not really trying to make a fair comparison. He is all about sensationalism. You can see this in his video when he says things like "USANA's product costs $107 on autoship. Your product costs $13. Your selling this so cheap, how do you keep your lights on?!?"
Don't be fooled. Minkow is trying to pull a fast one over on you. He'e not out there trying to bring truth to light. He's trying to make money by lowering the stock price. And what better way to legalize his FRAUD than hide under the guise of exposing other's FRAUD?? He looks like the hero and no one questions him....
6-17-2007 @ 2:01AM
Tom said...
How can people not see what Minkow is doing. This guy never answers a question on the Street.comshow. Everytime the weakling asks him a queastion about anything scathing, Minow flips the script and talks about something totally off the mark. The guy is an idiot. He's a felon and he's working a scam now