Usana Sues Barry Minkow

UPDATE: The judge in this case quickly threw out all of Usana’s claims against Barry Minkow, except one. That final cause of action was settled with Usana paying Barry Minkow $200,000. In exchange, Minkow agreed to remove from the internet all materials about Usana under his control.

Usana Health Science, the multi-level marketing company investigated by Barry Minkow and team (that includes me!) has filed a defamation lawsuit against Barry in federal court. Naturally, the company is quick to point out that Minkow was a convicted felon who served time in prison for securities fraud. Barry has turned his life around, becoming a Christian pastor and assisting law enforcement in investigating and shutting down multiple investment scams. The FBI even has Barry train its employees on identifying and investigating white collar crime.

Usana is claiming that Barry misrepresented details in his report in order to make a profit off a drop in stock prcie, since he holds put options for Usana stock. (Incidentally, the stock did fall 15% yesterday to $49.85.)

Also alleged by Usana is the distortion of laboratory evidence. Our report criticized the TenX bar, which was being marketed as having 10 times that antioxidant power of fruit juice. Lab tests show that it is really only about 2 times as powerful.

The interesting part of this accusation is that the company’s website used to market TenX this way:

With 10 times the antioxidant power of any juice products currently on the market, TENX ANTIOXIDANT BLAST is unlike anything ever seen before.

Usana has now changed that statement to read as follows:

Ounce per ounce, TenX Antioxidant Blast has 10 times the antioxidant power of most juice products currently on the market.

Sounds to me like they know that the original statement was quite misleading and deceptive!

Of course, the lawsuit fails to address any of the pyramid scheme issues. I wonder why they didn’t want to discuss why almost none of their distributors turn a profit?

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