In a stunning release of previously undisclosed information, the ]Fraud Discovery Institute (FDI) released today documented evidence that the entire Usana Health Sciences, Inc. (Nasdaq:USNA) Medical Advisory Board secretly owns large independent Usana multi-level marketing distributorships.
“The company presents their advisory board as an independent medical body of experts that have affirmed the quality and effectiveness of Usana products. But the reality is that the entire board have vested financial interests in Usana’s success as multi-level marketing distributorships,” said Barry Minkow.
In today’s report, FDI also addressed Usana’s April 4th public conference call to investors alluding to Denis Waitley’s questionable credentials.
“Usana told the world on their earnings call that it was their oversight regarding Mr. Waitley’s fictitious masters’ degree. But FDI has proven otherwise by providing two other non-Usana, independent biographies of Mr. Waitley that also contain misrepresentations about his earning a masters degree. This proves a pattern of behavior made worse by the Usana management team covering for him.”
Today’s announcement also contains a detailed account of how Usana advisory board member Dr. Ladd McNamara surrendered his medical license in Georgia, only to then form a medical corporation in California where he is not a licensed physician, according to findings submitted to FDI by CheckMate Investigative Services. “He appears to be licensed in Ohio, but that does not meet the burden for California,” Barry Minkow added.
Other information released today exposes an alleged non-profit corporation, Sanoviv Foundation Inc., run by Dave and Myron Wentz, which was formed in California in 2004 but has never registered under IRS Publication 78.
But perhaps the most damaging new evidence comes from Usana’s own summation of 2006 North American Average Income Chart, where only 48,240 (or 33%) of the average distributors in North America received any commission at all. This leaves more than 94,000 distributors (the bottom 67%) not receiving a single dime in commissions from Usana. “These figures, derived from primary source documentation, are undeniable and confirm the very essence of our report-specifically the ‘destined for doom’ fate of the Usana distributor,” said Barry Minkow.
“How can management say to the world on a conference call, with this evidence clearly known to them – that over 94,000 Usana distributors in North America alone never earned a single dime in commissions last year – that many of their associates signed up to become preferred customers and not to build a business? Why would anyone pay for the opportunity to purchase a product at a significantly higher price than comparable other vitamins in any retail store? That is a ridiculous argument; these people are clearly signing on to build businesses,” says Minkow.
“That said, the past Usana stock repurchases of approximately 140 million dollars were made, as our chart proves, on the backs of failed distributors. This is wrong and people are being exploited. In fact, the only difference with the newly announced Usana repurchase plan of 40 million dollars, is that Bank of America is paying most of the tab through debt, and not via the 86% percent of failed associates whose compelling stories we will begin to show to the world on YouTube.com within the next 24 hours.”