USANA Watch Dog - MLM Pyramid Scheme Scam?

USANA and the Comparative Guide to Nutritional Supplements - A Symbiotic Relationship

2011-12-24T23:25:00.001-05:00

Since 1999, USANA and its distributors have used the Comparative Guide to Nutritional Supplements written by Lyle Macwilliam as proof that their supplements are the best in the industry. Every edition of the book granted USANA supplements #1 in the industry. I also found that many USANA distributors purchased the book to use as a sales tool when trying to persuade someone to join USANA. For several years this had seemed very odd to me so I did some research. Every time I looked into it, I found more and more ties between USANA and the Comparative Guide to Nutritional Supplements. Their relationship is truly symbiotic. The following are my findings.

There are 4 editions to the Comparative Guide to Nutritional Supplements. The First edition came out in 1999, Second edition in 2001, Third edition in 2003 and Fourth edition in 2007. USANA has been chosen #1 in every edition since the first edition. In fact, the first edition of the book chose USANA as the baseline to compare all other brands to.

One of the individuals listed on the book is Gregg Gies who was responsible for research, editing and layout for the Comparative Guides editions 1 through 4, was a USANA distributor #285320. I questioned Nutrisearch (Lyle Macwilliam's corporation for his books) about this and they informed me that before Gregg joined NutriSearch he purchased USANA product and at the time the only way to get the product was to sign up as a distributor (no preferred customer option). I was also told that he let the distributor lapse between ten and twelve years ago. Yet, the first edition came out in 1999, twelve years ago. It should be noted that this distributor ID achieved a leadership level of Sharer, which does not seem consistent with someone who only wanted product.

I think there is a conflict of interest here because Lyle Macwilliam basically hired a USANA distributor to perform the research for a book that ranks USANA #1 while trying to portray itself as an independent source of information regarding the nutrition industry. Gregg was also Co-Owner of NutriSearch at one point in time. Currently, he is only considered as a consultant. Although, when contacting NutriSearch, their replies to me also carbon copied Gregg at a NutriSearch email account. I'm not aware of companies giving their consultants email accounts.

Knowing that Gregg Gies was a USANA distributor around the time Lyle hired him to do research for the Comparative Guide, what do you think about the following statement made by NutriSearch?

"The research, development, and findings are the sole creative effort of the author and NutriSearch Corporation, neither of whom is associated with any manufacturer or product represented in this guide."

Another name listed on the Comparative Guide to Nutritional Supplements is Ian Black. He is responsible for the book's cover design. He is a professional graphics artist. He is also a Silver Director USANA distributor #90155 as is his wife, who is a 1-star diamond director #43050. How is it that Lyle Macwilliam wrote a book claiming to be an independent guide to the nutrition industry that chooses USANA #1 in all four editions ends up hiring a USANA distributor to do the book's cover design?

I asked NutriSearch if anyone there is a USANA distributor. They responded by telling me no one at NutriSearch is a USANA Associate. When bringing to their attention that Gregg Gies and Ian Black are USANA associates, NutriSearch responded stating that Gregg is a consultant and Ian is not and never was "employed" at NutriSearch.

Then there is Dr. Ray Strand. He is listed as one of the "Independent Nutritional Experts" used for the Comparative Guide's "Blended Standard". Ray Strand has been on USANA's medical advisory board since the 1990s, which isn't that big of a problem since the medical advisory board members are not paid a salary by USANA, but only stipends. However, Ray Strand and his wife were USANA distributors making hundreds of thousands of dollars off their downline. Their distributorship was called "AMARA Enterprises, Inc." This is a huge conflict of interest, especially when USANA mysteriously manages to rank #1 in every edition. During USANA's third quarter of 2011, Ray Strand has since left USANA to join a different MLM company, ARIIX. Their USANA distributorship appears to also have ended.

I questioned NutriSearch about Ray Strand's distributorship with USANA and NutriSearch's "independent nutritional expert" claim. NutriSearch stated that Ray Strand's recommended daily nutritional supplementation along with the eleven other authors used as references for the Blended Standard is published work in the public domain. So what? The problem I have is the usage of the term "Independent". To me, the term implies the twelve individuals used for the Blended Standard do not have a financial ownership with any of the companies listed in the book or financial motives on the outcome of the data represented in the book. Clearly, the fact Ray Strand was a USANA distributor even before the first edition of the book came out and the fact he contributed directly to the results presented in the Comparative Guide (USANA being #1 out of over a thousand choices) means Ray Strand is not an independent authority.

Yet, NutriSearch finished by stating that these independent nutritional experts are associated with different nutritional product lines and does not bias the scoring of any of the products listed in the Comparative Guide. I strongly disagree...

I should also point out that another one of the independent authorities used for Lyle's Blended Standard is Michael Colgan. He was also a USANA distributor in the 1990s. His distributor ID was #89201 and was listed under the account name "Colgan Institute". It is unclear when he left the USANA distributorship and it may be close to the time the first edition of the Comparative Guide was written.

Another interesting piece of evidence is that the 1st edition of the Comparative Guide To Nutritional Supplements (1999) appears to have been written for USANA distributors to use as a sales/recruiting tool. The following was written on Lyle's website macwilliam.net back in 2001:

Why is the USANA graph flat, with everything at 100%?

The reason the USANA graph appears as a series of yellow bars, all set at 100%, is because this represents the comparison standard. In other words, it represents USANA compared to itself. Why did we do this? The purpose was to establish a benchmark where all products would be compared to the USANA standard - this allows your clients to clearly see how the vitamin formulation they use stacks up to the USANA formulation.

I believe Lyle Macwilliam's response to the FAQ on his old website suggests he is answering a USANA distributor's question. The "your clients" refers to the USANA distributor's prospective customer/recruit. Seems quite obvious to me the motive behind the book - to sell it to the hundreds of thousands of USANA distributors.

From an archived copy of USANA's unitogether.com website which sells many books related to USANA including the 2nd edition of the Comparative Guide to Nutritional Supplements (2001), the following is the description for the book:

Fully revised and updated - Lyle MacWilliam's Comparative Guide puts the USANA Essentials against over 250 of the most common nutritional supplements on the market today. Through his incredible research, Mr. MacWilliam shows both how and why the USANA Essentials are second to none. This best seller was updated for the USANA 2001 9th Annual International Convention and it's better than ever.

So the book was updated for USANA's convention which I believe was so it could be sold to all of the participating distributors at the event. So of course the book will rate USANA #1.

On the back cover of the 3rd edition of the Comparative Guide to Nutritional Supplements (2003), there are five individuals praising the book. These five members are listed as doctors and authors of their own books. What is not disclosed to the reader is that these five doctors are also USANA distributors!

Dr. Christiane Northrup, M.D. - USANA Distributor ID# 2040175
Dr. Gerald Lewis, M.D. FRCP, FRACP - USANA Distributor ID# 203463
Dr. Laz Bannock, Ph.D. - USANA Distributor ID# 2290764
Dr. Denis Waitley, Ph.D. - USANA Distributor ID# 70541
Dr. Christine Wood, M.D. - USANA Distributor ID# 348

So out of the thousand plus supplements presented in the book, Lyle and his team were not capable of producing anyone else to praise his book other than USANA distributors? I find this very deceiving and dishonest. USANA associates would only need to tell the person they are trying to recruit to look at the back of the book and claim that five doctors trust the book and so should you, so join my downline today (before you find out the truth).

Then there is the fact that Lyle Macwilliam was on USANA's Medical Advisory Board from 2003 to 2006, the time the fourth edition to the comparative guide was being produced. I was quite vocal about this on the Yahoo USNA stock message board (where I began sharing my research since 2006). Finally after criticizing that fact for several months, Lyle Macwilliam left USANA's medical advisory board and USANA made the following statement on their Ask Andy website (which is no longer made available for some unknown reason):

"Lyle shares his expertise as a consultant with a number of nutritional manufacturers and, for this reason, was asked to join USANA's Medical Advisory Board after the release of the third edition of the Comparative Guide to Nutritional Supplements in 2003. He served on the Medical Advisory Board until 2006. Lyle decided to leave the position, in part, because he felt that that it might have created an impression of bias for his work. Lyle is neither an employee of USANA Health Sciences nor an Independent USANA Associate."

So Lyle finally figured out that after 3 years of being on USANA's medical advisory board, that it created an impression of bias for the Comparative Guide to Nutritional Supplements... Really!?

Do I need to mention that USANA received their NSF stamp only a few weeks before the fourth edition of the comparative guide came out awarding USANA the top rank again, only achievable by having a third party certification, i.e. NSF. Seems that while Lyle was on USANA's medical advisory board, information about what USANA had to do to keep #1 status was also coordinated. It was even admitted by Lyle that after the third edition, other companies adjusted their formulations and leapfrogged USANA. So how was it that USANA was able to then reformulate their product to be #1 again?

Lyle wrote the following after publishing the 4th edition: "In fact, for at least the last three years of the third edition’s run, it had been false to say USANA was ranked #1 in our research. Even though our guide still showed this product as the best in the field, other products had already eclipsed it, simply by adjusting their formulations to improve their score on our rating criteria, possibly with little or no regard for the scientific evidence supporting their changes. They simply wanted to be #1."

Yet, USANA regained that #1 position by reformulating their supplements. Lyle criticized other companies for doing reformulating their products claiming there was little or no regard for the scientific evidence supporting their changes. Gee, if that's really true, and these companies changed their formulation to be closer to this "Blended Standard", and Lyle calls that reformulation a change with no regard for scientific evidence supporting their changes, then shouldn't the same be said about the Blended Standard? Seems very hypocritical to me.

Lyle Macwilliam claimed the following regarding USANA and the Physicians Desk Reference:

"USANA nutritional products are listed in the Physician’s Desk Reference, one of a select few nutritional supplement manuacturers to merit such high recognition of product quality." - FAQ

What Lyle does not understand is that the PDR does not endorse nor offer any type of credibility for the products listed in their book. In fact, all the products listed are paid advertisements. USANA had to pay a fee to have their products listed and USANA got to chose which book to listed it in (PDR for drugs or the PDR for Herbs & Supplements). USANA chose the book for drugs. Then USANA claims their supplements are better than the rest of the vitamins because they are listed in the PDR for Drugs. Because of Lyle Macwilliam's lack of understanding regarding the PDR, he decided to repeat the same nonsense USANA did. So much for any real research. But of course the research for the Comparative Guide was done by a USANA distributor (Gregg Gies).

In Conclusion: I believe Lyle Macwilliam chose USANA to be #1 in his book from the very beginning back in 1999. Lyle hired a USANA distributor "Gregg Gies" to do research for his book. For the past 12 years, USANA has remained #1 in every edition of the Comparative Guide to Nutritional Supplements. Yet, USANA spends less than 1% of their net revenue on Research & Development (incredible if you ask me). Why research when the author of the Comparative Guide is on your medical advisory board. From the research I have done, I believe there is a symbiotic relationship between USANA and NutriSearch where one is dependent on the other. USANA's main source of praise for their product is the Comparative Guide. I have no doubt the main source of Lyle Macwilliam's sales comes from USANA distributors themselves. If one looks back at the way Lyle sold his Comparative Guide, he did so priced as bulk purchases.

According to Macwilliam.net 9 years ago regarding their 2nd edition:
1-9 books    $15.95 per copy
10+ books    $14.95 per copy
25+ books    $13.95 per copy
50+ books    $12.95 per copy

And where can you get a copy of the book? Lyle suggests buying from him directly or from USANA's website "Unitogether.com" which was a site used to sell sales tools and other books to USANA distributors. This book was intended to be sold to USANA distributors as a sales aid. Any time a USANA distributor recruits somebody into their downline, you can be almost certain that the Comparative Guide to Nutritional Supplements was used to claim USANA was #1 in the industry. Lyle also appears at just about every USANA event as a key speaker. I would like to know what other vitamin manufacturers Lyle is a key speaker for.

USANA's Third Quarter Earnings for 2011 Decline Over Previous Quarter - ARIIX to Blame?

2011-10-26T00:46:00.001-04:00

FOR IMMEDIATE RELEASE:

USANA's Third Quarter Earnings for 2011 Decline Over Previous Quarter - ARIIX to Blame?

Salt Lake City, Utah - October 26, 2011 - Net sales declined by $5,424,000 or 3.6% from the prior quarter. Earnings before income taxes declined $2,245,000 or 10.6% from the prior quarter. Several days ago I released a report showing many distributors leaving USANA to join ARIIX. Several of them were USANA's top distributors. I gave my prediction that associate levels will decline and as a result drop in overall earnings. Seems I was correct.

I'm not sure how USANA can keep a straight face while sending out a press release trying to make their third quarter earnings appear good. I predict this decline to continue due to ARIIX. Many of the USANA distributors that joined ARIIX did so during the third quarter and are still counted in USANA's active associate figures. As a result, active associates in the fourth quarter will likely continue to decline.

It's amazing that even after USANA's "Crazy Cash Contest" where associates receive huge points for recruiting additional distributors and miniscule points for signing up preferred customers, USANA still managed to lose more associates than they can recruit. I've always said USANA's business opportunity is all about selling the dream to make money instead of retailing product to customers, and this contest simply backs up my claims.

I still believe USANA has been violating China's laws by actively recruiting Chinese Nationals into their MLM business opportunity by encouraging them to open the account in Hong Kong. Mainland China has banned MLMs from operating within their country. Remember, Dave Wentz made the following statement last quarter "We definitely have a number of people [Chinese Nationals] who are building in Hong Kong. We do not have a percentage or have a number that we could point to with any accuracy." And then Jim Bramble follows that up with "Well if an individual does not have residency in Hong Kong and the ability to build in Hong Kong, then they can only build in China." So there is clearly something very sneaky going on and I believe analysts need to keep pressing USANA on this issue. I'm not sure how the SEC can continue to turn a blind eye by allowing USANA to continue breaking foreign laws.

The following are charts showing the Active Associate & Preferred Customer trends quarter by quarter. I believe they speak for themselves. The captions describe the result from Q2-2011 to Q3-2011

US Active Associates declined by 2000 or 4%

US Preferred Customers declined by 2000 or 5%

Canada Active Associates declined by 1000 or 4%

Canada Preferred Customers remained flat

Mexico Active Associates remained flat

Mexico Preferred Customers remained flat

SE Asia/Pacific Active Associates increased 4000 or 9%

SE Asia/Pacific Preferred Customers increased 1000 or 17%

Greater China Active Associates declined 9000 or 10%

Greater China Preferred Customers declined 1000 or 12%

N Asia Active Associates remain flat

N Asia Preferred Customers remain flat

USANA lost “Major Customers” to ARIIX, which may adversely affect 3rd quarter earnings

2011-10-19T01:00:00.002-04:00

USANA states in their own words the following in many of their 10-K SEC filings: My Emphasis in BOLD Red

Major Customers

Sales are made to independent Associates and Preferred Customers. No single customer has ever accounted for 10% or more of net sales in any fiscal year. Notwithstanding the foregoing, the nature of our business model results in a significant amount of sales to several different Associate leaders and their downline sales organizations. Although no single Associate has ever accounted for 10% or more of our net sales, the loss of a key Associate leader or that Associate’s downline sales organization would adversely affect our net sales and our overall operating results.

That is exactly what has and is happening!

Back on May 9, 2011 I reported that four of USANA's top executives (Fred Cooper, Jeff Yates, Mark Wilson, and Riley Timmer ) resigned from their position. However, USANA released this information publicly on May 10, 2011. How did I know 1 day ahead of time? USANA sent out a private memo to all of their Gold director distributors and up. They were privy to insider information before shareholders. However, stock analysts completely dismissed this fact. So when USANA stated in a press release that these executives resigned May 10th, that is not the case according to the May 9th private memo.

Now I'm here to give shareholders heads up on the fact that USANA has lost many of their top distributors who quit their distributorship with USANA to join ARIIX, the multilevel marketing company founded by Fred Cooper and operated by the other three ex-USANA executives who resigned in May. USANA is falling apart and stock analysts covering USANA don't seem to have the shareholders in their best interests.

After some research, I have compiled a list of USANA distributors that have decided to join ARIIX (bottom of this posting). The list is incomplete since neither company publishes who their distributors are (so secretive). Most of the USANA distributor ranking I show below are as of October of 2010. I do not have any recent information of their rankings and USANA has taken great strides at keeping the information a secret.

2 - 5 Star Diamond Director
1 – 4 Star Diamond Director
*1 - 3 Star Diamond Director
2 – Diamond Director
1 – Ruby Director
2 – Gold Director
7 – Silver Director
1 – Bronze Director
1 – Director
2 – Achiever
6 – Builder
4 – Believers
3 – Sharers

*(Revised October 25, 2011: I must at one more 3-Star Diamond Director, Robert & Daryl Allen)

~~Five~~ Six Diamond Directors are what I would consider KEY ASSOCIATE LEADERS. Many of the others were part of one of these key associate's “sales organization” and left USANA to follow their leader. These key leaders have been plastered all over USANA's website, sales material, training material and all over YouTube promoting USANA's business model and its product. However, these Diamond Directors left USANA even before ARIIX launched, which gaurantees these members key positions in the ARIIX compensation business model. This really says a lot about USANA's products and doesn't bode very well for the company. Also doesn't help that Dr. Ray Strand left USANA to join ARIIX. Recently Liz Strand (Ray's wide) had her USANA distributor page shut down as well.

That's not all. USANA terminated a couple of these key leaders (Lynn Allen Johnson & Duke Tubtim) when they were reported to USANA executives for being on a conference call with ARIIX and other interested individuals who wanted to find out more about ARIIX. Many should be very familiar with a recent 2008 arbitration that awarded an ex-USANA distributor $7,000,000 for being wrongfully terminated back in 2003. Well, now we are talking about a couple star-diamond directors that USANA terminated just a few months ago. So where are stock analysts on this issue?

Now I want to make a little prediction, but first I have to make the following very clear. I have no financial position on USANA's stock or any competitor to USANA. I have never traded USANA stock and never plan to. No one is paying me to write anything about USANA. I am volunteering my time to educate people. I do not like to see people lose their hard earned money because they were deceived or misled.

With that said, I believe USANA's active associate numbers will decline across most of their territories, with China being the exception. If USANA's own SEC filings state that “the loss of a key Associate leader or that Associate’s downline sales organization would adversely affect our net sales and our overall operating results. ” Notice it doesn't use the term “might”,“maybe” or “possibly”. It states it “would” adversely affect their overall operating results

The following is a list I have compiled of USANA distributors who have joined ARIIX.

USANA Distributor #133412 - Lynn Allen Johnson - 5 Star Diamond Director
ARIIX Distributor #10146 - Lynn Allen Johnson - Vision is Power Inc.- http://www.myariix.com/lynnallenjohnson

USANA Distributor #2119355 - Duke Tubtim - 5 Star Diamond Director - Millionaire Club
ARIIX Distributor #10198 - Duke Tubtim - Kaizen Support Group Inc. - http://www.myariix.com/Kaizensupport

USANA Distributor #2111980 - Timothy Lewis - 4 Star Diamond Director - Millionaire Club
ARIIX Distributor #10138 - Timothy Lewis - 4DL Enterprises Inc. - http://www.myariix.com/4dl

USANA Distributor #33009 - Robert & Daryl Allen - 3 Star Diamond Director - http://robertallen.usana.com
ARIIX Distributor #213647 - Robert Allen - http://www.myariix.com/robertallen

USANA Distributor #295671 - Steve and Myrna Swartz - Diamond Director - Millionaire Club
ARIIX Distributor # 10168 - Steve Swartz - Have it All, Inc. - http://www.myariix.com/steve

USANA Distributor #3053770 - Iris Lee - Team ASD – Diamond Director - http://teamasd.usana.com/
ARIIX Distributor #10228 - Iris Lee - IS Health Enterprises Ltd. - http://myariix.com/teamasd

USANA Distributor # - Sandy LV - Ruby Director -
ARIIX Distributor #19176 - Sandy LV - http://www.myariix.com/sandy

USANA Distributor #2127139 - Tatyana Sutherland - Gold Director - http://www.usana.com/webhosting/tatyana
ARIIX Distributor #11188 - Tatyana Sutherland

USANA Distributor #2765838 - Tracee Gluhaich - Gold Director - http://truehealthintl.usana.com/
ARIIX Distributor #18696 - Tracee Gluhaich - http://www.myariix.com/truehealthintl

USANA Distributor #3216982 - Phyllis Goodman - Silver Director - http://health4lifeinc.usana.com/
ARIIX Distributor #10847 - Phyllis Goodman - http://www.myariix.com/phyllisgoodman

USANA Distributor #2137359 - Glenna and Richard Norris - Silver Director
ARIIX Distributor #59886 - Glenna and Richard Norris, CHHC - http://www.myariix.com/gnr

USANA Distributor #3704262 - Randy "Yosef" Katz - Silver Director - Sabai Marketing Group http://www.usana.com/webhosting/sabaiARIIX Distributor #10247 - Randy "Yosef" Katz - Sabai - http://www.myariix.com/esuite/home/sabai

USANA Distributor #86832 - John & Carol Cliffe - Silver Director - http://riskfree.usana.com/
ARIIX Distributor #11327 - John Cliffe -

USANA Distributor#2811720 - David & Monica Rendon - Silver Director - http://www.achievinghealth.usana.com
ARIIX Distributor #42887 - David & Monica Rendon - http://www.myariix.com/rendon

USANA Distributor #2554180 - Marlisa Hurt - Silver Director - http://www.usana.com/webhosting/marlisa
ARIIX Distributor #33636 - Marlisa Hurt

USANA Distributor #2320280 - Jean Amicarella - Silver Director - http://www.usana.com/webhosting/jeana
USANA Distributor #3669898 - Jean Amicarella - Sharer - http://www.usana.com/webhosting/jeanamic (Yes, two USANA IDs with separate websites for this unique distributor)
ARIIX Distributor #17766 - Jean Amicarella - http://www.myariix.com/ariixinfo

USANA Distributor #128089 - Larry & Susie Sisson - Bronze Director - http://www.usana.com/distWeb/site/sisson
ARIIX Distributor #10547 - Larry & Susie Sisson - http://www.myariix.com/myfreedom

USANA Distributor #244097 - Arlene Hutchinson - Director - http://www.usana.com/webhosting/bhealthy2
ARIIX Distributor #11578 - Ennis Hutchinson - http://www.myariix.com/marketing

USANA Distributor #3940012 - Pollawat Pankam - Achiever
ARIIX Distributor #11357 - Pollawat Pankam - http://www.myariix.com/esuite/home/username/

USANA Distributor #2398784 - Maryann Cady - Achiever - http://www.usana.com/webhosting/maryanncady
ARIIX Distributor #38008 - Maryann Cady - http://www.myariix.com/maryanncady

USANA Distributor #3936760 - Somboon Pongpruk - Builder - http://how2success.usana.com/
ARIIX Distributor #11376 - Somboon Pongpruk - http://www.myariix.com/esuite/home/online

USANA Distributor #3909038, 4112764 & 4380414 (Builder) - Anh Vongbandith - http://www.dreamsmadeinc.usana.com/
ARIIX Distributor #12816 - Anh Vongbandith - http://www.myariix.com/DreamsMadeInc

USANA Distributor #3250998 - Melissa Daniels - Builder - http://www.usana.com/webhosting/mdaniels
ARIIX Distributor #11496 - Healthy 4 Life, LCC - Melissa Daniels - http://www.myariix.com/healthy4life

USANA Distributor #2479038 - Lucia Sanchez - Builder - http://www.usanamexico.usana.com
ARIIX Distributor #34596 - Lucia Sanchez - http://www.myariix.com/ariixmexico

USANA Distributor #4202538 - Ed Walls - Builder - http://teamwalls.usana.com/
ARIIX Distributor #15538 - Edward Walls -

USANA Distributor #4086676 - John R. Parke - Builder - http://4086676.usana.com/
ARIIX Distributor #11507 - John R. Parke

USANA Distributor #4154550 - Rick & Cynthia Evans - Believer - http://cevans.usana.com/
ARIIX Distributor #10896 - Rick & Cynthia Evans - http://www.myariix.com/rickevans

USANA Distributor #4446386 - Irv Segal - Believer - http://irvsegal.usana.com/
ARIIX Distributor #21328 - Irv Segal -

USANA Distributor #4353344 - Loredana Nuñez - Believer - http://healthytime.usana.com/
ARIIX Distributor # - Francisco & Loredana Moreno -

USANA Distributor #4387858 - Ric & Carmen Goodson - Believer -
http://ricandcarmen.usana.com/
ARIIX Distributor #11387 - Ric & Carmen Goodson -
http://www.myariix.com/carmengoodson

USANA Distributor #3076606 - Angie Lee - Sharer
ARIIX Distributor #17818 - Angelica Lee - http://www.myariix.com/angielee

USANA Distributor #4202828 - Sou Fin Saechao - Sharer - http://4202828.usana.com/
ARIIX Distributor # - Sou Fin Saechao

USANA Distributor #3914138 - Jidbhong - Jayavasu - Sharer -
ARIIX Distributor #56076 - Dr Jidbhong Jayavasu - http://www.myariix.com/dr_jay

USANA Distributor #7662974 - Edward Williams - http://m3ister.usana.com/
ARIIX Distributor #12996 - Edward Williams - http://www.myariix.com/esuite/home/m3ister/

USANA Distributor #2926598 - Rick Billings - http://www.usana.com/distWeb/site/rickbillings
ARIIX Distributor #10727 - Rick Billings - http://www.myariix.com/RickBillings

USANA Distributor #2812402 - Mike Delevante - http://www.usana.com/distWeb/site/miked
ARIIX Distributor #10817 - Mike Delevante - http://www.myariix.com/mikedelevante

USANA Distributor #8297220 - Debbie Turner - http://turner.usana.com/
ARIIX Distributor #20916 - Debbie Turner - http://www.myariix.com/turner/

USANA Distributor #9638662 - Susan Hamilton - http://www.usana.com/webhosting/susanhamilton
ARIIX Distributor #34007 - Susan Hamilton, CHHC - http://www.myariix.com/SusanHamilton

USANA Distributor #9202660 - Chad zinda - http://www.usana.com/webhosting/9202660
ARIIX Distributor # - Chad Zinda

USANA Distributor #9613734 - Lyn Clark -
ARIIX Distributor #37967 - Lyn Clark

USANA Distributor #7016988 - Emery Krahn - http://www.usana.com/webhosting/emery
ARIIX Distributor #36707 - Emery Krahn - http://www.myariix.com/emery

USANA Endorses Manny Pacquiao or Vice Versa? Special Privileges For One Lucky Distributor

2011-09-23T00:02:00.000-04:00

How does a distributor obtain special privileges from USANA? Hundreds of thousands of individuals join USANA each year as an associate/distributor. 99% of them never manage to even see a profit. But once in a blue moon, USANA picks a winner. This winner is Tim Sladeck.

How does this work? Good question! I'm not really sure. What I have found is the following.

Tim Sladeck works on many of Manny Pacquiao's endorsement deals. Who is Manny Pacquiao? He is the first boxer in history to hold world titles in 8 different weight divisions. Manny endorses USANA and takes USANA supplements. In fact, USANA has taken this endorsement to a whole new level. USANA now offers a special "Manny Basic Pack" and "Manny Advanced Pack". Both are considered a MyHealthPak deal, so they are nonrefundable (yes, not refundable because they are not resalable according to USANA). No big deal here, just smart advertizing.

But here's the fishy part: USANA customer service is instructed to sell these special Manny Packs through Tim Sladeck's distributor website! So the USANA distributor Tim Sladeck appears to make all of the sales! Think I'm kidding? Below is a screenshot of the USANA document that proves it.

Following the http://www.usana.com/webhosting/8662528 link takes you to Tim Sladeck's USANA website. So USANA has instructed their customer service to sell this "Manny Pack" exclusively through a USANA distributor named Tim Sladeck.

So is any USANA distributor allowed to make a special name for a "MyHealthPak" package, like "Obama Advanced Pack", and have the customer service direct all sales through that single distributor if anyone in the country calls about it? What a deal! Sign me up!!!

Dr. Ray Strand Leaves USANA to Join ARIIX

2011-08-16T23:41:00.002-04:00

Dr. Ray Strand, another prominent member of USANA Health Sciences, Inc. (USNA) has left to join ARIIX. Strand has been part of USANA's medical advisory board pretty much since USANA's beginning. He has played a very important role for USANA not only by acting as a credible figure on USANA's team with his title, but is also one of the so called "independent authorities" in Lyle MacWilliam's book, the Comparative Guide To Nutritional Supplements.

This departure becomes even more interesting because not only was Dr. Ray Strand a medical advisor for USANA, but is also a USANA distributor who has reached USANA's millionaire club. You wouldn't know this however, because USANA does not promote Dr. Ray Strand as a distributor. In fact, the distributor account (#73631) is under his wife's name, Elizabeth Strand. Here is their USANA distributor page. So what will happen with this distributor account now? Will USANA terminate their account like they did to other top distributors who took interest in ARIIX? Will they simply leave USANA to join ARIIX?

I look forward to seeing how this plays out. I think USANA is crumbling in the US market and wouldn't be surprised if USANA moves their headquarters out of the US all together.

If a USANA Distributor Asks You To Join Their MLM, Ask Them This Simple Question

2011-08-15T06:00:00.000-04:00

If a USANA distributor asks you to join their Multi-Level Marketing business opportunity, simply ask them the following question.

How much commission do you make each month on average from (1) Downline Distributor's purchases and (2) Preferred Customer's purchases?

If the promoting distributor has actually made anything (66% of them haven't made a penny), then the answer you get will likely break down as the following: 90% of their commission came from Downline Distributors and 10% came from Preferred Customers. What does this mean? It means the distributor's primary job is to sell the business opportunity and recruit more distributors. Only 10% of the business opportunity is committed toward selling the product and signing up preferred customers.

How do I know this? Because 90% of USANA's products are purchased by USANA distributors according to their latest SEC filings. Does this mean distributors want the product because they use it or because they have a customer to resell it to? Absolutely not. In fact, USANA distributors are forced to purchase over $100 worth of product every 28 days in order to participate in the business venture. It is a business obligation. If the distributor fails to make this required purchase, then that distributor loses all volume points accumulated, is not eligible to collect commission and is no longer considered as “Active”.

So in order to be successful in USANA, distributors must recruit enormous downlines. Not only that, but these distributors must pressure downline members to also recruit more distributors. This is an endless chain of recruiting. More than half of new distributors stop participating within the first year. So in order for MLMs to survive, distributors must recruit new distributors at a higher rate than those who are dropping out. This is a pyramid scheme. If the recruitment of new distributors were to stop, then the MLM company like USANA would go out of business in just a couple months. The product itself cannot retain enough customers. Only the dream of becoming rich in their deceptive business opportunity keeps the company alive. Only 1% of those who join make a profit.

Now if that USANA promoter answers your question by telling you they make most of their commission from preferred customers, then ask them what the dollar amount is per month. If it is not more than $100, then they are not even recovering the expense of their $100 required product purchase, not to mention all the other expenses incurred.

Another answer you may hear is that they immediately received a $100 commission check their first week. This is a very deceptive answer because of the following. If you joined USANA and signed up purchasing their $1250 "Professional Pack" starter package, you will automatically receive a $100 commission check without having to sell anything! Now ask yourself, if you purchase something for $1250 and receive $100 back, would you seriously consider that an earning let alone a commission? This is one of USANA's dirty little secrets ad violates even their own policies and procedures by paying a commission to someone without any selling whatsoever. It's also used to manipulate their numbers.

If you are asked to join, consult with your accountant regarding the business opportunity. Take them the compensation plan and ask them to evaluate it.

Does USANA having a product mean they are not a MLM pyramid scheme? No.

2011-08-12T22:41:00.000-04:00

Remove the USANA product from the equation and what do we have? The same thing.

Most MLM promoters claim that Multilevel Marketing is not a pyramid scheme because they offer products and claim pyramid schemes don't have products. This is far from the truth. Modern pyramid schemes offer products to make their scam appear legitimate. Lets look more closely at this and use USANA as the example.

Scenario 1) Lets pretend that USANA had no product. All the distributors who want to participate in the compensation plan would be required to pay $68 every four weeks (13 times a year) in order to collect commission from their downline. Those who make their payments would be considered as “Active Associates”. If a distributor neglects to make their payment for any given four week cycle, then that distributor loses all rights to collect commission from their downline and are no longer considered as “Active”.

So what does this $68 fee consist of? Well, $23 of it goes toward paying the operators of the pyramid scheme (USANA executives and employees). The remaining $45 is used to pay commissions and bonuses to Active Distributors who joined earlier. The amount of commission paid to a distributor depends on the number of active members they have in their downline. The more you recruit and get others to recruit for you, the more you make.

Distributors with 10 active members in their downline would receive $100 every four weeks.

Distributors with 100 active members in their downline would receive $1000 every four weeks.

Distributors with 1000 active members in their downline would receive $10,000 every four weeks.

Unfortunately, the majority of participants (over 90%) do not make enough to even cover the required $68 fee they must pay every four weeks to participate. Most participants don't even receive a single commission check! This is a pyramid scheme. While distributors aren't paid when new recruits pay the $19.95 startup kit (required to become a member), the distributors are paid commission when downline members pay their $68 mandatory participation fee. Thus, distributors are paid to recruit!

Scenario 2) Now lets go ahead and include USANA's products into the mix. USANA's cost to produce their product is $18. Adding that to the $68 fee and we end up with $86, but that is not what distributors will actually pay. In fact, USANA distributors will pay an additional $14, which brings the total to $100. These are actual figures based on USANA's SEC filings. For ever $100 of net revenue, 45% goes toward commissions and bonuses paid to distributors, 23% goes toward “selling, general & administrative” expenses, and 18% goes toward USANA's “cost of sales”.

The only differences between the two scenarios is that one you get a product and the other you don't. Both are still pyramid schemes. Both have over 90% of participants losing money. These percentages are fixed no matter how hard members try to “work the business”. Success in MLM takes a lot of hard work at deceiving people into throwing their hard earned money away by joining a pyramid scheme.

If you are considering joining USANA or any other MLM company, take the compensation plan to your accountant and ask them if you should join. Ask your accountant if the majority of their clients who are in MLM lose money. This broad of a question would not break any client confidentiality rules. Do not let the USANA promoter pressure you into making a decision without doing your own homework. 99% of MLM participants lose money.

USANA Recruits Chinese Nationals To Participate and Build Their Business in Hong Kong in Violation of Chinese Direct Selling Laws.

2011-07-28T00:39:00.000-04:00

I've been stating this for years now. USANA has been recruiting citizens from mainland China as distributors in a multilevel marketing company for their Hong Kong territory. I've pointed out in the past how USANA's Hong Kong distributor numbers are way out of proportion (now 1 in every 112 Hong Kong citizens are USANA distributors = RED FLAG) and that mainland China only allows their citizens to participate in SINGLE-level marketing companies.

Well, today USANA was asked during their dismal second quarter earnings results the following question by John San Marco at Janney Montgomery Scott LLC:

"Do you know what the percentage of your Hong Kong associates that are actually Chinese nationals?" - Transcripts

Finally, someone asks USANA a real question instead of the soft balls USANA usually receives. Dave Wentz's first answer was a very calculated "No, we do not". If Dave is being honest, then USANA's management team doesn't know their ass from a hole in the ground. But I'm sure USANA knows the answer but refuses to publicly disclose that number.

Better yet, Dave Wentz could have just simply quoted their own internal document that surfaced over a year ago!

"IV. What is the biggest market that buys our products that we are not eligible to operate in?

i. Once again I couldn’t give you an exact answer on this. Since I work with our Asian markets, I know that a large sum of product ends up in China, but I’m sure product somehow gets shipped to other unauthorized markets as well… "

Dave could have simply stated that he isn't sure of the exact percentage, but that a "LARGE SUM OF PRODUCT ENDS UP IN CHINA". But Dave is only the CEO, so why would he know any of this...

After John San Marco asked for USANA to at least give a ball park estimate on the percentage, Dave Wentz replies back with:

"We definitely have a number of people who are building in Hong Kong. We do not have a percentage or have a number that we could point to with any accuracy."

Really!? Chinese Nationals "building in Hong Kong"? Uh oh! Dave Wentz was not suppose to admit that. During the first quarter's conference call 3 months ago, USANA's Fred Cooper said "we have a large group of Asian Associates who are involved with USANA only because of the products and are buying in Hong Kong for consumption only."

So now USANA is in a pickle. Dave Wentz lets the truth come out and admits that the Chinese Nationals are actually building a USANA downline in Hong Kong. So USANA has been "Cheating in China". And of course they are having trouble "transitioning" these distributors over to BabyCare because they all know that without a downline they have no chance of making a dime. The product is over priced and over rated. There is little to no demand for USANA's product except as a required purchase to participate in a pyramid scheme. To transition these Chinese Nationals over to BabyCare would mean breaking apart their already formed downlines. And best of all, these downlines are attached beneath many of USANA's top distributors. That is why USANA's distributor leaders were upset about some changes USANA was trying to implement which forced USANA to quickly retract their plan. To split up the Chinese Nationals out from USANA would mean top distributors of USANA losing tens of thousands of dollars in commissions. Commissions which come from the mandatory product purchases by these Chinese Nationals in order to participate in the scheme.

Lastly, John San Marco asks USANA if there are any Chinese Laws that prevent Chinese Nationals from doing any sort of multilevel marketing outside their borders. Dave defers the question to Jim Bramble, USANA's legal officer. Jim dances around the question and John had to then be more specific. Finally, Jim makes the following statement:

"Well if an individual does not have residency in Hong Kong and the ability to build in Hong Kong, then they can only build in China." - Jim Bramble

Jim follows that up with a lot of rambling and back peddling. So in otherwords, Chinese Nationals are not legally allowed to participate in USANA's multilevel marketing business opportunity whatsoever. I have been making this claim for a while now USANA finally admits it. But wait a minute, in regards to Chinese Nationals, Dave Wentz had just stated that "We definitely have a number of people who are building in Hong Kong." I think we have a winner folks. USANA caught in a lie regarding Chinese Nationals as USANA distributors.

I want to thank John San Marco at Janney Montgomery Scott LLC for asking USANA his questions. Good job.

USANA Second Quarter 2011 Earnings Results Reveal Stagnant Distributor Base

2011-07-27T00:28:00.000-04:00

USANA Health Sciences, Inc (USNA) released their second quarter financial statement on July 26, 2011 and they still can't seem to grow in the United States, Canada, Mexico, Australia, New Zealand, Japan, or Malaysia. In fact, USANA seems to be relying primarily on Hong Kong and mainland China. We have heard USANA's excuse for the lack of distributors for several quarters now, which is to blame the bad economy. However, if you read much about the MLM industry, it is said that the industry benefits from a down economy because people need jobs and are more likely to join companies like USANA. If you look at Herbalife (HLF), you'll see that they have been "increasing" their distributor base in North America and Mexico. So what is USANA's problem? Is the pyramid scheme becoming more clear in the eyes of potential recruits? Is it the fact distributors are unable to retail the product for more than their cost since it is over priced and preferred customers get it at the same price as distributors?

We'll soon listen to USANA's 2nd quarter conference call in the coming hours and doubt anything relevant will be mentioned by USANA. Maybe I will be surprised! I think the following question should be asked by stock analysts during the conference call:

ANALYSTS, ASK THIS DURING CONFERENCE CALL:

USANA, is it true you terminated Lynn Allen Johnson & Duke Tubtim (Both are 5 star diamond directors) because they showed an interest in ARIIX (company started by former USANA president Fred Cooper). What about Steve Swartz & Tim Lewis (Diamond and 4 star diamond directors), were they "terminated" as well? All four of these members are now active members in ARIIX; have additional USANA distributors joined ARIIX following the ex-USANA leaders? Do you expect lower distributor figures for the United States in the third quarter as a result of ARIIX? And most importantly, do you expect these former USANA leaders mentioned above to sue USANA because they were terminated? How is this distributor termination any different than the one where USANA was forced to pay $7,000,000 to TWO distributors for wrongful termination?

I will be disappointed if analysts never mention the termination of their top distributors because investors should be made aware of this.

	2010-Q2	2010-Q3	2010-Q4	2011-Q1	2011-Q2
ACTIVE ASSOCIATES
United States	57000	55000	51000	49000	49000
Canada	26000	25000	24000	24000	24000
Mexico	12000	11000	11000	10000	10000

SE Asia Pacific	44000	46000	41000	40000	43000
Greater China	63000	89000	93000	82000	87000
North Asia	8000	8000	8000	8000	9000

ACTIVE PREFERRED CUSTOMERS
United States	39000	37000	36000	38000	37000
Canada	15000	14000	14000	14000	13000
Mexico	3000	3000	4000	3000	3000

SE Asia Pacific	6000	7000	6000	6000	6000
Greater China	2000	12000	16000	8000	8000
North Asia	1000	1000	1000	1000	1000

Top USANA associates leave USANA for ARIIX - a MLM founded by former USANA president Fred Cooper

2011-07-24T14:13:00.008-04:00

From USANA to ARIIX.

Fred Cooper, Mark Wilson, Jeffrey Yates and Riley Timmer resigned from USANA on May 9th, 2011 launched their own multilevel marketing company called ARIIX. At the beginning of July, USANA discovered that several of their top distributors (and I mean very top) had joined ARIIX as founding distributors. USANA terminated these members and may have a much larger problem looming. I believe we have to wait until the Third Quarter financial results to see the damage if any ARIIX has on USANA's distributor numbers.

When top distributors leave one MLM company to join another, their devote congregation (Downline members) usually follow. These leaders were used in virtually all of USANA's literature as well. So who are these so called USANA leaders that joined ARIIX?

USANA Distributor #2111980 - Timothy Lewis - 4 Star Diamond Director - Millionaire Club
ARIIX Distributor #10138 - Timothy Lewis - 4DL Enterprises Inc. - http://www.myariix.com/4dl

USANA Distributor #133412 - Lynn Allen Johnson - 5 Star Diamond Director - Millionaire Club
ARIIX Distributor #10146 - Lynn Allen Johnson - Vision is Power Inc.- http://www.myariix.com/lynnallenjohnson

USANA Distributor #2119355 - Duke Tubtim - 5 Star Diamond Director - Millionaire Club
ARIIX Distributor #10198 - Duke Tubtim - Kaizen Support Group Inc. - http://www.myariix.com/Kaizensupport

USANA Distributor #295671 - Steve and Myrna Swartz - Diamond Director - Millionaire Club
ARIIX Distributor # 10168 - Steve Swartz - Have it All, Inc. - http://www.myariix.com/steve

(There may be more leaders who joined ARIIX, and I will post them on here when I find them)

These members have all made over one million dollars in commission and bonuses at USANA and they decided to take a risk and join ARIIX instead. Interestingly enough, all four of these USANA distributors are placed at the very top of ARIIX's distributor hierarchy (because they were the first ones in). A couple of these members have written on the internet why they believe they were terminated by USANA and express their displeasure.
Lynn Allen Johnson letter
Duke Tubtim letter

Now USANA does have a policy in place that allows their distributors to join other MLM companies as long as the other company does not offer a competing product. Well, ARIIX markets vitamins and minerals just as USANA does. So none of USANA distributors can join ARIIX and remain a USANA distributor. So are other USANA distributors joining ARIIX? You bet!

As I find additional USANA members also with ARIIX, I will update the list below.

USANA Distributor #3704262 - Randy "Yosef" Katz - - Sabai Marketing Group http://www.usana.com/webhosting/sabai
ARIIX Distributor #10247 - Randy "Yosef" Katz - Sabai - http://www.myariix.com/esuite/home/sabai
See Randy Yosef Katz USANA resignation letter

USANA Distributor #3940012 - Pollawat Pankam -
ARIIX Distributor #11357 - Pollawat Pankam - http://www.myariix.com/esuite/home/username/

USANA Distributor #3936760 - Somboon Pongpruk - http://how2success.usana.com/
ARIIX Distributor #11376 - Somboon Pongpruk - http://www.myariix.com/esuite/home/online

USANA Distributor #7662974 - Edward Williams - http://m3ister.usana.com/
ARIIX Distributor #12996 - Edward Williams - http://www.myariix.com/esuite/home/m3ister/

(added to this list Aug 5, 2011)
USANA Distributor #3053770 - Iris Lee - Team ASD - http://teamasd.usana.com/
ARIIX Distributor #10228 - Iris Lee - IS Health Enterprises Ltd. - http://myariix.com/teamasd

(Following added to this list Aug 20, 2011. These USANA Distributors were all part of the Team "Global Success Leaders" in USANA with Lynn Allen Johnson. Now they are all part of the same team and same name, but under ARIIX. )
USANA Distributor #2926598 - Rick Billings - http://www.usana.com/distWeb/site/rickbillings
ARIIX Distributor #10727 - Rick Billings - http://www.myariix.com/RickBillings

USANA Distributor #4154550 - Rick & Cynthia Evans - http://cevans.usana.com/
ARIIX Distributor #10896 - Rick & Cynthia Evans - http://www.myariix.com/rickevans

USANA Distributor #2812402 - Mike Delevante - http://www.usana.com/distWeb/site/miked
ARIIX Distributor #10817 - Mike Delevante - http://www.myariix.com/mikedelevante

USANA Distributor #3909038, 4112764 & 4380414 - Anh Vongbandith - http://www.dreamsmadeinc.usana.com/
ARIIX Distributor #12816 - Anh Vongbandith - http://www.myariix.com/DreamsMadeInc

USANA Distributor #2127139 - Tatyana Sutherland - http://www.usana.com/webhosting/tatyana
ARIIX Distributor #11188 - Tatyana Sutherland

USANA Distributor #4086676 - John R. Parke - http://4086676.usana.com/
ARIIX Distributor #11507 - John R. Parke - 11507

(Following added to this list Aug 23, 2011.)
USANA Distributor #: 3250998 - Melissa Daniels - http://www.usana.com/webhosting/mdaniels
ARIIX Distributor #: 11496 - Healthy 4 Life, LCC - Melissa Daniels - http://www.myariix.com/healthy4life

USANA Distributor #: 128089 - Larry & Susie Sisson - http://www.usana.com/distWeb/site/sisson
ARIIX Distributor #: 10547 - Larry & Susie Sisson - http://www.myariix.com/myfreedom

USANA Distributor #: 2765838 - Tracee Gluhaich - http://truehealthintl.usana.com/
ARIIX Distributor #: 18696 - Tracee Gluhaich - http://www.myariix.com/truehealthintl

(Following added to this list Aug 29, 2011.)
USANA Distributor #: - Sandy LV - Ruby Director -
ARIIX Distributor #: 19176 - Sandy LV - http://www.myariix.com/sandy

USANA Distributor #: 8297220 - Debbie Turner - http://turner.usana.com/
ARIIX Distributor #: 20916 - Debbie Turner - http://www.myariix.com/turner/

USANA Distributor #: 2479038 - Lucia Sanchez - http://www.usanamexico.usana.com
ARIIX Distributor #: 34596 - Lucia Sanchez - http://www.myariix.com/ariixmexico

(Following added to this list Sept 1, 2011.)
USANA Distributor #: 244097 - Arlene Hutchinson -http://www.usana.com/webhosting/bhealthy2
ARIIX Distributor #: 11578 - Ennis Hutchinson - http://www.myariix.com/marketing

USANA Distributor #: 2320280 - Jean Amicarella - http://www.usana.com/webhosting/jeana
USANA Distributor #: 3669898 - Jean Amicarella - http://www.usana.com/webhosting/jeanamic (Yes, two USANA IDs with separate websites for this unique distributor)
ARIIX Distributor #: 17766 - Jean Amicarella - http://www.myariix.com/ariixinfo

(Following added to this list Sept 15, 2011.)
USANA Distributor #: 9638662 - Susan Hamilton - http://www.usana.com/webhosting/susanhamilton
ARIIX Distributor #: 34007 - Susan Hamilton, CHHC - http://www.myariix.com/SusanHamilton

USANA Distributor #: 2137359 - Glenna and Richard Norris
ARIIX Distributor #: 59886 - Glenna and Richard Norris, CHHC - http://www.myariix.com/gnr

USANA Distributor #: 2398784 - Maryann Cady - http://www.usana.com/webhosting/maryanncady
ARIIX Distributor #: 38008 - Maryann Cady - http://www.myariix.com/maryanncady

Finally, USANA Receives FDA certification for Pharmaceutical Good Manufacturing Practices.

2011-07-11T21:34:00.000-04:00

I have criticized USANA for many years for not seeking certification to back their claim that they adhere to "Pharmaceutical GMP". But after 19 years, USANA finally gets the certification and can now use this fact to bolster their product's manufacturing quality. The certification was done by none other than the United States Food and Drugs Administration. Finally, USANA does something right.

Now if they can fix their compensation plan to eliminate the pyramid scheme in which 99% of associates who joined the business opportunity with the intent to make money actually end up losing money. Those with no intent to make money sign up as preferred customers. All associates are required to continually purchase over $100 worth of product every 28 days in order to participate in the business venture. Those mandatory purchases pay out commission to the upline associates. However, the associate making those purchases receive no commission even if they retail the product. This is why I believe USANA is a pyramid scheme.

The FTC made the following statement regarding pyramid schemes:

"...a multi-level compensation system funded primarily by payments made for the right to participate in the venture is an illegal pyramid scheme." - Staff Advisory Opinion - Pyramid Scheme Analysis

Now one of USANA's very top associates who claims to have made over $4 million as a USANA distributor recently made the following statement when explaining to team members whether they should join as distributors or non-distributors:

"Our recommendation, unless you plan to make a lot of retail sales (which most Associates don’t, because of the USANA PC Program), would be to enroll as a non-Distributor Associate, since you would be charged sales tax on the lower, Wholesale, rather than Retail, prices of taxable items for your location." - Distributor or Non-Distributor Associate - by Pete and Dora Zdanis

So like I have pointed out many times, USANA's distributors cannot retail the product because the preferred customers get it at the same price the distributors do. Here we have a top USANA distributor who has been with the company for 18 years (since the beginning) admitting that most associates don't make a lot of retail sales because of the preferred customer program. USANA has 213,000 ACTIVE associates and 70,000 ACTIVE preferred customers. Since there are 3 associates for every 1 preferred customer, it doesn't take a genius to come to the conclusion that very little marketing of USANA products goes on beyond the associates.

I bring this up to make my point that USANA's commissions are funded primarily by their associates' required 4 week purchases which are made for the right to participate in the venture and be commission eligible. The FTC stated that commissions funded primarily by these required payments is illegal pyramid scheme. I believe USANA can do it legitimately by doing one of two things.

1) Either stop FORCING associates to purchase over $100 worth of products every 4 weeks in order to be commission eligible (you lose any sales points built by preferred customers or downline associates if you fail to make these purchases)

OR

2) Stop paying commission to upline distributors from the FORCED purchases made by their downline distributors in order to fulfill business obligations. The associates are buying product from USANA, not each and every upline distributor above them.

Of Course, USANA will never consider doing either one of my suggestions because it would collapse the pyramid scheme and the company would go out of business in less than 3 months. This is because the only distributors who would continue to make product purchases would be those who actually want to product and not because it is a required business obligation.

So how about it USANA, would you like to make the next step in the right direction?

USANA Allows Their Top Distributors Dictate Which Rules and Foreign Laws are Followed. USANA Sends Three Confusing Letters To Their Chinese Distributors.

2011-05-14T23:46:00.000-04:00

It is clear to me who really runs USANA; The top 1% of distributors.

I have received a series of letters from an anonymous source that USANA sent to their Chinese distributors. I believe these letters might shine some light on the recent executive resignations. What transpires in these letters is USANA trying to put an end to the underground recruiting of Chinese Nationals into USANA's business opportunity in Hong Kong. However, when USANA's leaders (top distributors) complain, USANA caves and changes their mind. As a reminder, it is against China's direct selling laws for their citizens to participate in a Multi-Level Marketing scheme.

USANA has recently admitted to recruiting Chinese Nationals in one of the recent conference calls. However, USANA claimed these citizens from mainland China only signed up to consume the product (even though they joined as DISTRIBUTORS and not Preferred Customers). Here's the transcript & quote:

we have a large group of Asian Associates who are involved with USANA only because of the products and are buying in Hong Kong for consumption only. We expect many of these consumers will begin purchasing USANA products through BabyCare and either remain consumers or become entrepreneurs and build a BabyCare business.

So the following first two letters sent to their Chinese Distributors try to set rules to prevent this illegal recruiting. The third letter tells their Chinese distributors to cancel the effects of the first two letters! The first letter was sent before the 4 executive's resignations. The last two letters came after the resignations.

The letters were sent in English and Chinese together. For the purpose of this blog, I only included the English version. To view the three letters in their Chinese & English form, you can view the following PDF documents: Letter 1, Letter 2, Letter 3.

My Emphasis in Bold Red:

LETTER ONE – Sent May 8, 2011

USANA and BabyCare: 3 Steps to Long-term Success

Dear USANA Family,

The Management Team, Board of Directors, and I all eagerly looked forward to the day that we could announce that BabyCare and USANA would be working together to realize my vision of a world free from pain and suffering. After the indirect acquisition of BabyCare was finalized last year, we were incredibly excited to tell the world that the USANA family now had an opportunity to help even more individuals attain improved health and better wealth. The partnership with BabyCare has brought my vision one step closer to reality by allowing USANA to recommend the finest nutritional products and direct selling opportunity to China in a way that meets all local laws and regulations.

When Dave became aware of BabyCare, he was focused on the prospect of having a license to operate in China and thereby share the USANA products with the People’s Republic of China. After thoroughly reviewing the management, culture, direction, values, products, and performance of BabyCare, he and I came to the realization that we could take an even larger step forward by making BabyCare a part of our family. Today, we are confident that BabyCare is the way for Distributors in China to share in the success of USANA. To realize this ambitious dream, however, we have to complete several steps:

1. Provide the highest quality, science-based products to consumers in China. As I stated during the Asia Pacific Convention, BabyCare’s products are exceptional, and something we can proudly add to the USANA product line. Additionally, we have product approvals underway to expand the variety of USANA products offered in China throughout 2011.

2. Offer an excellent direct selling plan to Distributors in China. As many of you know, a binary multi-level plan is not allowed in China. Yet, USANA remains committed to ensuring that we offer the richest opportunity for everyone, regardless of the market. As such, I had Dr. Fred Cooper evaluate the direct selling plan offered currently by BabyCare to see if he could make any improvements to the commission-earning potential of current and future BabyCare Distributors while adhering to the Direct Sales Regulations in China. After careful consideration, I am pleased to announce that while the Integrated Sales Program (ISP) has remained unchanged, modifications have been made to enrich BabyCare’s current plan. So we encourage all Achievers and above who have not yet received their ISP certification to do so. A meeting for Gold Directors and above will be held in Beijing on May 21 to explain these changes.

3. Ensure full compliance of all market regulations. USANA enjoys a great reputation all over the world where we do business. We want to make sure that in China we have the same reputation with all governing bodies. To secure that reputation—and thus the long-term success of our products and direct selling plan—we must add some changes to the rules for those Distributors doing business in Hong Kong. Therefore, the following changes have been established and are effective for all Distributors:

Beginning May 21, 2011

New enrollment
1. New Hong Kong Distributors will be asked to prove their compliance with our residency requirement by presenting their original Hong Kong Permanent Identity Cards, or Hong Kong Identity Cards, in person. They must also provide a Hong Kong bank account matching the main applicant’s name for enrollment and payment.

Common address
2. A limit of only five (5) Distributorships will be allowed to enroll using any single Hong Kong address for any new enrollments.

Credit card usage
3. Distributors may use their credit cards for purchase on another distributorship only at the time of enrollment. Continual use of a credit card for multiple distributorships is not allowed.

Existing Hong Kong Distributors can continue to purchase products and participate in the USANA compensation plan, but restrictions will apply to those who fail to prove their Hong Kong residency.

Beginning June 4, 2011

Limit on ordering and collection
1. Existing Hong Kong Distributors who have not proven their compliance with Hong Kong residency requirements can only (1) place orders, and (2) pick up products, up to a total of 250 sales volume points in any given rolling four-week period. This includes Autoships, orders placed online, or orders placed over the counter.

Personal pick-up

2. Existing Hong Kong Distributors who have not proven their compliance with Hong Kong residency requirements can only pick up orders in person. They will no longer be allowed to authorize third-party pick-ups, nor can their orders be shipped to a designated address.

Restriction on new Autoships

3. Existing Hong Kong Distributors who have not proven their compliance with Hong Kong residency requirements will not be allowed to initiate a new Autoship.

Photo identification
4. All Hong Kong Distributors must produce photo identification when picking up their orders. USANA reserves the right to place a Distributor’s account on hold if he/she refuses to provide photo identification.

I know that change is difficult. We certainly do not want to add unnecessary rules or cause inconvenience to our valued Distributors. However, the above changes are essential if we are to maintain our reputation as a company that stands true to its principles and the rules of the governments around the world where we do business.

On behalf of all of USANA, I want to thank you for all you do to share USANA’s opportunity for true health and true wealth. With these changes, we will embark on a future for USANA that I feel is brighter than ever! To our new prospects and soon-to-be partners through BabyCare, I welcome you on behalf of both USANA and BabyCare to join the healthiest family on earth.

Sincerely,
Dr Myron Wentz
Founder & Chairman, USANA Health Sciences

“直銷商" refers to “distributor” as defined in USANA’s Policies and Procedures. The English version of this communication will govern in case of dispute or confusion due to translation.

For any enquiries, please contact us at our hotline (852) 2162-1812.

It seems very clear to me that this letter is directed towards Chinese Nationals (not to be confused with residents living in Hong Kong) who joined USANA's business opportunity in Hong Kong. The most important line out of "Letter One" was "the above changes are essential if we are to maintain our reputation as a company that stands true to its principles and the rules of the governments around the world where we do business." This line validates my ongoing claims that USANA has been illegally recruiting Chinese Nationals into their Hong Kong territoty and is responsible the explosive growth in Hong Kong. This letter was sent before the Executive Resignations. Now for letter 2.

LETTER TWO – Sent May 11, 2011 (after 4 executives resigned)

A Message From Deborah Woo & Dave Wentz

Dear Distributors,

I am honored to be appointed USANA's President of Asia Pacific.

I understand the responsibility that comes with this position, and promise that I will dedicate myself to helping all our Asia Pacific Distributors in USANA and BabyCare Distributors in China achieve true health and true wealth.

Dave and I received some feedback from leaders on the challenges which some Hong Kong Distributors will face in adhering to the new requirements we announced recently. Therefore, we are pleased to announce the following changes to the requirements which were due to be implemented on June 4:

For Hong Kong Distributors who have not proven their compliance with Hong Kong residency requirements,

(1) The 250-point limit for every rolling four-week period will still apply to order-placing, but no longer to order-pickup

(2) The requirement to pick up orders in person will be rescinded. This means that all Hong Kong Distributors will continue to be able to authorize third-party pick-up, as well as have their orders shipped to a designated address

However, the restrictions on new Distributor enrollment to those with Hong Kong Identity Cards, common address, and credit card usage from May 21, 2011 will remain.

Dave and I will continue to work to improve the BabyCare compensation plan to ensure that both BabyCare and USANA Distributors will enjoy a fair and lucrative way of building their future with the USANA family.

We look forward to working with you.

Deborah Woo
President of Asia Pacific

Dave Wentz
Chief Executive Officer
____________

A Short Summary of the Important Messages (Revised on May 11, 2011)

Beginning May 21, 2011

New enrollment
1. New Hong Kong Distributors will be asked to prove their compliance with our residency requirement by presenting their original Hong Kong Permanent Identity Cards, or Hong Kong Identity Cards, in person. They must also provide a Hong Kong bank account matching the main applicant’s name for enrollment and payment.

Common address
2. A limit of only five (5) Distributorships will be allowed to enroll using any single Hong Kong address for any new enrollments.

Credit card usage

3. Distributors may use their credit cards for purchase on another distributorship only at the time of enrollment. Continual use of a credit card for multiple distributorships is not allowed.

Existing Hong Kong Distributors can continue to purchase products and participate in the USANA compensation plan, but restrictions will apply to those who fail to prove their Hong Kong residency.

Beginning June 4, 2011

Limit on ordering

1. Existing Hong Kong Distributors who have not proven their compliance with Hong Kong residency requirements can only place orders up to a total of 250 sales volume points in any given rolling four-week period. This includes Autoships, orders placed online, or orders placed over the counter.

Restriction on new Autoships

2. Existing Hong Kong Distributors who have not proven their compliance with Hong Kong residency requirements will not be allowed to initiate a new Autoship.

The English version of this communication will govern in case of dispute or confusion due to translation.

For any enquiries, please contact us at our hotline (852) 2162-1812.

So it appears that "leaders" or those distributors who are Gold Directors and up (you know, the special ones who found out 4 executives resigned a day before shareholders found out) are upset with Myron Wentz's plan to ensure they are abiding by foreign laws. Now that Fred Cooper has jumped ship, Deborah Woo and Dave Wentz have begun erasing the necessary rules to abide by China Direct Selling Laws. Lets find out what Letter 3 is all about!

LETTER THREE – Sent May 13, 2011

Dear USANA Family,

It is a new era of growth and opportunity for USANA. Our success as a family relies heavily on our ability to listen and respond to feedback from our leaders and Associates. As a result, we have reassessed previous decisions in regards to Hong Kong policies announced last weekend that were attributed to Dr Wentz. We would like to formally announce that all policy changes that were recommended are being canceled.

There is a bright future for the USANA family through USANA China and BabyCare. We were gratified for the feedback and great suggestions we received from our leaders and those that took time to meet with us in person on how to complete this transition successfully.

Our strategy going forward will be to work with leaders individually to help them transition their teams when they are ready. The leaders have told us they understand the need to transition to China for the long term benefit of their Distributorships, but we want to allow each of them to have the necessary time and training to make this transition smooth and rewarding.

We apologize for the confusion and concern this has created. We remain focused on securing long-term success for you and your business.

Deborah Woo
President of Asia Pacific

Dave Wentz
Chief Executive Officer

Wait a minute! Didn't Myron Wentz's first letter state "the above changes are essential if we are to maintain our reputation as a company that stands true to its principles and the rules of the governments around the world where we do business." So because USANA's top distributors complain, USANA decides to scrap the rules for Chinese Nationals?

From the evidence I have seen, USANA has knowingly allowed citizens of mainland China to join USANA's Hong Kong territory for several years. They even admit that a LARGE SUM of USANA product ends up in mainland China (long before they even owned Babycare Ltd) as stated in this internal memo. They finally admit it in a recent conference call. And these three letters add to the evidence that USANA is fully aware of the restrictions mainland China has on their citizens joining a Multi-Level Marketing scheme, even if they cross the border and join in Hong Kong.

How much longer will USANA get away with this? Shareholders should be demanding answers from USANA. Questions USANA should answer to shareholders are:

1) How many total mainland Chinese citizens joined USANA's business opportunity in Hong Kong?

2) How much of USANA's revenues came from the underground recruitment of Chinese Nationals into their Hong Kong territory over the past several years?

3) How much commission is paid to USANA "Leaders" (Gold Distributors and up) that came as a result of these Chinese Nationals who joined USANA's business opportunity in violation of China's Direct Selling Laws?

USANA forgot to mention Riley Timmer's resignation until after markets closed. Can they do anything right?

2011-05-10T21:16:00.000-04:00

None of USANA's press releases today regarding the resignation of their executives ever mentioned Riley Timmer's resignation. It wasn't until USANA's 4:00 PM conference call did a caller ask when Riley Timmer's resignation was given. USANA took a while to respond and admitted his resignation came the same day as all the others.

When the President & Chief Operating Officer (Fred Cooper), Chief Financial Officer (Jeffrey Yates), Vice president of Sales (Mark Wilson), and Vice President of Finance (Riley Timmer) all resign on the same day, then there is something much more serious that USANA is not willing to admit. I have a feeling it has more to do with the issues I have raised on this blog regarding their overpriced products, saturated markets, underground China recruiting, and the fact 99% of their distributors don't make a penny worth of a profit while enriching the top 1%. And to top it off, USANA told this top 1% of distributors (Gold Directors and Up) about their executives resigning 1 day before announcing it to their shareholders.

It amazes me how USANA can get away with so much questionable activities like giving away 3 iPads to distributors who purchase Myron and Dave's book "The Healthy Home" (violates lottery laws), or the underground recruiting of Chinese Nationals into their Hong Kong distributor market (MLM is banned in mainland China). When will stock analysts start asking tough questions and demanding answers to those questions? One caller asked when USANA was made aware of these resignations. After dancing around the question, USANA finally answered "Recently"... Well, Recently could have been 4 weeks ago. Then, instead of the analyst demanding a specific date, this analyst just accepted USANA's answers. I'm starting to believe USANA writes the questions for the analysts to ask...

I feel sorry for anyone who invests in USANA. How can anyone invest in a company that makes its money off the backs of 99% of their distributors who are all losing money because they are forced to purchase the overpriced product just to participate in the scheme.

I have several questions that I believe USANA should answer:

1) How many "Professional Packs" were sold to new associates and distributors?

2) How many starter kits were sold to new associates including those that were free during promotional periods?

3) How many associates have or had a subscription to USANA's DownLine Management software?

4) How many associates and distributors renewed their membership?

5) How much of the net revenues came from associates and distributors maintaining their Personal Sales Volume?

Too bad USANA would never answer these questions. It would reveal too much...

USANA executives Fred Cooper, Jeff Yates, Mark Wilson, and Riley Timmer send in their resignations to USANA.

2011-05-09T22:05:00.001-04:00

USANA has a little shake up taking place. Fred Cooper, Jeff Yates, Mark Wilson, and Riley Timmer have given USANA their resignations.

*** UPDATE - 05/10/2011

USANA sent out a memo YESTERDAY to all their their Gold Director distributors and up. These special individuals were privy to important information before USANA released a press announcement to their shareholders. The SEC should investigate to see if any Gold Directors and up sold their shares yesterday before the public announcement was made.

USANA's 2011 First Quarter Earnings - A look Into The Active Associate and Preferred Customer Trends

2011-04-28T01:43:00.001-04:00

USANA's first quarter earnings release reveals major drop in active associate numbers from prior quarter. I do not recall any mention of any quarter to quarter information in any press release. I have put together a 2 year trend of Active Associates and Active Preferred Customers by region. What I notice is a downward spiral. USANA lost a total of 22,000 of their Active Total Customers (Associates and Preferred Customers), yet their stock price actually went up from $35.70 to a high of $38.50 and closing at $36.30... I will break down each of USANA's regions and discuss the various situations in each.

USANA's United States Active Associate and Preferred Customer Results

figure 1 - USANA US Active Associates


figure 2 - USANA US Active Preferred Customers

USANA's United States territory lost 2000 active associates and gained 2000 active preferred customers.

Seems clear to me where the US is trending. USANA constantly blames the bad economy in the US, yet there are several leading distributors who claim that a down economy is good for MLM business opportunities because more people are out looking for work and are more likely to join MLMs. USANA has also blamed this downward trend on the rampant recruiting in their Greater China territory. USANA claims that US distributors are focusing their attention on business in China, which is hogwash. USANA distributors cannot recruit Chinese Nationals into their downline. Chinese Nationals can only be recruited into BabyCare in a single level marketing compensation plan, which I believe will fail USANA miserably because the incentive to recruit an endless chain doesn't exist. Perhaps USANA is referring to the underground recruiting of Chinese Nationals into USANA's Hong Kong territory, which violates China's Direct Selling laws. I believe with the help of Utah's Attorney General Mark Shurtleff, USANA is above the law.

USANA's Canada Active Associate and Preferred Customer Results

figure 3 - USANA Canada Active Associates

figure 4 - USANA Canada Active Preferred Customers

USANA's Canada active associates and preferred customers remained unchanged.

Canada too has been suffering a decline in active associates and preferred customers. I guess this must be because of the bad economy in the United States. At least that is what USANA might claim. I believe USANA's reputation of being a recruiting scheme with over priced products that are almost impossible to resell have more to do with this decline than USANA would ever admit. Saturation has also kicked in.

USANA's Mexico Active Associate and Preferred Customer Results

figure 5 - USANA Mexico Active Associates

figure 6 - USANA Mexico Active Preferred Customers

USANA's Mexico territory lost 1000 active associates and 1000 active preferred customers.

I never thought Mexico was a serious territory for USANA. I think this territory has more to do with having Sanoviv there than having USANA associates running around recruiting each other. It was interesting though during the Swine Flu hysteria because USANA's "Poly C" was being marketed by many distributors as a preventative measure against the Swine Flu. I guess if people simply "believe" something will work, then it probably will - Placebo Effect. Perhaps USANA should simply produce a sugar pill, call it Usanebo™ and give their poor distributors a break and only charge them $0.99 for a 28 day supply.

USANA's S.E. Asia/Pacific Active Associate and Preferred Customer Results

figure 7 - USANA South East Asia / Pacific Active Associates

figure 8 - USANA South East Asia / Pacific Active Preferred Customers

USANA's South East Asia / Pacific territory lost 1000 active associates while active preferred customers remained unchanged.

This territory includes: Australia, New Zealand, Singapore, Malaysia, and the Philippines. Unfortunately, USANA no longer breaks down these territories individually. This is a shame because it gave a much more detailed view of how bad these territories are actually doing. USANA prefers to through around unspecified percentage growths and declines making it difficult to effectively analyze those territories. Either way, the declining trend of active associates is yet another sign of a saturated market, bad reputation and (cough) the bad economy in the United States. Seriously, the US economy has nothing to do with Australia and New Zealand's declining trends. I can only wonder why analysts don't question USANA on their answers. Instead, analysts simply accept whatever answer USANA gives, as if it satisfied the question. However, most of the time it paints an even more ambiguous picture. So far, USANA's latest quarterly report shows a continued decline of members.

USANA's Greater China Active Associate and Preferred Customer Results

figure 9 - USANA Greater China Active Associates

figure 10 - USANA Greater China Active Preferred Customers

USANA's Greater China territory lost 11,000 active associates and 8000 active preferred customers.

This territory includes: Hong Kong, Taiwan and Mainland China. Are the lemmings jumping overboard? As I have written many times now, USANA has been recruiting people from Mainland China into their USANA Hong Kong territory. This is in violation of China's direct selling laws, but don't let that stop anyone. Chinese Nationals are not allowed to join MLM companies. USANA has finally come around and started to mention the recruitment of Chinese Nationals into USANA's Hong Kong territory. However, USANA has a very interesting way to define these distributors. USANA claims that they are simply people who joined solely so they can personally purchase and consume the product. Really! Why then did they not simply join as preferred customers? I believe USANA is full of crap.

These Chinese National USANA distributors joined so they can participate in the endless recruiting scheme in hopes to make money by recruiting other Chinese Nationals under them. Since everyone is forced to purchase USANA product to participate in USANA's compensation plan, distributors are essentially paid to recruit. Mainland China is a fresh market and that is why USANA witnessed an explosive growth in their Hong Kong territory over the past couple years.

Now we have a huge decline over the previous quarter. USANA claims it is because of the Chinese New Year, which lasts a couple weeks. If this is true, then it reveals how desperately associates must continue to recruit more associates into the endless chain just to maintain the same number of active associates! However, I believe it has more to do with the fact that most associates realizing they are never going to make a dime and how difficult it is to endlessly recruit people. With the product prices so high and having to import the product from the US, why waste their time and money in actually retailing any product. China has more vitamins brands than Carter has pills. Not to mention the skin care market in China.

And Babycare associates will learn quickly than making money retailing USANA product is not worth their time and energy. Since Babycare associates cannot recruit new associates into a downline (Single Level Marketing is China), there is no way for them to make money off the backs of hundreds below them. The USANA fad in China will wear off unless USANA brings down the distributors cost for the product by a substantial amount.

USANA's North Asia Active Associate and Preferred Customer Results

figure 11 - USANA North Asia Active Associates

figure 12 - USANA North Asia Active Preferred Customers

USANA's North Asia active associates and preferred customers remained unchanged.

This territory includes: Japan and South Korea. This is another joke of territories as was Mexico. Why USANA even bothers to publish these numbers is beyond me. We may see that the next quarterly release, Japan might go up 1000 associates. I believe this could be from USANA associates pushing the sale of potassium iodide as a preventative measure against the nuclear radiation caused by the earth quake and tsunami. But again the amount would be insignificant. This territory is saturated and not going to help USANA in the long run.

These are my opinions based on my research and analysis of USANA Health Sciences. As always, I welcome the harsh criticism. If there are errors, let me know as I finished writing this at 1:30 AM.

USANA's First Quarter Results for 2011 Reveal Falling Interest For USANA's Business Opportunity.

2011-04-27T00:48:00.000-04:00

USANA released their First Quarter Earnings Statement and it shows that all over the world USANA's active associate numbers fell except China, which I believe cannot be trusted.

Year over year, USANA's active associate figures yield:
United States: from 56,000 to 49,000
Canada: from 25,000 to 24,000
Mexico: from 13,000 to 10,000
Southeast Asia/Pacific: from 44,000 to 40,000
North Asia: from 9000 to 8000
Greater China: from 57,000 to 82,000

USANA uses the excuse that the bad United States economy is responsible for the declining figures, but this decline is world wide. However, China is an exception. Hong Kong and mainland China numbers are sky rocketing, but as I have mentioned many times now, I belive this is because USANA is allowing illegal recruiting of mainland China persons into USANA's Hong Kong territory, which violates foreign laws. Not to mention mainland China is not a "USANA" territory. It is a Babycare territory. There is a difference.

I believe USANA stated last quarter that they expect the Hong Kong distributor numbers to start falling because a handful of USANA products are now sold through Babycare Ltd. This was due to the expectation that mainland Chinese distributors signed up as USANA associates in Hong Kong would leave USANA and sign up as a Babycare associate. Not only does this validate my claims that USANA has been recruiting mainland Chinese nationals as USANA associates in Hong Kong, but also raises a serious question: Those associates who left USANA's Hong Kong distributorship and signed up as Babycare associates, are they counted twice? The answer should be "NO", but it would not surprise me. Perhaps there are those that hold both a USANA distributorship as well as a Babycare distributorship; count them twice!

Of course this begs the question, where are the millions of retail customers that should come from having hundreds of thousands of USANA sales reps? Unfortunately, after distributors pay a premium price for the USANA inventory, why would anyone pay even more? Distributors pay $110 for a USANA Healthpak100 which only lasts 28 days which makes it a $3.93 per day multivitamin supplement. View the USANA Price List for yourself. Who in their right mind would fork out $1430 per year for vitamins, and that's the distributor's cost! And don't expect any ethical doctor or nutritionist to recommend such a product either. Since only USANA distributors can sell the product, the doctor or nutritionist would have to be a USANA distributor. In other words, some doctors peddle USANA product to the patient they would have to peddle the product to their patient, which violates their code of ethics.

Yet, USANA's Healthpak100 is one of their most commonly sold product. Why is that? Simple. USANA attaches sales points to each of their product. Most distributors have 1 business center and are required to personally purchase 100 sales volume points every 28 days. The Healthpak100 is 100 sales points, so only 1 product would have to be purchased. Plus, it is the best value for the number of sales points awarded. Purchasing other products and meeting the minimum 100 point requirement would usually put the order over 100 points, which further wastes the distributors money. So a 100 point product easy much easier to deal with. Sadly, USANA distributors also have to pay a pricey shipping and handling fee on top of it.

Knowing all this, it is obvious why there is a serious lack of retail customers. One can go down USANA's entire product line and see how over priced it is. More and more people in the United States are becoming aware of MultiLevel Marketing schemes like USANA and are distancing themselves from the cultish behavior. USANA has reached saturation in the United States and other areas, and without the shenanigans in the China region, USANA would have a single digit stock price.

These are my opinions and I welcome harsh criticism.

Don't be Fooled! Editorial Reviews on the Back Cover of The Healthy Home are USANA Affiliates

2011-04-13T23:14:00.000-04:00

Who's who on the back cover of The Healthy Home?

On the back cover of Myron Wentz and Dave Wentz's latest book "The Healthy Home" are three editorial reviews. Lets take a look.

“Dave and Dr. Wentz have conspired to create an innovative and imaginative approach to living simply. As a physician, I would offer one bit of advice: heed the constructs, sentiments, and words written in this book. We cannot wait for the scientific method to verify the claims made. As individuals we must act now! We should follow our intuition and adhere to The Healthy Home.” - Peter W. Rugg, M.D., FACEP

Missing from Peter Rugg's title: USANA Scientific Advisory Council Chairperson, USANA distributor (ID# 3079662)

Interesting that Peter implies the book is full of unverified claims that the scientific method has yet to prove.

“The Healthy Home is an amazing revelation of 'truths' on everyday products that parents use for their children. This book will empower parents to take measures to protect their children from toxins that may threaten the health of our future generations.” - Christine Wood, M.D., pediatrician and author of How to Get Kids to Eat Great & Love It

Missing from Christine Wood's title: USANA Scientific Advisory Council member, USANA Distributor (ID# 348)

Amazing revelation of 'truths' on everyday products, yet Peter Rugg implies the scientific method has not verified them yet. Can they really be called truths?

“I have met few individuals more generous, more approachable, and more caring than Dr. Wentz. He believes in true health and is seeking to discover its secrets with a passion that is as spiritual as it is scientific. In this brilliant collaboration with his son, Dave, we are able to witness the passage and expansion of simple truths from generation to generation.” - Denis Waitley, Ph.D., bestselling author of The Psychology of Winning

Missing from Denis Waitley's title: Former member of USANA's Board of Directors, chairman of USANA's Athletic Advisory Council, USANA Distributor (ID# 1069)

The problem with these editorial reviews is the fact each member is financially tied to the authors of the book. Interesting that Myron and Dave chose to leave off the fact these members not only worked with USANA, but each hold their own distributorship as well. Why was this conveniently left off the back cover? I believe it was so it gave the appearance of third party credibility.

It reeks of the same problem that the Third Edition of the Comparative Guide to Nutritional Supplements has. Written by Lyle MacWilliam (who was also on USANA's Scientific Advisory Council), the book ranked vitamins and ranked USANA #1. On the back of its cover were all USANA affiliates giving their review without ever disclosing such USANA affiliation. In fact, Christine Wood and Denis Waitley were two of the editorial reviewers on that book as well!

USANA's Use of "The Healthy Home" Book as Entry Into Company Run Nation Wide Lottery May Violate State & Federal Laws

2011-04-12T22:43:00.000-04:00

"The Healthy Home" hits 5 best seller lists during first couple weeks of book release. However, ...

Screenshot of USANA's website showing The Healthy Home

It appears USANA is currently violating both Utah State and Federal gambling laws. USANA's requirement for distributors to purchase Myron Wentz's book "The Healthy Home" in order to participate in a lottery to win an iPad may land USANA in a heap of trouble. State and Federal Regulators need to be made aware of this potential crime currently taking place. The lottery runs from March 27, 2011 to April 15, 2011.

According to PRNewsWire, USANA has made the Best Sellers list for The New York Times, USA Today, L.A. Times, Publisher's Weekly, and Amazon.com for the book's extraordinary sales.

According to Utah State Laws for gambling

     76-10-1102.   Gambling.
     (1) A person is guilty of gambling if he:
     (a) participates in gambling;
     (b) knowingly permits any gambling to be played, conducted, or dealt upon or in any real or personal property owned, rented, or under the control of the actor, whether in whole or in part; or
     (c) knowingly allows the use of any video gaming device that is:
     (i) in any business establishment or public place; and
     (ii) accessible for use by any person within the establishment or public place.
     (2) Gambling is a class B misdemeanor, provided, however, that any person who is twice convicted under this section shall be guilty of a class A misdemeanor.

According to Federal Laws regarding lotteries:

* The federal lottery statutes made it illegal to transport lottery materials across state lines, or ship them to other countries
* The Interstate Wagering Amendment of 1994 made it illegal to procure a ticket for someone in a different state than that in which the lottery was held

Let this also be a reminder to the general public that Myron and Dave Wentz's book "The Healthy Home" made it to several Best Sellers lists solely because they used their book as $13.19 raffle tickets for USANA distributors and USANA preferred customers to purchase and have the right to participate in a company run lottery to give away 3 iPads. The "general public" as Dave Wentz calls it, has virtually nothing to do with the sales of his book.

Myron Wentz's “The Healthy Home” makes NY Times best seller list by being sold as raffle tickets in lottery drawing held by USANA.

2011-04-10T19:50:00.000-04:00

Myron Wentz (founder of USANA) and his son Dave Wentz (CEO of USANA) authored a book called “The Healthy Home” which was released on March 22, 2011. Their book made it to number 7 on the NY Times best selling book list for “Hard Cover Advise and Misc”. What is not mentioned on any press releases is the fact the book is being sold as raffle tickets to win an iPad in a lottery operated by the authors.

USANA is currently running a lottery drawing exclusively for their distributors and preferred customers to win iPads. In order to participate in this lottery drawing, the USANA distributor or preferred customer must purchase Myron Wentz's new book “The Healthy Home” from Amazon.com for $13.19. Distributors can enter as many times as they wish, but are advised to do so during different weeks of the contest to help bolster the book's best seller rankings.

USANA explains this contest in a document on their Ask Andy website which is used by their distributors to access important information regarding USANA: http://obs.usana.com/UPLOADS/usana/2011/87/87-1_CAA.html. (A copy of this document is provided in full at the bottom of this blog entry)

"Here’s how it works—Purchase a copy of The Healthy Home on Amazon.com between March 27 and April 15 and e-mail a copy of your electronic receipt to contest@myhealthyhome.com. Not only will you receive a special Healthy Home pin at USANA’s 2011 International Convention, but your name will also be put into one of three special drawings for a chance to win one of three iPads!

…

* Week 1: March 27–April 2 (we need to sell 1,000 copies of the book this week)
* Week 2: April 2–9 (we need to sell 1,500 copies this week)
* Week 3: April 10–15 (we need to sell 2,500 copies this week)

...

Q. Who can participate in the drawing?
A. This drawing is only for USANA Associates or Preferred Customers living in the United States."

Distributors interested in participating in the lottery to win a $500 iPad only need to purchase a $13.19 raffle ticket from Amazon.com called “The Healthy Home”.

Amazingly, USANA's CEO Dave Wentz made the following statement regarding their position on the NY Times Best Seller list in the following article:

"The response to our book has been incredible," says Dave Wentz. "Although the book was released less than three weeks ago, we have gotten calls from reporters and TV and radio stations from all over North America. We have received over 3,000 'likes' on Facebook in a short time and gotten a lot of great feedback from our readers. Clearly, the topics we address in The Healthy Home are a huge interest to the general public." (my emphasis in bold)

What GENERAL PUBLIC is Dave Wentz referring to? Dave knows that the book is primarily being sold to USANA distributors who purchase the book in hopes of winning a $500 iPad in a lottery drawing. The general public has nothing to do with the purchases of The Healthy Home. Clearly, the statement made by Dave regarding "interest to the general public" was an attempt to mislead the general public.

I believe the authors are conducting a highly unethical method to appear on Best Seller lists. It would be very interesting to find out what Amazon thinks about this lottery system. Also, what about the other outlets that sell the book? What do they think about the fact the authors are holding this lottery exclusively with Amazon.com?

Below is USANA's Lottery Information found on their Ask Andy website: http://obs.usana.com/UPLOADS/usana/2011/87/87-1_CAA.html

Amazon.com Contest

The Healthy Home launched with a bang, but we're not done. Our sights are set at the top of the best-seller lists, and we need your help. Purchas at Amazon.com, and you could win an iPad!

Buy Copies of The Healthy Home at Amazon.com by April 15

Participate in USANA’s efforts to help make The Healthy Home a best seller and you could win an iPad!

The Healthy Home launched on March 22 with incredible success, but the journey is just beginning. To make this book a truly powerful vehicle for spreading Dr. Wentz’ vision and for building your business, we need to make it a best seller. To do so, we need you! And in case you need a little extra incentive, we’ll be awarding incredible prizes to those who help.

To become a best seller, we’ll need to sell a certain number of copies of The Healthy Home on Amazon.com within the next three weeks.

Here’s how it works—Purchase a copy of The Healthy Home on Amazon.com between March 27 and April 15 and e-mail a copy of your electronic receipt to contest@myhealthyhome.com. Not only will you receive a special Healthy Home pin at USANA’s 2011 International Convention, but your name will also be put into one of three special drawings for a chance to win one of three iPads!

There will be an iPad drawing at the end of each of the three weeks during which Amazon.com will be reporting sales of The Healthy Home for possible inclusion on the top best-seller lists.

Week 1: March 27–April 2 (we need to sell 1,000 copies of the book this week)
Week 2: April 2–9 (we need to sell 1,500 copies this week)
Week 3: April 10–15 (we need to sell 2,500 copies this week)

The number of books we need to sell is not impossible. We can do it, and any help from you will make a big difference. So talk to your Preferred Customers (because they can participate, too), talk to your downlines, and talk to your uplines—spread the word and create a strategy to determine the best week for each of you to make your purchases. And if you plan on purchasing more than one copy of the book from Amazon.com, buy them one at a time and during different weeks to help bolster our chances of making the best-seller list and your chances of winning an iPad.

Together, we can make a difference. Many of you have already bought copies of The Healthy Home, and your efforts are reflected in the early success of the book. But with a little more help—even the purchase of just one more copy through Amazon.com by April 15—you can help make The Healthy Home an even greater sales tool than it already is. Let’s spread the vision of Dr. Wentz to the world together.

Q. Who can participate in the drawing?
A. This drawing is only for USANA Associates or Preferred Customers living in the United States.

Q. What do I win?
A. Anyone who purchases a copy of The Healthy Home from Amazon.com between March 27 and April 15 will receive a special Healthy Home pin at USANA’s 2011 International Convention. The name of each entrant will also be placed in a drawing for one of three iPads.

Q. Can I enter the drawing multiple times?
A. Yes, as long as you have more than one receipt. Multiple copies of the book shown on a single receipt will only be entered into the drawing once. Therefore, it is important that you purchase each copy of The Healthy Home separately during this period.

Q. Where do I send my receipt?
A. E-mail an electronic copy of your receipt from Amazon.com to contest@myhealthyhome.com.

This is an individual-based promotion.
Participants must reside in the United States.
Only one Healthy Home pin and/or iPad will be awarded per distributorship.
No purchase necessary. Participants can be entered into the drawing by mailing a postcard with their name and Associate or Preferred Customer identification number to the following address:

Healthy Home Contest
c/o USANA Health Sciences
3838 W. Parkway Blvd.
Salt Lake City, UT 84120
Employees of USANA and their family members may not participate in this promotion.
Any manipulation of this promotion, i.e., sponsorship manipulation, downline purchasing (placing a sales order in a Business Center other than where the sale was generated), forgery of receipts, etc., will result in disqualification from this promotion, in addition to any sanctions under the Associate Agreement.
By entering, each entrant accepts and agrees to be bound by these rules and by the decisions of USANA, which shall be final and binding in all respects.
Taxes, if applicable, are the sole responsibility of the prize winner. The fair market value of all prizes will be reported to the IRS pursuant to IRS regulations.
Prizes are non-negotiable and cannot be redeemed for cash.
No substitutions or transfer of prizes is permitted. USANA reserves the right to substitute a prize for one of equal or greater value in the event that an advertised prize is unavailable.
USANA is not responsible for lost, late, or misdirected online entries or transactions for incorrect, inaccurate, or incomplete entry information whether caused by a contestant, equipment, or technical malfunction or for any human error, technical error, or malfunctions. USANA reserves the right to halt or modify the promotion at any time during the promotion period if events beyond their control compromise the promotion's fairness or integrity.
USANA, in its sole discretion, may disqualify any entrant from participating in the promotion, refuse to award prizes, and require the return of any prizes if entrant engages in any conduct USANA deems to be improper, unfair, or otherwise adverse to the operation of the promotion or detrimental to other entrants. Such improper conduct includes, but is not limited to, falsifying personal information required during the promotion.
USANA reserves the right to modify these rules for clarification purposes without materially affecting the terms and conditions of the promotion.
This promotion may not be used for any form of gambling.
If for any reason the Internet portion of the program is not capable of running as planned, including infection by computer virus, bugs, tampering, unauthorized intervention, fraud, technical failures, or any other causes beyond the control of USANA which corrupt or affect the administration, security, fairness, integrity, or proper conduct of this promotion, USANA reserves the right, at its sole discretion, to disqualify any individual who tampers with the entry process, and to cancel, terminate, modify, or suspend the promotion.
USANA assumes no responsibility for any error, omission, interruption, deletion, defect, delay in operation or transmission, communications line failure, theft or destruction, or unauthorized access to, or alteration of, entries or transactions.
USANA is not responsible for any problems or technical malfunction of any telephone network or lines, computer on-line systems, servers, or providers, computer equipment, software, failure of any e-mail entry or transaction to be received on account of technical problems or traffic congestion on the Internet or at any website, or any combination thereof, including any injury or damage to participant's or any other person's computer related to, or resulting from, participation or downloading any materials in this promotion.
USANA reserves the right to use names, images, and likenesses of promotion winners for printed and online media to market USANA products and promotions.

USANA's distributor Hall of Fame reveals their elaborate recruiting pyramid scheme

2010-10-24T16:00:00.000-04:00

USANA's October 2010 Distributor Hall of Fame
Compiled and Analyzed

By: USANAWatchDog

October 2010

Click For FULL SIZE

USANA Health Sciences, Inc. does not publicly publish their distributor figures. So I must take it upon myself to compile and publish the information. It becomes very apparent why USANA refuses to disclose the distributor numbers; almost everyone is unable to make a profit!

Of course if this information were made available to prospects before they join USANA's business opportunity, the outcome may be very different. Who would join a failed business where 99% of USANA's sales representatives lose money? It is easy to see how bad the failure rate is when comparing the leadership levels in this diagram to USANA's last average distributor earnings figures: USANA's 2006 North American Distributor Earnings Statement. USANA has not published a relevant report since then.

In the diagram, I represent USANA's distributors in a pyramid chart. The pyramid on the lower left represents all of USANA's distributors that have at one time or another received a commission check. Since the higher ranks represent such a small percentage of the total, the middle pyramid is a zoomed-in representation of the lower left pyramid's tip. The same goes for the upper right pyramid, which is a zoomed-in representation of the middle pyramid. The diagram does not even include the other 600,000+ distributors that have never received a commission check! USANA also only considers what is represented in the upper right pyramid as "Full Time" distributors (Gold Directors and up). Everyone else are just part timers according to USANA.

So what is USANA's response to this? I would love to know. USANA cannot claim that most distributors join only to receive discounts on the product because USANA's Preferred Customers pay the same price as distributors. All of USANA's distributors joined with the intent to "Make Money" (otherwise they would only be preferred customers). Distributors are forced to purchase over $100 worth of product every 4 weeks in order to receive their commission check. Just imagine each level of distributors making these required product purchases. Those purchases pay commission to the higher levels. What we have here is a very elaborate pyramid scheme.

The Security Exchange Commission, Federal Trade Commission, Stock Analysts, Shareholders, Distributors and Prospects should all be aware of the information presented in the diagram.

How is USANA a Pyramid Scheme? Prospecting Associates Should Read This Before Joining.

2010-09-27T06:00:00.054-04:00

How is USANA a Pyramid Scheme?

In short, I believe USANA Health Sciences, Inc. is a pyramid scheme because associates can recruit an endless chain of new associates into a downline and are paid commission from the required product purchases made by each of the associates in the downline. Retailing USANA's products are unachievable due to the associates's exorbitant cost for the products. USANA associates resort to recruiting more sales representatives as their primary focus instead of retailing the product for a profit margin. The product is overpriced in order to fund the top recruiters in the pyramid scheme. As a result, 99% of USANA distributors never make a profit and lose a lot of their time and money.

Required Product Purchases

The following is a statement from USANA's SEC filings regarding the requirement for associates to purchase product:

"To be eligible to earn commissions, an Associate must purchase a certain amount of product each month ("Qualifying Purchases"), which they may resell to consumers or use personally. Associates do not earn commissions on these Qualifying Purchases. Associates only earn commissions on the purchase of products by Associates in their down-line organization and Preferred Customers." - USANA's 10-K SEC Filing

First of all, the SEC Filing states that a certain amount product must be purchased each month, which is false. A certain amount of product must be purchased every 4 weeks, which happens 13 times a year instead of 12. USANA calls the amount of products associates are required to purchase as the "Personal Sales Volume" (PSV). It is very interesting that USANA chose the term "Personal Sales Volume" when in fact it is a "Personal Purchase Volume". The upline associates receive commission from the associate that makes these required purchases even in the product is never retailed to a customer. However, if the associate chooses to retail the product, that associate is not paid commission on the sale. Because the product is over priced, retailing for a profit margin is practically unheard of. What is actually happening here is that every associate is required to purchase about $110 worth of inventory every four weeks (13 times a year) and those inventory purchases pay commission to the associates who joined earlier.

What was left out of the SEC filing are the consequences of failing to purchase a certain amount of product every 4 weeks.

"If, at any time, an Associate’s PSV falls below the minimum requirement to remain active, the Associate will no longer be eligible for commission checks or bonuses or to advance in rank. The Associate will also lose any Carryover Volume, and he or she will not carry over any volume until re-activating the BC(s). The Carryover Volume will start again at zero." - USANA's Ask Andy

This rule threatens associates to continue purchasing inventory. A real business would not have such ridiculous hoops to jump through. Put it this way, if an associate were to sign up 10,000 preferred customers who purchase product on a regular basis, this associate will not be paid a single penny for their work unless the associate purchases $110 worth of inventory every 28 days. Why should a USANA associate be forced to purchase their own product if they don't need to? USANA would collapse if they did not force their distributors to purchase product every four weeks.

Recruiting Associates Instead of Retailing Product

Associates can make far more money by selling the dream of becoming rich rather than selling USANA's vitamins or skincare products. In fact, as long as you sell the dream, the product sells itself!

USANA Pure Rest™

Example: USANA's Pure Rest(TM) melatonin product

Costs USANA associates $14.95 and retails for $17.94.

Each bottle Contains 56 tablets and each tablet contains 2 mg of melatonin.

So USANA's melatonin product costs associates 13.3 cents per milligram.

Most melatonin products retail for less than 3 cents per milligram - See for yourself!

All of USANA's products are overpriced like the above example!

However, when taking all of USANA's perks into consideration, USANA associates can potentially receive $20 in commission every 28 days from each associate in their downline simply from the required product purchases! Of course, what gets left out of their promotional material are the vast amounts of rules that prevent most all associates from making a dime. This is why is pays to recruit instead of retailing USANA's products.

Endless Recruiting is How it Works

Most distributors do not remain in the pyramid scheme and drop out after only a few months. This is because reality sets in and they soon discover that nobody wants to purchase overpriced vitamins or skincare product. Not only that, but most of their family members, friends, and co-workers do not support their venture after being asked to join their downline. Because of this, there is a very high dropout rate for new associates in USANA's business opportunity. In fact, an estimated 81.5% of new associates drop out within their first year!

USANA knows that most associates drop out soon after they join and has developed a means to extract most of the money from the associate before they drop out. They do this two different ways. 1) in order for new associates to initially activate their business center and be eligible to collect commission, the associate must personally purchase about $220 worth of product. 2) Alternatively, a new associate can purchase one of four special enrollment packages ranging from $300 to $1250, which contains product and recruiting material.

What Does The FTC Say About MLM and Pyramid Schemes?

In 2004, the Federal Trade Commission wrote a letter in response to a question the Direct Selling Association's president Neil H. Offen asked. The letter is titled "Staff Advisory Opinion - Pyramid Scheme Analysis". Mr. Offen requested a staff advisory opinion regarding the FTC's analysis of pyramid schemes.The response does not bode well for Multilevel Marketing companies like USANA. I recommend reading the memo for yourself.

"A multi-level compensation system funded primarily by such non-incidental revenues does not depend on continual recruitment of new participants, and therefore, does not guarantee financial failure for the majority of participants. In contrast, a multi-level compensation system funded primarily by payments made for the right to participate in the venture is an illegal pyramid scheme." (My Emphasis in Bold) - FTC Memo

USANA makes most of their net revenues from the money distributors pay in order to participate in the business opportunity. According to FTC's statement, it is very likely USANA is conducting an illegal pyramid scheme. 89% of USANA’s net revenue comes from distributors who purchase product and services from USANA.

"The Commission’s recent cases, however, demonstrate that the sale of goods and service; alone does not necessarily render a multi-level system legitimate. Modem pyramid schemes generally do not blatantly base commissions on the outright payment of fees, but instead try to disguise these payments to appear as if they are based on the sale of goods or services. The most common means employed to achieve this goal is to require a certain level of monthly purchases to qualify for commissions. While the sale of goods and services nominally generates all commissions in a system primarily funded by such purchases, in fact, those commissions are funded by purchases made to obtain the right to participate in the scheme. Each individual who profits, therefore, does so primarily from the payments of others who are themselves making payments in order to obtain their own profit. As discussed above, such a plan is little more than a transfer scheme, dooming the vast majority of participants to financial failure." (My Emphasis in Bold) - FTC Memo

According to this quote, simply because USANA has a product to market does not mean render the company legitimate. It goes on to explain that Modern Pyramid Schemes require a certain level of monthly purchases to qualify for commission and these schemes call the required purchases a "sale of goods". The majority of USANA's commissions paid out comes primarily from the associate's required inventory purchases. If an MLM company makes the majority of their net revenues from the payments made by distributors to qualify for commissions, then the company is an Illegal Pyramid Scheme.

Conclusion

Based on the information I have provided above, I believe that USANA conducts an illegal pyramid scheme. 99% of USANA distributors lose money due to this scam. The FTC needs to investigate USANA and put an end to the fraud. USANA currently operates this pyramid scheme in Australia, New Zealand, Canada, the United Kingdom, the Netherlands, Hong Kong, Japan, Taiwan, Korea, Singapore, Mexico, Malaysia, Philippines, and the United States. I recommend any prospecting distributor from these countries to consider what I have written above and do your own research before making a decision whether to join or not.

USANA'a Hong Kong active associate numbers may begin declining because of BabyCare Ltd.

2010-09-20T06:00:00.023-04:00

Now that USANA Health Sciences owns BabyCare Ltd in China, will USANA continue to recruit Chinese Nationals into their Hong Kong market? Currently, China has outlawed Multilevel Marketing because they consider it to be a pyramid scheme. Only Single Level direct selling is allowed. Distributors are not allowed to recruit additional distributors.

It appears that USANA and their distributors have been recruiting people from mainland China into their Multilevel Marketing business opportunity through their Hong Kong market. As I pointed out in a previous blog posting regarding USANA's active associates per territory, USANA's Hong Kong territory reveal that 1 in every 135 Hong Kong citizens are active distributors in USANA's business. That's very suspicious when you consider that USANA's United States market has 1 in every 5436 American citizen as an active Usana distributor.

So if USANA's Hong Kong territory has been used to funnel profits to USANA through illegal means (recruiting people from mainland China), and now USANA owns BabyCare Ltd, will those mainland Chinese distributors who joined USANA illegally leave USANA and join BabyCare Ltd instead? I believe this may be the case. This would mean that USANA's Hong Kong active associate figures will begin to drop. Keep in mind, people living in Hong Kong would not be able to join BabyCare Ltd because Hong Kong is not part of mainland China. Now if USANA believes their Hong Kong active associate numbers are going to decline as a result of BabyCare Ltd, then USANA has a responsibility to inform their shareholders since it is a material matter.

Regardless, I firmly believe there is sufficient evidence for a SEC investigation of USANA's distributor recruiting in their Hong Kong territory. I believe this is a SEC issue because if illegal distributor activities within a foreign country such as China is confirmed, it may account for a very substantial amount of USANA's net revenues and gross profits. If this is truly the case, then shareholders may suffer massive loses in their investment in USANA's stock. Another consequence will be a damaging blow to the auditing firm PriceWaterHouseCoopers' reputation since they have been notified of this matter almost a year ago.

I would ask that anyone with additional information or evidence please email me. Your identity will not be revealed.

UPDATED September 21, 2010 at 7:47 PM:
If USANA's management HYPOTHETICALLY told an investment firm that they are expecting Hong Kong active associate numbers to be lower because of BabyCare Ltd, but did not make this statement publicly to all shareholders, does this violate SEC laws due to insider trading?

USANA Purchases BabyCare Ltd for its Direct Selling License in China for $62,716,000

2010-08-18T07:00:00.005-04:00

USANA recently purchased a company based in Beijing China that has been unprofitable. However, this company had something USANA has not been able to obtain; a direct selling license in mainland China. USANA paid a whopping $62,716,000 for a company that only had $15,000,000 in annual net sales and $19,000,000 in total assets. The transaction took place in the Cayman Islands, so it is questionable whether or not either party had to pay any US or Chinese tax.

USANA Health Sciences, Inc. is successful for one reason, Multilevel Marketing (MLM). USANA distributors can recruit more distributors, and because any distributor who wants to participate must personally purchase over $100 worth of product every 28 days, there is no need to retail product. Commission is paid to upline distributors from those mandatory product purchases made by their downline. So in MLM, selling the dream of making money and recruiting new distributors is what makes 1% of distributors a lot of money and make USANA very profitable. However, mainland China does not allow MLM compensation plans!

Mainland China only allows single level marketing compensation plans. So the only means for a distributor to make any money would be to retail product to real customers, which is really what direct selling is suppose to be about. For USANA to bring their product into China, USANA must at least drop the price of their product line in half (or more). This would allow its distributors in mainland China to retail the product and make a “Profit Margin”. This profit margin in currently unheard of with USANA's products around the rest of the world because the distributors already pay a premium retail price for the product and cannot resell it for more than they paid. Also, USANA's preferred customers pay the same price as the distributors. USANA would also have to reward those Chinese Nationals that actually retail product unlike those around the rest of the world which are rewarded for recruiting more distributors instead of retailing product. In case this isn't clear, distributors in mainland China would not have a downline! These distributors would also only be recruited by USANA's corporate office (or BabyCare for now) and not by distributors inside or outside the country.

There are good reasons for USANA to make this move however. They will try to use it to encourage the rest of their markets to recruit like crazy. USANA can put in their promotional material that they are only 1 of 25 companies in the world that have a direct selling license in mainland China, which is now the second largest economy in the world. If USANA distributors thinks USANA will be able to grow a large distributor base in China and maintain those distributors, then those distributors are in for a surprise. Again, what incentive is there for Chinese Nationals to join a distributorship with BabyCare/USANA? Unlike MLM where distributors think they work as a team, single level marketing means that each distributor is a competitor to one another. So the more distributors in a single level marketing plan, the less each distributor has to potentially make. Because of this, the number of Chinese distributors not rise as much as some believe. If the numbers grow too big, Chinese distributors will not last very long and will drop out even quicker than MLM distributors do.

Goodluck to USANA though. If USANA brings their product line into mainland China, they'll be forced to drastically lower the price of their products. Then the Chinese National distributors will pay about $50 USD or less for a USANA HealthPak100 and resell it for about $70 USD and make a $20 profit from each box sold, unless USANA refuses to lower the price. Oh, and if you think the product sent to Chinese Nationals would only be resold in China, think again. USANA has been unable to police Ebay and other auction sites for USANA distributors who have been reselling massive amounts of product at half the price that it costs distributors to purchase; all for the sales volume points (MLM point game)! What would stop Chinese Nationals from using ebay to resell all their product world wide and do it for a real profit while still reselling it for a cheaper price than any other USANA distributor elsewhere in the world could even buy it for.

Bottom line, MLMs have not been successful in mainland China and that is because MLMs were never about retailing product. MLM's like USANA are in business to sell the opportunity to make money (the dream). China is smart because they know a pyramid scheme when they see one; MLM. Companies in mainland China with a direct selling license can only succeed if the product is very affordable and competitive against those on store shelves. With a LIMITED distributor base, the product line can make the company and its distributors a lot of money. But if the product is too expensive, customers will not buy, and distributors will leave.

USANA's Active Associate Per Territory, Evidence of Illegal Recruiting in Mainland China, and Misleading Philippines Associate Figures.

2010-08-11T00:07:00.003-04:00

The following table shows the number of reported Active Associates for USANA Health Sciences, Inc. 2nd quarter financial results in 2007 and 2010. Also included is a ratio of the number of USANA active associates to the population for the given territory. The results of this chart reveal what I believe is strong evidence that supports the notion that illegal associate recruiting is taking place in mainland China. I've been saying this for quite a while now, but the SEC needs to investigate this matter.

Territory	06/30/07	07/03/10	USANA Associates Per Citizen
North American Region
United States	63,000	57,000	1 : 5,436
Canada	27,000	26,000	1 : 1,315
Mexico	14,000	12,000	1 : 9,268
SE Asia/Pacific Region
Australia-New Zealand	21,000	18,000	1 : 1,476
Singapore	8,000	5,000	1 : 998
Malaysia	11,000	14,000	1 : 2,022
Philippines	0	7,000	1 : 13,140
E Asia Region
Hong Kong	13,000	52,000	1 : 135
Taiwan	15,000	11,000	1 : 2,095
N Asia Region
Japan	4,000	4,000	1 : 35,855
South Korea	2,000	4,000	1 : 12,190

1. It is very interesting that over the past 3 years Hong Kong gained 39,000 active associates, which is a 300% increase. How is this possible when the rest of USANA's markets did so poorly? And to top it off, Hong Kong has 1 USANA associate for every 135 citizens! This is a huge red flag and should easily prompt an SEC investigation into the illegal recruiting of Chinese Nationals. USANA is forbidden to recruit associates from mainland China because China has banned MLM from operating in their country. Any recruiting of people from mainland China breaks foreign laws. USANA is fully aware of the associates they are recruiting from mainland China. In a leaked USANA internal document from October 2009, USANA admitted that a "large sum" of product ends up in mainland China. USANA has never disclosed this information to shareholders. Besides, according to a long time USANA distributor, over 5 years ago USANA already had some problems with about 1400 of their distributors that were all Chinese Nationals who joined illegally, so it isn't like this would be the first time.

2. Also revealed by this chart is the fact that after three years USANA is losing active associates in most of their territories. Are shareholders aware of just how saturated USANA's markets are? USANA only reports in their SEC filings the active associate results for each region (North American, E. Asia, N. Asia, SE Asia). Investors have no idea how bad each of USANA's markets are doing because they are grouped together as a whole. After three years, US down 6000, Canada down 1000, Mexico down 2000, Australia/New Zealand down 3000, Singapore down 3000, Taiwan down 4000. Japan remains the same. Malaysia went up 3000 and South Korea went up 2000. The Philippines have 7000, but didn't exist 3 years ago. And finally, Hong Kong went up 39,000! Red Flag???

I believe the massive recruiting situation in Hong Kong and this large sum of product that is being sent to mainland China are signs of fraudulent activity. It is also evident that USANA's management is fully aware of the situation since they acknowledge it in their internal document. Without this situation in Hong Kong, USANA's stock would be in the toilet.

3. Another thing to point out are the number of active associates in the Philippines. If stockholders followed USANA's press releases after the Philippines market opened, they would expect the number to be much higher!

USANA Q1-2009
"the addition of 5,000 Associates in the Company’s newest market, the Philippines"

USANA Q2-2009
"Additionally, the Company’s newest market, the Philippines, added 5,000 Associates during the quarter."

USANA Q3-2009
"Additionally, the Company’s newest market, the Philippines, added 6,000 Associates."

USANA Q4-2009
"Additionally, the Company's newest market, the Philippines, added 4,000 Associates."

USANA quit reporting the Philippines numbers during Q1 and Q2 of 2010, and never mentions any increase or decrease in the Philippines market. So shareholders and distributors are left to believe USANA has at least 20,000 active associates in the Philippines. However, according to my chart above, USANA only has 7,000 active associates in that market! What kind of management runs a publicly traded company with such irregularities like this?

Why is USANA management trying to fool investors? Is it so the stock price will rise? What does the SEC think about all of this? Someone should ask them.

USANA's 10 Reasons Why You Should Join USANA and My 10 Responses To Them

2010-08-10T00:01:00.059-04:00

USANA Health Sciences, Inc. has a section on their website that lists 10 reasons why to have a home-based business with USANA. I will list each one of them and explain why I believe they are not true.

1. Low Start-Up Costs
To start your own home-based USANA business, there is very little upfront investment and no qualifying volume or inventory requirements. The only required purchase is USANA’s Business Development System. For as little as $30 US, you get a tried and tested system for creating an income-generating business that can last a lifetime.

FALSE
- New associates are also required to activate their business center(s) before they are considered “Active” and be eligible to collect commission. To activate a 1-Business Center plan, associates need to personally purchase about $180 worth of product. To activate a 3-Business Center plan, associates need to personally purchase about $540 worth of product. These Personal Sales Volume (PSV) purchases do not pay out any commission to the new associate even if resold to a retail customer, however the associate's upline will get paid a commission from your purchase.

- While USANA claims there are no inventory requirements, there are mandatory PSV purchases that associates must make every 28 days depending on the number of business centers they have. For a single business center, this is about $120 every 28 days that the associate must personally purchase. If the associate fails to make this purchase, the associate loses their "Active" status, is stripped of any Group Sales Volume (GSV) that has accumulated up to that point, and is not eligible to collect any commission from their preferred customers or downline associate's purchases. So yes, there is an inventory requirement. This is why it pays to recruit new associates instead of retailing product.

2. Simple Compensation Structure
No previous experience is necessary for you to be successful with USANA—just bring a willingness to learn and a passion for helping others improve their lives. It only takes your efforts and two individuals to do the same for you to start building a profitable downline organization. And, depending on your ambition and efforts, you can start earning commissions in your first week simply by sharing the products with others and ordering some for yourself.

FALSE
- USANA's compensation plan is extremely complex, contains vast amounts of requirements that are difficult to follow and understand, and is designed to fail over 90% of participants no matter how hard they try.

- USANA's claim that you can start earning commissions in your first week "simply by sharing the products with others and ordering some for yourself" is not true. Sharing the products with others implies the associate is giving away samples or even selling product from the associate's own inventory purchases. Don't be fooled however! Associates are not paid any commission from the PSV purchases that USANA requires them to make every 28 days. If a new associate joins, activates a single business center by personally purchasing $180 worth of product, and shares these products with others, that associate will not be paid a dime in commission. In order to be paid a commission like USANA claims, you would have to recruit at least 2 new associates in your downline who spend over $250 each, or find about 5 preferred customers who each purchase $100 worth of product during your first week (Both scenarios will pay you $40 in commission). BTW, there are 1 active preferred customer for every 3 active associates. Good luck on the preferred customers because they have been on a downward spiral!

3. Incredible Earning Potential
Unlike a traditional job that gives you only one way to earn income, USANA’s award-winning compensation plan offers an incredible six ways to earn income, providing a realistic opportunity to leverage your downline’s efforts to earn an above-average commission check every week. To help you succeed, unpaid volume carries over every week, there are no group sales requirements, and you are not limited to levels. In addition, you could potentially save thousands of dollars with home-based business tax deductions*.

FALSE
- 99% of USANA associates never make a profit. This incredible earning potential only applies to those who inact boiler room recruiting tactics, unethical doctors peddling USANA products to patients, and those who have gotten in very early on. Of course someone can join today and make a fortune by recruiting their church's congregation into their downline by placing undue pressure on the church members (See Operation Promise Land).

4. Your Business Fits Your Life
It’s your business. You work where, when, and how you want. Generally, if you put in a little bit of work, you’ll earn a little bit of income. If you put in more work, your earnings will increase. And, you’ll be free from the typical workweek irritations—no alarm clock, no schedule, no rush hour traffic, and no boss.

FALSE
- It is not a business unless you are out retailing USANA's products. Unfortunately, very few associates do so. The real operation is to sell the business opportunity and recruit more and more associates into the scheme. You can be sure that all of USANA's big shot associates making hundreds of thousands of dollars are all doing so because they have a massive downline of associates in their business centers, not because they retail millions of dollars worth of product to customers. It's not about selling the product, it's about selling the dream of making money. You sell the dream of becoming rich and the products are purchased automatically because it is a requirement to purchase in order to participate!

5. You’re in Business for Yourself, Not by Yourself
USANA is behind you every step of the way. You will receive expert training and have access to a wealth of tools to make your life easier: a full Associate-only web site where you can get the latest news, training, free downloads, and business management services; frequent Web conferences; unforgettable events; eye-catching sales aids, professional multimedia productions; exciting publications; and much more. Our enthusiastic and experienced customer service team is available to help in six languages. And, with our Autoship program, you’ll never have to handle inventory—we’ll ship everything directly to you or your customers on a schedule that’s convenient for you.

FALSE
- USANA is in front of you every step of the way. USANA associates must purchase overpriced product every 28 days in order to participate in the opportunity. Because the distributor's prices and the preferred customer's prices are the same, there is no profit margin that can be made on selling the product retail. Then USANA takes 45% of the money you just paid them and gives the vast majority of it to the 1% of associates that are at the top of the pyramid scheme. However, the bottom 99% of associates never make enough of see a profit. USANA's heading for this section would be more accurate if it read "You're in Business for Your Upline, Not for Yourself".

6. A World of Possibilities
If you’ve always wanted to travel the world, USANA is your ticket to a successful international business. USANA responsibly expands by choosing promising markets around the world in which to open for business. With our seamless compensation plan, you can build your organization in multiple countries without having to worry about different compensation plans or currency conversions. USANA takes care of everything while you work in exotic locations, discover exciting cultures, and make a world of new friends.

FALSE
- New associates don't stand a chance at doing business internationally. This is because the big shot associates (top 1%) already have their feet planted firmly in new territories just prior to the official openings. What USANA really means by their statement here is that there are no territorial boundaries in which you can recruit preferred customers or new associates. In other words, everyone in your neighborhood could become an associate just like you, and if they are not in your downline, then you are pretty much out of luck. But consider this, if 25 different McDonalds restaraunts existed on a single block, would any of them make a profit? No, of course not. In fact, they would all go out of business except one. That last remaining McDonalds would then be able to profit and stay in business. This dilemma is known as over saturation. USANA wants to pretend as though saturation does not apply to their recruitment operation.

7. Growing Health & Wellness Industry
For many years, wellness-related businesses have been one of the fastest growing segments in direct selling. Renowned economist Paul Zane Pilzer identified wellness products and programs as the economy’s next trillion-dollar industry. As a large portion of the world population ages, they are looking for products that make them look and feel better, and younger generations are looking for ways to maintain their health and energy levels to meet the needs of their busy lives. USANA is poised to meet those needs.

FALSE
- About 99% of the world cannot afford USANA's expensive products. If USANA did not force its associates to purchase over $100 worth of product every 28 days to participate in the compensation plan and be eligible for commission, then USANA would vanish because the people who would purchase the product would be those who actually want it. Associates who quit the business opportunity also quit purchasing USANA products. Over the past 18 years, USANA has had over one million associates. However, only 210,000 are considered "Active" as of July 2010. Most of these currently active associates joined within the past year. Thus, over 80% of USANA associates left the business opportunity and also stopped purchasing the product. This is indicative of the fact that the net sales for USANA change proportional to the number of currently active associates. USANA is NOT poised to meet the world's needs.

8. The Leader in Quality and Innovation
USANA’s quality products are formulated by a world-class scientific team based on cutting-edge, proven science and Dr. Myron Wentz’ expertise in keeping cells healthy through optimal nutrition. The company also collaborates closely on research with the Linus Pauling Institute and other notable institutions. Additionally, most products are manufactured and packaged in USANA’s own state-of-the art facility, allowing USANA to guarantee the quality and potency of every product.

FALSE
- USANA spends less than 1% of net sales in Research and Development. Simply readjusting dosages in their products is not innovative. As far as quality goes, USANA claims to manufacure according to Pharmaceutical GMP. However, USANA refuses to allow any agency or organization to test USANA's facility according to Pharmaceutical GMP. Only the standard Food GMP has been tested at USANA's facility. Manufacturers like USANA can claim to manufacture according to drug standards, but never have to prove it because they are not required to. You cannot call yourself a leader in "Quality" when you refuse to allow testing of your products to the Pharmaceutical GMP quality like USANA claims. BTW, in order to be Pharmaceutical GMP like drugs have to be, USANA's ingredients would have to be exactly 100% to what they claim is in the pills. Not 10% over or 10% under. Can you imagine a prescription drug that calls for exactly 30 mg is slightly over or under the printed dosage

9. Worldwide Credibility
A member of the Direct Selling Association, USANA is a solid, publicly traded company that has attracted people of all ages, genders, and education levels from across the globe. World-class athletes, best-selling authors, respected scientific institutions, leading health and wellness experts, and experienced business professionals across the globe have all recognized USANA’s commitment to excellence.

FALSE
- The Direct Selling Association has no credibility. The DSA board members consist of executives from Multilevel Marketing companies, not Direct Selling companies. The hijacking of the association has destroyed the credibility of network marketing by promoting product-based pyramid schemes called Multilevel Marketing. And just because individuals from all walks of life join USANA does not mean anything. Some people will do anything for a buck. Credible people also recommended and stood behind Enron, Worldcom, and Bernie Madoff's scheme.

10. Experience You Can Count On
Founded in 1992, USANA has years of experience in perfecting not only products that set the gold standard in the industry, but also a duplicable home-based business model that is stable in a good economic climate or bad. Under the direction of USANA’s solid and experienced management team, the company is positioned for a future of continued growth and success.

FALSE
- Whether constantly changing dosages in their vitamins constitutes a perfecting of the product or whether it is done just so associates cannot return the product for a refund after 3 months (instead of 12 months as required), I guess USANA does have experience, but you don't want to count on it. The claim that USANA set the "Gold Standard" in the industry was given by Lyle Macwilliam's Comparative Guide to Nutritional Supplements. I have written much on this subject.

- Pyramid Schemes can sustain themselves as long as you can attract new participants. Pyramid Schemes are successful in both good and bad economical times. Probably more so in bad economical times because people are desperate and looking for ways to make some money. Currently, USANA is growing only in their Asian market, mainly their Hong Kong region. Over the past several years, USANA has NOT been able to grow in their United States Region, Canada Region, Mexico Region, New Zealand Region, Australian region, South Korea Region, Japan Region, Taiwan Region, or United Kingdom Region. So much for continued growth.

USANA Doctors Peddling Product To Their Patients - Violation of Ethics

2010-08-07T12:00:00.002-04:00

Many associates in USANA Health Sciences, Inc. try to recruit doctors into their downline. However, most doctors turn down the USANA distributor due to ethical reasons. Most doctors are familiar with something known as Code of Medical Ethics. So what ethical issue do doctors have with becoming a USANA distributor? They are the following:

The following links are from the American Medical Association's (AMA) Code of Medical Ethics:
- Opinion 8.063 - Sale of Health-Related Products From Physicians' Offices

and

- Opinion 8.06 - Prescribing and Dispensing Drugs and Devices

Here are a couple quotes from the Code of Medical Ethics:

"In-office sale of health-related products by physicians presents a financial conflict of interest, risks placing undue pressure on the patient, and threatens to erode patient trust and undermine the primary obligation of physicians to serve the interests of their patients before their own."

"Physicians may not accept any kind of payment or compensation from a drug company or device manufacturer for prescribing its products."

"Physicians should not urge patients to fill prescriptions from an establishment which has entered into a business or other preferential arrangement with the physician with respect to the filling of the physician’s prescriptions."

Doctors who choose to peddle USANA products to their patients break the Code of Medical Ethics. Because these doctors choose to put the interest of their personal business before the patient's own medical interest, it ruins the trust between the patient and the doctor. This becomes even a bigger violation of ethics when the doctor recruits their patients as distributors into their downline. It is all out of the financial interest of the doctor and not the interest of the patient.

How do doctors that sell USANA products to their patients keep their medical license?

Unless the doctor's patients file a complaint within their state, the practice of peddling will continue. Personally, if I go to a doctor for something and their recommended treatment is to purchase a specific brand of vitamins that the doctor is a distributor for, I would never go back to that doctor again. Would you? Most people would not go through the enormous hassle of filing a complaint. So the doctors peddling their own product never get in trouble. Ethical doctors do not place their own personal financial gain ahead of their patient's health.

Is there a way doctors can prescribe USANA products in an ethical manner?

Doctor's who want to recommend USANA product can do so ethically. This ethical option is for the doctor not to become a distributor, and to simply tell their patient to go to USANA's website and order the recommended product directly from USANA. By doing this, it removes the "conflict of interest" out of the equation. By doing this, it removes the "undue pressure" that would be placed on the patient. There are ethical ways for doctors to recommend USANA product, but the doctor cannot be financially connected, otherwise their would be a conflict of interest and violate the code of ethics.

USANA Announces Their Intention to Enter China - They're Already In China!

2010-05-24T09:55:00.000-04:00

USANA announced that they have intentions to enter China. They made this announcement during their Hong Kong convention. Who are they trying to fool? USANA's already conducting their pyramid scheme in mainland China. They already admitted in an October 2009 internal document that a LARGE SUM of product ends up in mainland China. That's because they are allowing illegal recruiting to take place in mainland China.

MLM is banned in China, and the only way for USANA to enter China is to do away with their MULTI-LEVEL marketing structure. USANA will have to design a SINGLE-LEVEL marketing compensation plan just for China. But why bother? USANA's products are designed to be overpriced and forced to purchase by their distributors in order to participate in the pyramid scheme. Without the incentive to recruit large downlines, there is no reason to purchase the product. Investors might see this announcement as a positive, and the stock will probably go up. However, everyone will soon find out that no entrance into China will happen. USANA will lose money if they change to a single level marketing structure.

So when will stockholders demand USANA to disclose how much product and how many active distributors are a result of illegal China recruiting? When will PriceWaterhouseCoopers do their job according to their code of ethics and require USANA to comply with SEC filing rules and disclose this "Large Sum" of product that was illegal sent to mainland China?

Reference: USANA Health Sciences Announces Its Intention to Open in China

USANA, PriceWaterhouseCoopers, and China - Post on Yahoo Forum

2010-05-14T10:54:00.000-04:00

The other day a gentleman asked me a question regarding USANA and China. The Following is a copy of my response on that forum: Yahoo Posting

"it is so surprise as all know USANA is doing sales to china. how can hong kong do sales of so many sale with only small number of population." - Stevechu6264

Good observation. It does seem a bit odd that so many people in Hong Kong want to join USANA's MLM.

"what if someone tell china customs." - Stevechu6264

Fraud Discovery Institute did a couple years ago. They even have video of a USANA "employee" in Hong Kong trying to show how someone from mainland China can set up bank accounts in Hong Kong to hide under the radar.

"so risk to USANA distributor if usana is stop in china. why does sec care. is it illegal to stock because it keep going up? did company lie? why cant they get license to do legal job?" - Stevechu6264

China has banned all MLM companies from doing business within their country. They do not allow "Multi-Level" compensation plans because they are not stupid. China understands that it is a pyramid scheme. So because USANA is a Multi-Level business, they are not welcomed in China.

USANA can get a license to do business in China if they designed a Single-Level compensation structure for mainland China. But if USANA did that, they would never sell any product because the product is overpriced. The only reason USANA is able to sell product is because it is a requirement for all distributors to purchase at least $100 USD worth every 28 days if that distributor wants to participate in the compensation plan. So without the Multi-Level structure, USANA would never stand a chance.

Would you buy a $112 USANA Healthpak from a USANA distributor that lasts only 28 days when you can get the same exact USANA Healthpak off EBAY for $50 from USANA distributors who can't sell it? Both boxes are unopened and brand new.

The SEC should care because USANA has stated in an internal company document that a "LARGE SUM" of product ends up in mainland China. And the only way product is sold is to "Distributors". So USANA is recruiting distributors from Mainland China into their MULTI-LEVEL compensation plan. And doing so violates China's Laws. The SEC should care because USANA is breaking foreign law. Because USANA admitted a "LARGE SUM" of product goes to China, then USANA is knowingly withholding this information from their stockholders.

PriceWaterhouseCoopers is USANA's financial auditor, and it is their duty to make sure USANA complies with the SEC filing rules. It is PWC's responsibility to either force USANA to comply and report the amount of sales that went to mainland China, or PWC must resign as USANA's auditors. Because PWC was notified of this document many months ago and has not done anything about it, then PWC is now as guilty as USANA is.

So if the SEC ever decides to do their job and investigate this matter and finds USANA guilty, then PWC should also be held accountable.

Investors are being misled by USANA's E. Asia growth. No where else in the world is USANA expanding their distributor force. However, they are doing so in areas with small populations. I would bet the growth is from mainland China.

USANA's 1st Quarter Earnings Boosted by incredible E. Asia Recruiting - Mainland China Recruiting???

2010-04-27T20:56:00.003-04:00

USANA's 1st Quarter Earnings Boosted by incredible E. Asia Recruiting

East Asia increased distributors from 35,000 to 57,000. That is a 63% increase. However, the rest of the world stayed the same or dropped. See USANA's 1st Quarter 10-Q.

USANA's preferred customers also continued to decline, no surprise.

I have been claiming that USANA's growth is because of illegal activity in Mainland China. I have good reason as well. An internal USANA document even says so!

http://www.sequenceinc.com/fraudfiles/wp-content/uploads/2010/01/usanacompliance100609.pdf
"IV. What is the biggest market that buys our products that we are not eligible to operate in?

i. Once again I couldn’t give you an exact answer on this. Since I work with our Asian markets, I know that a large sum of product ends up in China, but I’m sure product somehow gets shipped to other unauthorized markets as well…"

In case you missed it:
"large sum of product ends up in China"

When will the SEC investigate this issue. If USANA's Asian Market growth is from illegal recruiting in mainland China (and I believe it is), then USANA should be held accountable. USANA admitted that there is a LARGE SUM of product being sent to mainland China. When the SEC is done looking at porn on your tax dollars, I suggest they start doing their job and investigate USANA's China fraud.

USANA's auditor PWC ignores USANA's fraudulent China revenues

2010-03-19T11:53:00.000-04:00

USANA is breaking foreign laws by allowing their distributors to conduct business within "Mainland China" (Recruiting distributors and/or selling product). USANA admitted in an internal document that a "large sum" of product ends up in China, which is a restricted region. USANA is required to disclose this activity to their shareholders. Because this activity is a violation of foreign laws, it does not matter how significant or insignificant the amount of product that is illegally being sent to China, it has to be disclosed to shareholders.

USANA's auditor PriceWaterhouseCoopers was notified of this on November 16, 2009 and has had plenty of time to investigate the matter. The fact that USANA's recently filed 2009 10-K did not make any mention of product being sent to China leads me to believe PWC did not take the matter seriously.

This is a violation of PWC's code of ethics and is now subject to lawsuits by USANA shareholders. PWC should have required USANA to disclose the amount of product being sold in Mainland China, and if USANA refused, PWC should have resigned.

PWC's main office should investigate this issue. The SEC should too.

USANA's Overdosing Antioxidants May Be UNPROTECTING Your Body To Fight Cancer!

2010-02-15T22:49:00.002-05:00

After I read today's latest scientific discovery regarding aging, I found the following quote extremely interesting!

"The research, published by the journal Molecular Systems Biology, shows that when an ageing cell detects serious damage to its DNA – caused by the wear and tear of life – it sends out specific internal signals.

These distress signals trigger the cell’s mitochondria, its tiny energy-producing power packs, to make oxidising “free radical” molecules, which in turn tell the cell either to destroy itself or to stop dividing. The aim is to avoid the damaged DNA that causes cancer."

If I'm not mistaken, this means that free radicals are important in protecting your body from developing cancer! But according to USANA's entire regimen, free radicals are bad and your body must receive megadose amounts of ANTIOXIDANTS to help protect your body from cancer.

This is a startling discovery because if proven without a doubt, the entire "MEGADOSE" vitamin industry is dead.

If USANA actually does what they claim, which is to adjust their supplement formulas to the latest scientific research, then USANA should drastically cut back the amount of antioxidants they overdose your body with.

The following is the link to the entire article titled "Scientists discover the secret of ageing"

USANA Admits Products Are Sold Illegally In China

2010-01-21T10:36:00.000-05:00

This one is a great one. Please visit the article at Usana Health Sciences knows it products are being sold illegally in China

Here is the internal document that states so: USANA Internal Document

"IV. What is the biggest market that buys our products that we are not eligible to operate in?

i. Once again I couldn’t give you an exact answer on this. Since I work with our Asian markets, I know that a large sum of product ends up in China, but I’m sure product somehow gets shipped to other unauthorized markets as well… "

So Barry Minkow was right about this all along. This also explains the unusual growth in USANA's Asian market. Their growth is due to illegal activities! I believe the SEC should investigate this matter. If USANA's knew for years that illegal activity in China accounts for a "Large Sum" of product, then they knowingly deceived shareholders and used this to keep the stock price propped up. All this while the insiders keep selling millions of dollars worth of stock.

USANA Becomes Official Supplement Provider of AFC Bournemouth - Sign me up!

2010-01-20T13:24:00.000-05:00

USANA's latest press release titled "USANA Health Sciences Becomes Official Supplement Provider of AFC Bournemouth" is another desperate attempt to make news out of nothing.

Stated on the article is the following: “As a 37-year-old professional footballer, it is vital that I look after myself to the best of my ability,” said AFC Bournemouth Striker Steve Fletcher. “With USANA’s nutritional program, I have never felt better.”

What is not mentioned in the article is that Steve Fletcher is a USANA distributor. He is a salesman for USANA. His Distributor ID number is 4245360. So when you become a USANA distributor, it would also benefit you to have USANA create a press release about your "partnership" with the company. It is just too bad most of USANA's distributors have never made a profit in the business opportunity. And you can get brand new USANA product off Ebay at less than half the price that it costs distributors to buy it!

USANA's Announced Partnership with Kathy Kaehler is Not a Partnership at all

2010-01-11T23:16:00.001-05:00

USANA recently made a press release announcing their partnership with Kathy Kaehler. However, this is not a partnership at all!

Kathy Kaehler simply joined as a USANA Distributor. Her USANA distributor number is 4236366.

Since when did USANA distributors start being defined as "Partners" with USANA?

According to Wikipedia: "A partnership is a type of business entity in which partners (owners) share with each other the profits or losses of the business."

USANA does NOT share their "Profits" with their distributors. Unless this is an actual partnership, USANA should stop writing untruthful press releases just to give an appearance of substantial news. Distributors are recruited every day. Why are they not receiving the same special treatment from USANA as Kathy Kaehler has?

Bouncy Balls or Nutritional Supplements, It Doesn't Matter - A Pyramid is a Pyramid

2009-11-26T19:17:00.001-05:00

A discussion I am having on the Scam.com forum explains how USANA works in a nutshell. You can enjoy this current discussion at the following link at Scam.com: http://www.scam.com/showthread.php?t=123086

Originally Posted by bibleman
Let's play with this for a minute...

You are saying that if a company sells bouncy balls that normally cost someone roughly $5 at their local sports store...but in order to participate, you are required to buy the $5 ball for $10 in order to have a commissionable payout split 5 levels...and further, that you are required to buy a new $10 bouncy ball every month in order to collect the commissions on your own sale of bouncy balls (mostly to other distributors who are recruiting their own distributors/customers) that it is a pyramid scheme.

BibleMan,

1) USANA distributors would be required to purchase $100 worth of bouncy balls every four weeks in order to participate in the compensation plan. (There is no way for a distributor to make a single penny if they don't make these required purchases)

2) Normally these bouncy balls retail for $5, but USANA sells them to their own distributors for $10 and tells its distributors they could then resell it for $15 and make a profit margin. (Obviously the notion that a distributor could retail the bouncy ball for a profit is nothing but lip service and does not happen in the real world)

3) 40% of the price of each bouncy ball ($4) goes toward paying out commission to as many levels as it takes to max out the given leg. If you string together a line of distributors all on the left leg, and each distributor purchases their required amount of bouncy balls for the 28 day cycle, then the commission gets paid up 50 levels before maxing out. This is much higher than the 5 levels you mention.

4) Since commission payout is only calculated based on the lesser of your two legs (the balancing act), it ensures that USANA will never pay out too much (helping to ensure a 40% distributor incentive rate).

5) Since a perfectly balanced BINARY MLM structure yields a 87% guaranteed profitless rate (not including other business expenses than the required purchases), and since balancing your downline legs is virtually unheard of and near impossible, it sends the profitless rate up close to 99%.

6) So 99% of distributors who are out purchasing bouncy balls every 4 weeks enrich the pockets of the top distributors and company executives while those 99% of distributors lose money.

7) In fact, the recent $3 billion in sales milestone USANA reached was achieved by 99% of the USANA distributors who themselves LOST MONEY and never made a profit by forcing their distributors to purchase their expensive product.

Whether USANA distributes bouncy balls or nutritional supplements, the effect is the same. The compensation plan is designed to prevent 99% of distributors from ever making a profit. So what's the fair solution? Well, instead of shutting down thousands of MLM companies one by one, all that is required is to restrict MLMs from forcing their distributors to purchase personal product on a regular basis in order to participate and be commission qualified.

MLM companies should make their distributors direct SELLERS instead of direct BUYERS. Get rid of this stupid point system and the stupid balancing act. In other words, MLMs should stop playing games with their distributor's money. If a distributor brings in 100 preferred customers, then that distributor should be paid commission based on those preferred customer's purchases whether the distributor personally purchases USANA product for them self or not. Stop forcing distributors to purchase overpriced product.

Just so everyone knows, these forced purchases distributors must make do not pay out commission to the distributor who makes the purchase. So if a distributor RESELLS the product they were forced to purchase, and they resell it at their cost, well, they are paid ZERO commission for that sale. However, each and every upline member gets paid a commission on it whether you resell it, or flush the garbage down the toilet.

USANA Launches New Vitamin D Product - Get Ready To Pay Too Much

2009-11-02T20:52:00.002-05:00

USANA launches their newest Vitamin D product. While there is nothing special about the ingredients used, it does share one of USANA's popular traits: It is way over priced!

USANA Distributors pay $19.95 for a bottle of 84 tablets, each containing 2000 IU of Vitamin D. Distributors are forced to purchase USANA's overpriced product in order to participate in the business opportunity and be "commission qualified". They are overpriced to fund the pyramid scheme. The majority of USANA's net revenues comes from the distributor's required purchases. The FTC has much to say about that.

The following graph shows a price comparison of USANA's Vitamin D product. A table of the graph is at the bottom.

PDF Document: USANAVitaminD.pdf

Company	Price Per Bottle	Tablets Per Bottle	Vitamin D Per Tablet	Adjusted Price To Match USANA's Dosage
USANA	$19.95	84 Tablets	2000 IU	$19.95
Natures Bounty	$3.18	100 Tablets	400 IU	$13.36
Windmill Sunshine	$6.89	60 Tablets	2000 IU	$9.65
Natures Bounty	$10.99	100 Tablets	2000 IU	$9.23
Natures Made	$4.99	100 Tablets	1000 IU	$8.38
Sundown	$4.79	100 Tablets	1000 IU	$8.05
Carlson Laboratories	$4.79	100 Tablets	1000 IU	$8.05
GNC	$14.99	180 Tablets	2000 IU	$7.00
Natural Factors	$3.57	90 Tablets	1000 IU	$6.66
Kal	$3.93	100 Tablets	1000 IU	$6.60
Source Naturals	$6.36	200 Tablets	1000 IU	$5.34
Life Extension	8.25	60 Tablets	5000 IU	$4.62
Vitamin Shoppe	$5.49	100 Tablets	2000 IU	$4.61
Source Naturals	$5.23	200 Tablets	1000 IU	$4.39
NSI	$6.99	300 Tablets	1000 IU	$3.91
Good'n Natural	$2.20	100 Tablets	1000 IU	$3.70
Carlson Laboratories	$4.99	120 Tablets	2000 IU	$3.49
Carlson	29.09	360 Tablets	4000 IU	$3.39
Source Naturals	$3.95	100 Tablets	2000 IU	$3.32
NOW	$6.99	120 Tablets	5000 IU	$1.96

USANA Leadership Ranking Table - Shocking Truth About Rank Advancements

2009-10-15T01:55:00.000-04:00

I have taken some time and put together a wonderful PDF document that clearly shows how many distributors are in each leadership ranking. Included in this document is a shocking bit of information. Of those distributors who had been a member of USANA at this time last year, only 2% of them advanced in rank during the past year. Even more shocking is the fact that less that 0.3% of distributors had advanced from a level of builder or less to a level of Achiever or greater. This is evidence that hardly anyone advances in USANA, especially those at the bottom of the pyramid scheme. Chances of making a profit are less than 1%!

View PDF Document: USANALeadershipRankingOct2009_Table.pdf

New Chart shows that 810,000 USANA distributors are "Builders" or below

2009-10-12T23:18:00.002-04:00

USANA doesn't publish a complete list of their business associates, and for good reason - the truth hurts.

810,000 USANA business associates rank as "Builders" or below, which makes up 97% of the company's sales force. According to USANA's last published associate earnings report from 2006, the average builder makes only $1195 for the year. However, it costs the associate close to $1480 in product inventory every year. This product inventory is a mandatory purchase (or else you don't get paid any commision) and the extremely high prices cause associates to get stuck with dead inventory.

Some of you may know that USANA reports to have 200,000 "active" associates, which are those who met their minimum inventory purchase within the last 3 months. So it should surprise you when USANA has 834,000 distributors in their database. Whether this figure includes those who have left the distributorship long ago or not, it still shows the devastating effect an MLM like USANA has on its participants. This is evidence toward the claim that 99% of distributors lose money while enriching the top 1%. Make sure you understand that point. Those distributors that lose money are the ones making the top 1% of distributors all their money. And of course those 99% who lose money also make USANA billions of dollars.

The following chart shows the findings in a graphical representation. I will add a numerical table soon. I will also include a link for anyone who wishes to download the entire distributor list containing the distributor ID # and the leadership ranking for that number. I will withhold the distributor names for those numbers.

View PDF: USANADistributorLeadershipRanking.pdf

USANA's absurdly overpriced CoQuinone® 30 versus comparable products

2009-09-17T00:08:00.005-04:00

USANA's CoQuinone® 30 product is quite popular among its distributors. Do their distributors know just how much they are paying for their CoQ-10 product? I thought I would compare USANA's product with other companies.

USANA's CoQuinone® 30 has 56 tablets, each contains 30 mg of CoQ-10 and 12.5 mg of Alpha Lipoic Acid. USANA Charges its distributors $37.95 for one bottle.

What I did is find other companies who sell both CoQ-10 and Alpha Lipoic Acid. I calculated the cost per mg per tablet for both products. Then I recalculate the cost to make an equivalent product as USANA's (56 pills each with 30 mg of CoQ-10 & 12.5 mg of Alpha Lipoic Acid). The resulting cost is astonishing!

GNC, Natrol, Source Naturals, and Nature's Bounty all fall under $10 for an equivalent product to USANA's. The graph below says it all. I recommend sharing the PDF document in the link below as it contains all the calculations so there is no refuting the numbers.

Again, USANA overcharges its distributors in order to fund its pyramid scheme. Contact your state's attorney general's office if you are or have been a victim of USANA's business opportunity scam.

View Complete PDF Document which contains additional information

USANA over charges its distributors for their new Pure Rest™ melatonin sleep aid

2009-09-06T19:38:00.007-04:00

USANA announced their new melatonin product called Pure Rest™ during their 2009 annual convention. Pure Rest™ costs distributors $14.95 and retails for $17.94. Each Bottle contains 56 tablets. Each tablet contains 2 mg of melatonin. So USANA charges its distributors 13.3 cents per mg per tablet.

Why so much?
USANA says their Pure Rest™ contains "Pharmaceutical Grade Synthetic Melatonin". I believe the high absurd price is to fund USANA's pyramid scheme.

Does anyone else have Pharmaceutical Grade Synthetic Melatonin?
A company 17 miles down the road from USANA's headquarters in Utah called WorldWide Labs. Their melatonin sleep aid costs 2.6 cents per mg per tablet, and that's the retail price!

So how does USANA's Pure Rest™ fair up with other popular brands of melatonin product? The following graph has the answers.

View PDF version

Sanoviv in danger of being shut down - 2009 USANA Convention Highlight kept quiet.

2009-08-31T07:30:00.002-04:00

Sanoviv is in danger of shutting down according to the Sanoviv Dinner that was held at USANA's 2009 Annual Convention. Low attendance is the reason. The cause? Well, USANA, I mean Sanoviv is blaming it on three factors. The Swine Flu, The Drug Cartels, and The Economy.

I have another suggestion. How about the astronomically high prices for their phony treatments! All of their "alternative" treatments are banned in the United States because no evidence is out there that those treatments have any effect.

- Complete Diagnostic Program (CDP)----$8,500 –Six nights
- Comprehensive Medical Program--------$14,600 –base cost for Two weeks
- Medical Spa----------------------------------$7,550 – One week
- Rejuvenate-----------------------------------$13,200– Two weeks
- Holistic Oncotherapy----------------------$39,000- Four weeks at Sanoviv, two weeks at home
- Cardiovascular health---------------------$17,000- two weeks at Sanoviv, two weeks at home
- Neurological Repair------------------------$23,000 – Three weeks at Sanoviv, three weeks at home

How much is a USANA distributor worth? Gross reality of USANA

2009-08-30T15:34:00.002-04:00

Multilevel Marketing is serious business, especially when each recruit means more money in your pocket.

For the example below, assume that distributors only purchase the required amount to qualify for commission for a single business center for an entire year (1300 PSV).

In one year, a USANA distributor with 1 business center will have purchased around $1430 worth of inventory so they can qualify for commission (company required policy).

After doing some analysis with the exampled distributor above, I found that each distributor in one's downline makes them $130 per year. So in order to break even, a distributor must enroll 11 more distributors into their downline.

What does all this mean? 11 out of 12 distributors LOSE MONEY. And that is the best possible outcome because I am assuming everyone has a perfectly balanced downline. In reality, everyone's downline is so lopsided, that the loss rate goes up to 99% of distributors.

So if you have Seven Levels totaling 127 distributors, 112 of them lose money while only 15 make money.

This business structure is not sustainable and obviously not fair. It isn't fair because no matter how many people are recruited, the loss rate is mathematically FIXED. In the most perfect world, USANA will have at least 88% of their distributors fail. Mathematically designed to fail the majority of its distributors.

Another sick outcome of this design is the fact that those who lost money are the ones bringing in all the revenue for USANA! In the Seven level example, those 112 distributors who lose money paid a total of $160,160. The 15 who made money only paid a total of $21,450!

So USANA's net revenues including their $3,000,000,000 milestone, were funded primarily by their distributors whom themselves LOST MONEY!

According to a FTC memo, USANA is a Pyramid Scheme.

2009-08-29T17:05:00.007-04:00

The FTC states the following:
"Modern pyramid schemes generally do not blatantly base commissions on the outright payment of fees, but instead try to disguise these payments to appear as if they are based on the sale of goods or services. The most common means employed to achieve this goal is to require a certain level of monthly purchases to qualify for commissions." - Pyramid Scheme Analysis

USANA does exactly this. USANA makes most of its net revenue from the required 100/200 Personal Sales Volume that business associates are forced to purchase every four weeks if they want to "qualify for commissions". If USANA did not have this forced inventory purchase, then USANA would go out of business in less than three months.

If USANA claims that the business associates purchase the product because they want it for personal use, then prove it by eliminating the four week required personal purchases in order to qualify for commission.

Does USANA violate SEC rules by announcing new products during private convention?

2009-08-27T21:54:00.000-04:00

Question for the law savvy individuals in here. If USANA privately announces new products (Pure Rest) to their distributors during their 2009 annual convention instead of publicly announcing it through a press release so all 100% of shareholders could be notified, is that against SEC rules?

USANA distributors who are also USANA shareholders could have called their stock broker today and purchased USNA shares because they have insider information that the remaining shareholders don't have who didn't attend this private convention. If I am right about this, then USANA's method of announcing new products needs to be investigated by the SEC and fined if guilty.

USANA's Flawed "Product Advisor"

2009-08-27T21:34:00.000-04:00

USANA has a "Product Advisor" service on their Product section at their corporate website. The service asks you a list of questions and depending on your answers, recommends which USANA products you need to take. The system is grossly flawed!

After answering the questions with the BEST possible answer allowed, the "Product Advisor" still recommends AT LEAST $96 (retail price) worth of product every month! This is messed up! That was the "Compact List" as well.

The "Optimal List" the Product Advisor service suggested adds up to $150 of supplements!

This is FALSE ADVERTISEMENT because USANA is basically claiming that no matter how perfect you treat your body, you are "DEFICIENT". So USANA suggests you purchase AT LEAST $1248 worth of their supplements each year.

Their product advisor program should be written to allow for the possibility that an individual does NOT need to supplement their diet.

New Watch Dog site dedicated to the MLM company USANA

2009-08-22T14:29:00.000-04:00

This blog will be designed to help prospective and current USANA business associates decide whether they are making the right decision by joining USANA. Stay tuned!