Saturday, December 24, 2011

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

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.

UPDATE January 4, 2014: I have discovered that there has been yet another USANA distributor working at Lyle Macwilliam's NutriSearch. Her name is Joan Baumann USANA distributor #100450. She joined NutriSearch in 2008 as a Database Administrator. It appears that my correspondent at Nutrisearch lied to me when I had asked if any USANA distributors work at Nutrisearch. Obviously there is a serious conflict of interest here.

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 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 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 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 "" 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.

Wednesday, October 26, 2011

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


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

Wednesday, October 19, 2011

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

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.-

USANA Distributor #2119355 - Duke Tubtim - 5 Star Diamond Director - Millionaire Club
ARIIX Distributor #10198 - Duke Tubtim - Kaizen Support Group Inc. -

USANA Distributor #2111980 - Timothy Lewis - 4 Star Diamond Director - Millionaire Club
ARIIX Distributor #10138 - Timothy Lewis - 4DL Enterprises Inc. -

USANA Distributor #33009 - Robert & Daryl Allen - 3 Star Diamond Director -
ARIIX  Distributor #213647 - Robert Allen -

USANA Distributor #295671 - Steve and Myrna Swartz - Diamond Director - Millionaire Club
ARIIX Distributor # 10168 - Steve Swartz - Have it All, Inc. -

USANA Distributor #3053770 - Iris Lee - Team ASD – Diamond Director -
ARIIX Distributor #10228 - Iris Lee - IS Health Enterprises Ltd. -

USANA Distributor # - Sandy LV - Ruby Director -
ARIIX Distributor #19176 - Sandy LV -

USANA Distributor #2127139 - Tatyana Sutherland - Gold Director -
ARIIX Distributor #11188 - Tatyana Sutherland

USANA Distributor #2765838 - Tracee Gluhaich - Gold Director -
ARIIX Distributor #18696 - Tracee Gluhaich -

USANA Distributor #3216982 - Phyllis Goodman - Silver Director -
ARIIX Distributor #10847 - Phyllis Goodman -

USANA Distributor #2137359 - Glenna and Richard Norris - Silver Director
ARIIX Distributor #59886 - Glenna and Richard Norris, CHHC -

USANA Distributor #3704262 - Randy "Yosef" Katz - Silver Director - Sabai Marketing Group Distributor #10247 - Randy "Yosef" Katz - Sabai -

USANA Distributor #86832 - John & Carol Cliffe - Silver Director
ARIIX Distributor #11327 - John Cliffe -

USANA Distributor#2811720 - David & Monica Rendon - Silver Director -
ARIIX Distributor #42887 - David & Monica Rendon -

USANA Distributor #2554180 - Marlisa Hurt - Silver Director -
ARIIX Distributor #33636 - Marlisa Hurt

USANA Distributor #2320280 - Jean Amicarella - Silver Director
USANA Distributor #3669898 - Jean Amicarella - Sharer (Yes, two USANA IDs with separate websites for this unique distributor)
ARIIX Distributor #17766 - Jean Amicarella -

USANA Distributor #128089 - Larry & Susie Sisson - Bronze Director
ARIIX Distributor #10547 - Larry & Susie Sisson -

USANA Distributor #244097 - Arlene Hutchinson - Director -
ARIIX Distributor #11578 - Ennis Hutchinson -

USANA Distributor #3940012 - Pollawat Pankam - Achiever
ARIIX Distributor #11357 - Pollawat Pankam -

USANA Distributor #2398784 - Maryann Cady - Achiever
ARIIX Distributor #38008 - Maryann Cady -

USANA Distributor #3936760 - Somboon Pongpruk - Builder
ARIIX Distributor #11376 - Somboon Pongpruk -

USANA Distributor #3909038, 4112764 & 4380414 (Builder) - Anh Vongbandith -
ARIIX Distributor #12816 - Anh Vongbandith -

 USANA Distributor #3250998 - Melissa Daniels - Builder
ARIIX Distributor #11496 - Healthy 4 Life, LCC - Melissa Daniels -

USANA Distributor #2479038 - Lucia Sanchez - Builder
ARIIX Distributor #34596 - Lucia Sanchez -

USANA Distributor #4202538 - Ed Walls - Builder -
ARIIX Distributor #15538 - Edward Walls -

USANA Distributor #4086676 - John R. Parke - Builder -
ARIIX Distributor #11507 - John R. Parke

USANA Distributor #4154550 - Rick & Cynthia Evans - Believer
ARIIX Distributor #10896 - Rick & Cynthia Evans -

USANA Distributor #4446386 - Irv Segal - Believer -
ARIIX Distributor #21328  - Irv Segal -

USANA Distributor #4353344 - Loredana Nuñez - Believer
ARIIX Distributor # - Francisco & Loredana Moreno -

USANA Distributor #4387858 - Ric & Carmen Goodson - Believer -
ARIIX Distributor #11387 - Ric & Carmen Goodson -

USANA Distributor #3076606 - Angie Lee - Sharer
ARIIX Distributor #17818 - Angelica Lee -

USANA Distributor #4202828 - Sou Fin Saechao - Sharer -
ARIIX Distributor # - Sou Fin Saechao

USANA Distributor #3914138 - Jidbhong - Jayavasu - Sharer -
ARIIX Distributor #56076 - Dr Jidbhong Jayavasu -

USANA Distributor #7662974 - Edward Williams -
ARIIX Distributor #12996 - Edward Williams -

USANA Distributor #2926598 - Rick Billings -
ARIIX Distributor #10727 - Rick Billings -

USANA Distributor #2812402 - Mike Delevante -
ARIIX Distributor #10817 - Mike Delevante -

USANA Distributor #8297220 - Debbie Turner -
ARIIX Distributor #20916 - Debbie Turner -

USANA Distributor #9638662 - Susan Hamilton -
ARIIX Distributor #34007 - Susan Hamilton, CHHC -

USANA Distributor #9202660 - Chad zinda -
ARIIX Distributor #  - Chad Zinda

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

USANA Distributor #7016988 - Emery Krahn -
ARIIX Distributor #36707 - Emery Krahn -

Friday, September 23, 2011

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

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 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!!!

Tuesday, August 16, 2011

Dr. Ray Strand Leaves USANA to Join ARIIX

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.

Monday, August 15, 2011

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

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.

Friday, August 12, 2011

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

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.

Thursday, July 28, 2011

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

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.

Wednesday, July 27, 2011

USANA Second Quarter 2011 Earnings Results Reveal Stagnant Distributor Base

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:


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

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


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

Sunday, July 24, 2011

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


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. -

USANA Distributor #133412 - Lynn Allen Johnson - 5 Star Diamond Director - Millionaire Club
ARIIX Distributor #10146 - Lynn Allen Johnson - Vision is Power Inc.-

USANA Distributor #2119355 - Duke Tubtim - 5 Star Diamond Director - Millionaire Club
ARIIX Distributor #10198 - Duke Tubtim - Kaizen Support Group Inc. -

USANA Distributor #295671 - Steve and Myrna Swartz - Diamond Director - Millionaire Club
ARIIX Distributor # 10168 - Steve Swartz - Have it All, Inc. -

(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
ARIIX Distributor #10247 - Randy "Yosef" Katz - Sabai -
See Randy Yosef Katz USANA resignation letter

USANA Distributor #3940012 - Pollawat Pankam -
ARIIX Distributor #11357 - Pollawat Pankam -

USANA Distributor #3936760 - Somboon Pongpruk -
ARIIX Distributor #11376 - Somboon Pongpruk -

USANA Distributor #7662974 - Edward Williams -
ARIIX Distributor #12996 - Edward Williams -

(added to this list Aug 5, 2011)
USANA Distributor #3053770 - Iris Lee - Team ASD -
ARIIX Distributor #10228 - Iris Lee - IS Health Enterprises Ltd. -

(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 -
ARIIX Distributor #10727 - Rick Billings -

USANA Distributor #4154550 - Rick & Cynthia Evans -
ARIIX Distributor #10896 - Rick & Cynthia Evans -

USANA Distributor #2812402 - Mike Delevante -
ARIIX Distributor #10817 - Mike Delevante -

USANA Distributor #3909038, 4112764 & 4380414 - Anh Vongbandith -
ARIIX Distributor #12816 - Anh Vongbandith -

USANA Distributor #2127139 - Tatyana Sutherland -
ARIIX Distributor #11188 - Tatyana Sutherland

USANA Distributor #4086676 - John R. Parke -
ARIIX Distributor #11507 - John R. Parke - 11507

(Following added to this list Aug 23, 2011.)
 USANA Distributor #: 3250998 - Melissa Daniels -
ARIIX Distributor #: 11496 - Healthy 4 Life, LCC - Melissa Daniels -

USANA Distributor #: 128089 - Larry & Susie Sisson -
ARIIX Distributor #: 10547 - Larry & Susie Sisson -

USANA Distributor #: 2765838 - Tracee Gluhaich -
ARIIX Distributor #: 18696 - Tracee Gluhaich -

(Following added to this list Aug 29, 2011.)
USANA Distributor #:  - Sandy LV - Ruby Director -
ARIIX Distributor #: 19176 - Sandy LV -

USANA Distributor #: 8297220 - Debbie Turner -
ARIIX Distributor #: 20916 - Debbie Turner -

USANA Distributor #: 2479038 - Lucia Sanchez -
ARIIX Distributor #: 34596 - Lucia Sanchez -

(Following added to this list Sept 1, 2011.)
USANA Distributor #: 244097 - Arlene Hutchinson -
ARIIX Distributor #: 11578 - Ennis Hutchinson -

USANA Distributor #: 2320280 - Jean Amicarella -
USANA Distributor #: 3669898 - Jean Amicarella - (Yes, two USANA IDs with separate websites for this unique distributor)
ARIIX Distributor #: 17766 - Jean Amicarella -

(Following added to this list Sept 15, 2011.)
USANA Distributor #: 9638662 - Susan Hamilton -
ARIIX Distributor #: 34007 - Susan Hamilton, CHHC -

USANA Distributor #: 2137359 - Glenna and Richard Norris
ARIIX Distributor #: 59886 - Glenna and Richard Norris, CHHC -

USANA Distributor #: 2398784 - Maryann Cady -
ARIIX Distributor #: 38008 - Maryann Cady -

Monday, July 11, 2011

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

 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)


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?