Tuesday, September 25, 2012

If Nu Skin Loses Their China License, USANA Might Lose Their China License As Well

There might be a very good reason Citron Research made the following Twitter comment today:

I can think of several USANA "China issues" that I have mentioned on my blog over the last several years. The biggest one that stands out is the illegal recruiting of Chinese Nationals into USANA's Hong Kong MLM compensation plan. It is illegal for any Chinese National to participate in Multilevel Marketing companies. China has outlawed MLM because it is a pyramid scheme.

I have pointed this out many times to my readers over the past several years. USANA's Hong Kong market exploded in growth a couple years ago and when the active associates in that market represented 1 out of every 100 Hong Kong citizens, it seemed pretty obvious to me that something is wrong. I have pointed out an internal USANA memo that admitted to sending a "LARGE SUM" of product to mainland China. There is no reason for a large sum of product to be sent to China unless they were going to distributors over there.

Then Dave Wentz and Fred Cooper actually admitted they have people signing up from mainland China in USANA's Hong Kong market. When a stock analyst asked USANA what percentage of USANA's Hong Kong market were Chinese Nationals, USANA refused to answer claiming they did not know (and never provided an actual answer). The analyst was satisfied with the non answer and dropped the subject.

I believe USANA has had tens of thousands of Chinese Nationals join USANA's MLM compensation plan. I believe USANA knows about it and is even training their associates to recruit Chinese Nationals into the MLM plan. The Fraud Discovery Institute uncovered this 5 years ago! According to the Fraud Discovery Institute (FDI), they had an undercover couple go into USANA's Hong Kong office and one of USANA's employees told that couple (who claimed they were from mainland China) to open up a bank account at the China Merchant Bank and use an address in Hong Kong. Also according to FDI, the USANA employee claimed there were 30,000 Chinese Nationals signed up in Hong Kong. Remember, this was 5 years ago. I believe this to be true.

Shortly after this China Report came out, FDI settled a lawsuit with USANA for an undisclosed amount and all the FDI material on USANA was removed from the internet. Then several years later Fred Cooper and Dave Wentz admit that Chinese Nationals signed up in Hong Kong.

Let it also be known that I brought this information to the attention of PriceWaterhouseCooper (USANA's Auditors) regarding the "LARGE SUM" of product being sent to mainland China as well as the recruiting of Chinese Nationals. PriceWaterhouseCooper ended their communications with me after I sent them all the information. Seems they didn't really care. But just for the record, they cannot claim they weren't informed about it years ago.

If there are tens of thousands of Chinese Nationals in USANA's Hong Kong distributorship, that could represent a very large portion of USANA's net revenues. Without this China recruiting, USANA's net revenues could have been on the decline like their United States market is. With such a decline, USANA's stock would be drastically lower. Which gets to my point about USANA executives selling their stock recently for millions of dollars with a stock price over $45. If these insiders know about the Chinese National recruiting scheme, then they know the stock price is grossly inflated because of the inflated earnings. I believe this is a form of stock manipulation.

Tuesday, September 11, 2012

USANA Executives Sell Millions of Dollars Worth of Stock

Myron Wentz sells $4,735,010 worth of stock in the last couple days (Sept 12 and 14). So I will update the figures below with the latest data. Someone should ask USANA to disclose what days the company repurchases the stock. Today it appears Myron Wentz sold his stock at the last 15 minutes of trading. (Update Sept 14, 2012)

Over the past couple weeks USANA's CEO Dave Wentz sold $2,960,088 of his stock.

Since the beginning of 2012, USANA executives have sold a total of $14,573,605 in stock. They have purchased $0.

Wentz Dave $2,960,088.00
Wentz Myron W $8,616,930.00
Macuga Daniel A. $515,973.30
Woo Deborah $500,436.24
McClain Jerry G $103,737.70
Guest Kevin $970,099.00
Iiekking G Doug $348,718.20
Fuller Gilbert A $164,095.00
Bramble James $196,329.00
Truett Roy $197,199.00

And I'd like to remind the readers how Dave Wentz responded during a past conference call:
John San Marco at Janney Montgomery Scott LLC:
"Do you know what the percentage of your Hong Kong associates that are actually Chinese nationals?"

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."

Also this Internal USANA Memo that admits to sending product to mainland China:
"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…"

And also what USANA's ex-president Fred Cooper stated:
"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 USANA executives are fully aware of the Chinese Nationals that are recruited into USANA's MLM compensation plan through Hong Kong China. And has I have written about for years, the ratio of USANA distributors in Hong Kong to citizens in Hong Kong is about 1 in 100. That's a major red flag. Now USANA admits to the recruiting of mainland China citizens. The problem here is, it is AGAINST CHINA'S LAW for any of their citizens to participate in MLM. Why is that? MLM is against the law in China. So USANA is knowingly circumventing foreign laws and the SEC should investigate this matter.

As I have stated before, I believe that if you remove the net revenue generated by these illegal distributors, USANA would no be growing, but actually declining!. Thus, the stock price would be far lower. I believe the stock price is grossly inflated because of the illegal recruiting of Chinese Nationals and believe the executives selling their shares at these inflated prices could land them in hot waters.

It would be very interesting to find out how many USANA distributors are illegal recruits from foreign territories that restrict MLM from operating in their own borders.