Rumors of NUS losing its license in China (cannot confirm), If so REAL BAD for USNA who has as many if not more "China issues" than NUS
— Citron Research (@CitronResearch) September 25, 2012
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.
To Watchdog
ReplyDeleteThis could explains why Wentz is selling his stock.
Does anyone think that he knew of this China problem before he sold the stock? I don't think he knew or he would have sold more.
I'm sure Myron Wentz and all of USANA's executives know that they are recruiting Chinese Nationals into their Hong Kong market, which violates China's direct selling laws. China has banned MLM.
DeleteDo I think Myron knew of an immediate potential threat to their China business? I don't know. It's possible. Of course Myron could have sold more, but where does someone draw the line?
Time for a history lesson:
Myron Wentz sold $5,183,300 on February 12, 2006 for $60.98 per share.
On February 20, 2006 the Fraud Discovery Institute sent their 500 page investigative report to federal regulators. Stock closed at $61.19 that day.
On March 15, 2006 the investigative report was released to the public and the stock dropped from $58.77 to $49.85.
I thought back then it was a little fishy that Myron sold that much stock just prior to bad news being released. Kind of like he knew it was coming...
Rita Hui is Usana's top distributor. She has earned this pretigious award as Usana's top distributor for the past few years. Take a guess where she is from.......Hong Kong.
ReplyDeleteTo be win the top distributor of the year award, you need to recruit thousands of new business associates. Where do you think Rita is recruiting?
I am know Rita works very hard, and she has an incredible testimony overcoming huge challenges. But I think it is pretty clear that there is a direct correlation between the Usana's exponential growth in China and the illegal recuitment of Chinese nationals.
I am glad to learn that the mlm companies like Usana are being investigated for the operations in China.
It also makes me very upset that Dr. Myron Wentz and his son have inside information about their company and decided to sell a large portion of their stock. This has to be illegal insider trading.
Tired of this company continuing to escape regulations, and really looking forward to the day when they finally get reprimanded for their actions. The continuously rip off the majority of their business associates and it is about time they get punished.
This explains why the most rank promotions in Asia Pacific are from Hong Kong.
ReplyDeleteShaun Kwong
Malaysia
China is only one of the markets that Usana has got into, there are another 18 countries, why dont we focus on the global market instead of just china?
ReplyDeleteif your business has gone globally, what kind of picture is that? doesnt matter it is Usana, Nuskin, Amway, or whatever ABC company, if you are the CEO of that global business, I dont think you will be just focus on this tinny litte one.
But it is this tiny little one (except the fact that it in reality China is one of the largest countries in the world, very poor choice of words hot shot)that is generating the most revenues and business growth for the company.
ReplyDeleteJust too bad it is illegal. So I guess you're right, why focus on the country that Usana isn't suppose to be recruiting in yet does so heavily and then spits in the face of everyone asking questions and looking to hold them accountable for conducting fraudulent operations.
Usana released the 3rd quarter financials earlier this week. On their website usana.com under the investor relations tab, you can read the 3rd quarter financial summary to see for yourself how they are doing.
ReplyDeleteIf found the following statment the most alarming:
"Net sales in the Asia Pacific region increased by 21.6% to $102.7 million, compared with $84.5 million for the third quarter of the prior year. This improvement was due to strong sales growth in Southeast Asia/Pacific and Greater China. This sales growth was driven by a 21.6% increase in the number of active Associates in Asia Pacific, as well as price increases in certain markets that were implemented in the first quarter. Active Associate growth was driven by double-digit growth in Greater China and Southeast Asia and, to a lesser extent, the addition of Thailand to the region.
“We are successfully executing our strategy in the Asia Pacific region,” continued Mr. Wentz. “We reported local currency sales growth in nearly all of our Asia Pacific markets and double-digit growth in Greater China and Southeast Asia. We are encouraged by the sales and customer growth in Greater China this quarter, a region that represents a meaningful growth opportunity for USANA in the future. Consequently, growing Greater China is one of the pillars of our worldwide strategy.”
Red flags everywhere with this statement. 21.6% increase in net sales in Asia, Greater China. Also 21.6 % increase in associates in same area. Find it quite ironic that both the net increase in sales and in active associates to be the exact same. What are the odds of that?
But the most troubling thing about the statement is that all of this growth is happening in Greater China and Asia. And the distributors are recruiting new associates like a bat out of heck. Only part is that it is ILLEGAL to recruit Chinese Nationals.
Although I didn't paste it here, get ready, the net increase in sales in the North America/Europe market has only increased by 5.9%. I personally love how Usana lumps North America and Europe together. Too bad these markets are separated by the ATLANTIC OCEAN and are thousands of miles apart.
If Usana had enough integrity, they would publish the net sales of just North America so people here could get a real unbiased census of how the company is really doing here.
Keep in mind, Usana just opened new markets in France, and Belgium earlier this past quarter, and is aggressively looking to expand in 6 other European countries (Germany, Spain, etc). Usana desperately needs to open this markets because the North American markets are all satured and not generating enough revenues. So the 5.9% increase in sales in North America/Europe is most likely inflated given that a few markets just opened up.
Still don't know how Usana continues to escape investigation for their operations in China, and how they are to combine markets separated by the Atlantic Ocean together in order to report revenues that paint a pretty picture of the company's performance.
if this scam falls, duno how it will affect the whole stock market. hope investors realize the problem before it's too late.
ReplyDeleteYes, I think the Insider stock sales explain volumes about this company and its leaders. They were timed at a peak and were tremendous amounts of money. It would be better if this company focused upon the products and ran advertisements of integrity like Amway does on television.
ReplyDeleteAnything new that you can share with us??
ReplyDelete