Citron Research has just backed up everything I have written about USANA's fraudulent China activities. They even have undercover investigative evidence! Be sure to read the full investigative report! Allegations are that USANA has been illegally recruiting Chinese Nationals into their Hong Kong MLM compensation plan.
For additional information regarding the allegations of USANA's fraudulent China activities, read through my blog and you will find several years of information revealing it all!
So what do you think will happen now? What happens to Usana when this gets more press?
ReplyDeleteWhat does it mean for distributors in the US and other areas?
Hi Watchdog,
ReplyDeleteIt leads me to a favicon.ico site, not the PDF.
Great read, thanks for the info watchdog. I see stock prices have plummeted since this report. Looks like the glass floor has one too many breaks in it and is about to come crumbling down.
ReplyDeleteWait a minute. Now why in the world would a legit company with a great product that has plenty of demand risk its business by doing something that's considered illegal in China?
ReplyDeleteIt can't possibly be because they're desperately trying to keep earnings up in order to keep their oblivious investors from selling their stock can it?
Seems like they're getting closer and closer to the tipping point. They should've went back to being private like Amway did in order to cover up their scheme from prying eyes a bit longer.
I wonder if Usana will just blame it on individual reps and claim they didn't know any of this was going on. More importantly, I wonder if any analyst will bring this up during the next earnings call. The plot thickens...
I found this Citron report very alarming and I actually forwarded the report directly Usana and asked for a solid explanation for the findings published in the report, specifically pertaining to the undercover agents posing as Usana recruits/distributors.
ReplyDeleteUsana's response was pithetic. Instead of defending themselves or offereing any explanation whatsoever, Usana sent me a link to filing they submitted. http://biz.yahoo.com/e/121129/usna8-k.html
Here is the complete filing for the link referenced just above.
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Form 8-K for USANA HEALTH SCIENCES INC
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29-Nov-2012
Regulation FD Disclosure
Item 7.01 Regulation FD Disclosure.
USANA Health Sciences, Inc. (the "Company") issued the following statements in response to speculation and allegations related to its business in China.
"USANA's business in China is that of BabyCare, Ltd ("BabyCare"), a direct selling company organized under the laws of China. BabyCare has been granted a license to conduct direct selling in China and has a long history of doing business in China. Additionally, the Chinese government has regularly reviewed our business activities in China. We are confident that our operations in China, through BabyCare, are in compliance with applicable regulations, as those regulations have been interpreted and enforced by the government of China.
USANA's and BabyCare's policies each require that distributors comply with applicable laws and regulations. We believe that distributor compliance is critical to the integrity of our business, and, therefore, we are aggressive in ensuring that our distributors comply with our policies. We actively educate and train our distributors on our policies and procedures. Any distributor who fails to adhere to our policies is subject to disciplinary action, which may include, without limitation, warnings, fines, probation and, in more serious cases, termination of the distributor's purchase and distribution rights."
The information in this Current Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended. The furnishing of the information in this Current Report is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information this Current Report contains is material investor information that is not otherwise publicly available.
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This filing is a complete load of political and legal jargon. Company has been caught red handed breaking international laws, and actively involved in a massive illegal operation in China. Their financial statements further substantiate the fact that Usana's primary region for business growth is Asia/Greater China.
As soon as officials start demanding answers from Usana for their activity in China and/or shut down their operations in China, the company will be in real trouble.
Usana's response was a joke and an insult to all of our intelligence. Doesn't take rocket scientist to figure out what they are doing.
You got USANA's "canned" response. USANA sent a memo to their employees instructing them to give the response you just received. Sorry, but you aren't gonna get any answers. Here's the link: http://obs.usana.com/UPLOADS/usana/2012/335/335-1_BAA.html
DeleteAlso, USANA's response completely ignored the allegations, which had nothing to do with Babycare. The report and investigation has to do with Chinese Nationals signing up as MLM distributors in Hong Kong, which circumvents China's laws. It was a complete insult to all shareholders for USANA to give the response they did. What is even more amazing is the fact that the analysts and federal authorities have completely ignored this issue for years. I would suggest there are over 30,000 to 50,000 Chinese Nationals signed up in Hong Kong in the MLM compensation plan.
"It was a complete insult to all shareholders for USANA"
DeleteI disagree, any shareholder who doesn't see the obvious scam doesn't deserve to get any real responses. If they are too blinded by profit numbers to see that they have invested in a scam, then obviously, the response Usana gave is enough for them to blow off what happened. Usana knows this, which is why they gave the response that they did and it seems like oblivious investors bought it seeing that their stock is inching upward since the drop.
I found an interesting article in which Usana attempts to defend their operations in China and deny the allegations in the Citron report.
ReplyDeleteHere is a link to that article:
http://news.investors.com/business/112912-635212-usana-denies-citron-report-illegal-china-marketing.htm
I also decided to get more information on this Babycare company in China. Interesting to note that babycare produces baby products and not supplements, vitamins, skin care products, or meal replacement shakes which is Usana's entire product line.
Here is a link to website I found on Babycare.
http://www.forbes.com/2010/09/30/china-baby-care-market-infant-milk-mothers-markets-economy-bcg.html
So the questions is quite simple. Usana is generating the greatest growth from China. Sales are through the roof on supplements and on new associates recruited into the business. However, the business growth from Usana has come the sales of their own products (supplements, skin care etc), and new business associates. I haven't seen a single thing from Usana that attributes the business growth mentioned above that is also substantiated in Usana's 3rd quarter financials to the growth from Babycare.
So this obvious question is if the business growth is not coming from Babycare, then exactly why do you have such a serious investment in Babycare? How is Babycare contributing to your balance sheet?
Usana really treats the public like we are complete idiots. The Babycare investment is their key to sell their products and business in China in a method that is both highly illegal and unethical.
I invest in stocks. I would never buy a usana stock because most profit comes from associates buying a dream that isn't real. The only customers that buy residually have no future financially so that means in the long run its a high risk that you can lose your investment when there isn't enough market to recruit. I mean around 30$ for stocks??!? It can easily go down to 15$ when people start getting SMARTER and more KNOWLEDGABLE. Stop believing your upline cares about you because they wouldn't if they didn't profit from you. How do I know?? Because once you stop autoship they ignore you like just another statistic. Talk to 10 and get 3 as jim rohn would say.
ReplyDeleteCommon everyone, why not be honest and accept that USANA is what is called pyramid selling. By making a cult of business, the uplines are making good money by brainwashing the downlines.
ReplyDeleteIt is simply selling very much overpriced vitamins and nutritionals. Why not shop around for different products.
Ask watch dog to provide you the breakdown of the cost of the product. He did in another post. Only 44% goes to the associates. You may want to compare this with some retail mark-ups and convince yourself that the price of the product is nowhere near as many in this blog claim it is. You may want to consider that this product is made on American soil by American people if want to have a fair comparison with Made in Taiwan products.
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