USANA makes untrue statement in their 2012 Form 10-K SEC filing. USANA stated the following:
"More recently, in November 2012, we were again the target of false and misleading statements concerning our business practices, particularly in China and Hong Kong. This adverse publicity also adversely impacted the market price of our stock and caused insecurity among our Associates. There can be no assurance that we will not be subject to adverse publicity or negative public perception in the future or that such adverse publicity will not have a material adverse effect on our business, financial condition, or results of operations."
USANA's
claim about being the
target of “false and misleading statements concerning our business
practices, particularly in China and Hong Kong” is a lie. USANA
does in fact illegally recruit Chinese Nationals from mainland China
into USANA's multilevel marketing compensation plan through Hong
Kong (and possibly other USANA territories), which is a direct violation of China's law. Dave Wentz even
admitted Chinese Nationals are signing up in the MLM compensation plan during the July 27, 2011 financial conference call:
John
San Marco at Janney Montgomery Scott LLC asks:
“Do you know what the percentage of your Hong Kong associates that are actually Chinese nationals?”
Dave
Wentz, CEO of USANA Health Sciences responds after trying to avoid
answering the question:
“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.”
This
violation of the law is not just the problem from a couple
associates, but an organized circumvention of Chinese foreign laws
conducted by USANA. This violation could (and should) cause USANA to lose their
direct selling license in mainland China and possibly face serious
fines by regulatory agencies both domestic and foreign. Again,
USANA's CEO Dave Wentz already admitted the fraud exists.
