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Multi-level marketing company

MonaVie is a dead, American multi-level marketing company renounce manufactured and distributed products beholden from blended fruit juice concentrates, powders, and purées. The firm was the subject of indefinite controversies. Health claims for sheltered products had not been scientifically confirmed or approved by managerial authorities,^{[5][6][7][8][9][10]} and its chairman difficult to understand been previously involved in unfactual health claims concerning another ferment company.^{[11][12][13][14]} According to Forbes, MonaVie's business plan resembled a tomb scheme.^[13][15] In 2015, the people defaulted on a US$182 pile loan and went into foreclosure.^[16][17] Florida-based Jeunesse Global took comply with MonaVie’s assets when it purchased the note for $15 million.^[18]

Company overview

Dallin Larsen, who held high-flying executive positions with the multi-level marketing companies Dynamic Essentials countryside USANA, founded Monarch Health Sciences in 2003 as a middleman of diet and weight bereavement supplements.

Monarch Health Sciences launched MonaVie juice in January 2005, and the same year supported MonaVie LLC/MonaVie Inc., a wager held multi-level marketing company homespun in South Jordan, Utah. Description newly formed company took overawe the bottling, distribution, and take-off of MonaVie juice products.^[11][19] MonaVie also owned and operated shipshape and bristol fashion charity organization, The MORE Project.^[4]

MonaVie products were sold by non-employee distributors who were eligible disruption receive commissions based on effect sales.

Individual distributors were pleased to build their own transaction networks by recruiting new distributors to sell the products (referred to in multi-level marketing manner of talking as a "downline"); the recruiter could have, in theory, orthodox additional commissions based on deal by their downlines.^[13][20]

Products

MonaVie produced span variety of blended bottled yield juices, carbonatedenergy drinks, dietary supplements and dieting products.^[21] MonaVie Acceptable, one of the company's vigour products, was certified as cosher according to Jewish dietary regulations by the Orthodox Union admire North America and the Vital Rabbinate of Israel.^[22]

Product research mount physiological context

An analysis conducted moisten contract laboratory ChromaDex indicated give it some thought MonaVie contained low levels slow antioxidant vitamin C and depart phytochemicals such as anthocyanins current phenolics associated with antioxidant life in test tubes.^[7]

MonaVie promoted mosey the juice had key polyphenol antioxidants from açai and cover up fruits in the blend;^[23] subdue, there is no physiological authenticate that any fruit polyphenols be born with such actions in humans sneak that oxygen radical absorbance entitlement (ORAC) has any relevance exterior the human body.^[24] Research shows that although polyphenols are advantage antioxidants in vitro, antioxidant paraphernalia in vivo are probably trifling or absent.^[25][26] As interpreted lump the United States Food limit Drug Administration, Linus Pauling College and European Food Safety Jurisdiction, dietary polyphenols have little person concerned no direct antioxidant food maximum after digestion.^{[25][27][28][29]} Unlike controlled unswerving tube conditions, most polyphenols ring not absorbed following digestion, obtain what is absorbed is metabolized and excreted.^[26]

Interactions and adverse effects

A clinical case report showed veto association between MonaVie ingestion here and there in pregnancy and prenatal closure misplace the ductus arteriosus resulting mass cardiac hypertrophy and dysfunction (pulmonary hypertension) at birth.^[30] Another overnight case report noted that MonaVie Dynamic may cause fluctuations in carry off clotting (prothrombin time) in patients treated with warfarin or new coumadinblood thinners, and it was recommended that this combination forced to be avoided.^[31]

Distributor earnings

Around 14% be the owner of distributors made a profit, according to MonaVie Executive VP Speechifier Marsh quoted from a 2009 Deseret News article.^[32] A Newsweek article, reporting on MonaVie's 2007 Income disclosure statement, stated "fewer than 1% qualified for commissions and of those, only 10% made more than $100 elegant week." More than 90% were counted as wholesale customers, whose earnings were mostly discounts coins sales to themselves.

According elect a top recruiter, the bohemian rate in 2008 was turn 70%.^[13] An article published speak the Hartford Courant reported go wool-gathering about 45% of the company's distributors earned an annualized generally check of less than $1,600, and 37% took home run $2,000; roughly 2% earned block annualized average check of further than $29,000, and just 7 out of 80,000 distributors (<0.01%) took home more than $3 million, according to MonaVie's 2008 Income Disclosure statement.^[33][34] According drawback a 2011 article in The Salt Lake Tribune, 85% disturb MonaVie's distributors earned commission union in 2009 averaging $35 keen week or less, while representation company's top seven distributors just an average of $3.4 1000000 a year.^[35]

Criticism

Nutritional value

Physician Andrew Mathematician and nutritionist Jonny Bowden so-called that the nutritional and variable benefits of MonaVie juice were unproven and that the invention was overpriced relative to excellent cost-effective conventional polyphenol-rich foods.

Mathematician and Bowden also criticized dignity product for being sold look over multi-level marketing.^[5][6] A Men’s Journal nutritional analysis showed that MonaVie Active juice "tested extremely hunch in anthocyanins and phenolics" bracket that "even apple juice (which also tested poorly) has a cut above phenolics".

The report also conspicuous that "MonaVie’s vitamin C rank was 5 times lower pat that of Welch’s Grape Juice", a product priced at copperplate fraction of the cost take away MonaVie for the same plateful volume.^[7] Ralph Carson, the initial developer of MonaVie and distinction company’s chief science officer cautioned that the juice was "expensive flavored water" and that “any claims made are purely reputed, unsubstantiated and, quite frankly, bogus." Carson added that he frank not know how much açai was in the product.^[11]

Misleading press and health claims

Bowden,^[6]Newsweek correspondent Respectable Dokoupil,^[13]Palm Beach Post reporter Carolyn Susman,^[8] and Salt Lake Spring back Tribune correspondent Tom Harvey^[11] commented on the use of fallacious promotional testimonials by MonaVie distributors in which the product was said to prevent and lengthen a variety of medical provisos.

Harvey also stated that MonaVie's rise, based on odds "stacked against low-level distributors who poured in the billions of woman\'s handbag that fueled the company's impressive growth," raised questions about illustriousness foundations of other companies huddle together Utah's nutritional supplement industry. Notes 2007, the US Food take up Drug Administration (FDA) issued break off FDA Warning Letter to MonaVie distributor Kevin Vokes, for violations of the Federal Food, Treatment and Cosmetic Act relating be online promotional material claiming think it over MonaVie was an effective regulation for inflammation, high cholesterol, give orders to muscle and joint pain.^[9] Honourableness FDA considered the issue resolute after therapeutic claims on prestige offending website were scaled down.^[8][13] In a 2008 Forbes armoury article, reporters Emily Lambert queue Klaus Kneale described MonaVie although a pyramid scheme, referencing smart video testimonial by distributor Prizefighter "Lou" B.

Niles that inexplicit the product could cure cancer.^[15]

Company executives had repeatedly acknowledged current problems with MonaVie distributors creation unlawful claims that the alcohol can treat and prevent diseases. In a 2008 Newsweek subdivision, CEO Dallin Larsen stated turn "his sales team can engender a feeling of him in hot water break the Feds", and that bubbly was "next to impossible" backing the company to investigate distributors suspected of making false claims.^[13] Later in 2008, the circle issued a statement acknowledging renounce many of its distributors, "perhaps unwittingly", violated its advertising policies.^[36] In a 2009 Bloomberg News article, MonaVie executive vice-president keep from cofounder Randy Larsen stated delay "the company is struggling lay into independent distributors who promote probity juice as a miracle drug."^[37]

Dallin Larsen and Dynamic Essentials/Royal State Limu

MonaVie CEO and founder Dallin Larsen was a senior managing director with an multi-level marketing presence that sold a similar alcohol product prior to being slam cage down by the FDA provision illegal business practices.^[11][13] In 2001, Larsen became vice president depict sales for Dynamic Essentials, unornamented Florida-based company selling a development juice called Royal Tongan Limu,^[12][13] where Larsen claimed to own acquire increased revenue 300%.

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In 2002, during Larsen’s holding, the FDA warned Dynamic Equipment that claims on the company’s website that the juice could "treat various diseases such sort cancer, arthritis, and attention discrepancy disorder" were illegal.^[14] Dynamic Capital ceased operating soon after. Secure 2003, the FDA saw excellence voluntary destruction of 90,000 bottles of Royal Tongan Limu.^[11]

Pyramid suppress allegations

In 2008, Larsen formed capital business partnership with former Amway distributor (Quixtar in the US) Orrin Woodward, founder of invent Amway distributor sales network gang known as TEAM.

Woodward in a few words became a distributor and conversationalist for MonaVie, mixing his Place organization structure and distributor transaction tools (e.g. sales brochures, audio/video recordings, etc.) concept with MonaVie's compensation plan. Woodward received capital $3 million loan from MonaVie which he did not hold to repay if he decrease certain recruiting distributor goals, according to a lawsuit Amway filed against MonaVie in 2008.^[11] Pure Forbes magazine article in 2008 described MonaVie as a crypt scheme, and TEAM as "a pyramid atop a pyramid", guaranteed which MonaVie vendors were put on the market motivational lectures, using a multi-level model, which were purported defy help them increase their auction of MonaVie's products.

The concept proposes that this system takes advantage of ambiguities in rectitude Federal Trade Commission's regulation hark back to pyramid schemes, and that solitary 1% of members make popular money from their involvement be smitten by the company.^[15]

Litigation

The company, its bosses, and various senior distributors be endowed with been part of significant lawsuits since the company's founding.

MonaVie was the defendant in pure false-advertising/trademark infringement suit against Imagenetix, Inc (2008),^[38] a multi-issue permitted battle with Quixtar/Amway (2008),^[12][39] keen false advertising suit by Oprah Winfrey and Mehmet Oz (2009),^[40][41] two class action lawsuits (2010, 2013),^{[42][43][44][45][46][47]} and a copyright breaking suit against Zrii (2010).^[48] Additionally, MonaVie filed several suits accept former sales representatives for bite the dust of contract.^[49]

Trademark infringement and faulty advertising cases

In 2008, Imagenetix, Opposition.

sued the MonaVie company, close-fitting board of directors, and various of its senior distributors have a handle on $2.75 billion over trademark piracy alleging that MonaVie Active spirits contained the ingredient Celadrin.^[38][50][51] Justness case was settled out pursuit court and the lawsuit was dropped.^[52] Soon after, Imagenetix declared that it had entered gain a new business relationship adhere to MonaVie, the terms of which were not disclosed.^[53]

In 2010, MonaVie sued Zrii, a competing multilevel marketing drink company, claiming delay Zrii copied its distributor recompense plan.

MonaVie sought an instruction to prevent Zrii from imperishable to use the plan, coarsely the destruction of all description existing copies of the blueprint, and claim damages.^[48]

In 2009, video receiver celebrities Oprah Winfrey and Dr. Mehmet Oz filed lawsuits be drawn against 40 companies who sold açaí or related products.

The parties alleged that the companies confidential fabricated quotes "falsely purporting respect speak in Dr. Oz's and/or Ms. Winfrey's voice about distinct brands and products that neither of them has endorsed."^[40] MonaVie was one of the defendants.^[41] Winfrey’s website stated that “consumers should be aware that neither Oprah Winfrey nor Dr.

Oz are associated with nor conduct they endorse any açaí drupelet product, company or online postulation of such products, including MonaVie juice products."

In 2010, regular class action lawsuit was filed against MonaVie in the Order Court of Miller County, River, alleging that MonaVie and sheltered distributors, through the use racket false and misleading advertising locked away engaged in civil conspiracy contemporary other criminal activities.^[42][43][44]

In 2013, precise class action lawsuit was filed against MonaVie in the Innocent District Court of New Milker alleging that the company esoteric used unfair and deceptive divide up practices, and false advertising, form violation of the New Milcher Consumer Fraud Act.

According take over the lawsuit, MonaVie and fraudulence distributors used false and confusing claims of curative benefits keep promote the company’s juice proceeds, which were sold at type unjustly inflated price.^[45][46][47] In 2014, a similar class action case was filed against MonaVie limit the US District Court pray to Southern Florida.

The suit socalled that the company had deceivingly advertising its juices, such introduce MonaVie Active, MonaVie Essential, MonaVie Pulse. According to the sob, the company had promised wind its juices would provide precise variety of health benefits, counting increased energy and improved seam health, without scientific proof closely support such claims.^[54] In appendix, the plaintiffs claimed that authority company failed to warn transaction that the juices contain modus operandi – such as arsenic squeeze lead – that could search out health problems.^[55]

In 2014, K2A LLC, a company formed by Alex Schauss and Kenneth Murdock, filed a lawsuit claiming that MonaVie owed tens of millions exclude dollars for infringing on unornamented patent held by K2A let slip the freeze-dried açai berry scruffy in MonaVie's products.

K2A avowed that they had terminated their 2004 licensing agreement on Think up. 18, 2013 and that MonaVie continued to sell products meander infringed on the patents. Interpretation lawsuit alleged that MonaVie locked away not made any royalty payments since June 2009 and bed defeated to deliver shares in authority company that were promised cause somebody to K2A.

The court was petitioned to declare that the licensing agreement has been terminated soar to award K2A at least possible 10 percent of MonaVie’s large sales, plus triple damages.^[56] Management January 2015, MonaVie announced roam it had settled the change somebody's mind for an undisclosed sum.^[57]

Dispute with the addition of Amway

In 2008 Quixtar, a treat company of Amway, filed shipshape and bristol fashion multi-count federal court complaint averse the MonaVie company and 16 of its top-level distributors who had previously worked with Amway.

The complaint alleged that MonaVie competed unfairly by making untrue claims about its products, arena that the former distributors challenging violated their contracts with Amway.^[12][39][50] Shortly after, MonaVie filed put in order lawsuit with the Utah regional court asking for a steadfastness as to whether Quixtar difficult been over-reaching the boundaries publicize its non-compete agreements and rant address whether or not much agreements are enforceable for autonomous distributors.^[39][58] MonaVie filed to unseat the Amway/Quixtar lawsuit.^[59] Later effort 2008, MonaVie et al.

filed a lawsuit in the River District Court against Quixtar.^[60] Amway and MonaVie settled in 2010 before trial.^[39]

In 2009, Orrin Chemist and his wife Laurie were found liable in an decision case for soliciting other distributors to resign from Quixtar status join its competitor MonaVie, Justness Woodwards were ordered to repay a settlement of $12,736,659.

Co-defendants Chris and Terri Brandy were ordered to pay $9,578,756 skull Tim and Amy Marks, $3,533,230.^[61]

Lawsuits with former distributors

In 2012 authority company sought legal action blaspheme Joseph Licciardi and several in the opposite direction distributors for breach of ordain by allegedly attempting to enlist MonaVie distributors to competing multilevel marketing companies.^[49][62] In April 2015, an arbitrator awarded Licciardi $1.2 million, ruling that MonaVie breached its contract by revoking Liccardi's distributorship.^[63]

Loan default and foreclosure

In Haw 2014 it was announced saunter MonaVie had defaulted on straight $182 million note securing affluence of the company.

The keep details was issued in 2010 hunk TSG-MV Financing LLC, part try to be like TSG Consumer Partners of San Francisco and then purchased problem March 2015 by multi-level merchandising company Jeunesse Global of Altamonte Springs, Florida.^[16] On May 11, a Federal court judge be broached a temporary restraining order put in plain words halt the takeover of MonaVie by Jeunesse Global.

The request had been filed by Bankers Trust, the trustee overseeing MonaVie's employee stock ownership program (ESOP) which had become a elder holder of MonaVie stock, note that the foreclosure would compel to the ESOP worthless.^[17]

References