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Fraud Discovery Institute Releases List of Contradictory Statements Made by Usana Management
FDI: Usana Health Sciences, Inc. (USNA) Is Tale of Two Companies
| Source: Fraud Discovery Institute
SAN DIEGO, CA -- (MARKET WIRE) -- May 2, 2007 -- The Fraud Discovery Institute (FDI) today
released a new compilation of blatant contradictory statements issued over
the past several years by the management of Usana Health Sciences, Inc.
"The company has misrepresented critical facts that both Wall Street and
distributors rely upon to make decisions," said Barry Minkow, Co-Founder of
the Fraud Discovery Institute.
In one example, Usana CFO Gil Fuller stated in a June 2005 earnings call:
"We now have 125,000 active associates who are pursuing a home-based
business opportunity." Myron Wentz, the company's founder, made a similar
claim about business builders when he said: "I have no question that I made
the right decision by launching Usana the way we did. Not only has it
delivered true health to consumers, but it has also delivered true wealth
to our associates."
However, during Usana's April 2007 earnings call, Gil Fuller appeared to
back off the number of 125,000 business-building associates by stating: "So
you only have something on the order of about 12% of people who get into
this business with the intent of making money." Further adding to the mass
of contradictions, Usana President Dave Wentz, in the same April 2007
earnings conference call, stated: "So making money for them [the
associates] isn't the goal. Just covering the cost of their products may
be the goal. For others of course, it's just customers with our survey.
75% joined just focused on the nutritional benefits, and 25% joined on the
business aspect."
Are only 12% of the Usana associates trying to make money? "If so, how can
there be 125,000 active associates building their businesses," FDI's Minkow
asked. "This is significant because 86% of Usana's revenue comes from
distributors, of whom only 12% are actually trying to succeed."
In another example, President Dave Wentz, in an April 2004 earnings call,
provided the following assurance regarding the company's tangible
commitment to research and development for its products: "I've encouraged
Tim Wood, our Vice President of R&D to make sure that we stay on a leading
edge with scientific products and so I've encouraged him to increase his
clinical studies, increase his research to make sure that we're ahead of
everyone else. And so I've asked him to continue to try to maintain a high
percentage of R&D going forward, because at the fast pace of sales, that
percentage would drop quickly and I want to maintain that we are a
science-based and an advanced nutritional company."
"This assurance appears to be an empty promise," said Minkow. "Annually,
Usana spends less than 1% of net sales on R&D. Our contention is that
apparent misrepresentations are a pattern of behavior for this company.
The examples above appear to bear that out."
The full compilation of contradictory statements, "A Tale of Two Usanas,"
can be read in its entirety at www.frauddiscovery.net.
About Fraud Discovery Institute
Over the past 5 years, the Fraud Discovery Institute and Barry Minkow has
uncovered and stopped over $1 billion in financial fraud. With experience
on both sides of the law concerning financial fraud, FDI is uniquely
positioned and qualified to help companies and individuals as it relates to
maters of fraud.
Once a fraud does occur, the costs in earnings, manpower, possibly hostile
litigation, higher insurance premiums, and corporate credibility are hard
to contain. FDI's proactive fraud detection and awareness program can save
time, money, embarrassment, and potential damages in a class-action
lawsuit.