The following is a MarketWave alert regarding Mannatech. Len Clements has graciously allowed me to re-post his alerts in full here at the MLM Blog.

 

May 30th, 2007
I reported in Alert #78 that The Wall Street
Journal had published an article
critical of Mannatech’s alleged condoning of
various medicinal claims by their
distributors. This article quoted Mannatech
Chairman and CEO Sam Caster as saying "Nobody
is claiming these products by themselves are
providing a treatment for disease." But the
column’s author described first hand
experiences with Mannatech reps making
"sweeping claims about the power of Mannatech
products to provide relief from serious
disease." I also cited my own online
investigation where I discovered, quickly and
easily, several web sites where disease
treatment claims were being made about
specifically the Mannatech brand of products.

In the four minute video teaser of the
upcoming segment on the 20/20 web site, a
young girl is interviewed who had a large
tumor removed from her brain, but who is now
refusing all traditional medical treatments
in lieu of Mannatech’s Ambrotose products.
She confidently believes it will cure cancer.
There is also, of course, the obligatory
"hidden camera" footage of distributors
making disease treatment claims, usually in
the form of personal testimonials. Mr. Caster
is also interviewed. Within the context of
the girl who was denying medical treatment,
which the interviewer reminds Caster is
watching, he is asked specifically "Does your
product cure cancer?" Rather than respond
"No, it does not", Caster hesitates, then
states "I would say we do not make that claim."

20/20 Airs on Fridays at 10:00 pm on ABC. You
can view the video preview by clicking on the
"A Magic Pill" link under the video screen
here: http://abcnews.go.com/2020 

 

Commentary:

Obviously this 20/20 segment is going to be
very negative, and we’re all going to take a
hit. After all, here’s what will surely be
perceived as yet another one of those
"multilevel schemes" making outrageous claims
about their snake oil. The sad thing is,
companies like SeaSilver,
and Quantum
Leap are extremely rare, at least to the
extreme extent of their exceptional claims.
In fact, these are the only two severe
regulatory hits on MLM companies for making
medical claims in the past ten years (and
both companies are now gone). Sure, a lot of
inexperienced, "independent" distributors get
carried away, or don’t know what the rules
are (i.e. believe a medical claim is okay if
it’s a personal testimonial, or from third
party material). But the vast majority of MLM
companies do, and really do make an assertive
effort to educate their reps, and enforce
their anti-medical claim policies.
Unfortunately, a few don’t, or at least not
hard enough, and naturally those are the only
one’s that 20/20 will ever do a report on.

We know that there is an investigation
underway by the Texas AG’s office concerning
Mannatech’s possible "health-law violations",
although it seems to be stalled at present.
In 2005 a class-action
lawsuit was filed by Lerach Coughlin LLP
on behalf of Mannatech investors also
alleging Mannatech made "materially false and
misleading statements" about its products.
Amazingly, the FDA has not yet issued a
Warning Letter to Mannatech.

I wouldn’t be surprised if this 20/20 segment
garners such an FDA warning, gives some
traction to the AG’s investigation, and gets
Champaign stains on the carpet of the Lerach
Coughlin office.

And if you think the almost 10% drop in
Mannatech’s stock price today (which began
minutes after the 20/20 preview went online)
is bad, wait until a full report airs on
Friday night (fortunately there’s the weekend
for the impact to wear off a little before
trading begins  again Monday morning).

This is another great example of why the FTC,
SEC and FDA are not the only one’s you want
to avoid the scrutiny of. As much, if not
more damage can be caused by ABC, CBS and NBC.

  Len Clements

MarketWave,
Inc.