Source: 4/24/2009

USANA named in Pyramid Lawsuit

A Clark County man has sued Usana Health Sciences Inc., alleging the big direct marketer of nutritional and cosmetic products operates as a pyramid scheme in which independent distributors must focus on signing up more distributors as opposed to selling products.

Joseph Chirco, in his lawsuit filed last week in Clark County District Court, seeks to have the suit certified as a class-action representing all Nevada Usana distributors. His Las Vegas attorney is John Nowakowski.

Chirco claims to have lost money by purchasing a Usana distributorship.

He alleges violations of Nevada's deceptive trade practices act and accuses Usana of consumer fraud, of failing to disclose all required facts about its marketing program, of unjustly enriching itself at the expense of distributors and of civil conspiracy.

In its annual report filed with the Securities and Exchange Commission, the company said it's careful to comply with marketing laws.

"Associates are encouraged to build and manage their own business group by recruiting, managing, and training others to sell our products. Associates are compensated on sales generated by their business group, and they can also receive compensation by purchasing products at wholesale prices and selling them at retail prices," Usana said.

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