Fraud Discovery Institute's Analysis of USANA

[MWave]

As for Usana's "legal vindication", let us also consider:

(1) NASDAQ's investigation of Usana that was a direct result of, and specifically cited (among other issues), the allegations of illegality made by Minkow - which was closed by NASDAQ with absolutely no action taken by them of any kind.

(2) Minkow's extensively documented attack on Usana, over a year ago, alleging SEC violations due to illegal pyramid recruiting activity in mainland China (a crime punishable there by life imprisonment, or even death) which was disseminated to several high ranking regulatory authorities there. Not only has Usana not been investigated by any level of the Chinese government, they have yet to even be contacted! Most likely due to the same numerous errors and omissions described in my rebuttal to this matter, China has completely ignored this issue.

Agency inaction means just one thing: agency inaction. The law - you did call it "Usana's legal vindication", right? - permits no inference at all from such inaction, let alone "vindication".... So you might like to conclude that the SEC or NASDAQ's failure to take any action is "legal vindication", but the law certainly doesn't permit that conclusion.

You're not the first to use this defense, and I've always got a kick out of it. So the SEC and NASDAQ investigated all of the alleged illegal activities that Minkow asserted, did find evidence of this illegal activity, and just decided to forget it and drop the whole thing? There is no other logical scenario that supports your position. Mine, however, suggests that they spent months (10 in the case of the SEC) investigating these claims, and took no action because they found no evidence of any illegal activity.

"All other things being equal, the simplest solution is the best."
– Occam's razor

I'll leave it to the reader to decide which of our solutions is most reasonable.

And inaction in China? In China? It's bad enough to try to infer anything by a U.S. agency's inaction, but China's? Just one observation: do you recognize the words "Tienanmen Square"? Certain things took place there several years ago, culminating in the events of June 4, 1989. Although the exact number will never be known, respected news reports claimed that the Chinese military killed several hundred protestors. Not only did China take no action against the military, but they arrested, tried and executed many of the protestors who survived. But, since you credit their government sufficiently to conclude what you wish from its inaction, I guess you credit it even more when it acts.

Like I said, China reacts far more swiftly and with much greater force to what they deem to be illegal or even anti-social activities than does the United States. Yet, even there, where pyramid scheme operators are sometimes put to death, and with all the supposed "evidence" that Minkow heaped upon their top legal authorities, they took no action of any kind! They didn't even contact Usana and ask them about this. You just made my point!

(3) In Minkow's withdrawal of his attack on Herbalife, he states: "The Fraud Discovery Institute immediately withdraws all accusations against Herbalife, including any Proposition 65 allegation relating to any Herbalife product and any contentions against the Herbalife business model." The Herbalife business model, multilevel marketing, is the same business model used by Usana.

One more time: the only conclusion I am addressing - and, if you read back through this thread, the only conclusion I have ever addressed - was that USANA was somehow "legally vindicated" in its suit against Minkow. I don't know about his allegations against Herbalife, and you keep trying to change the subject.

Any reasonable reader must clearly see that you are trying desperately to keep this argument to the one and only legal decision that went against Usana, and ignore the numerous others that were in their favor. This debate was and is most certainly not only focused on the SLAPP ruling in CA. My response to you, which you so arrogantly and sarcastically challenged, was that Usana has been "legally vindicated". Period. I then listed all the ways they were "legally vindicated". I'm sure you would love to just have everyone ignore all of the other "legal vindications" Usana achieved, and focus on only their single loss (that actually provides utterly no evidence of any actual illegality). How convenient I'm sure that would be for you at this point.

[4-6] [The shareholder derivative suits.]

One more time: the only conclusion I am addressing - and, if you read back through this thread, the only conclusion I have ever addressed - was that USANA was somehow "legally vindicated" in its suit against Minkow. I don't know about the shareholder derivative suits, and you keep trying to change the subject.

I know the only thing you addressed was the SLAPP decision, and it's glaringly obvious you didn't know about all of the other suits charging Usana with the same illegal activities as Minkow that Usana completely defeated! That's the very point of my argument! You originally claimed that as a result of this one decision, which was only part of a much larger suit, "Minkow had established sufficiently the truth of his pyramid / overpriced-product and similar claims". And you made this claim precisely because you didn't know about all of the other, much more significant legal victories that Usana had experienced that specifically dealt with these same specific allegations! Now that I've defended by argument with them, you are trying, as I suppose any good litigator would do, to try to create the illusion of their unimportance and irrelevance.

It won't work. Usana was, in fact, "legally vindicated" by several legal authorities, you were ignorant of it all, and now you've painted yourself into a corner you can't get out of.

Maybe one day I'll have time to read the dockets on the derivative suits.

You keep referring to all of the class action law suits I listed as "derivative suits". There was ultimately only one derivative suit, which plaintiff's council agreed to just drop (oh, but you're right - that could have been because they did have evidence to support their case, but just didn't feel like pursuing it). The other two class actions were a distributor suit (where the plaintiff's council asked to have it dropped!), and the shareholder suit where a federal judge actually reviewed the "evidence" against Usana's illegality and found it to not even be "plausible" - then dismissed it on summary!

I would have swore I mentioned all of this before. Care to actually respond to it?

(8) And then there's the Usana law suit against Minkow, which was entirely and solely about gaining a court ordered Permanent Injunction against Minkow to force him to remove his anti-Usana material, cease to produce more of it, and to be forever forbidden from participating in its stock. Clearly Usana's primary goal was not to win damages from the libel component of their suit since Minkow still owes millions to Union Bank in restitution. They needed, and wanted, the stock manipulation charge to go forward because that was by far their strongest count, and that's what would have garnered them the injunction – and ultimate vindication.

Well, yes, that was USANA's claim. Unfortunately, their own actions belied the claim, and the Court decided it wasn't true... Judge Campbell acknowledged that what you say was USANA's position: "Specifically, USANA maintains that the case centers on illegal market manipulation, not the Defendants’ statements made in the report and after." She then rejected that position... Why don't you mention that?

Here, folks, is a classic example of what they teach you in law school. In lawmen's terms, it's called the "If you can't dazzle 'em with brilliance, baffle 'em with BS" technique. What, exactly, is Mr. Serra responding to here? What did the court decide "wasn't true" about what I just said? That Usana wanted a "court ordered Permanent Injunction against Minkow"? But, that's exactly what the court gave them! So that can't be it. Maybe that "Usana's primary goal was not to win damages from the libel component"? But, since Minkow still owes millions in restitution, how could that possibly have been their goal? And how could a court rule that something is or is not a plaintiff's "goal" (desired outcome)? The only other thing it could be is the line "They needed, and wanted, the stock manipulation charge to go forward..." and that it was their "strongest count". But, again, that's exactly what the court did agree with!

This response was nothing more than a poorly executed lawyer's trick.

...it is clear that USANA began the suit to shut Minkow up in his criticism of their business and products. I explain all of this in some detail, including posting links to the documents, earlier in the thread.

Yes, that was what the suit was based on for about, oh, a month. Then it was based on stock manipulation (for about 15 months) because of even stronger evidence that supported that charge, which also would have still ultimately involved Usana having to prove Minkow's claims of illegality to be false, and still would have ultimately resulted, had they won, in an injunction against him forcing him to remove his claims.

But I do admire how nicely you've veered the discussion away from the actual point – that being, all the ways Usana was "legally vindicated".

Judge Campbell dismissed the heart of USANA's case against Minkow. That's not "legal vindication".

Considering Usana achieved the exact outcome from this suit that they were striving for (an injunction), I'll leave it to the reader to decide if the "heart" of Usana's suit was thrown out. And you're right. Her throwing out that facet of their case was not "legal vindication". This was:

SEC investigation: No evidence of any illegality;
Federal court in Shareholder suit: No evidence of any illegality;
Derivative class action suit: Dropped by plaintiff;
Distributor class action suit: Dropped by plaintiff;
NASDAQ investigation...

Damn... I'm sure I've mentioned all this before.

And why don't you say so when you reach conclusions which are the exact opposite of the Court's?

But, you're conclusions are in exact opposition to the SEC's, the federal judge in the shareholder suit, etc. etc. But then, we know why you didn't say anything about all these other cases because you just told us. You didn't know about them. Had you simply admitted that up front and dropped it, I'd have said "fair enough" and done likewise. But, unbelievably, you are still trying to defend your point in spite of this overwhelming evidence of "legal vindication".

there appears to be very good reason the judge allowed this charge to go forward (did you really not know about all of this, Mr. Serra?).

I posted on it. I expressed considerable displeasure with Minkow's decision to short USANA, the only reason there was any case left against him at all. Why don't you read the thread?

Um, you might want to take your own advice there, Mr. Serra. Since you apparently didn't even read all of my response, let alone the whole thread, allow me to fill you in on the part you skipped:

Yes, Minkow shorted Usana's stock. AND... he made $61,000 from those put options, AND... he was paid $250,000 by fellow felon Sam Antar (did I mention he, like Minkow, was convicted of stock fraud?) specifically for the anti-Usana report, who was also short Usana's stock, AND... Minkow was given a $100,000 "gift" by Antar, AND... this was all right before Minkow began his Usana investigation, AND... he was paid $50,000 specifically for the report by two hedge fund managers! And since you chose to defend this point, allow me to also include... Minkow wrote a negative report on Herbalife and shorted their stock right before the report was published, AND... shorted PrePaid Legal's stock right before his negative report on them was published! That's why the judge allowed the stock manipulation suit to go forward!

So I ask you again, Mr. Serra, and not rhetorically... did you really not know about all of this?

And, ultimately, Usana achieved that "Final Injunction" against Minkow which legally compelled him to remove his anti-Usana material, produce no more of it, and never trade in their stock again, which was a separate COURT ORDER over and above the private settlement between the parties. Usana was wholly victorious in achieving the primary goal of this law suit!

Unless you have inside information which I don't have, for all we know USANA paid Minkow as part of the settlement, in addition to the $143K which the Court ordered them to pay him in costs and attorney's fees. As you say, it's a private settlement - something else (as I posted) which gave me a problem with Minkow's actions.

Another blatant dodge. We all know there was a sealed, private settlement. I was clearly and specifically referring to the Final Court Order granting Usana an injunction against Minkow issued by the judge! If this was all part of the private settlement, then why would the judge have ordered an injunction? Why didn't the judge just say, the parties have agreed to a settlement involving Minkow ceasing his attacks, and just allow the suit to drop? Again, Mr. Serra, this is not a rhetorical question.

you suggested "Minkow had established sufficiently the truth of his pyramid / overpriced-product and similar claims". This is blatantly, entirely, and verifiably false. First, had any actual evidence been heard it would only have shown that Usana could not sufficiently DIS-prove Minkow's claims, not that Minkow had proven them (which, from a legal standpoint, is an entirely different criteria, as you surely know).

Wrong. Again, let me quote the Court: "USANA must show “there is a reasonable probability [it] will prevail on the merits at trial” by “show[ing] both that the claim is legally sufficient and there is admissible evidence that, if credited, would be sufficient to sustain a favorable judgment.” USANA brought the case. All they had to do was to show a "reasonable probability" of prevailing at trial. They couldn't. That's hardly "legal vindication".

I don't know about law school, but in debate class they referred to this technique as being a combination of the "Rhetorical" (or "cap") response, along with some old fashioned reverse psychology thrown in.

Note that my original argument was that Mr. Serra was wrong in stating the judges ruling "established sufficiently the truth of (Minkow's) pyramid/overpriced-product and similar claims." I then countered that Minkow proved no such thing, nor did he even have to, as the only burden was on Usana to DIS-prove his claims. That is, had Minkow proven Usana was a pyramid, then they were a pyramid (SEC investigations and federal judge rulings aside). But if Usana failed to DIS-prove his claim, then they may or may not be a pyramid, they just failed to show enough evidence to take Minkow's statements from the realm of protected "opinion" to "libel". From a legal standpoint, as Mr. Serra most certainly knows, there is a Grand Canyon sized cap between the two legal criteria.

But, now go back and really read his rebuttal. He has essentially verified my original statement! The way this works is that you're always taught in debate (and I assume law school as well) to never allow a point go unanswered, even if you simply have to restate your original point over again. It will at least create the illusion of a response. And here, Mr. Serra has employed a cute little trick where the reader (or jury) will hear both points, think the second point sounded right - because, after all, both points are the same - and then assume the respondent surely wouldn't be supporting his opponent's point, so they must have misunderstood the first point, and it has just been successfully rebutted.

Actually, Mr. Serra, that might have worked during a live debate

Furthermore, the threshold for proving libel in California is exceedingly high.

So what? USANA brought the damn case, and you claimed they were "legally vindicated".

I guess you also didn't read the docket where Usana moved to have venue changed to Utah - and succeeded.

So, the concept that Usana might have been victorious in the libel charge in most other states, but failed in CA due to their exceptionally higher standard of proof, is not a reasonable point to make? Are you saying that if you were pleading my case, and standing in front of a jury, you would not have made the same point?

In other words, in California (where the Pledge of Allegiance was ruled unconstitutional, and O.J. got to play golf the last 13 years - until my state finally got him), you're apparently allowed to call someone a child molesting terrorist as long as it's your "opinion".

Why don't you take some shots at California courts now? Maybe that way people will forget that you claimed that USANA was "legally vindicated".

The level of irony in that non-response is profound.

Having said that, none of this is even what the judge's ruling was based on! Usana lost on these counts because they did not meet certain evidentiary deadlines... It was not based on any actual evidence either way – it was entirely procedural!

Off the deep end to anyone who knows anything about the law. The first part of the opinion is a discussion of Erie, and whether California law should apply. If the law were procedural (let alone "entirely procedural"), Erie holds it would not apply. The judge, of course, applied it, thus finding it substantive... Now you're into the realm of just making stuff up. USANA lost on the matters most important to them because the judge found in so many words that they couldn't prove their case.

Because they didn't meet certain evidentiary deadlines! Again, you're playing word games. Do you have a rebuttal to my claim, or don't you?

You see, Mr. Serra, I actually did read the dockets!

I'm curious, Mr. Serra, did you even read any of the motions and rulings in this case, or are you basing yours on what you've gleaned from internet troll droppings?

Good one. Very perspicacious.

For those of you who don't own a set of Verbal Advantage CDs like Mr. Serra, "perspicacious" means "having keen mental perception and understanding; discerning." So I think, again ironically, he was going for sarcasm there. But notice, no where does he actually answer this simple yes or no question.

Were you genuinely ignorant of all of these "legal vindications" of Usana, or were you fully aware of them and just hoping the rest of us weren't?

That one too. You may be right, after all, about those forums in which you participate being ad hominem.

Could you actually answer the question, please? Did you really not know about all of these "legal vindications" and your original challenge to this statement was just an honest mistake, or were you fully aware of them and was hoping to deliberately deceive the readers of this board?

It's a fair question.

Len Clements

[MWave]

I'm curious, rant and rave as you may, how does any of that show that your product isn't junk and that the structure isn't a pyramid?

First, the value of the products is not the issue being debated. It is whether or not Usana was "legally vindicated". As to that issue, whether or not Usana was a "pyramid scheme" was a key component of every investigation I listed. The results were:

NASDAQ investigation: Usana is NOT a pyramid scheme;
SEC investigation: Usana is NOT a pyramid scheme;
Federal court in Shareholder suit: Usana is NOT a pyramid scheme;
Derivative class action suit: Dropped by plaintiff;
Distributor class action suit: Dropped by plaintiff;

And you now ask "how does any of that show that... the structure isn't a pyramid?" You're joking, right? And when you say "pyramid structure" I'm giving you the benefit of the doubt by assuming you mean from a legality standpoint. If you actually mean the geometric shape of an MLM downline all you have to do is look at a downline report to know that they do not form pyramid shaped structures.

I see USANA scoring a draw in the sense that while the court effectively ruled that Minkow was right in calling your operation a scam, further legal action managed to uncut his position return everything back to square one.

As much as you, Mr. Serra, and the rest of your side here would love for this to be only about this single, partial decision in this single case, it is not. Usana's "legal vindications" are substantial and derived from a variety of sources. The SEC's decision alone provides a "legal vindication" that far outweighs this one California judge's decision in this one issue.

And the court most certainly did not "effectively rule that Minkow was right in calling (Usana) a scam". They only ruled that Usana did not provide sufficient evidence to disprove it and take it out of the realm of First Amendment protected "opinion". You're simply ignoring the facts that have been stated within this thread, that even Mr. Serra hasn't denied.

Len Clements

[MWave]

Nonsense. Hebalife has an underlying product. USANA has ...?

Um... an underlying product?

In fact, Usana not only has over 50 products, they manufacture their own products, where as Herbalife is supplied mostly from private labelers. Furthermore, a study was performed by Steven Rotolante, who is ironically anti-Usana, that proved there is a sizable market for Usana products beyond the distributor base who are more than willing to pay a premium price for Usana products 100% to 500% higher than what Minkow claimed was the price of "comparable" products! This is besides the 73,000 Preferred Customers that he and the rest of your side are so loath to acknowledge. Rotolante surveyed eBay resellers of Usana products in June of 2007 and found that during that single month $31,795.46 of products were sold to non-distributor customers! What's more, the HealthPak 100 resold for an average price of $60.01. That's the product that Minkow toted to several stores in his YouTube video and claimed was "comparable" to vitamin products selling for $29.95 to as low as $9.95. And keep in mind that Usana reps can return their product for a 90-100% refund, so the only reason they would sell to an eBay reseller (almost all of which clearly defined themselves as being such, and as not being a Usana distributor) is if their product is more than one year old, or is one of the two products Usana has reformulated in the last ten years (which they still could have returned at 90% for three months after the old product was discontinued). So the fact all of this was aged, unrefundable, third-party product easily accounts for the difference between the price paid and actual wholesale. Yet, in spite of it being aged, unrefundable, third-party product sold by an anonymous eBay reseller rather than a personal acquaintance, $31,795.46 worth of it was STILL sold at a premium price to non-distributor customers who just wanted the product! Furthermore, I just checked eBay again and found that $14,340.67 worth of aged, unrefundable, third-party Usana products were sold at a premium price to non-distributor customers who just wanted the product in just ten days (between 9/29 and 10/8)! This solid, undeniable evidence provided by Rotolante clearly proves there is a significant market for Usana products beyond their own distributors.

Len Clements

[Nikki]

If a company or businessman were totally legitimate and above reproach, if it were not an inherently scam-based pyramid scheme designed to extract money from ignorant, starry-eyed true believers, then it wouldn't need to defend themselves on every 2-bit Internet forum that happened to mention their name -- or would they?

Could it be that someone is nervous about the revelation of the dross beneath the gilt?

[MWave]

If a company or businessman were totally legitimate and above reproach, if it were not an inherently scam-based pyramid scheme designed to extract money from ignorant, starry-eyed true believers, then it wouldn't need to defend themselves on every 2-bit Internet forum that happened to mention their name -- or would they? Could it be that someone is nervous about the revelation of the dross beneath the gilt?

I always get a kick out of this kind of logic. "If they have to defend themselves, they must be guilty!"

And if no one does offer a defense? Well, I'm sure you all would thoroughly enjoy having free reign to post what ever the hell you like on "every 2-bit internet forum" and never have anyone challenge you or prove you wrong. I'm sure that would be a blast.

Sorry to ruin your fun.

Len Clements

[Nikki]

A few simple questions:

Is the company a MLM or not?

Is the bulk of the revenue, at all levels, from sales of distributorship rights?

Is it not true that every distributor-based MLM will eventually collapse because it will run out of people willing to buy into the distrubutorship concept?

Is is not true that the vast majority of your distributors annual profits are not even adequate to to buy a good pair of shoes?

[MWave]

A few simple questions:

Is the company a MLM or not?

Is the bulk of the revenue, at all levels, from sales of distributorship rights?

Is it not true that every distributor-based MLM will eventually collapse because it will run out of people willing to buy into the distrubutorship concept?

Is is not true that the vast majority of your distributors annual profits are not even adequate to to buy a good pair of shoes?

All of these issues have been thoroughly addressed in my "Rebuttal to FDI Usana Report".

Len Clements

[ROFL]

Do you have any proof that Minkow ever received anything from USANA, other than the Court-ordered costs and attorney's fees? I'd certainly be interested in it, if such proof exists.

Yes, Minkow was paid. No, I cannot provide you with proof.

[ohein56]

If a company or businessman were totally legitimate and above reproach, if it were not an inherently scam-based pyramid scheme designed to extract money from ignorant, starry-eyed true believers, then it wouldn't need to defend themselves on every 2-bit Internet forum that happened to mention their name -- or would they?

Could it be that someone is nervous about the revelation of the dross beneath the gilt?

That's what I would call " Can't win for losing!".

Gimme a break!

Also

Mr. Serra, "perspicacious" means "having keen mental perception and understanding; discerning." So I think, again ironically, he was going for sarcasm there. But notice, no where does he actually answer this simple yes or no question.

Yep, I caught that too! (I looked the definition to it up as well, great word! Show-off lawyers! It fit though, and No, he still didn't answer the question, as Len said!)

Great thread all of a sudden!

Kerry

[WhiteKnight]

Many readers of this forum should be aware of the following details:

Mwave aka Len Clements was Vice President of Market Research for Zenza Life Sciences.

He was also an undisclosed Zenza distributor placed at the top as the very first United States Zenza distributor who once held the distributor page http://www.zenza.us/clements (which is no longer active)

He recruited John Milton Fogg and one other gentleman directly under him in his downline.

Even John Milton Fogg admitted that Len Clements was not only VP of Market Research, but was a Distributor as well. Here is the following Email exchange that was posted on Yahoo, but quickly deleted at the request of Len Clements.

EMAIL:
Question To John: I recall listening to a conference call where Len Clements introduces you to Zenza where you were hesitant to join for a while until Len convinced you to join. Was Leonard Clements your sponsor (immediate upline member) in Zenza?

John Milton Fogg's Answer: Yes.

Question To John: I cannot find anything on the internet about Len Clements actually being a distributor in Zenza.

John Milton Fogg's Answer: He was (he's no longer affiliated with the company) a distributor and was on the corporate side as well. He sponsored me and some number of others. You'd need to ask him who.


Len Clements left Zenza April 1, 2008

Len Clements is currently in Litigation with Zenza (accoring to Len). Rumor is that he is suing Zenza for not paying him the commissions made from his downline in Zenza. On the other hand, rumor has it that Zenza is countersuing Len for working for USANA for 18 months during the FDI issue while Zenza was paying his handsome salary as a VP of Market Research. Rumor also has it that Zenza is pulling out of the United States because they failed, and this might have something to do with Len spending his time with USANA instead of doing his work for Zenza.

He then visited USANA's Headquarters on April 4, 2008. Len admitted that he was there on this day and claims that he only discussed his work on his Minkow Rebuttals with corporate members.

What Len does not admit is that USANA and he made a deal. USANA searched their computer systems for a vacant distributor position and found one under pete Zdanis. This distributor position has an "almost maxed out leg" (according to Len). Len Clements only paid $19.95 for this distributor position (which is the cost of a starter kit). Rumor has it that Len Clements also received a full color page ad in an MLM magazine paid for by USANA as well as Free Lead Generation paid for by USANA. I don't know ANY other prospect that received such a deal!

Len Clements questioned on the Yahoo board why he waited 5 months after his April 4th meeting to join USANA if this deal was made on April 4th. Well, one other thing was discussed during this April 4th visit: USANA's new "Matching Bonus" plan, which is exactly what Zenza has as well. The reason Len did not join until one day prior to USANA's September Annual Convention was the fact that nobody could start fulfilling the requirements for the Matching Bonus plan until the annual convention was over. So Len waited during this time so that when he recruits his members, it would satisfy the matching bonus requirements. These requirements had to be filled by September 26 (which got extended a couple days due to USANA's system being overloaded with so many recruits being signed up on the last day).

Len Clements first recruited John Milton Fogg, the same person who he had recruited in Zenza (no surprise there!). Then Len recruited his brother and then another Zenza Distributor Brian Bier. While it wasn't really enough to make Platinum (for the 100% matching Bonus), Len should have still made Platinum for a 50% matching bonus.

So while over 600,000 USANA distributors never received such a nice deal from USANA and never got to join with a pre-existing distributor position with close to 150 distributors already in the downline, Len Clements did. Why? I can only assume it was because of what Len Clements admitted to discuss with Corporate members during his April 4th Visit. That is, USANA gave him this free distributor position with about 150 distributors already in the downline as PAYMENT for his work on defending USANA throughout the FDI issue.


So how is it that a self appointed "MLM Watchdog" who claims to be a "Court certified Expert in Network/Multilevel marketing" can participate in this type of unethical behavior and keep a straight face?

[MWave]

Many readers of this forum should be aware of the following details:

Here are some more details you should be aware of...

"WhiteKnight" is the afore mentioned Steven Rotolante.

This poster was a contributor to the Anti-Usana report produced by Barry Minkow, and has posted anti-Usana propaganda over 1,600 times on the Yahoo board (where he has been terminated once already). Be aware that I and several others have tried to have rational discussions and debate with him for many months, and I have offered him (like wserra) the opportunity to a formal, live debate and he has always refused (note: his identity has already been exposed on the Yahoo board, so his desire for anonymity can not be the reason for his refusal to debate live - his excuse is that he's just too shy).

No matter how irrefutable the evidence you provide to him, no matter how logical or verifiable your argument, he will not waver from his anti-Usana stance. He is literally, clinically delusional and obsessive in his desire to cause harm to this company and those who support it (thus all of the outright lies he has just posted about Zenza and how I joined Usana, which I have explained to him, but which he continues to repeat anyway). If you are pro-Usana/MLM and you do respond to him, keep in mind he will use what ever information you give him to twist and mutate into what ever serves his anti-Usana agenda. If you post evidence that he can not counter he will simply ignore it, divert the discussion away from it, and then once the exchange is buried deep enough into the archives of the board he will then restate his original accusation, often times declaring it to be unchallenged.

He is a classic internet troll.

"If you can't discredit your opposition's point, try to discredit your opposition."
– Mr. Harington (my debate class teacher)

Len Clements

[ohein56]

WhiteKnight,

It sounds to me like a bunch of theory and conjecture.

You know what happens when you assume something, and I fall for it? You make an ass of U & Me!

It'll be interesting to hear Lens side of the story, don't you think?

Even if it were all true, IMO, so what?! Special 'Deals' are cut for exceptionally influential people in business all day long. Why would it surprise you that NWM/MLM would be any different?

So what...

Could this be defined as making a mountain out of a mole hill?

Can't wait to see Len's response.

Kerry

[ohein56]

Many readers of this forum should be aware of the following details:

Here are some more details you should be aware of...

"WhiteKnight" is the afore mentioned Steven Rotolante.

This poster was a contributor to the Anti-Usana report produced by Barry Minkow, and has posted anti-Usana propaganda over 1,600 times on the Yahoo board (where he has been terminated once already). Be aware that I and several others have tried to have rational discussions and debate with him for many months, and I have offered him (like wserra) the opportunity to a formal, live debate and he has always refused (note: his identity has already been exposed on the Yahoo board, so his desire for anonymity can not be the reason for his refusal to debate live - his excuse is that he's just too shy).

No matter how irrefutable the evidence you provide to him, no matter how logical or verifiable your argument, he will not waver from his anti-Usana stance. He is literally, clinically delusional and obsessive in his desire to cause harm to this company and those who support it (thus all of the outright lies he has just posted about Zenza and how I joined Usana, which I have explained to him, but which he continues to repeat anyway). If you are pro-Usana/MLM and you do respond to him, keep in mind he will use what ever information you give him to twist and mutate into what ever serves his anti-Usana agenda. If you post evidence that he can not counter he will simply ignore it, divert the discussion away from it, and then once the exchange is buried deep enough into the archives of the board he will then restate his original accusation, often times declaring it to be unchallenged.

He is a classic internet troll.

"If you can't discredit your opposition's point, try to discredit your opposition."
– Mr. Harington (my debate class teacher)

Len Clements

Gee, no surprise here!

Sounds exactly like some of the numbskull, Anti-MLM zealots over at SCAM.com.

Don't bother em with the facts, their minds are made up!

The liar's punishment is not in the least that he is not believed, but that he cannot believe anyone else. ~ George Bernard Shaw

Kerry

[wserra]

To put some order in this thread, I'm recapping the points so far as to why USANA was "legally vindicated" (Clements' phrase), starting with Clements' assertions, followed by Serra's responses, then Clements' replies.

Clements' Point I: Inaction as "legal vindication".

I(a). Clements: SEC, NASDAQ took no action against USANA. Serra: No legal significance, citing law. Clements' reply:

You're not the first to use this defense, and I've always got a kick out of it. So the SEC and NASDAQ investigated all of the alleged illegal activities that Minkow asserted, did find evidence of this illegal activity, and just decided to forget it and drop the whole thing? There is no other logical scenario that supports your position. Mine, however, suggests that they spent months (10 in the case of the SEC) investigating these claims, and took no action because they found no evidence of any illegal activity.

Unless you have a report, you can only guess at what they did. In any event, the SEC does not have primary responsibility for pyramid scheme enforcement - the FTC does. For all you know, SEC staffers shrugged (yes, it can take ten months for the government to shrug) and said that it's an FTC matter. (The SEC's page on pyramid schemes refers the reader to the FTC.)

More importantly, though, I cited Supreme Court law that agency inaction (absent an affirmative statutory duty to act) is not proof of anything, let alone "legal vindication". I looked carefully though your reply and found no law at all. I did find, however:

"All other things being equal, the simplest solution is the best."
– Occam's razor

I have a hint for you, Mr. Clements: If you ever find yourself in court and your opponent cites the Supreme Court, don't cite Occam's Razor in response. You won't like the result.

I'll leave it to the reader to decide which of our solutions is most reasonable.

I'm perfectly content to do that, too - pointing out only in passing that readers don't determine the law.

Clements I(b): "China took no action against USANA." Serra: "China? China? You're kidding, right?" Clements reply:

Like I said, China reacts far more swiftly and with much greater force to what they deem to be illegal or even anti-social activities than does the United States. Yet, even there, where pyramid scheme operators are sometimes put to death, and with all the supposed "evidence" that Minkow heaped upon their top legal authorities, they took no action of any kind! They didn't even contact Usana and ask them about this. You just made my point!

Absurd. If you can't infer "legal vindication" from U.S. agency inaction, how can you possibly infer it from Chinese inaction? As the NY Times reported yesterday, the Chinese government won't even allow courts to accept open-and-shut cases of Chinese babies killed by tainted milk. The Times attributes it to "corruption and inefficiency among China’s regulators". But you want to infer that the same regulators righteously exonerated USANA?

The question is rhetorical.

Clements Point II: The lack of success of other actions means USANA was "legally vindicated".

II(a) Clements: Minkow's "withdrawal" of his allegations against Herbalife means USANA was "legally vindicated". Serra: Minkow's allegations against Herbalife are now gone, and I never looked into them. Clements:

Any reasonable reader must clearly see that you are trying desperately to keep this argument to the one and only legal decision that went against Usana, and ignore the numerous others that were in their favor.

There was no "legal decision" in Herbalife's favor. There was never any case at all. The reason I am able to discuss the USANA-Minkow situation is because I read the docs on PACER. The reason I can't discuss Herbalife is because I don't know enough about it. In any event, how does Minkow saying "never mind" to Herbalife "legally vindicate" USANA? And that "one and only" legal decision that went against USANA was that they couldn't prove a case (other than the 10b-5). Kind of an important one, don't you think, to any discussion about whether they have been "legally vindicated"?

Why is this not obvious?

I then listed all the ways they were "legally vindicated". I'm sure you would love to just have everyone ignore all of the other "legal vindications" Usana achieved, and focus on only their single loss (that actually provides utterly no evidence of any actual illegality). How convenient I'm sure that would be for you at this point.

In point of fact, I showed that none of what you cite constitutes "legal vindication". I did that by citing law. You cite ... you.

Point II(b) Clements: The dismissal of the shareholder derivative / class action suits vindicates USANA. Serra: Whatever the merits (or lack thereof) of those suits, they have nothing to do with USANA's suit against Minkow. Clements:

I know the only thing you addressed was the SLAPP decision, and it's glaringly obvious you didn't know about all of the other suits charging Usana with the same illegal activities as Minkow that Usana completely defeated!

The only thing I undertook to debate in the first place - I agree, the only thing I know enough to debate about - was USANA's claimed "legal vindication" in its suit against Minkow. There are lots of ways that class action and derivative suits can founder which are unrelated to the merits. Maybe those suits were decided on the merits, maybe not. If they were, maybe those merits were the merits of Minkow's arguments, maybe not. The one thing I know was that Minkow was not a party to them.

If you really want, when I have time I'll take a look at the dockets. But I find it strange that they are so important to you, since there can be no dispute that Judge Campbell ruled on the merits that USANA did not meet its burden of proof against Minkow.

III. Clements: USANA really won against Minkow, since they got what they wanted. Serra: That is shameless post-defeat spin, since USANA made it clear (and Judge Campbell found as fact) that USANA cared most about disputing Minkow's observations about its business and products, which it ignominiously failed to do. Clements repeats:

[Delete ad hominem. How did you put it? Oh, yeah, "If you can't discredit your opposition's point, try to discredit your opposition."]

And how could a court rule that something is or is not a plaintiff's "goal" (desired outcome)?

Well, I think you should ask Judge Campbell, who (as I quoted in my post above) rejected USANA's position that stopping Minkow's market manipulation was its real goal, and instead found that goal to be shutting Minkow up about its business practices and products - what she refers to as Minkow's "report". She went on to rule that USANA was unable to show even a "reasonable probability" of attaining that goal. Squirm, repeat and obfuscate as you will, that's completely clear.

Whom do I accept, you or Judge Campbell? Another rhetorical question.

IV. Clements: Ad hominem against Minkow. Serra: so what? Facts are facts, law is law. Clements:

Yes, Minkow shorted Usana's stock. AND... he made $61,000 from those put options, AND... he was paid $250,000 by fellow felon Sam Antar (did I mention he, like Minkow, was convicted of stock fraud?) specifically for the anti-Usana report, who was also short Usana's stock, AND... Minkow was given a $100,000 "gift" by Antar, AND... this was all right before Minkow began his Usana investigation, AND... he was paid $50,000 specifically for the report by two hedge fund managers! And since you chose to defend this point, allow me to also include... Minkow wrote a negative report on Herbalife and shorted their stock right before the report was published, AND... shorted PrePaid Legal's stock right before his negative report on them was published! That's why the judge allowed the stock manipulation suit to go forward!

There. I left it all in this time. Happy?

And you are a senior USANA distributor over whose position controversy swirls concerning whether you bought your position from a previous distributor or whether USANA placed you in a vacant position ahead of hundreds of thousands of others in compensation for your tireless defense of them. I knew of this before my colleague webhick posted it, but didn't see the relevance in a discussion of facts and law. Since you insist on reposting what you posted about Minkow, I'll certainly agree (as I have in numerous other posts) that Minkow's motives are suspect due to his financial interest. However, there is no difference between Minkow's interest and yours. He has a financial interest due to his shorting USANA, and even if you got the position in accordance with established USANA procedures, you have a financial interest in the company's health. I, on the other hand, have none.

So I ask you again, Mr. Serra, and not rhetorically... did you really not know about all of this?

No, I knew about it. I saw it as no more relevant than your own interest. Since you do, I now comment on it.

We all know there was a sealed, private settlement. I was clearly and specifically referring to the Final Court Order granting Usana an injunction against Minkow issued by the judge! If this was all part of the private settlement, then why would the judge have ordered an injunction? Why didn't the judge just say, the parties have agreed to a settlement involving Minkow ceasing his attacks, and just allow the suit to drop? Again, Mr. Serra, this is not a rhetorical question.

OK, a non-rhetorical answer. A settlement isn't a court order. I have settled hundreds of cases over the years. If part of the settlement consists of injunctive relief - as it frequently does - then it must be "So Ordered" to have the power of the Court (and contempt relief if violated) behind it. It has nothing to do with any Court determination, since it was agreed by the parties.

Enough. I don't have the time or the inclination to cover the ground necessary to explain the relationship between federalism, Erie, state-law claims in diversity cases and federal procedure to someone who thinks they have anything to do with a change of venue.

[wserra]

Yes, Minkow was paid. No, I cannot provide you with proof.

OK, how do you know he was paid?

[MWave]

Mr. Serra, I have tried to ignore your last "response" and move on, but you are just making this too darn easy. I can't resist...

Clements: SEC, NASDAQ took no action against USANA. Serra: No legal significance, citing law. Clements' reply:

You're not the first to use this defense, and I've always got a kick out of it. So the SEC and NASDAQ investigated all of the alleged illegal activities that Minkow asserted, did find evidence of this illegal activity, and just decided to forget it and drop the whole thing? There is no other logical scenario that supports your position. Mine, however, suggests that they spent months (10 in the case of the SEC) investigating these claims, and took no action because they found no evidence of any illegal activity.

Unless you have a report, you can only guess at what they did. In any event, the SEC does not have primary responsibility for pyramid scheme enforcement - the FTC does. For all you know, SEC staffers shrugged (yes, it can take ten months for the government to shrug) and said that it's an FTC matter.

Where do I even begin? First, if Minkow's allegations were an "FTC matter", then why did the SEC and NASDAQ even get involved in the first place? Wouldn't they have known it was an FTC matter when they first looked at the claims they were going to be investigating? And didn't the SEC and NASDAQ also investigate allegations of securities violations? And so, are we to assume that the SEC and NASDAQ did find evidence of such violations and simply "shrugged", and said, screw it, let's forget all the time, effort and expense of this 10 month long investigation and let's just let them keep doing it? Are you actually suggesting they did find evidence that Usana was an illegal pyramid, decided this was the FTC's jurisdiction - and then didn't tell them!? Or, are you suggesting they did inform the FTC (as Minkow already had), and the FTC simply chose to ignore both Minkow and the SEC? Please, Mr. Serra, describe for us any scenario besides those I've just described where your "just because they took no action doesn't mean they didn't find evidence of Usana's guilt" makes rational, logical sense.

Furthermore, you claim that "the SEC does not have primary responsibility for pyramid scheme enforcement - the FTC does" is just more of your semantic game playing. While you are correct that the "primary" responsibility for enforcing anti-pyramid law falls on the FTC - that federal regulatory body that completely ignored Minkow's (and based on your statement, possibly the SEC's as well) anti-Usana claims - but that absolutely does not mean the SEC does not investigate allegations of such schemes and, if warranted, take legal action against them. The basis for such SEC actions is not breaking anti-pyramid law (yes, the FTC and state AGs do that), but rather for not disclosing the true nature of the scheme (a violation of disclosure law), and for selling an unregistered security. To loosely quote Tom Cruise in "The Firm", It's not as sexy, but has teeth that are just as sharp. So the SEC would have absolutely investigated, and if warranted taken action on, Minkow's pyramid scheme allegation.

More importantly, though, I cited Supreme Court law that agency inaction (absent an affirmative statutory duty to act) is not proof of anything, let alone "legal vindication".

While you would love to keep my "legal vindication" claim to only actual legal decisions handed down by a court, I am talking about "legal vindication" based on the laws of common sense, logic, and reason.

Clearly, the SEC and NASDAQ closed their investigations, and the FTC didn't even commence one, BECAUSE THERE WAS NO EVIDENCE THAT USANA WAS GUILTY OF EVEN A SINGLE CHARGE MADE AGAINST THEM! To argue otherwise is simply foolish.

I looked carefully though your reply and found no law at all. I did find, however:

"All other things being equal, the simplest solution is the best."
– Occam's razor

I have a hint for you, Mr. Clements: If you ever find yourself in court and your opponent cites the Supreme Court, don't cite Occam's Razor in response. You won't like the result.

I agree. You are correct in that logic, common sense and reason do not always prevail in a court of law (I again direct your attention to O.J. Simpson). However, I am speaking to the good readers of this board. They are our jury.

Clements I: "China took no action against USANA." Serra: "China? China? You're kidding, right?"

Once again we are left with two possible scenarios:

Mr. Serra's: China, who has far stronger anti-pyramid laws that the U.S., who (according to Barry Minkow) far more aggressively pursues such schemes, where the most agregious violations are punishable by death, did investigate Minkow's claims and simply, in this one case, chose to just ignore it, and not even let Usana know.

Mine: China took no action of any kind because Usana broke no laws.

Again, I'll leave it to the reader to decide which makes more sense.

Oh, and BTW, according to Minkow's anti-Usana documents (the subject of this thread, as you'll recall), Usana's "Cheating-in-China" was also a direct violation of U.S. securities law, and he sent this report to the SEC as well. Which also ignored it!

Clements: Minkow's "withdrawal" of his allegations against Herbalife means USANA was "legally vindicated". Serra: Minkow's allegations against Herbalife are now gone, and I never looked into them... how does Minkow saying "never mind" to Herbalife "legally vindicate" USANA?

I'll catch you up. Minkow said Herbalife was an illegal pyramid due to its MLM compensation model, and the fact that most of the sales were made to reps, not retailed to non-reps – the identical assertion on which he based his claim that Usana was an illegal pyramid. The SEC investigated Herbalife on this claim (we know this - well, at least I know this - because the SEC specifically requested data on percentage of sales to reps vs. non-reps), and the SEC also took no action against Herbalife. But more to the point, Minkow eventually ceased his entire campaign against Herbalife (who had not sued him - at least not yet) and stated publicly that Herbalife's MLM model was valid - the same MLM model used by Usana, except that Usana requires a fraction of the upfront product purchase that is typically bought by new Herbalife reps.

And that "one and only" legal decision that went against USANA was that they couldn't prove a case (other than the 10b-5). Kind of an important one, don't you think, to any discussion about whether they have been "legally vindicated"? Why is this not obvious?

Um, maybe because you keep changing your answer. I thought you said Minkow had sufficiently proven that Usana was guilty? I countered that Minkow didn't even make such a case, and the burden was on Usana to DIS-prove his claims. Now you're saying they lost because Usana couldn't "prove" their case - which I think is the same thing I said, is it not? Once again you have validated my original point.

And to throw in the "other than the 10b-5" (the stock manipulation charge) as a parenthetic aside is kind of like saying, "The prosecution couldn't prove their case (except for the murder charge)".

I then listed all the ways they were "legally vindicated". I'm sure you would love to just have everyone ignore all of the other "legal vindications" Usana achieved, and focus on only their single loss (that actually provides utterly no evidence of any actual illegality). How convenient I'm sure that would be for you at this point.

In point of fact, I showed that none of what you cite constitutes "legal vindication". I did that by citing law. You cite ... you.

Mr. Serra, not being a mind reader I would never presume you are outright lying, so I will assume your memory is faulty on the matter (or you are hoping the reader's is).

Even if I were to concede every point not involving an actual legal decision by a court of law (which I'm not), I would still have the federal court decision in Ashok Kapur vs. Usana et al, where the identical set of charges that would have still been in play had the Minkow case gone forward was found to not even be "plausible", and was DISMISSED WITH PREJUDICE!

This single, and very legal vindication by a federal court of ALL counts against Usana certainly trumps your partial, state level decision which also in no way found Usana actually guilty of those same counts.

You're wrong. Usana was, by every definition, "legally vindicated" in this case, and unless you can prove the Court Order I just linked to above is a fake, you can not possibly defend this point.

Clements: The dismissal of the shareholder derivative / class action suits vindicates USANA. Serra: Whatever the merits (or lack thereof) of those suits, they have nothing to do with USANA's suit against Minkow.

The only thing I undertook to debate in the first place - I agree, the only thing I know enough to debate about - was USANA's claimed "legal vindication" in its suit against Minkow. There are lots of ways that class action and derivative suits can founder which are unrelated to the merits. Maybe those suits were decided on the merits, maybe not. If they were, maybe those merits were the merits of Minkow's arguments, maybe not. The one thing I know was that Minkow was not a party to them.

Minkow was most certainly a direct party to the distributor suit (see "Christopher Crane" section, Page 30, of this Rebuttal Report), and his report was directly responsible for the two shareholder suits. And you are simply ignoring facts already in evidence. We know why these two suits were dropped. The plaintiff's attorney agreed to drop the derivitave suit, and asked to drop the distributor suit! Do attorney's typically do that in class action cases if their case has any legal merit, Mr. Serra?

And I most certainly was not debating only the Campbell decision, nor did I even insinuate any such thing. I specifically and clearly declared Usana to be "legally vindicated". Nothing more. You then provided a snotty response challenging this claim, which I then defended by pointing out all the ways that Usana has been legally vindicated - which you now are apparently admitting you didn't know about. "Don't count all the evidence I didn't know about" may work after discovery, Mr. Serra, but it probably doesn't play well in this forum.

Clements: USANA really won against Minkow, since they got what they wanted. Serra: That is shameless post-defeat spin, since USANA made it clear (and Judge Campbell found as fact) that USANA cared most about disputing Minkow's observations about its business and products, which it ignominiously failed to do.

I keep saying that Usana would have still had to defend against these points had the stock manipulation case been heard, but you keep ignoring this point (in fact, after comparing your last response to my previous one, I've notices there are quite a few points I made that you made no effort what-so-ever to refute). Besides that, Usana obviously didn't need this libel decision for vindication against Minkow's claims because they had already gotten it from the SEC, NASDAQ, and three law suits they defeated!

Let's see if you can spin your way out of this point by asking the question this way: Had Usana's libel count gone forward, what could they have achieved that they did not already achieve by the actual outcome?

Delete ad hominem. How did you put it? Oh, yeah, "If you can't discredit your opposition's point, try to discredit your opposition."

Do you really not appreciate the hypocracy and irony in this repeated accusation towards me? Do you not recall that your very first reference to me on this board was as an "ignorant scammer"? While I do tend to lower myself to the level of my opponent - a fault in my conduct, I confess - the mud was first slung by you, sir.

And how could a court rule that something is or is not a plaintiff's "goal" (desired outcome)?

Well, I think you should ask Judge Campbell, who (as I quoted in my post above) rejected USANA's position that stopping Minkow's market manipulation was its real goal, and instead found that goal to be shutting Minkow up about its business practices and products - what she refers to as Minkow's "report". She went on to rule that USANA was unable to show even a "reasonable probability" of attaining that goal. Squirm, repeat and obfuscate as you will, that's completely clear.

Now I'm totally confused. My exact point was that Usana's "goal", their "desired outcome", was, and could only have possibly been, a Permanent Injunction against Minkow forcing him to remove his anti-Usana materials, cease and desist in producing more of it, and to never invest in their stock again. Now you rebut my point by claiming that the judge "found that goal to be shutting Minkow up". How in the world do you think your complete agreement with my point in some way refutes it?

I ask you again, Mr. Serra – and keeping in mind Minkow still owes millions in restitution to one of his past victims (Union Bank), so monetary damages are obviously not on the table – what more could Usana have gotten that they didn't get?

Yes, Minkow shorted Usana's stock. AND... he made $61,000 from those put options, AND... he was paid $250,000 by fellow felon Sam Antar (did I mention he, like Minkow, was convicted of stock fraud?) specifically for the anti-Usana report, who was also short Usana's stock, AND... Minkow was given a $100,000 "gift" by Antar, AND... this was all right before Minkow began his Usana investigation, AND... he was paid $50,000 specifically for the report by two hedge fund managers! And since you chose to defend this point, allow me to also include... Minkow wrote a negative report on Herbalife and shorted their stock right before the report was published, AND... shorted PrePaid Legal's stock right before his negative report on them was published! That's why the judge allowed the stock manipulation suit to go forward!

There. I left it all in this time. Happy?

No. Because you still haven't answered the question as to why, if you knew all of this as you now claim, you suggested Usana's stock manipulation suit was tenuous (based on "hints" from the judge), and only mentioned, within the context of this count's validity, that Minkow had "shorted their stock". You weren't trying to manipulate the reader into believing that's all Usana had on this count, were you? I have a better theory: You had absolutely no clue about all of this other evidence! Am I right?

And you are a senior USANA distributor over whose position controversy swirls concerning whether you bought your position from a previous distributor or whether USANA placed you in a vacant position ahead of hundreds of thousands of others in compensation for your tireless defense of them. I knew of this before my colleague webhick posted it, but didn't see the relevance in a discussion of facts and law.

You forgot to explain what changed your mind. Doesn't it still have no relevance? I mean, other than to "discredit the source" of facts you can't discredit?

For the record, I am not a "senior" distributor. I started at the same rank as everyone else. And there is no "controversy". This entire issue is a blatant fabrication manufactured by Steve Rotolante, a delusional, obsessed, anti-Usana nut case who has been lying about me and attacking me in hundreds of posts over several message boards for almost two years now. He's a classic internet troll who has zero credibility. Well, at least with people who actually think for themselves.

Since you insist on reposting what you posted about Minkow, I'll certainly agree (as I have in numerous other posts) that Minkow's motives are suspect due to his financial interest. However, there is no difference between Minkow's interest and yours. He has a financial interest due to his shorting USANA, and even if you got the position in accordance with established USANA procedures, you have a financial interest in the company's health. I, on the other hand, have none.

Interesting wording. So this now begs the question, Do you have a financial interest in their ill-health?

And, again, you are wrong. As you will see from this extensive list of rebuttal reports HERE, I defended Usana, and indirectly the MLM industry, many months before I became a Usana rep. The points I am making now are the very same. Furthermore, the proposition that my points should be less credible because I am defending a company, or an industry, that I am personally involved in is only, once again, an attempt to deflect from the point and diminish the credibility of its source.

We all know there was a sealed, private settlement. I was clearly and specifically referring to the Final Court Order granting Usana an injunction against Minkow issued by the judge! If this was all part of the private settlement, then why would the judge have ordered an injunction? Why didn't the judge just say, the parties have agreed to a settlement involving Minkow ceasing his attacks, and just allow the suit to drop? Again, Mr. Serra, this is not a rhetorical question.

OK, a non-rhetorical answer. A settlement isn't a court order. I have settled hundreds of cases over the years. If part of the settlement consists of injunctive relief - as it frequently does - then it must be "So Ordered" to have the power of the Court (and contempt relief if violated) behind it. It has nothing to do with any Court determination, since it was agreed by the parties.

You're right, a settlement isn't a court order. A COURT ORDER is a COURT ORDER! And again I ask, why didn't the parties just agree as part of their private settlement that Minkow stop his attacks? Wouldn't that have been legally binding? Why would Usana also ask for this COURT ORDER over and above what was already agreed to in the private settlement? Fine, I'll play along. Let's call it "injunctive relief". Call it what ever you want, but Usana got exactly what they would have gotten had the case went forward and they had won!

Enough. I don't have the time or the inclination to cover the ground necessary to explain the relationship between federalism, Erie, state-law claims in diversity cases and federal procedure to someone who thinks they have anything to do with a change of venue.

Whoa! Hold on. You were the one who insisted we debate this here, in this forum, Mr. Serra. We could have easily covered all of this in less than an hour on a live podcast, where I challenged you to take this. You were the one that suggested I was running from the debate. And now you decide you've had "enough"?

And what the hell did my comment about venue, which was specifically and directly in response to your claim that Usana chose to pursue their case in CA, have to do with all those other points? Getting desperate, are we?

But I agree. I think I've made my point, and I am confident that any reasonable, objective reader (should one actually exist on this board), will conclude that you have not made yours.

The last word, Mr. Serra, is yours. Knock yourself out.

Len Clements

[wserra]

I only address two things. As to everything else, since there is nothing new in your latest post, there would be nothing new in mine either. Folks can read and judge as is.

First:

While you would love to keep my "legal vindication" claim to only actual legal decisions handed down by a court, I am talking about "legal vindication" based on the laws of common sense, logic, and reason.

Thereby, of course, redefining the word "legal". Perhaps next you'll claim that USANA was "legally vindicated" based on the law of gravity, the law of averages, or the law of the jungle.

Second:

Even if I were to concede every point not involving an actual legal decision by a court of law (which I'm not), I would still have the federal court decision in Ashok Kapur vs. Usana et al, where the identical set of charges that would have still been in play had the Minkow case gone forward was found to not even be "plausible", and was DISMISSED WITH PREJUDICE!

Not, of course, the case involving Minkow. Nonetheless, I guess I gotta read it.

Having read it, I'm glad I did. (BTW, I also checked the docket to make sure that it's the final word. It is.) A comparison shows how the Minkow decision was in fact on the merits, while the Kapur decision was not. For those really interested, I suggest using the links to have both decisions open while reading this. I'll refer to the former case as "Minkow", and the latter as "Kapur".

(1) The respective issues as the Courts framed them.

Minkow:

USANA maintains that the case centers on illegal market manipulation, not the Defendants’ statements made in the report and after.

But the allegations in the amended complaint do not support USANA’s argument. In fact, most of the allegations arise from Defendants’ “public relations campaign,” in which Defendants made disparaging remarks about USANA’s products and business strategy. (See Am. Compl. ¶¶ 1, 25-48.) Because the manipulation, as described in the amended complaint, is clearly based on the report and Defendants’ statements about USANA, the basis of the lawsuit is the report and Defendants’ statements about USANA. (See id. ¶¶ 5, 32, 38.)

What’s more, USANA’s own pleadings in response to Defendants’ motions leave no
doubt that the essence of USANA’s claims centers on Defendants’ statements.
...
USANA must show “there is a reasonable probability [it] will prevail on the merits at trial” by “show[ing] both that the claim is legally sufficient and there is admissible evidence that, if credited, would be sufficient to sustain a favorable judgment.” ... The court “should grant the motion if, as a matter of law, the defendant’s evidence supporting the motion defeats the plaintiff’s attempt to establish evidentiary support for the claim.” (Citations omitted.)

Kapur:

To adequately plead that the defendant made a material representation or omission, the PSLRA [Private Securities Litigation Reform Act, a 1995 statute which makes it more difficult for a private plaintiff to pursue certain securities litigation - wserra] requires a plaintiff to “‘specify [in the complaint] each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.’”
...
Specifically, the PSLRA increases a plaintiff’s burden when pleading two elements of a rule 10b-5 action: (1) a material misrepresentation or omission by the defendant and (2) scienter.
...
To sufficiently plead scienter under the PSLRA, a plaintiff must, “‘with respect to each act or omission[,] . . . state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.

The Court in Minkow thus inquired whether USANA could show a "reasonable probability" of prevailing on the merits, while the Court in Kapur looked at whether the plaintiffs had sufficiently pleaded their case.

2. The respective rulings.

Minkow:

USANA emphasizes that “Defendants knowingly released false and misleading reports . . . in an effort to manipulate USANA’s stock price.” (Pl.’s Resp. Opp’n Defs.’ Mot. Dismiss 7.) ... Without specific evidence to explain why this misstatement was material
and could have deceived the public—particularly when Defendants attached the lab report to
their report—the court has no basis to find that the statement establishes a violation of
California’s unfair competition law.
Similarly, USANA emphasizes that the report compares the antioxidants of a serving of
grape juice to a serving of USANA’s TenX bar. USANA declares—without any evidentiary
support—that this is misleading because “the only meaningful way to compare [differing foods] is gram-for-gram . . . .” (Pl.’s Suppl. Resp. Opp’n Defs.’ Mot. Strike 7.) But this assertion does not establish that the report is false. On the contrary, as USANA states in its brief, Defendants’ report explains that it is not comparing the products gram-for-gram, stating that the “‘test results showed TENX is just over 2 times stronger than 8 ounces of grape juice . . . .’” (Id. at 6) (quoting Compl. Ex. 1 at 12 n.32) (emphasis added). USANA’s remaining assertions of Defendants’ inaccuracies suffer from similar problems; they are hyper-technical statements representing differing interpretations of data, with no evidence tending to show how the statement was material.
...
Because USANA provides no evidence to illustrate why the purported misstatements
should create liability under the unfair competition law, USANA does not satisfy its burden of
showing a probability of success for its claim of unfair competition and the court grants
Defendants’ motion to strike this cause of action.
...
Consequently, the evidence now indicates only that Defendants engaged in the lawful
trading of securities. Because USANA did not meet its burden, the court strikes the second claim for relief under California’s anti-SLAPP statute.
...
USANA submitted no evidence of Defendants’ wrongful conduct or any evidence that
Defendants’ wrongful conduct harmed USANA’s business relationships.9 Because USANA
failed to meet its burden, the court strikes the third claim for relief.
...
USANA has offered no evidence tending to show that Defendants engaged in tortious conduct or that this conduct required USANA to incur litigation costs. Without any evidence to support the claim, USANA has failed to meet its burden, and the court strikes the fifth claim for relief.

Kapur:

In sum, there are simply no alleged facts in the Second Amended Complaint strongly suggestive of “intent to deceive, manipulate, or defraud.” Id. at 1259. Nor has Lead Plaintiff alleged facts that strongly insinuate conduct constituting “an extreme departure from the standards of ordinary care.” The court concludes that while “the inference of scienter [in this case could perhaps be] . . . reasonable or permissible . . . [it is not] cogent and compelling.... The court concludes that in failing to assert actionable federal securities law claims and to satisfy the PSLRA’s heightened pleading requirements, Lead Plaintiff has failed in her Second Amended Complaint to “‘nudge [her] claims across the line from conceivable to plausible.’” (Citations omitted) Accordingly, the court GRANTS Defendants’ Motion to Dismiss with prejudice.5

5 Lead Plaintiff indicated at oral argument that she was not interested in further amendments to the Second Amended Complaint.

In short, it is absolutely clear that the Court in Minkow ruled that USANA could not show a "reasonable probability" of prevailing on the merits. It is just as clear that the Court in Kapur ruled that plaintiffs had insufficiently pleaded their case. The Kapur dismissal is (as you put it) "WITH PREJUDICE" because plaintiffs declined the opportunity to further amend their complaint. Both Courts said as much in so many words.

Was USANA "legally vindicated" in Kapur? In the sense that the case is over - what counts most - sure. In the sense that the Court ruled that they were correct on the merits - no, because it didn't; if you read through the opinion, the Court repeatedly noted it did not decide the merits in view of the pleading deficiencies. Was USANA "legally vindicated" in Minkow? Clearly not.

BTW, how do you know that USANA didn't pay Minkow an additional $1M on top of the court-ordered costs and fees to settle the case? I'm clearly not defending Minkow - this is uncomfortably close to greenmail (or Ed Magedson of Rip-Off Report). But how do you know it wasn't the case?

One final interesting observation on the Kapur opinion. Early on (at p 3 of the 34-page opinion), the Court noted that the SEC had begun and terminated an investigation into USANA without bringing any charges. For the remainder of the lengthy opinion, the Court never mentions that fact again, and certainly never says anything like the Clements claim that this constitutes a "vindication" of USANA. Why? Because, as I've been saying, it doesn't.

[Nikki]

USANA logic (Boolean logic on KoolAid)

Kapur = not lost

not lost = won

won = vindication

QEDumb

[wserra]

Nearly three weeks. It seems that Dracula and Renfield have left the building.

[ohein56]

Nearly three weeks. It seems that Dracula and Renfield have left the building.

WFG, Matthew Hopkins, I presume?

I believe it's due to the hallways around here being quite too narrow to walk through comfortably.

Happy hunting...