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Texas AG Files Suit Alleging Mannatech Uses False Claims In Marketing

This article was originally published in The Tan Sheet

Executive Summary

Texas Attorney General Greg Abbott has filed a lawsuit seeking to shut down Mannatech, but the firm's executives advise their multi-level marketing associates to continue conducting business as usual, predicting a "marathon" in defending the suit

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Mannatech settles Texas complaint

The Coppell, Texas-based multilevel supplement marketer agrees to pay $6 million to resolve allegations in a 2007 state lawsuit that it exaggerated therapeutic benefit claims for supplements from 2002 to 2006. The Texas attorney general's office says Mannatech agreed to pay $4 million in restitution to consumers and $2 million to cover regulators' expenses (1"The Tan Sheet" July 16, 2007, p. 11). Under the final judgment, the firm agrees "not to advertise or otherwise claim" its supplements "can cure, treat, mitigate or prevent disease." The firm's founder and former CEO, Sam Caster, who was named in the original complaint, will pay a $1 million fine. Mannatech admits no wrongdoing but says it has made "significant changes to its operating practices" in the past two years

Mannatech CEO quits

Sam Caster, co-founder of Coppell, Texas-based multilevel dietary supplements marketer Mannatech, resigns as the firm's chief executive Aug. 21 amidst litigation charging the company engaged in deceptive sales practices. Caster will retain his position as chairman of the board. President and COO Terry L. Persinger, who will retire from the company in June 2008, has been appointed interim president and CEO while Mannatech seeks a permanent replacement. Additionally, Exec VP-Global Operations Terence L. O'Day will assume responsibility as COO. The Texas attorney general filed a lawsuit in July seeking to shut down Mannatech, due to its alleged use of false claims in marketing. However, Mannatech has vowed to fight the suit (1"The Tan Sheet" July 16, 2007, p. 11)...

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Barr: Emergency contraceptive Plan B second quarter sales increased $12 mil. over the year-ago quarter due to the OTC launch in November 2006, Barr reports in an Aug. 8 analysts call ("1The Tan Sheet" March 5, 2007, In Brief and 2"The Tan Sheet" Nov. 13 2006, p. 8). The firm's total revenues for the quarter were $637 mil., up 81% from the same period in the prior year. With Plan B boosting its proprietary division sales, generic oral contraception sales also drove overall revenue. Integration of Croatian firm PLIVA acquired in 2006 is on track, the firm reports...

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