bailey glasser llp magleby greenwood p.c....knowledge, the investigation of his counsel, and upon...

Gregory Y. Porter, pro hac vice pending

[email protected]

James L. Kauffman, pro hac vice pending

[email protected]

BAILEY & GLASSER LLP

910 17th

Street NW, Suite 800

Washington, DC 20006

Telephone: 202.463.2101

Facsimile: 202.463.2103

James E. Magleby (7247)

[email protected]

Jennifer Fraser Parrish (11207)

[email protected]

MAGLEBY & GREENWOOD, P.C.

170 South Main Street, Suite 850

Salt Lake City, Utah 84101

Telephone: 801.359.9000

Facsimile: 801.359.9011

Attorneys for Plaintiffs and the Putative Class

______________________________________________________________________________

IN THE UNITED STATES DISTRICT COURT

DISTRICT OF UTAH, CENTRAL DIVISION

KELLY JESSOP, an individual, on behalf

of himself and all others similarly situated,

Plaintiff,

v.

DALLIN LARSEN, an individual, HENRY

MARSH, an individual, RANDY LARSEN,

an individual, MACHIEL KENNEDY, an

individual, RALPH CARSON, an

individual, AMY COWLEY, an individual,

MARK RAWLINS, an individual,

PORTER HALL, an individual, STEPHEN

J. HALL, an individual, DOES 1-10, and

BANKERS TRUST COMPANY, a

Delaware corporation,

Defendants.

CLASS ACTION COMPLAINT

JURY TRIAL DEMANDED

Case No.

Honorable

mailto:[email protected]




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Plaintiff Kelly Jessop (“Plaintiff”), by his undersigned attorneys, alleges upon personal

knowledge, the investigation of his counsel, and upon information and belief as to all other

matters, as to which allegations they believe substantial evidentiary support will exist after a

reasonable opportunity for further investigation and discovery, as follows:

INTRODUCTION

1. Plaintiff was a corporate trainer employed by MonaVie, LLC (“MonaVie”).

Plaintiff is vested in MonaVie’s Employee Stock Ownership Plan (“ESOP”). In recent months,

Plaintiff was locked out of his online ESOP account and is unable to view documents related to

the ESOP or obtain any information about his shares. As alleged below, Plaintiff and the Class

he seeks to represent have been cheated out of their hard-earned retirement benefits as a result of

violations of the fiduciary duties and prohibited transactions under the Employee Retirement

Income Security Act of 1974 (“ERISA”) by Bankers Trust Company (“Bankers Trust” or

“Trustee”) and such other persons who may have served as fiduciaries to the ESOP, and the

knowing participation by the Individual Defendants named herein (all Defendants other than

Bankers Trust) in these violations of ERISA.

2. MonaVie is a privately held company that manufactures and distributes products

made from blended fruit and vegetable juice concentrates, powders, and purees through a multi-

level marketing business model. On November 17, 2010, MonaVie (and/or its principal

shareholders) sold an unknown percentage of its shares for $186 million to the ESOP (the

“ESOP Transaction” or “Transaction”). Bankers Trust represented the ESOP as Trustee in the

2010 ESOP Transaction. The ESOP Transaction allowed MonaVie and its principal shareholders

to unload thousands of shares in MonaVie at grossly inflated values and saddle MonaVie’s own

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employees with a crushing loan to finance the Transaction. Bankers Trust, as Trustee for the

ESOP, completely failed to fulfill its duties to the ESOP and ESOP participants like the Plaintiff.

3. In the years prior to the ESOP Transaction, MonaVie was mired in negative

headlines and lawsuits with consumers, competitors, and distributors. MonaVie was accused of

false and misleading advertising, questionable business practices in their multi-level marketing

scheme, and other practices that called into question the value of the company’s stock. In this

environment, MonaVie and the selling shareholders knew they could not secure bank financing

for a loan to the ESOP to acquire shares of MonaVie because the collateral for the loan would be

near worthless MonaVie stock. Instead, MonaVie and the selling shareholders, with Bankers

Trust’s cooperation, caused MonaVie to loan the money to the ESOP. Bankers Trust allowed the

ESOP to borrow $186,496,985 payable in full over fifteen years at a rate of ten percent (10%)

per annum, a rate that was more than twice the 4.25% rate for similar financing. Thus the selling

shareholders saddled the ESOP and MonaVie employees with $186 million of debt, payable to

MonaVie and the selling shareholders, at more than double the going interest rate and unloaded

thousands of shares in MonaVie at grossly inflated values. Bankers Trust should never have

allowed this. It failed utterly to perform its duties

4. The numerous red flags about MonaVie and its principal shareholders and

distributors from readily available public sources would have alerted any reasonable financial

institution to the defects in a high-stakes transaction in MonaVie stock. Indeed, MonaVie was in

a bitter litigation against Amway Corp. over false and deceptive sales practices and illegal

recruiting of Amway distributors. The public record in this lawsuit cast serious doubts on

MonaVie’s business practices and future. Thoroughly reviewing and evaluating a critical lawsuit

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is basic due diligence in any financial transaction. But Bankers Trust ignored this record and

numerous other warning signs and failed completely in its due diligence and duties as ESOP

Trustee.

5. The ESOP’s MonaVie stock lost just over one third of its value, $66 million,

within 44 days after the Transaction, showing that the Transaction was a get-rich-quick scheme

for the selling shareholders at the expense of MonaVie employees.

6. As of January 2014, the ESOP’s MonaVie shares were only worth 6 cents a share,

$774,000, a loss of 99.95%. But the ESOP still owes MonaVie and the selling shareholders over

$265 million.

7. Defendant Bankers Trust caused the ESOP to pay substantially more than the fair

market value for MonaVie’s stock, relied upon inflated financial projections and a flawed

valuation report in valuing MonaVie’s stock for the 2010 ESOP Transaction, and failed to give

appropriate consideration to material adverse facts about MonaVie widely available to the

public. Further, Bankers Trust failed in its fiduciary obligation to seek to mitigate the losses to

the ESOP. Currently, ESOP participants cannot even obtain a statement of the value of their

shares and their shares are believed to be currently worthless.

8. MonaVie’s founders, principal shareholders, and Board (“Individual Defendants”)

knowingly participated in Bankers Trust’s breach of duty. Each of them was intimately familiar

with the aforementioned news headlines and litigation challenging MonaVie’s multi-level

marketing model as a Ponzi scheme. Each of them knew that MonaVie’s days were numbered

because virtually all sales of its products were to downstream distributors as opposed to real

consumers, and downstream distributor sales were rapidly decreasing. Many of these Individual

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Defendants were plan fiduciaries in their own right or controlled the plan's fiduciaries. Once the

Ponzi scheme collapsed, the individual defendants escaped by unloading their stock onto their

own employees’ ESOP. The Individual Defendants walked away with millions of dollars for

nearly worthless stock and saddled the ESOP with a $265 million liability.

JURISDICTION AND VENUE

9. This action arises under Title I of ERISA, 29 U.S.C. §§ 1001 et seq., and is

brought by Plaintiff to enjoin acts and practices that violate the provisions of Title I of ERISA, to

require Defendants to make good to the Plan losses resulting from fiduciary violations, to restore

to the Plan any profits that have been made by the breaching fiduciaries and parties in interest

through the use of Plan assets, and to obtain other appropriate equitable and legal remedies in

order to redress violations and enforce the provisions of Title I of ERISA.

10. This Court has subject matter jurisdiction over this action pursuant to ERISA§

502(e)(2), 29 U.S.C. § 1132(e)(2).

11. Venue is proper in this District pursuant to ERISA § 502(e)(2), 29 U.S.C.§

1132(e)(2), because some or all of the events or omissions giving rise to the claims occurred in

this District, the ESOP is administered in this District, and several of the Individual Defendants

reside or may be found in this District.

PARTIES

12. Plaintiff Kelly Jessop is a participant, as defined in ERISA § 3(7), 29 U.S.C. §

1002(7), in the ESOP. Kelly Jessop resides in Salt Lake City, Utah. Kelly Jessop was employed

by MonaVie as a corporate trainer and is vested in MonaVie shares via his account in the ESOP.

The value of his MonaVie shares in his ESOP account has declined dramatically since he

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received them. As of November 2014, Plaintiff was locked out of has been unable to obtain any

information regarding his MonaVie shares or his ESOP account. When Plaintiff called customer

service for the ESOP online portal, he was told that MonaVie is evaluating the stock price and

was given no estimated date when that evaluation will be complete.

13. Defendant Bankers Trust is and was the Trustee of the ESOP during the 2010

ESOP Transaction. Bankers Trust at all relevant times was a “fiduciary” under ERISA because it

was named as the Trustee. As Trustee, Bankers Trust had exclusive authority to manage and

control the assets of the ESOP and had sole and exclusive discretion to authorize the 2010 ESOP

Transaction. Defendant Bankers Trust at all relevant times was also a party in interest under

ERISA § 3(14), 29 U.S.C. § 1002(14). Defendant Bankers Trust is a Delaware corporation

headquartered in Iowa.

14. At all relevant times, Dallin Larsen (“D. Larsen”) was the Chief Executive Officer

and Chairman of MonaVie. D. Larsen was responsible for MonaVie’s strategic development,

creation of its products, and services distribution channel. D. Larsen has a Bachelor of Science

degree in Finance from Brigham Young University. D. Larsen was a principal shareholder of

MonaVie and owned, upon information and belief, at least 17% of MonaVie’s stock prior to the

2010 ESOP Transaction. Thus, at all relevant times, D. Larsen was a “party in interest” as to the

ESOP as defined in ERISA § 3(14), 29 U.S.C. § 1002(14). D. Larsen stepped down as Chairman

and CEO in 2014. D. Larsen has an 8,900 square foot mansion in Key Largo, Florida, and also

resides in Wasatch County, Utah.

15. Prior to founding MonaVie, D. Larsen was the vice president of sales for

Dynamic Essentials, a Florida-based company selling fruit juice called Royal Tongan Limu,

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where D. Larsen claimed to increase revenue by 300%. During D. Larsen’s tenure at Dynamic

Essentials, the Food and Drug Administration (“FDA”) warned Dynamic Essentials the claims

on the company’s website that its juice could “treat various diseases such as cancer, arthritis, and

attention deficit disorder” were illegal. In 2003, the FDA oversaw the destruction of 90,000

bottles of Royal Tongan Limu.

16. At all relevant times, Randy Larsen (“R. Larsen”) was the Director and Senior

Vice President of Marketing of MonaVie. R. Larsen is the brother of D. Larsen. R. Larsen was

responsible for MonaVie’s product and service development, development of marketing

strategies and new market identification, and company image development. R. Larsen has a

Bachelor of Science degree in Business Management from Brigham Young University. R.

Larsen was a principal shareholder of MonaVie and owned, upon information and belief, at least

11% of MonaVie’s stock prior to the 2010 ESOP Transaction. Thus, at all relevant times, R.

Larsen was a “party in interest” as to the ESOP as defined in ERISA § 3(14), 29 U.S.C. §

1002(14). R. Larsen resides in Las Vegas, Nevada.

17. At all relevant times, Henry Marsh (“Marsh”) was the Director and Executive

Vice President of Sales of MonaVie. Marsh was responsible for MonaVie’s recruitment and

management of its product and service distribution channels, management of its sales associate

compensation program, product and service development and public presentations. Marsh has a

Bachelor of Science degree in Economics from Brigham Young University and a Juris Doctor

degree from University of Oregon, School of Law. Marsh was a principal shareholder of

MonaVie and owned, upon information and belief, at least 11% of MonaVie’s stock prior to the

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2010 ESOP Transaction. Thus, at all relevant times, Marsh was a “party in interest” as to the

ESOP as defined in ERISA § 3(14), 29 U.S.C. § 1002(14). Marsh resides in Bountiful, Utah.

18. At all relevant times, Machiel “Mike” Kennedy (“Kennedy”) was the Chief

Medical Officer and Vice President of Professional Services of MonaVie. Kennedy was

responsible for MonaVie’s strict adherence to medically supported product and program

development, product and services design, corporate and government consulting, medical

community relationships and on-line patient services. Kennedy held medical licenses in Indiana

and Florida. Kennedy has a Bachelor of Science degree in Biology from Central State University

and a medical degree from Indiana University, School of Medicine. Kennedy was a principal

shareholder of MonaVie and owned, upon information and belief, 10% of MonaVie’s stock prior

to the 2010 ESOP Transaction. Thus, at all relevant times, Kennedy was a “party in interest” as

to the ESOP as defined in ERISA § 3(14), 29 U.S.C. § 1002(14). Kennedy resides in Clearwater,

Florida.

19. At all relevant times, Ralph Carson (“Carson”) was the Chief Science Officer and

Vice President of Product Development of MonaVie. Carson was responsible for establishing

and monitoring scientific guidelines for the development of MonaVie’s products and services,

sales associate training product presentations, and corporate educational consulting. Carson has a

Bachelor of Science degree in Pathology from Duke University, a Bachelor of Science degree in

Food & Nutrition from Oakwood College and a PhD degree in Nutrition from Auburn

University. Carson was a principal shareholder of MonaVie and owned, upon information and

belief, 10% of MonaVie’s stock prior to the 2010 ESOP Transaction. Thus, at all relevant times,

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Carson was a “party in interest” as to the ESOP as defined in ERISA § 3(14), 29 U.S.C. §

1002(14). Carson resides in Morristown, Tennessee.

20. At all relevant times, Amy Cowley (“Cowley”) was the Vice President of Finance

of MonaVie. Cowley was responsible for financial management, corporate administration and

human resources. Cowley has a Bachelor of Science degree in Accounting from the University

of Utah and is a Certified Public Accountant. Cowley was a principal shareholder of MonaVie

and owned, upon information and belief, 10% of MonaVie’s stock prior to the 2010 ESOP

Transaction. Thus, at all relevant times, Cowley was a “party in interest” as to the ESOP as

defined in ERISA § 3(14), 29 U.S.C. § 1002(14). Cowley resides in North Salt Lake, Utah.

21. At all relevant times, Mark Rawlins (“Rawlins”) was a Director of MonaVie.

Rawlins was responsible for supervising corporate governance and the long-term strategic

direction of the MonaVie’s financial performance. Rawlins has a Bachelor of Science degree in

Information Technology from Utah State University. Upon information and belief, Rawlins was

a principal shareholder of MonaVie and owned MonaVie’s stock prior to the 2010 ESOP

Transaction. Thus, at all relevant times, Rawlins was a “party in interest” as to the ESOP as

defined in ERISA § 3(14), 29 U.S.C. § 1002(14). Rawlins resides in Orem, Utah.

22. At all relevant times, Porter Hall (“P. Hall”) was a Director of MonaVie. P. Hall

was responsible for supervising corporate governance and the long-term strategic direction of the

MonaVie’s financial performance. P. Hall has a Bachelor of Science degree in Accounting from

Brigham Young University and is a Certified Public Accountant. Upon information and belief, P.

Hall was a principal shareholder of MonaVie and owned MonaVie’s stock prior to the 2010

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ESOP Transaction. Thus, at all relevant times, P. Hall was a “party in interest” as to the ESOP as

defined in ERISA § 3(14), 29 U.S.C. § 1002(14). P. Hall resides in Sandy, Utah.

23. At all relevant times, Stephen Hall (“S. Hall”) was a Special Advisor to the Board

of Directors of MonaVie. S. Hall was responsible for consulting with the Board of Directors on

supervising corporate governance and the long-term strategic direction of the MonaVie’s

financial performance. S. Hall has a Bachelor of Science degree in Marketing from Boise State

University. Upon information and belief, S. Hall was a principal shareholder of MonaVie and

owned MonaVie’s stock prior to the 2010 ESOP Transaction. Thus, at all relevant times, S. Hall

was a “party in interest” as to the ESOP as defined in ERISA § 3(14), 29 U.S.C. § 1002(14). S.

Hall resides in Park City, Utah.

24. Doe Defendants 1-10 are individual fiduciaries, principal shareholders, and board

members.

FACTUAL ALLEGATIONS

25. MonaVie is a Utah limited liability company headquartered in South Jordan,

Utah. MonaVie manufactures and distributes fruit juice beverages. MonaVie’s business model is

to distribute its product through multi-level marketing, resembling a pyramid scheme of

distributors. MonaVie was founded by D. Larsen in January 2005.

26. MonaVie products allegedly combine the juice from açai berry with the juices of

eighteen other fruits and berries, including pomegranates, grapes, pears, cranberries, and

blueberries. MonaVie products are priced at $39 for a bottle of MonaVie original juice. The

bottle contains approximately 25 ounces and has the shape of a wine bottle.

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27. MonaVie sells its products through a multi-level marketing distribution system.

MonaVie ranks its distributors and provides incentives as a distributor progresses through the

ranks in the following ascending order of prestige: Star, Bronze, Silver, Gold, Ruby, Emerald,

Diamond, Blue Diamond, Hawaiian Blue Diamond, Black Diamond, Royal Black Diamond,

Presidential Black Diamond, Imperial Black Diamond, and Crown Black Diamond. MonaVie

promotes that its juices contain antioxidants from açai or other fruits in its blends.

28. MonaVie’s 2007 Statement of Policies and Procedures (“Policies and

Procedures”) provide for income disclosure to distributors and prospective distributors, through a

developed Income Disclosure Statement (“IDS”). According to MonaVie’s policies and

procedures, the IDS was “designed to convey truthful, timely, and comprehensive information

regarding the income that MonaVie distributors earn.” Further, the MonaVie policies and

procedures required an IDS be provided to all prospective distributors, as well as any time

distributor compensation was discussed. The IDS also was required to be produced anytime an

income claim or earnings representation was made, including statements that refer to average

earnings, ranges of earnings, for example “our average Black Diamond distributor makes XXX

per month.”

29. MonaVie’s Policies and Procedures provide that distributors of MonaVie’s

products cannot use any sales or marketing aids without prior, written authorization of MonaVie.

Only those distributors who attained the ranking of Black Diamond or higher were allowed by

MonaVie to create and publish their own marketing materials, but MonaVie’s policies and

procedures required that any marketing or sales items must be reviewed by MonaVie and bear

the appropriate review seal before being disseminated or displayed.

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30. MonaVie’s Policies and Procedures also allowed distributors to utilize Internet

web pages to promote their business, however, all distributors were required to do so through

MonaVie’s official website or through replicating already approved MonaVie websites.

Distributors who reached the rank of Black Diamond or higher were allowed to develop their

own websites, but could only use text found on MonaVie’s official website and were prohibited

from supplementing their websites with text from any source other than MonaVie.

31. In 2007, the FDA issued a Warning Letter to MonaVie distributor Kevin Vokes

for misleading promotional materials claiming that MonaVie was an effective treatment for

inflammation, high cholesterol, and muscle/joint pain. Amidst serious criticism, MonaVie issued

a statement that many of its distributors may have unwittingly violated its internal advertising

practices.

32. According to MonaVie's 2007 Income Disclosure Statement, a federally required

printout of their distributor earnings, most of the sales were generated by selling MonaVie juices

to its own salesforce. More than 90 percent were considered "wholesale customers," whose

earnings are mostly discounts on sales to themselves.

33. In July 2008, MonaVie, and several of its top level distributors were sued in this

Court by Quixtar, Inc.(“Quixtar”) and Amway, Corp. (“Amway”) for unfair competition and for

raiding the sales forces of Quixtar and Amway through false and misleading statements

regarding MonaVie’s products and the health benefits associated with MonaVie’s products.

34. The lawsuit by Quixtar and Amway named top level MonaVie distributors and

particularly described false or misleading sales tactics. Two distributors, John Brigham (“Brig”)

and Lita Hart (collectively with Brig as the “Harts”), were promoted by MonaVie’s website as

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having achieved the rank of “Imperial Black Diamond Executive” and featured the Harts in at

least documentary videos. Quixtar and Amway named the Harts individually in their suit,

alleging that each had held recruitment meetings across the country where the Harts tried to

recruit and promote sales of MonaVie products through the promotion and circulation of false

and misleading statements about the products’ health benefits. According to the lawsuit, videos

of some of the Harts’ recruitment meetings were posted on internet websites, including

YouTube.com.

35. The Quixtar and Amway Complaint alleged one marketing video featured John

Brigham interviewing a purported MonaVie customer identified as Chris Sanders from Melrose

in the following exchange:

Brig: Okay, well, how long have you been on the product?

Sanders: Three weeks.

Brig: And how much you drinking?

Sanders: Three ounces in the morning and three ounces in the afternoon

Brig: Praise God. That always does my heart good. Okay, what’s happened since you

been at it?

Sanders: Dropped my blood pressure down to 135 over about 85. It was 190 over

120. Lost five pounds --

Brig: (whisper) Come on.

Sanders: And my sister-in-law just called me tonight. She has fibromyalgia. She

had one bottle.

Brig: (whisper) This is good.

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Sanders: And her neck and arm stopped hurting, and she’s been off it for two days,

and now she’s begging for another bottle.

36. According to the Quixtar and Amway Complaint, repeatedly in the Harts’ sales

meetings, potential MonaVie customers and distributors were told that MonaVie products reduce

blood pressure and relieve the symptoms of fibromyalgia despite the fact that MonaVie’s

products were not approved by the FDA for medicinal use.

37. The 2008 Quixtar and Amway Complaint also named Jason Lyons (“Lyons”) and

Carrie Palmieri (“Palmieri”) for similar marketing tactics employed by the Harts. In one sales

meeting, captured on video and available on the Internet according to the Complaint, Jason

Lyons introduced Dr. Lou Niles (“Niles”) to promote MonaVie products in the following

exchange:

Lyons: Folks, also we have a doctor in the house. You wanna give you’re your

best three minutes on MonaVie and come in here and share a little bit about it? Dr. Lou

Niles.

Niles: I am the guy you don’t want to really know because I am the doctor of “last

resort” it seems, and I am usually dealing with end-stage cancers . . . I very reluctantly

got involved in MonaVie. I only got involved in it when I realized there that something

else was going on in the combination of the juices that Dr. Carson put together. And it’s

more than just fruit juices – it’s the combination that seems to be working. So, I have

never lost a cancer patient yet . . . The reason is that MonaVie is so loaded with

antioxidants and anti-inflammatories that it immediately scrubs all the smoke that is

being produced by the body and it immediately stop and slows down oxidation. It can’t

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[prevent oxidation] at 100%, but it slows it down, and if you drink MonaVie on a regular

basis for the rest of your life and it becomes part of your menu, you will have put in your

body enough antioxidants to keep from aging at a rapid pace. What it also does is it also

allows your T-killer cells, which are your immune cells, to arrest a virus, bacteria, fungus

or loose cancer cells. That is why it is such a cool product. There is no other food on the

planet that can do this.

38. The 2008 Quixtar and Amway Complaint also alleged that Dr. Niles’ outrageous

misrepresentations of the healing effects of MonaVie products were found on Club MonaVie

Radio via the internet at www.blogtalkradio.com/live2a120/2007/12/09/MONAVIE-

FEATURING-OPTI-ACAI.

39. Yet another distributor, Dr. Farid Zarif (“Zarif”), was sued in the 2008 Quixtar

and Amway Complaint for misrepresenting that MonaVie products helped cure cancer and

rheumatoid arthritis. Dr. Zarif’s comments were captured in videos available to the public on the

internet. In those videos, Dr. Zarif recommended at least four ounces of MonaVie juice per day

and that MonaVie could help cancer patients, chemotherapy patients, and treat diseases including

Osteoporosis and Alzheimer’s.

40. The 2008 Quixtar and Amway Complaint also alleged that Dr. Zarif advertised

MonaVie products on the website www.mymonavie.com/drzarif, where Dr. Zarif falsely

represents that MonaVie products can treat inflammation, heart disease, cancer, arthritis, obesity,

diabetes, asthma, Alzheimer’s and allergies. According to the Complaint, these

misrepresentations were made freely available to the public.

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41. An inventory of many of the outrageous, bogus, and false health claims made by

top MonaVie distributors and representatives, all of which were well-documented before the

2010 ESOP Transaction was executed, is attached as Exhibit 1 hereto.

42. On or about April 30, 2008, Quixtar provided notice through certified mail to

MonaVie and its distributors, including the Harts, Lyons, Palmieri, Niles, and Zarif, of the

deceptive, misleading and false advertising practices of the MonaVie and its distributors.

Quixtar’s notice requested that MonaVie and the individual distributors cease making false

statements, to take steps to remove false statements from all forms of media, and to publish

adequate corrections within ten days.

43. Several reporters and columnists, including Tony Dokoupil of Newsweek, Jonny

Bowden of The Huffington Post, Carolyn Susman of Palm Beach Post, and Tom Harvey of Salt

Lake City Tribune, have been critical of the misleading promotional efforts and testimonials of

MonaVie distributors.

44. In August 2008, Forbes published an article by Emily Lambert and Klaus Kneale

that described MonaVie as a “pyramid atop a pyramid.” According to the article, MonaVie

recruits distributors on the lure of a sustainable entrepreneurship, selling their distributors

motivational lectures and multi-level marketing tools which purportedly helped to increase their

sales of MonaVie products. The article explained that MonaVie’s business model takes

advantaged of ambiguities in the Federal Trade Commission’s regulation of pyramid schemes

and that only 1% of distributors make any money from their involvement in MonaVie.

45. In 2008, MonaVie was named as a defendant in a false advertising and trademark

infringement suit and was in a multi-issue legal battle with Quixtar/Amway. The lawsuit by

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Quixtar, a sister company of Amway, alleged that MonaVie unfairly competed with it by making

false claims about its products and that former Amway distributors, now MonaVie distributors,

were violating non-compete agreements with Amway. In 2009, similar lawsuits were filed by

Oprah Winfrey and Dr. Mehmet Oz against MonaVie alleging false advertising.

46. In 2009, Orrin and Laurie Woodward were found liable in arbitration for

soliciting other distributors to resign from Quixtar to join MonaVie, and were ordered to pay

$12,736,659. Several other MonaVie distributors were ordered to pay over $13 million.

47. MonaVie experiences high turnover of distributors, with only a small percentage

of distributors earning enough to make a living. Most distributors become disillusioned with

MonaVie’s multi-level marketing, and the turnover rates are estimated to be above 50% per year.

In 2009, 85% of MonaVie’s active distributors received commission checks averaging $35 a

week or less. In 2009, R. Larsen acknowledged in an article with Bloomberg News that “the

company is struggling with independent distributors who promote the juice as a miracle drug.”

2010 ESOP Transaction

48. MonaVie is the Sponsor of the ESOP within the meaning of ERISA § 3(16)(B),

29 U.S.C.§ 1002(16)(B). MonaVie adopted the ESOP effective on or about January 2, 2010.

Bankers Trust, in its capacity as Trustee of the ESOP, purchased the common stock of MonaVie

from the Selling Shareholders (or entities controlled by them) in consideration for payment of

$186 million. The sale was seller-funded by a loan agreement where the ESOP financed the

buyout and owed $186,496,985 effective November 17, 2010. Presumably, no other lender was

willing or would be willing to make this loan based on the questionable value of the collateral

stock, therefore MonaVie’s employees were stuck with the financing.

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49. Prior to the sale of MonaVie stock to the ESOP, 100% of MonaVie stock was

owned by the Selling Shareholders or entities that they controlled. After the sale it is unknown

what percentage of MonaVie stock is owned by the ESOP or the Selling Shareholders or entities

that they controlled.

50. MonaVie appointed Bankers Trust as Trustee of the ESOP in 2010 for the

purpose of representing the ESOP in the proposed 2010 ESOP transaction. It is unknown

whether Bankers Trust hired anyone as its financial advisor for the proposed 2010 ESOP

Transaction.

51. The Selling Shareholders resorted to seller-financing because there were

presumably unable to arrange bank financing for the proposed. Any prospective bank lenders

would have been troubled by the fact that the proposed ESOP transaction would be 100%

leveraged. No reasonably prudent bank would have financed the transaction at the $186 million

dollar value without conducting robust due diligence on the loan, including reviewing public

information and the Amway lawsuit, to ensure that the collateral pledged, the stock, was actually

worth $186 million. Because the Selling Shareholders could not obtain, or knew they could not

obtain, bank financing for the transaction, they “financed” the transaction themselves with a 10%

note. The 2010 ESOP Transaction’s interest rate was more than double the customary rate of

4.25%, which was the then-available rate for issuance of debt with similar terms.

52. Bankers Trust either failed to conduct adequate due diligence or ignored the facts

that were readily available both publicly and within MonaVie in acting as trustee for the 2010

ESOP Transaction. For example, a review of MonaVie’s IDS over the previous years would have

demonstrated that MonaVie’s distributors were not earning as much as they had in the past.

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Because MonaVie sells its products entirely through multi-level marketing, reduced

commissions earnings for its distributors would directly correlate to reduced sales. Bankers Trust

could have readily obtained the IDS reports because even prospective distributors with no

relationship to MonaVie were purportedly provided a current copy of the IDS whenever

distributor earnings were discussed in the recruiting process.

53. Further, Bankers Trust either failed to conduct adequate due diligence regarding

the mounting criticism of MonaVie, its principals, and its top-level distributors. Even a cursory

search on the Internet would have revealed scathing articles from such widely read publications

as Forbes, The Huffington Post, Palm Beach Post, or the Salt Lake City Tribune. This skeptical

view of the benefits of MonaVie’s products was widely reported in 2008, and could have been

easily discovered by Bankers Trust in 2010.

54. Even if Bankers Trust ignored or disregard the numerous articles that describe

MonaVie’s problems, Bankers Trust due diligence review should have included a review of

pending and past litigation. Again, an Internet search in federal or state courts would have

revealed the lawsuits filed by Qixtar, Amway, Oprah Winfrey, and Dr. Mehmet Oz against

MonaVie, not to mention the numerous lawsuits against MonaVie’s distributors.

55. Despite this sea of red flags, Bankers Trust initially valued the ESOP’s stock at

$186,496,985 and agreed to a loan agreement for a period of fifteen years, on behalf of the ESOP

for this same amount on November 17, 2010. The loan bore an interest rate of ten percent (10%)

per annum, with a fair value on the note payable of $265,764,839, determined using an interest

rate of 4.25% for then available rates for the issuance of debt with similar terms, maturity dates,

and nonperformance risk.

20

56. The interest rate on the loan was exorbitant. The accountants for the ESOP

determined that a fair interest rate for similar private debt transactions was 4.25%. 2010 5500

Financial Statement Note G. Thus not only did the Bankers approve the acquisition of MonaVie

stock at vastly inflated values, it also approved a note that was more than double the going rate

and that was paid to the very same Selling Shareholders who unloaded the vastly overvalued

stock.

57. In fact, the ESOP is going deeper in the hole on the note. The Selling

Shareholders decide at their sole discretion how much to contribute to pay down the note. Not

once have the annual contributions been sufficient to service the interest on the note, let alone

pay down principal. Bankers Trust essentially blessed a transaction that was doomed to fail and

saddled

58. Within 45 days, the value of the ESOP stock plummeted and lost over $62 million

in value. As of December 31, 2010, the ESOP’s stock was valued at $122,001,163.

59. Given the precipitous decline in the value of MonaVie stock, it is implausible that

Bankers Trust reviewed or analyzed MonaVie’s earning statements, such as the IDS, which was

provided to all prospective distributors and would necessarily be made available to every

MonaVie distributor marketing the products and recruiting other distributors. Moreover, Bankers

Trust failed to prepare a due diligence review of MonaVie’s growing revenue and liability issues.

If Bankers Trust had followed up with MonaVie regarding these revenue and liability issues or

conducted sufficient due diligence, Bankers Trust would have learned that MonaVie’s revenues

were dwindling while liabilities were piling on.

21

60. Bankers Trust almost certainly did not undertake an independent investigation of

MonaVie’s dwindling revenues, legal trouble and potential liabilities prior to the proposed ESOP

transaction. Bankers Trust, inter alia, did not obtain or did not consider information about

previous or pending lawsuits, claims against the company, or internal documents, such as the

IDS which would demonstrate dwindling sales for MonaVie products as part of Bankers Trust’s

due diligence review of the proposed Transaction.

61. As of January 3, 2014, the ESOP’s stock was valued at 6 cents per share, which

values the ESOP’s stock at under $772,000, which is less than 0.05% of the original $186

million purchase price. In 2014, the ESOP’s stock value has continued to decline and is now

essentially worthless.

62. Currently, ESOP participants are unable to obtain any information concerning the

value of their shares, while MonaVie conducts an evaluation of the stock price.

63. During the period since the Transaction, Bankers Trust has not adequately sought

to remedy the overpayments caused by the acts and omissions described above.

CLASS ACTION ALLEGATIONS

64. Plaintiffs bring the First and Second Claims for Relief for violations of ERISA §§

502(a)(2) and 502(a)(3), 29 U.S.C. §§ 1132(a)(2) and 1132(a)(3), as a class action pursuant to

Fed. R. Civ. P. 23 (a) and (b), on behalf of all persons who were participants in the ESOP on

February 1, 2008, or at any time thereafter, and/or beneficiaries of ESOP participants on

February 1, 2008, or at any time thereafter (hereinafter “Plaintiff Class”). Excluded from the

Plaintiff Class are the Individual Defendants, and their immediate families; the officers and

22

directors of Defendant Bankers Trust or of any entity in which a Defendant has a controlling

interest; and legal representatives, successors, and assigns of any such excluded persons.

65. The Plaintiff Class is so numerous that joinder of all members is impracticable.

Although the exact number and identities of Class Members are unknown to Plaintiff at this time,

the ESOP’s form 5500 filing for 2013 indicates that there are 458 participants in the ESOP.

66. Questions of law and fact common to the Plaintiff Class as a whole include, but

are not limited to, the following:

i. Whether Defendant Bankers Trust engaged in a prohibited transaction

under ERISA by permitting the ESOP to purchase MonaVie stock for

more than adequate consideration;

ii. Whether Defendant Bankers Trust engaged in a prudent investigation of

the proposed purchase of MonaVie stock by the ESOP;

iii. Whether Defendant Bankers Trust breached its duty of loyalty by making

commission or bonus payments to Bankers Trust employees only if the

ESOP transaction was consummated;

iv. Whether Defendant Bankers Trust breached a fiduciary duty to ESOP

participants by causing the ESOP to purchase MonaVie stock for more

than fair market value;

v. Whether Defendant Bankers Trust breached its fiduciary duties to ESOP

participants by failing to adequately investigate and remedy the

overpayment by the ESOP in the 2010 ESOP Transaction;

23

vi. Whether the Selling Shareholders knowingly participated in Bankers Trust

violations of ERISA;

vii. Whether the Selling Shareholders were fiduciaries for the ESOP in the

course of the ESOP Transaction;

viii. Whether the Selling Shareholders are liable under ERISA for monetary

and nonmonetary equitable remedies even if they are not fiduciaries for

the ESOP;

ix. The amount of damages suffered by the ESOP and its participants as a

result of Defendant’s fiduciary violations.

67. Plaintiff’s claims are typical of those of the Plaintiff Class. For example, Plaintiff,

like other ESOP participants in the Plaintiff Class, suffered a diminution in the value of his

ESOP account because the ESOP plunged in value after purchasing MonaVie stock for more

than fair market value, and he continues to suffer such losses in the present because Defendants

have failed to correct the overpayment by the ESOP.

68. Plaintiff will fairly and adequately represent and protect the interests of the

Plaintiff Class. Plaintiff has retained counsel competent and experienced in complex class

actions, ERISA, and employee benefits litigation.

69. Class certification of Plaintiff’s Claims for Relief for violations of ERISA is

appropriate pursuant to Fed. R. Civ. P. 23(b)(1) because the prosecution of separate actions by

individual Class members would create a risk of inconsistent or varying adjudications which

would establish incompatible standards of conduct for Defendants, and/or because adjudications

24

with respect to individual Class members would as a practical matter be dispositive of the

interests of non-party Class members.

70. In addition, Class certification of Plaintiff’s Claims for Relief for violations of

ERISA is appropriate pursuant to Fed. R. Civ. P. 23(b)(2) because Defendants have acted or

refused to act on grounds generally applicable to the Class, making appropriate declaratory and

injunctive relief with respect to Plaintiff and the Class as a whole. The members of the Class are

entitled to declaratory and injunctive relief to remedy Defendants’ violations of ERISA.

71. The names and addresses of the Plaintiff Class are available from the ESOP.

Notice will be provided to all members of the Plaintiff Class to the extent required by Fed. R.

Civ. P. 23.

CLAIMS FOR RELIEF

FIRST CLAIM FOR RELIEF

Breach of Fiduciary Duty Under ERISA §§ 502(a)(2) and (a)(3),

29 U.S.C. §§ 1132(a)(2) and (a)(3)

72. Plaintiff incorporates the preceding paragraphs as though set forth herein.

73. ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1), requires, inter alia, that a plan

fiduciary discharge his or her duties with respect to a plan solely in the interest of the participants

and beneficiaries and with the care, skill, prudence, and diligence under the circumstances then

prevailing that a prudent person acting in a like capacity and familiar with such matters would

use in the conduct of an enterprise of a like character and with like aims. The fiduciary duty of

loyalty entails a duty to avoid conflicts of interest and to resolve them promptly when they occur.

A fiduciary must always administer a plan with an “eye single” to the interests of the participants

and beneficiaries, regardless of the interests of the fiduciaries themselves or the plan sponsor.

25

74. ERISA § 409, 29 U.S.C. § 1109, provides, inter alia, that any person who is a

fiduciary with respect to a plan and who breaches any of the responsibilities, obligations, or

duties imposed on fiduciaries by Title I of ERISA shall be personally liable to make good to the

plan any losses to the plan resulting from each such breach, and additionally is subject to such

other equitable or remedial relief as the court may deem appropriate, including removal of the

fiduciary.

75. ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2), permits a plan participant to bring an

action for relief under ERISA § 409.

76. ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), permits a plan participant to bring an

action to obtain appropriate equitable relief to enforce the provisions of Title I of ERISA or to

enforce the terms of a plan.

77. Defendant Bankers Trust breached its duties under ERISA § 404(a)(1), 29 U.S.C.

§ 1104(a)(1). These breaches include but are not limited to the following:

i. Bankers Trust failed to take reasonable steps to determine that it received

complete, accurate and current information necessary to value MonaVie’s

stock;

ii. Bankers Trust failed to conduct a reasonable inquiry as to whether the

individuals responsible for providing MonaVie’s financial projections: (a)

had a conflict of interest in regards to the ESOP; and (b) served as agents

or employees of persons with such conflicts;

26

iii. Bankers Trust did not adequately investigate or evaluate the

reasonableness of the financial projections considered in the proposed

Transaction;

iv. Bankers Trust did not take reasonable steps necessary to determine the

prudence of relying on MonaVie’s financial statements provided to them,

especially in light of the wealth of public information about the company

that cases doubts on the valuation;

v. Bankers Trust caused the ESOP to pay more than fair market value for

MonaVie stock;

vi. Bankers Trust failed to conduct a thorough and independent review and

adequately consider whether the 2010 purchase of MonaVie stock from

the Selling Shareholders or the was in the best interests of the ESOP

participants;

vii. Bankers Trust caused the ESOP to take on excessive debt in connection

with the 2010 ESOP Transaction;

viii. Bankers Trust failed to undertake an adequate and independent valuation

of the MonaVie stock prior to the 2010 ESOP Transaction;

ix. Bankers Trust failed to adequately consider all material facts in

negotiating the 2010 ESOP Transaction;

x. Bankers Trust failed to adequately remedy the ESOP’s overpayment for

MonaVie stock at any time between January 2010 and the present.

27

78. ERISA § 410 prohibits agreements that purport to relieve a fiduciary from

responsibility or liability for any fiduciary duty. 29 U.S.C. § 1110(a). Specifically, § 410 states

that “any provision in an agreement or instrument which purports to relieve a fiduciary from

responsibility or liability for any responsibility, obligation, or duty under this part shall be void

as against public policy.” 29 U.S.C. § 1110(a).

79. Any indemnification agreement between Bankers Trust, on the one hand, and

MonaVie or the ESOP, on the other hand, violates ERISA § 410 and is therefore null and void.

Defendant’s acts and omissions caused millions of dollars of losses to the Plan and its

participants in an amount to be proven more specifically at trial.

SECOND CLAIM FOR RELIEF

Engaging in Prohibited Transactions Forbidden by ERISA §§ 406(a)-(b),

29 U.S.C. §§ 1106(a)-(b)

80. Plaintiffs incorporate the preceding paragraphs as though set forth herein.

81. ERISA § 406(a), 29 U.S.C. § 1106(a), requires that a plan fiduciary “shall not

cause the plan to engage in a transaction, if he knows or should know that such transaction

constitutes a direct or indirect sale or exchange, or leasing of any property between the plan and

a party in interest,” or a “transfer to, or use by or for the benefit of, a party in interest, of any

assets of the plan.”

82. ERISA § 406(b), 29 U.S.C. § 1106(b), mandates that a plan fiduciary shall not

“act in any transaction involving the plan on behalf of a party (or represent a party) whose

interests are adverse to the interests of the plan or the interests of its participants,” or “deal with

the assets of the plan in his own interest or for his own account,” or “receive any consideration

28

for his own personal account from any party dealing with such plan in connection with a

transaction involving the assets of the plan.”

83. ERISA § 408(e), 29 U.S.C. § 1108(e) provides a conditional exemption from the

prohibited transaction rules for sale of employer securities to or from a plan if a sale is made for

adequate consideration. ERISA § 3(18)(B) defines adequate consideration as “the fair market

value of the asset as determined in good faith by the trustee or named fiduciary.” ERISA’s

legislative history and existing case law make clear that ERISA § 3(18)(B) requires that the price

paid must reflect the fair market value of the asset, and the fiduciary must conduct a prudent

investigation to determine the fair market value of the asset.

84. Defendant Bankers Trust engaged in a prohibited transaction in violation of

ERISA §§ 406(a)-(b), 29 U.S.C. §§ 1106(a)-(b), in the 2010 ESOP Transaction, and the

prohibited transaction did not meet the conditional exemption requirements of ERISA § 408(e),

29 U.S.C. § 1108(e). Defendant Bankers Trust failed to ensure that the ESOP paid no more than

fair market value for the MonaVie stock purchased by the ESOP from the Selling Shareholders,

all parties in interest to the ESOP, in 2010. Specifically, the ESOP paid more than fair market

value for shares sold by the Selling Shareholders.

85. Defendant Bankers Trust engaged in a prohibited transaction in violation of

ERISA §§ 406(a)-(b), 29 U.S.C. §§ 1106(a)-(b), by causing the ESOP to purchase MonaVie

stock for greater than adequate consideration in 2010; causing the ESOP to borrow funds for the

2010 ESOP Transaction, even though the purchase price was inflated; and causing the ESOP to

take on excessive debt in connection with the 2010 ESOP Transaction.

29

86. Specifically, the ESOP paid more than fair market value for shares sold by the

Selling Shareholders, and Bankers Trust failed to conduct an independent and prudent

investigation into the fair market price before entering into the stock purchase agreement with

MonaVie and the Selling Shareholders.

87. ERISA § 409, 29 U.S.C. § 1109, provides, inter alia, that any person who is a

fiduciary with respect to a plan and who breaches any of the responsibilities, obligations, or

duties imposed on fiduciaries by Title I of ERISA shall be personally liable to make good to the

plan any losses to the plan resulting from each such breach, and additionally is subject to such

other equitable or remedial relief as the court may deem appropriate, including removal of the

fiduciary.

88. ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2), permits a plan participant to bring a

suit for relief under ERISA § 409.

89. ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), permits a plan participant to bring a

suit to obtain appropriate equitable relief to enforce the provisions of Title I of ERISA or to

enforce the terms of a plan.

90. Defendant Bankers Trust has caused millions of dollars of losses to the ESOP by

the prohibited transactions in an amount to be proven more specifically at trial.

THIRD CLAIM FOR RELIEF

Knowing Participation in Violations of ERISA

91. Plaintiffs incorporate the preceding paragraphs as though set forth herein.

92. ERISA §502(a)(3) permits a claim against parties-in-interest for knowing

participation in a fiduciary’s violations of ERISA.

30

93. The Individual Defendants knew of and participated in Defendant Bankers Trust’s

violations of ERISA, which are detailed in Plaintiff’s First and Second Claims for Relief.

94. Specifically, each of the Individual Defendants knew before and at the time of the

2010 ESOP Transaction that MonaVie was in dire financial condition, as detailed above. Each of

the Individual Defendants knew that: (1) sales of MonaVie products were declining; (2)

MonaVie had been widely criticized in various media outlets; (3) several of its top distributors

had multi-million dollar judgments entered against them; (4) several of its top distributors and

representatives had engaged in routine and repeated false and misleading health claims about

MonaVie products; (5) MonaVie was mired in several costly and bitter lawsuits; and (6) virtually

all of its sales were to wholesale distributors who left the distribution chain rapidly, rather than to

retail consumers.

95. Despite their knowledge that the ESOP was essentially insolvent and worthless on

day one, the Individual Defendants hired Bankers Trust to represent the ESOP as Trustee and

knowingly participated in Bankers Trust’s violations of ERISA.

96. The Selling Shareholders reaped millions from the ESOP Transaction.

PRAYER FOR RELIEF

Wherefore, Plaintiffs pray for judgment against Defendants and for the following relief:

As to the First Claim for Relief:

A. Certify this action as a class action pursuant to Fed. R. Civ. P. 23, certify the

named Plaintiff as class representative and his counsel as class counsel;

B. Declare that Defendant Bankers Trust breached its fiduciary duties to the Plaintiff

Class;

31

C. Enjoin Defendant Bankers Trust from further violations of its fiduciary

responsibilities, obligations, and duties;

D. Issue a preliminary and permanent injunction removing Bankers Trust as

fiduciary and Trustee of the ESOP and barring Defendant Bankers Trust from

serving as fiduciary or Trustee of the ESOP in the future, and appointing a new

independent fiduciary as Trustee of the ESOP;

E. Order that Defendant Bankers Trust make good to the ESOP and/or to any

successor trust(s) the losses resulting from its breaches and restoring any profits it

has made through use of assets of the ESOP;

F. Order that Defendant Bankers Trust provide other appropriate equitable relief to

the ESOP, including but not limited to surcharge, providing an accounting for

profits, and imposing a constructive trust and/or equitable lien on any funds

wrongfully held by Defendant Bankers Trust;

G. Declare that any indemnification agreement between the Defendant Bankers Trust

and MonaVie or the ESOP violates ERISA § 410, 29 U.S.C. § 1110, and is

therefore null and void;

H. Award Plaintiff reasonable attorneys’ fees and costs of suit incurred herein

pursuant to ERISA § 502(g), 29 U.S.C. § 1132(g), and/or for the benefit obtained

for the common fund;

I. Order Defendant Bankers Trust to disgorge any fees it received in conjunction

with the 2010 ESOP Transaction as well as earnings and profits thereon;

J. Order Defendant Bankers Trust to pay prejudgment interest; and

32

K. Award such other and further relief as the Court deems equitable and just.

As to the Second Claim for Relief:



B. Declare that Defendant Bankers Trust has breached its fiduciary responsibilities to

the Plaintiff Class;

C. Enjoin Defendant Bankers Trust from further prohibited transactions and

violations of its fiduciary responsibilities, obligations and duties;

D. Issue a preliminary and permanent injunction removing Defendant Bankers Trust

as fiduciary and Trustee of the ESOP and barring it from serving as fiduciary or

Trustee of the ESOP in the future, and appointing a new independent fiduciary as

Trustee;

E. Declare that Defendant Bankers Trust engaged in a prohibited transaction in

violation of ERISA § 406(a)-(b), 29 U.S.C. § 1106(a)-(b), by causing the ESOP to

purchase MonaVie stock for more than adequate consideration;

F. Order that Defendant Bankers Trust make good to the ESOP and/or to any

successor trust(s) the losses resulting from its breaches and restore any profits it

has made through use of assets of the ESOP;

G. Order that Defendant Bankers Trust provide other appropriate equitable relief to



wrongfully held by Bankers Trust;

33

H. Order Defendant Bankers Trust to disgorge any fees it received in conjunction

with the 2010 ESOP Transaction, as well as an earnings and profits thereon;

I. Order Defendant Bankers Trust to pay prejudgment interest;

J. Award Plaintiff reasonable attorneys’ fees and costs of suit incurred herein


for the common fund; and

K. Award such other and further relief as the Court deems equitable and just.

As to the Third Claim for Relief:



B. Declare that the Individual Defendants knowingly participated in Defendant

Bankers Trust violations of ERISA;

C. Enjoin the Individual Defendants from taking any actions with respect to the

ESOP and consistent with any additional orders entered by the Court;

D. Order that the Individual Defendants disgorge to the ESOP and/or to any

successor trust(s) the all monies received by them in connection with the ESOP

Transaction and any profits they made through the use of such monies;

E. Order that the Individual Defendants provide other appropriate equitable relief to



wrongfully held by the Individual Defendants;

34

F. Declare that any indemnification agreement between the Defendants and

MonaVie or the ESOP violates ERISA § 410, 29 U.S.C. § 1110, and is therefore

null and void;

G. Award Plaintiff reasonable attorneys’ fees and costs of suit incurred herein


for the common fund;

H. Order the Individual Defendants to pay prejudgment interest; and

I. Award such other and further relief as the Court deems equitable and just.

JURY DEMAND

Wherefore, Plaintiffs demand a trial by jury on all issues raised by the Complaint and so

triable.

DATED this 18th

day of December, 2014.

Respectfully submitted,


James E. Magleby (7247)

[email protected]

Jennifer Fraser Parrish (11207)

[email protected]


170 South Main Street, Suite 850

Salt Lake City, Utah 84101

Telephone: 801.359.9000

Facsimile: 801.359.9011



35

OF COUNSEL Gregory Y. Porter, pro hac vice pending

[email protected]

James L. Kauffman, pro hac vice pending

[email protected]

BAILEY & GLASSER LLP

910 17th

Street NW, Suite 800

Washington, DC 20006

Attorneys for Plaintiffs and the Putative Class



Exhibit 1

Appendix B

Stmt No.

Statement Source of Statement

1 BrigHart: “Here’s what I know. I had me some back pain, and I ain’t got no back pain no more. I had me a little bit of cancer, ain’t got no cancer no more. Now, I’m not saying this product did it, but I will tell you this: I didn’t do anything different other than drinking this product. Now, I drank a lot of it.”

CP‐ 2765 New Distributor Orientation (HART0001) at 3:55‐4:03.

2 Patricia Atcheson: Twenty years ago, I was diagnosed with degenerative arthritis…. The Açai Active Blend is the first product EVER that has totally amazed me…before I had finished the first bottle my pain was totally gone in those joints that had been so bad. –Patricia Atcheson, Virginia

CP‐2753 Why Do I need Monavie Daily at XANGO0205.218208.

CP‐2754, Super 19 Fruits at XANGO0205.230577.

3 Susan Allen: I am a 56 year old former nurse who has suffered from serious, chronic low back pain and sciatica since I was 29. I was on morphine injections (30 mgs, 5 a day) and oxycontin (40 mgs, 3 a day). I was introduced to the Açai Blend only recently and have had amazing results. I noticed within a week that my pain level had reduced by 80%, and I was using hardly any morphine… –Susan Allen, Melbourne Australia



4 My wrists, elbows and knees seemed worn out from injuries and years of hard work. Then a fork lift rammed by back and 3 months of misery began. Within 18 hours and just 3 oz. of this miraculous elixir, I awoke feeling like a new woman. I’m back to my old self again. –A.C., Iowa



5 Scott Olsen: I underwent major surgery to repair a completely crushed pelvis… When the Açai Blend became available in January 2005, I stopped all my medications and replaced them with the Açai Active Blend… before 3 weeks had gone by all of my pain had vanished. –Scott Olsen, Utah



Page 1 of 15

Case 2:08-cv-00204-BSJ Document 1398-4 Filed 06/04/10 Page 2 of 16

Appendix B

Stmt No.


6 MonaVie cures or aids in all of the following based on its ingredient profile: cancer, risk of stroke, heart disease, memory loss, anti‐aging, anti‐bacterial/viral, anti‐inflammatory, arterial Flexibility, brain health, skin health, eye Health, cardiovascular health, gastric health, inhibiting prostate cancer, DNA damage, eye problems, controlling cholesterol, reducing triglycerides in the blood, age‐related macular degeneration, binding/removing colon toxins, preventing colon and prostate Cancer, blood sugar control, protecting DNA from free‐radicals, inhibiting skin cancer, sexual health, chronic fatigue, headaches, high blood pressure, arthritis, diabetes, vision problems, circulatory Problems, insomnia, sexual dysfunction, skin/complexion Issues, dehydration, arteriosclerosis, allergenic support, prevent blood clots, heart disease, energy/stamina, mental focus, Alzheimer’s, digestion, sexual function, immune system support, anti‐aging support, amenorrhea, angina, bladder stones, blood disorders, bruising, capillary strength, chronic fatigue, collagen formation, coughs, diarrhea, digestive discomfort, fighting inflammation, glaucoma, gout, hemorrhoids, restoring/promoting collagen, heart attacks, rheumatoid arthritis, ulcers.

CP‐2753 Why Do I need Monavie Daily. CP‐2754, Super 19 Fruits.

7 I have suffered from Pernicious Anemia for almost 12 years. I am the poster child for inflammation. A while back I had an accident where I herniated two discs in my back and dislocated my right hip. For 25 weeks I could not function without intense pain. I was simply at the end of my rope when a friend gave me a bottle of MonaVie™ Active™. Within an hour, I noticed my hands were not as swollen. Over the first two days I pretty much finished the bottle and, amazingly, was pain and medication free! Praise God! ‐ Emmy Lilholt, Wellington, Florida


8 BrigHart: [example of what to say to prospects] “People are drinking it, feeling it, sharing it, seeing results. Back pain, neck pain, psoriasis, da da da, when you hear, diabetes, that type thing. People are seeing amazing results....”

CP‐2766 New Distr. Orientation (HART0002) at 1:04:59‐1:05:11

9 BrigHart: [what he said to prospect over phone] “I says Larry, you wouldn’t believe this thing. People are seeing results. Back pain, neck pain, arthritis, diabetes even some cancer. You wouldn’t believe what’s going on. I’m making no claims, I’m just telling him what’s going on.”

CP‐2766 New Distr. Orientation (HART0002) at 41:06‐41:17.

Page 2 of 15


Appendix B

Stmt No.


10 C. Sanders (to B. Hart): Chris Sanders from Melrose.B. Hart: Okay, well, how long have you been on the product?C. Sanders: Three weeks.B. Hart: And, how much you drinking? C. Sanders: Three ounces in the morning and three ounces in the afternoon.B. Hart: Praise God. That always does my heart good. The more you drink, the better I feel. Okay, what’s happened since you been on it?C. Sanders: Dropped my blood pressure down to 135 over about 85. It was 190 over 120. Lost five pounds –B. Hart: (whisper) Come on.C. Sanders: And my sister‐in‐law just called me tonight. She has fibromyalgia. She had one bottle.B. Hart: (whisper) This is good.C. Sanders: And her neck and arm was stopped hurting, and she’s been off it for two days, and now she’s begging for another bottle.

CP‐2767, AX 00034, QMVCD 0067: CD Video‐‐Brig Hart Solicited Testimonials at 1:09‐42.

11 C. Bagley (to B. Hart): I’m Cindy Bagley and, oh, I’m from Plano, Texas. And about, oh, eight months ago, I was diagnosed with rheumatoid arthritis. . . . And, I was taking pain medication as well as other drugs two times a day. I was taking anti‐inflammatory. And, my friend Lillian introduced me to this and within two days, I cut my pain medication in half. And at the end of the week, I stopped taking it completely and I haven't had it since. And my swelling has gone down much more than even when I was taking the anti‐inflammatory which was fantastic, but what was even better is the rheumatoid arthritis made me very tired and I was crashing about one o’clock. And now, I’m able to go the way I used to be ‘til eight or nine o’clock at night. And, the other thing is in my first month I lost six pounds and I’m very consistent in my weight. So, that was just another added benefit.

CP‐2767, AX 00034, QMVCD 0067: CD Video‐‐Brig Hart Solicited Testimonials at 1:49‐2:45.CP‐0192, AX 391, MONO0760 B.Hart website.

Page 3 of 15


Appendix B

Stmt No.


12 J. Purvis (to B. Hart): My name is Joanna Purvis and I’m from Claxton, Georgia, and I started with MonaVie March the fifteenth of this year. And, since that time, I have recovered from two strokes that really put me on bed rest. B. Hart: Really?J. Purvis: And, I had no energy, no ‐‐ my body wasn’t functioning properly. It affect the right side of my body. I had the Bell Palsy symptoms. I couldn’t even hold something without dropping it in my hand.B. Hart: Come on.J. Purvis: And, also – B. Hart: You’re too young for all this.J. Purvis: I turned 49 last Monday.B. Hart: Well, my God. What are you doing with strokes? What you do to live ‐‐ did you inherit that, or what? I mean ‐‐ J. Purvis: No. It was just a lot of stress. I used to be a judge.(General laughter)B. Hart: I’m sorry for anything I – J. Purvis: And, I also within that same period of time, they, the doctor found cancer cells, spots on my left ‐‐ my right ovary and my right breast. And, Brenda had came to my house, did the first meeting in Claxton and she told me, she said, “Don’t have the surgery yet. Drink the MonaVie – B. Hart: (whisper) My God. You told her that?J. Purvis: Give it some time. Three‐and‐a‐half weeks later, the doctor’s office called. Wanted me to go in and set up the time for the surgery. I told them I felt so much better. That there were so many things my body could do that it wasn’t allowing me to do before. And, so I went back and had some tests done. There is no cancer cells anywhere in my body.

CP‐2767, AX 00034, QMVCD 0067: CD Video‐‐Brig Hart Solicited Testimonials at 6:11‐7:28.

13 “I drank a bottle in two days . . . Within 48 hours, when I woke up, my back pain was literally gone. I didn't feel it. I got up and went straight to the chiropractor. I got up that morning, on a Wednesday morning, and I had no back pain. Zero…” “You know what happened Friday morning two days off of the product? God unhealed me. My back pain was back, about 50% of it… I slugged down about 4‐6 ounces, I literally watched my back pain dissipate.”

CP‐2774, AX 0040, QMVCD 00140, R3Global Team Support Video from 11‐16‐2007 at 1:19:00‐1:21:44 and 1:23:17‐39.

14 Brig Hart: I got two kids that are kinda ADD, you wouldn’t believe what this product has helped them settle down and all that. I’m not saying it’s the product you can’t do that, all’s I can tell you is it’s the only thing different we were doing.

CP‐2774, QMVCD0140, CD dated 11/16/2007‐(Video) Brig Hart Presentation ‐ Nebraska 11‐16‐2007 at 1:34:45‐55.

15 Brig Hart: My mom is seventy‐three, now seventy – she’ll be seventy‐six this year. My mom saw the product. Had osteoarthritis so bad her hands were crippled back. She saw the product. One bottle of product she opened her hands up by pressing them with no pain. Two bottles she opened them up on her own. My mom is now, she’ll finish ninety days in Maui, Hawaii. Swimming every day, walking the beach and all that . She was ready to give upon life three years ago. But she has done nothing more than drink this product.

CP‐2776, QMVCD0142: CD dated 2/15/2008 (Video) R3 Global LLC ‐ Brig Hart Presentation‐ Open WebCast ‐ 02‐15‐2008 at 12:24‐52.

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16 Steve Merritt: The second thing you want to know about the acai berry is that it is the number one anti‐inflammatory fruit you could possibly take uh, and inflammation is the cause of most pain and disease. So, uh, who doesn’t, who, anybody know someone who might have a back pain or knee pain that might want to feel better? Ok? A headache or two? Ah, think about it. Take a product, instead of taking uh, uh, an ibuprofen or, or, or a, a pharmaceutical drug you can take an all‐natural product.

CP‐2778, QMVCD0144 CD dated 3/12/2008 (Video) R3 Global LLC ‐ Brig Hart Presentation ‐ Open WebCast ‐ 03‐12‐2008 at 25:09‐39.

17 Charlie Kalb: I noticed those things pretty quick. I noticed my, you know, joints and things that I had ‐‐ how many of you know when you get a little older, especially when you’ve been involved in sports . . . so, I had some little aches and pains, and uh, started drinking the juice, and I noticed gosh, I used to crawl up the steps and I can actually walk up them.

CP‐2780, AX00046, QMVCD0148, CD dated 5/14/2008 (Video) Brig Hart Presentation ‐ 05‐14‐2008 at 13:59‐14:22.

18 Brig Hart: I went home and I drank the product. And what happened in less than forty‐eight hours, my back pain was gone. . . . I had been going to a chiropractor for eight and a half months. . . . I was wearing two diodes with a battery pack that shocked me when the pain got too bad. Because if you ever have a sciatic nerve that is fully pinched, which I had, the pain is unbearable. . . . I come home, drink this, get up on a Wednesday . . . I had no back pain. . . . I realized in about an hour and a half, now, I’m telling you, I felt something in my body, and I felt my pain dissipate . . . I said baby, you’re not going to believe this, but I said drank this, I drank this again, my pain went away. I felt it go away.

CP‐2781, QMVCD0151: CD dated 7/1/2008 MonaVie Presentation ‐ 07‐01‐2008, Part1 at 8:27‐36, 8:52‐56, 9:05‐15, 9:44‐57, 17:59‐18:07, 18:22‐30.

19 Brig: They came back home after hearing Dr. Schauss signs behind the product. Hearing motivational talks from the folks that understood why this business was doing what it was doing. The product was so backed up by people that gave testimony beyond anything that I’ve ever seen. Amputees that have no phantom pain; people whose cholesterol levels were balanced; children that were ADD were outward calm. People that were having symptoms that all of a sudden natural products doing something more for. The inflammation deal that Dr. Carson talks about. All of a sudden we are connected and realizing that now alls we have to do is plug‐in.

CP‐2796, QMVCD 125, CD dated 7/7/2005 (Audio) MonaVie Showcase Utterbach 2005‐7‐7 Brig at 25:51‐26:28.

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20 Brig: I did not let Dallin know that I was going in for lower back cortisone shots. I had blew my back out, I’m now 52 years young and been in the industry, been semi‐retired for 7 years, hadn't used my back a whole lot so I was out doing some work on my property, blew my back out had to go to the doctor every day. I could not move, I was in tremendous pain. I had a Monday‐‐ Last Monday I had an appointment with a specialist to inject my back with cortisone because the pain was so great I could not stand on my feet for a few hours at a time, the pain brought tears to my eyes, a grown man crying. My wife called me a sissy but the cortisone shots would at least alleviate the pain and guess what I got the Active and guess what I took the Active 2 days straight, I was – like I said that Monday and like I said that was a Saturday, took, by Sunday I rolled out of bed and said hey, look 1 of 2 things just happened. God has either fully healed me or else I’m so numb and I can’t feel it that I’m in big trouble, I probably hurt myself again. I did not suspect or even realize it was the Active that had done something. Now watch, I have been taking it now for the 2 weeks. I went in for my appointment, I did not get the cortisone shot, I’m still on the Active. To test this theory I got off of it for 2 days I was traveling my back started hurting again, got right back home got on it, I’m not taking the shot, just thought I’d let you know that. Great job team, Dr. Carson, Dallin, you have done a wonderful job with this product. The belief of the product certainly helps us to take this message and the method in which we’re going to do it I am fully excited about because of the simplicity of the new generation binary.

CP‐2902, QMVCD 100, Special Showcase with Darrell Utterbach ‐ 2005‐2‐28 Brig at 48:46 ‐ 50:27.

21 Ron Prudhomme: He said, ‘It stops pain,’ he went into this pain thing, I said, ‘I’ll take it.’ Because I was in pain that day . . . this is not a lie, this is not a, you know, I’m not claiming, I’m not making claims about the product, you have to understand this, but reality is, in twelve days, ah one bottle, this pain I’d had for four years was gone.

CP‐2867, QMVCD00145: Video of MonaVie Presentation ‐ Open WebCast date 03/17/2008 at 3:12‐18, 30‐46.

22 Brenda Prudhomme: And I know we can’t make claims, but I had a lot of inflammation in my right knee. Two weeks my inflammation, my throbbing knee, my pain subsided, and that was gone. I’ve had migraines for twenty years; um, the product put my body back in balance. After twenty years – after five weeks on the product my migraines had disappeared.

CP‐2867, QMVCD00145: Video of MonaVie Presentation ‐ Open WebCast date 03/17/2008 at 8:07‐27.

23 Hart: I drank a bottle in two days….In 48 hours my back pain was fully gone. CP‐2773, Oct. 26, 2007, West Palm Beach, FL Live Webcast on Brighart.com at approx. 14:56‐15:05.

24 Hart: That bottle I drank, my kids drank two bottles…and I gave my mother a bottle who has osteoarthritis real bad, well guess what, so I was out of product. So Thursday was a good day. Friday, I woke up, interestingly enough, my back pain was about 50% back.

CP‐2773, Oct. 26, 2007, West Palm Beach, FL Live Webcast on Brighart.com at approx. 17:30‐17:45.

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25 Hart: I was on autoship and it came in Friday. Not really thinking about the product so much other than I missed it. My body missed it and I knew it did. So I uncorked it, I wasn't even cold and slugged down about 3‐6 ounces. ... I sat down after drinking that bottle and felt my back pain go away after about an hour and a half and I sat down, Lita walked by and said “what are you doing’” “I says baby, you ain’t going to believe this, I started drinking this product and my back pain went away again. She’s says “Really? So she says, "What are you thinking about?” I said, "I’m thinking about how rich we’re gonna be."

CP‐2773, Oct. 26, 2007, West Palm Beach, FL Live Webcast on Brighart.com at approx. 18:54‐19:03; 20:51‐ 21:12.

26 Hart: My mom [who, remember, has osteoarthritis] saw results after 2 bottles opened up her hands for the first time. CP‐2773, Oct. 26, 2007, West Palm Beach, FL, Webcast on Brighart.com at approx. 21:41‐46.

27 Hart: I had given a bottle to my mom who has osteoarthritis…She drank a bottle in a week…In the next bottle, she opened her hands up for the first time in 9 years. She said she didn’t have any pain. She’s off all medication.

CP‐2774, Nov. 16, 2007 Omaha, NE, Webcast on Brighart.com at approx. 1:25:00‐1:27:06.

28 Hart: I gave it [the MonaVie product] to my daughter who had her wisdom teeth out, that the inflammation went almost immediately away.


29 Hart: I gave [MonaVie product] as housewarming gifts to 7 of my neighbors, … You know, after a week every one of them, it was within about 2 to 3 days all of them ended up at my house asking me questions about what was in this stuff… All 7 of them came and they were telling me things, that I’m telling you, I can’t even hardly believe, you know, we don’t make any claims about this product…we can’t….and by the way this is not FDA approved…They were telling me their eyes were better, they were growing hair, they were saying all kinds of weird things, man my pain is gone, one of them was getting cortisone shots, knees, ankles, legs, toes…. She drank the next bottle, she ran over to my house after the second one and she told me she didn’t get any shots, and she had been getting them for years. She 'aint had any for 2 ½ years.


30 Hart: Within 48 hours of me finding this product I had no back pain left. Now, I allowed to tell you that. Why? Because that’s what happened. 48 of hours after I got off the product because I ran out, my back pain was back about 50%.

CP‐2776, Feb. 15, 2008 Open Opportunity Meeting, Webcast on Brighart.com at approx. 6:58‐7:09.

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31 Hart: Seven out of seven, the first seven… I gave it as a housewarming gift. They all saw results, and they all within in a week came to my house without me asking…asking what was in the product, I said ‘It’s juice. My God, its fruit juice’…they started telling me things that I’m not allowed to repeat. Because if we start making claims that it cures anything we get in deep, deep trouble. The FTC can come and say ‘you’re making claims now we’re going to call it a drug.” No, it’s a fruit….I’m telling you, it sounded, if you’ve never been to a Benny Hinn healing crusade or Oral Roberts miracle service you do not know what I’m about to talk about. But they started telling me things and I was even going ‘You have got to be kidding me.’ You aren’t getting cortisone shots anymore, you threw your glasses away because you can see, you have hair growing where hair don’t grow…


32 Hart: After one bottle, [Hart’s mother, who has osteoarthritis] and she pressed her hands open and said ‘this is incredible, I want another bottle of that’… She drank the second bottle, opened her hands up on her own.


33 Hart: How many of you saw some results with a bottle? I did. Now, the reason why I knew it wasn’t psychosomatic or placebo is because I ran out of the product and my back pain came back 2 days after I was off the product…so I got the product, drank it, and I felt my pain dissipate.


34 Hart: For me, it was understanding that this product did something. When my mom opened up her hands, when my daughter with a root canal after just one day on the product after she had her wisdom teeth pulled out and her jaw was like a chipmunk, you’ve seen how that happens, in one day on the product she was back talking…it’s the anti‐inflammatory.


35 Hart: It’s got more anthocyanins than red wine…there are 30x more anthocyanins in this product than in red wine. CP‐2779, May 6, 2008 Open Opportunity Meeting, Webcast on Brighart.com at approx. 8:35‐8:55.

36 Hart: Here I drank the stuff, and my back pain dissipated…and that was on Wednesday…on Friday, guess what? God unhealed me. You know what happened? I was out of product…when it [MonaVie] came in on Friday a little after noon I uncorked the thing, I slugged it down…I don’t know, 4‐6 oz…I drank this product on that Friday…and in an hour and a half’s time I literally felt my back pain and that throbbing pain in my leg, my sciatic nerve, go away.

CP‐2779, May 6, 2008 Open Opportunity Meeting, Webcast on Brighart.com at approx. 20:07‐23:34.

37 Hart: But I saw such results. I says [sic], you know, at 73 her osteoarthritis was hurting so bad, her hands were‐ Steve, you remember my mom she all shriveled up… After the first bottle, one week, one bottle…you know what she did, she took her hands and pressed them open…she wanted another bottle…she opened her hands up on her own…at 76 she is more active than she was at 73…she is on no medication whatsoever.

CP‐2779, May 6, 2008 Open Opportunity Meeting, Webcast on Brighart.com at approx. 1:21:28‐1:24:52.

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38 Hart: So I drink the product, my pain goes away. It moves from my head to my heart, I'm in the business. I listen to the 7 people that tell me they saw results, my mom’s going nuts, osteoarthritis, opens her hands up after 2 bottles, she’s been on no pain medication. She, as a matter of fact, my mom's spending $500‐600 a month on medications, now all she buys is this.

CP‐2781, July 1, 2008 Open Opportunity Meeting, Webcast on Brighart.com at approx. 26:37‐ 26:58.

39 Hart: He just got the bottle last week and he’s flipped out because he’s got no pain in his legs and he’s says “I’ve taken every drug known to mankind” and he says what that does is messes me up. I drank this bottle. I quit taking the drug and I have no pain in my legs.

CP‐2951, QMVCD 0233A‐B, Nov. 2, 2009, Irvine, CA Live Webcast on Brighart.com at 9:15‐27.

40 Hart: We canned the motto Drink it, Feel it, which I did, and 48 hours I had no pain in my back and all that. In 3.5 months I had miraculous things happen, which I’m not allowed to share with you, but it happened… deal with it! And then Share It.

CP‐2951, QMVCD 0233A‐B, Nov. 2, 2009, Irvine, CA Live Webcast on Brighart.com at approx. 19:31‐9:48

41 Hart: Instead of eating pomegranates and prunes and all that stuff because that’s how I found the product. They said I had to eat that stuff to build my immune system to fight off this disease and I said I wasn’t gonna do it and it was very expensive. But $2‐4 dollars a day. Are you kidding me? I’ll tell you what’s expensive: Heart bypass. Ok don’t do this‐ we’ll see you in the hospitals, you know, a could hundred thousand dollars. Skin diseases. Arthritis. All kinds of‐ oh my gosh. And people are popping pills‐ they don’t even know what’s in them.

CP‐2951, QMVCD 0233A‐B, Nov. 2, 2009, Irvine, CA Live Webcast on Brighart.com at approx. 27:52‐28:22.

42 Hart: The green bottle is for all those folks that have aches and pains. Green. Active. Red came out, pulse, that’s with the plant sterols and all that. You drink enough of that each day and exercise on a regular basis and you can reduce cholesterol.

CP‐2951, QMVCD 0233A‐B, Nov. 2, 2009, Irvine, CA Live Webcast on Brighart.com at approx. 46:39‐ 46:52.

43 Hart: When I found it and saw results in 48 hours of drinking the product: my aches and pains dissipated. And that’s even something we can claim because the um the glucosamine and ester‐five fatty acids on top of those 19 fruits added to it.

CP‐2950 (Part I), Nov. 18, 2009, Jacksonville, FL Live Webcast on Brighart.com at approx. 6:36‐6:52.

44 Hart: Liquid glucosamine. One of the reasons in 48 hours drinking it my back pain dissipated. Because it was liquid. Your body absorbs it quicker. It goes right to the problem.


45 Hart: Drank a bottle. 48 hours my back pain is gone. I call back out there [to Utah] and talked to Dr. Carson…. I ran out of the product, my back pain came back, got it back in. That's when MonaVie went from my head to my heart. I drank it even when it was warm. …. Now, when I drank it after my back pain came, and I didn’t realize.. I felt my back pain dissipate. That’s when MonaVie got my heart.


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Stmt No.


46 Hart: As a matter of fact, this is an alarming statistic, but a true one: 10 years ago, 1 out of 75 people had cancer, some form of cancer.… any kind... 4 years ago, 1 out of 4, 3 years ago 1 out of 3. This is the year they are claiming 1 out of every 2 human beings, planet earth, will have some form of cancer. …. Knowing how God built by body, if I put the right stuff in [holds up MV bottle], my body can fight it off.

CP‐2950 (Part I), Nov. 18, 2009, Jacksonville, FL Live Webcast on Brighart.com at approx. 14:43‐ 15:48.

47 Julie Reed (High Level Distributor, introduced by Hart): His mom has health problems and so she was kinda our guinea pig. And I said, ‘lets give it to your mom’, and so, she didn’t die. She's fine.... We knew that she had health problems and so George just said ‘mom, I want you to drink this, don’t call us for a week, just drink this, drink a bottle a day if you have to, and literally that’s what she did. And I’ll never forget her calling us up and she was almost in tears, she was just like, ‘George, I don’t know what’s in this juice, but I’m serious, it’s like, Placa, WD‐40 for our joints, that’s the only way we can describe it, but the glucosamine, the liquid glucosamine, got right to her system. And it was literally like WD‐40 for her joints. … and she’s like ‘I think I’m gonna get off my medications.’

CP‐2950 (Part I), Nov. 18, 2009, Jacksonville, FL Live Webcast on Brighart.com at approx. 30:47‐ 31:38.

48 Hart: If the active product, which is good for lubricating your joints, and for aches and pains, everyone needs that. The pulse. Who doesn’t need cholesterol being lowed? Getting your heart in shape, your blood in shape? So, we've got an ounce of each of that in there.


49 Bob Kitchens: “Started on MonaVie in November. My daughter and son‐in‐law Chris and Stacy in the back started us on it for my shoulder. I had problems with my shoulder. About here, in excruciating pain, now it’s like I can scratch the middle of my back without hurting. And, my aunt had crippling arthritis. In her case, and talked to her about 2 weeks after she got it and said its great to get out of bed, put my feet on the floor without pain.”

CP‐2767, Hart's Solicited Health Claims (AX 00034/QMVCD 0067) at 0:15‐0:49.

50 Dennis Watts: “Within a week, my blood sugar had came down from 180 un‐, it was unstable, and it came down to about 125. So, now I’m only on 3 medications instead of 12.”Hart: “And you know what we want, we want an update in the next couple weeks as to what’s gonna happen with that too. You watch it close. Because here’s the deal, you’re gonna find out something, this is going to be the least expensive thing you ever did.”


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51 Jim Ellston: “I have MS, and I don’t hurt like I used to. And I thank Denny Watson. Cause I went fishing and he came to me and said I got something, would you try it? And I said, yeah, I don’t mind it. If it’s gonna help me, help me. And, he gave me a bottle of it, and I drank it. But I didn’t, I wasn’t drinking no 2 ounces, I just turned it up.”Hart: “Up your dosage, baby.”“And I drank it.”Hart: “The whole thing?”“No, not the whole, not right then, in about two weeks, whatever. I went to feeling a whole lot better. And I don’t, like I said I don’t hurt like I used to, I don’t cramp up, and the doctor tell me the blood pressure ‐‐ ”Hart: “You haven’t done anything different?”Ellston: “Nothing different.”Hart: “Your blood pressure’s better?”Ellston: “They stopped with the blood pressure; I don’t take it no more.”Hart: “You don’t take any blood pressure medicine?”Ellston: “I don’t take blood pressure no more”Hart: “I don’t like that stuff anyway, baby”Ellston: And I don’t, I haven’t took a shot in two months.Hart: Come on!Ellston: For MS.Hart: Come on!

CP‐2767, Hart's Solicited Health Claims (AX 00034/QMVCD 0067) at 3:28‐4:27

52 Rita Kitchens: “I’m the band director at the middle school in Crawsville, and last December I could not march the Christmas parade with my band. I had to grab hold of the running boards on the truck. So here goes my band leaving me and I’m hobbling along with my cane and crying every night.”Hart: “Honestly, you walked with a cane?”Kitchens: “Yes I did. As a matter of fact, 5 days from today I’m scheduled to go have a total knee replacement . . . I had all the cortisone shots, I had the rooster cone shots, I did the $2000 worth of shots, nothing helped. My doctor said nothing’s going to help. Stacey called and said, ‘Mom, I want you to try this, I want you to be a guinea pig.’ And I said ‘well gee, thanks’ you know. And we tried it. And, I’m gonna tell you, I’m going to be honest with you, I did not have a 2 week result. The first meeting I went to with MonaVie was here in Knoxville and everybody was saying, ‘oh, 2 weeks’ and I think Ron was really a little perturbed and saying ‘what’s wrong with you you weird woman.’ It took about 6 weeks and one day I’m walking down the steps at my house and I’m hollered: ‘Honey, come here look, honey, honey!’ Like to scared him to death. I didn’t have to scoot down the steps on my bottom, I could walk down the steps like you can. And today, I took my band on a 3 mile hike in the woods and I left every one of them behind.”


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53 Pam Hendricks: “I’ve been In MonaVie since February, and I was diagnosed with diabetes a year ago. And I had high cholesterol. And the last time I had all my blood work done everything was normal.”

Hart: “Oh my…how long did you drink the product and how much?”

Hendricks: “Just two ounces a day, and after 3 weeks my knees didn’t hurt anymore, so you know, I could tell it was helping.”

Hart: “Are you sleeping better, your knees are better, all that?”Hendricks: “Yes, yes.”


54 Catherine Borrowski: “My iron level was 6 tenths of a point above where they would transfuse me. So, nothing. I have had no, I can’t wait to go get my blood test to see what it is. As soon as she made me try it, I was up and about and moving and I couldn’t believe it.”

Hart: “How long?” "How long?"

Borrowski: “An hour”

Hart: “Now look, some people a month and a half, some an hour. I’m just gonna tell you something folks, your body is going to react different, ain’t no two of you alike. All that you’ve been putting in this body all these years. You know, 30‐40 years of riotous living ain’t going to be cured in an ounce. But some people aren’t at such crucial points. Everyone’s at different levels in this thing. That's why‐ you drink it until you see a difference, and an hour works. ”


55 Tony Miller: “After about a week, I felt kinda strange. And, I’ve been having trouble sleeping for the last couple of years, and I woke up and said ‘something’s wrong with me today.’ And, after a little bit I figured out I was rested and I wasn’t hurting no more.”Hart: “I was starting to ask ‘what’s going on?’ OK. You know, we tend to learn to deal with pain. And living’ that way. That’s what we do. We pain manage ourselves.”*****Miller: “My elbows don’t hurt, my hands don’t swell up”


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56 Kay Denton: “I have what is called the keyloid scars. And, that is the main thing that I am so happy about the product . . . I never dreamed that it would do anything for that, because I was thinking about the things in the bulletin that it was supposed to help, but those scars are beginning to fade out. I have to wear 2 camisoles to keep them from showing through my clothes, so I’m real happy about that. I think over a period of time they will go away completely.”Hart: “You know, they call it age‐defying beauty. And anybody with skin conditions you ought to give them this product. Anything, from eczema, and even, my daughter had a horrible, you know, just my type skin, she would break out. She hadn’t had a breakout since she’s been on this product. None. And, you know, all the medicines they put on their faces, and you know, teenage daughters, and all that kind of stuff, no breakouts, and all that. Now I know that’s strange, but my other next door neighbor, eczema has, her eczema is gone, I mean literally gone. And the thing is, she’s never seen, her skin is like a baby’s, it’s beautiful. She can’t believe it. So, your skin’s getting…”Other Lady: “The scars started clearing up on her in less than 2 weeks.”Hart: “In 2 weeks. And how much do you drink?”Denton: “3 ounces twice a day.”Hart: “3 ounces twice a day. Up your dosage and watch them go away.”


57 Web Lodge: “I’ve been taking about 3 or 4 months. We’re underneath you, right? The thing that I’ve seen is I have a lot of bursitis in my shoulders, and I couldn’t exercise or do pushups anymore.”Hart: “For how long?”Lodge: “Oh, probably a year, year and a half. I had shoulder surgery about 4 years ago, you know, the rotator cuff, just ripped everything apart. And now, I’m back up to doing 35‐43 pushups a night without the pain in the morning. Um, doing a lot more –Hart: “When did you see the difference? When did you see the pain was not like it was and you could have the movement that you have now?”Lodge: “You know, because I was with this man for a while and he gave me some encouragement. I didn’t see immediate results for 2 or 3 weeks, but I knew if I just kept up with it I would. And so, just on that faith, I just kept doing it. And so, it was probably a month or six weeks before I felt well enough to do that. But, I’m feeling better every day.”


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Stmt No.


58 Hart: “How long you been taking the product?”Kenneth Allen: “Two months”Hart: “How much you drinking?”Allen: “Two ounces a day.”Hart: “Two ounces a day. What’s happened since you been on it?”Allen: “I had prostate problems. I couldn’t urinate. And, I had to get up every 2 hours and go to the bathroom at night. I don’t do that. And I’m urinating. And, I had skin cancers on and they’re dried up. And, cholesterol, I don’t take that no more.Hart: “Listen. Now listen. We are not claiming that this is doing this, but, is this the only thing you’re doing different?”Allen: “The only thing I’m doing different.”


59 Hart: “How long you been on the product?”Robert Johnson: “I’ve been on it for one month.”Hart: “How much you drinking?”Johnson: “I take 2 ounces a day.”Hart: “What’s happened?”Johnson: “I’ve been taking Zantac for two and a half years, one a day, just so I can tolerate every day. I have not took a Zantac in 3 weeks. After one week of using.”

CP‐2767, Hart's Solicited Health Claims (AX 00034/QMVCD 0067) at 15:07‐ 15:25.

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Stmt No.


60 Hart: “How long you been on the product?”Tony Glad: “3 weeks now.”Hart: “3 weeks, and what you drinking?”Glad: “2‐4 ounces a day.”Hart: “And what’s happened?”Glad: “Mine’s just a bad back. A lot of back pain. And I woke up the 3rd day pain free.”Hart: “3rd day, that was the same thing that happened to me. I couldn’t hardly believe it. Have you tested it? Have you gotten off the product or are you still on it? To let the pain come back?”Glad: “You know, not really. I don’t want it to come back.”Hart: “Not really. Don’t want it to come back? And that’s what I try – a lot of people say ‘I’m not sure it’s the product, but’ and I say, ‘well, I can show you how to do it, just give me all of your product.’ And you know what happens? Pain’ll come back. You know why, it doesn’t heal you immediately, it’s doing what it needs to do. It’s just like food, you got to keep nourishing your body. So, you have little to no back pain?”Glad: “None, none, none.”Hart: “None whatsoever. You excited about that?”Glad: “I’m very excited about that.”Hart: “Did you look at this for the health benefits or the business benefits?”Glad: “I was skeptical, so I was just going in to see what it would do to me first”Hart: “Ok, so it did, and now you’re on the business side?”Glad: “Yes.”


61 Brig Hart: You know, for about a buck an ounce, to do what it does for you, for better health physically, financially, emotionally and spiritually. But, to here to get your servings of 13 fruits in 2 to 4 ounces a day of this stuff so that you can sleep better, have more energy, more focus, aches and pains dissipated, the Brazilian Viagra‐ that's worth it all anyways, if you're married that is.

CP‐2940, QMVCD 0220, Jeff Boyer Webcast with Hart 11‐17 at 8:38‐9:03.

62 Brig Hart: I saw results within 48 hours. … Wednesday I woke up. No back pain. Eight and a half months sciatic nerve, fully [inaudible], going to therapy every day to relieve that pain. … I'm gonna tell you what's gonna happen for a lot of you. Within and hour and a half's time, I felt the pain in my back that had come back dissipate. It went right away.

CP‐2942, QMVCD 0222, IrvineWebcast 11‐10‐08 at 16:18‐19:43.

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Appendix C

Stmt No.


1 Lyons: Folks, also we have a doctor in the house. You wanna give them your best three minutes on MonaVie and come in here and share a little bit about it? Dr. Lou Niles.Dr. Lou Niles: Wow. Alright. Well, I gotta stand near you here. I am the guy you don't want to really know because I am the doctor of "last resort" it seems, and I am usually dealing with end‐stage cancers. And, as you know, sugar is a food of cancer and so it's counter‐indicative to give juice to cancer patients. So, I very reluctantly got involved in MonaVie. I only got involved in it when I realized there was something else going on in the combination of the juices that Dr. Carson put together. And it's more than just fruit juices ‐ it's the combination that seems to be working. So, I have never lost a cancer patient yet ‐ and so I threw this juice into the formula in the "protocol", and it has had a tremendous effect on everyone that I am involved with, and everybody that is involved with cancer is becoming a distributor by an "act of last resort" sort of, but they are all embracing the juice and it has really helped them through the healing process.There is a big story behind this ‐ we don't have enough time tonight to go into it, but if you ever want to get a hold of me and talk about it, I can go through the specifics of why MonaVie works. It is a pretty amazing story. That's about it for three minutes.

CP‐2791 / AX 764, Niles video, Part 1 QMVCD 0173 at 0:03‐1:33.

2 Lyons: "You know there is nothing better than personal testimonials and that’s kind of what I’ve seen. You know I’ve been involved now for about 11 months and it’s just absolutely incredible the testimonials I know about and everything that’s going on with this. It's getting a lot of exposure. And what makes Mona Vie so potent and so powerful, because a lot of people will say oh there’s Acai out there you can buy in powder form, pill form and liquid form and you can‐‐you can go to GNC and a lot of these stores and you will find it. But what makes Monavie so special is first of all, it's a scientific blend, developed by a bunch of scientists and doctors. Three years in development stages the Company has been around now for a little over 2 years and its getting phenomenal ratings and everything that’s going on but its helping people with arthritis, diabetes, cholesterol, high blood pressure, aches and pains, energy levels, sleeping, just numerous ailments out there and what it is doing for people and it’s just an awesome product over all and what’s going on there."

CP‐2792 / AX‐0766, Lyons Video QMVCD 0211 at 0:58‐1:44.

3 Jason Lyons: "So, I mean it's just ‐ it's crazy what's going on. Next level, Blue Diamond Executive ‐ we had hit that level in 4‐1/2 months ‐ kind of got stuck there for a while. $2,500 a week or $500,000 a year. We just went to the next level here recently so we were stuck at blue from 4‐1/2 months to 10 months. It wasn't a bad place to be stuck because we make anywhere, at that time, we were making in between $7 to $12,000 per week. Again, when I tell you the money I'm not bragging to you, I'm just letting you know. It almost doesn't seem real, but it is. So, just the last few months, we went to Black Diamond, making anywhere from $14 to $16,000 per week ‐ that's what we are now, Black Diamonds in the business, the cool thing is ‐ last Friday night, delivered a brand new Mercedes to our house. Anybody that hits a level of Black Diamond ‐ you will get a brand new Mercedes ‐ that's part of the same. So that's pretty awesome."


Page 1 of 5


Appendix C

Stmt No.


4 Jason Lyons: "But what I want a ask, is there any personal testimonies ‐ anyone that's been on the product for a week, two weeks, a month, six weeks, that has any testimonies we can share?[Someone responds]: Hey‐Jason Lyons: How do you do?Jim: I'm Jim. I'm in Sun Shine (inaudible) and about a month ago, Alissa invited me ‐ well, I was doing some work here and she had me...Jason Lyons: Hey ‐ I'm not trying to get too close to you but you got the mike over her though. [LAUGHTER]Jim: She was ‐ we were talking about different juices that I make every day when I go home just to stay healthy ‐ and she asked me if I ever had heard of Mona Vie and I said no. So she invited me to come in that evening, I came by and I signed up with Louie. Any ways, I started drinking the juice just because it was ‐ it's supposed to be good for me ‐ I wasn't worried about the money part of it. About 2 1/2 weeks into it I noticed that my back wasn't bothering any more ‐ because I had a very bad back for 25 years, I've a lower lumbar joint that is deteriorated, 2 and 1/2 weeks I started noticing that just wasn't there anymore, and after 3 weeks there was just like totally gone, and I'm like blown away. Totally blown away.Jason Lyons: That's awesome. I mean you hear stuff like that ‐ oh you're not done?Jim: No, because I've been drinking it for four weeks now, and it's just like no more back pain, no more doctors, $4,000 ...Jason Lyons: So you'll drink it regardless of if you make money or not. Jim: I will yeah. I mean it just works.


5 Jared: "I'm Jared ‐ I started drinking Mona Vie about 3 weeks ago and a friend of mine got me into drinking the product ‐ Up until then, I was taking pharmaceuticals to sleep, I was taking Ambien and I started drinking this and I used to wake up at 11 in the morning, get my day going. For some reason now I'm drinking that so I'm waking up at 7:30 or 8 o'clock in the morning, sleeping all night long, not taking anything to sleep other than the shot of Mona Vie before I go to sleep and I feel that I have more energy than I've had in a long time, so it just seems to be working for me. And I'm a happy customer."

CP‐2792 / AX‐0766, Lyons Video QMVCD 0211 at 30:20‐54.

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Appendix C

Stmt No.


6 Todd: "Yeah, I can tell you, Hi my name is Todd . . . Uh Douglas Lettrell a dear friend of mine, who Louie actually put in the business started to call me about two months ago. He called me every day to tell me about juice. I said, I've got no interest in juice, my life's too busy; thank you very much. He kept calling and calling. After about three weeks, he went out and he got a new cell phone. (The God's honest truth.) He called me up and I looked at the number and didn't know. And I answered the phone, and he goes "I got ya." And I go, oh listen, here's the $39 bucks, here's my credit card, just send the freakin' crap to my house‐‐I'll start drinking. Well I drank it for 5 days and I didn't sleep a wink. I'd been up over a hundred hours and I said, I don't think I can drink this juice any more. On the sixth day I slept like I was in a coma and I got up and I had this great R.E.M. sleep and was like, oh, this is alright, I feel pretty good. I drank it on the eighth day, I noticed that I had injured my left elbow about 5 years ago lifting weights and I had torn a tendon off and I've had tremendous pain and I even looked at surgery and alternatives. I end up buying a prosthetic cast that I wore for six months and that helped to ease a lot of the pain but I was still, had always had it ‐ after the eighth day, that quit entirely. The tenth day‐‐I'd had a foot surgery 2 years ago and that even quit bothering me so you know I was hooked at that point. I was a skeptic about the business and, you know, now I'm in it basically four weeks. Uh, have about 30 people in it. I've made about $600 in my first two weeks, so you know, I'm hoping to get my goal, to get to $1,000 a week in a relatively short period of time. But, again, I can't say anything but positive things about it."


7 Jason Lyons: "They’re like Jason you really got to take a look at this. So, I said guys I’m out of here. Bob Robinson goes Jason I’m making 20,000 a week. I said come on in, let’s talk about the juice. So 100% I got involved because of the money, not that it’s a bad thing, but I got in it for the money. I heard $20,000, you know, a week that will get somebody’s attention cause Bob’s been an electrician his whole life. I think his best year in life Bob’s made 69 or 70,000 you know working as an electrician. Not a bad salary but you know he’s always been looking for something else. So I’m thinking 20,000, well the first thing I thought, you don’t have to tell me 20,000 to try and get me involved, I thought he was lying to be honest with you. He had to come in and show me on the computer, when he showed me that I said sign me up."


8 Jason Lyons: "So, make a long story short, got my Mom on the juice. She got arthritis, suffers from it in her hands pretty bad. Every morning she wakes up her hands are stiff and everything else. Well, 3 days after her being on this product I get a phone call. I’m up in Ocowa she’s like Jason I don’t know what’s in this stuff, so the first thing you think is: oh my Gosh, she must have broke out in a rash or something. I didn’t even let her finish. She goes, "This is absolutely incredible." I said, "What’s up?" She goes, "I suffer with arthritis everyday when I wake up in the morning." She goes, "I woke up this morning and my hands don’t hurt no more."


Page 3 of 5


Appendix C

Stmt No.


9 Jason Lyons: "I’m like really, you know you’ve heard this but don’t really believe it until you get something that hits home. So, come to find out, and what most people don’t realize: inflammation is the stem of most problems with our body and most diseases. Inflammation in your heart is heart disease. Inflammation of the lungs is asthma. Inflammation in your joints is arthritis. So ,when you put an anti‐inflammatory‐‐and this has such high anti‐inflammatories in your body‐‐your body tends to react. Now, it affects everybody differently. There’s all kinds of personal testimonies out there of what’s going on, but it tended – it helped her big time right away. Now, some people aren’t going to feel a response that fast. If you’re a healthy person you might not feel a response at all but it’s a wellness product. You’re putting a good thing into your body so it's helping you regardless, but people with ailments tend to feel a lot of results very quick."


10 Jason Lyons: "But the next best thing to happen ,and why I know this product's real...the most incredible testimony...one of my best friends Brian Thayer, Brian and Jackie Thayer‐‐Blue Diamonds in the business, rolling with it. One of my best friends; not only has it changed his financial status, but also the health of their daughter‐‐big time. He has 4 little daughters: Keely, Kylie, Karly and Kayla. Well Keely at 3 years old was diagnosed as a Type 1 Diabetic, which is terrible. That’s the worst diabetes you can have. It usually doesn’t happen until later in life, but Type 1 diabetic means your pancreas produces no insulin at all. She got this at 3 years old. Well she’s been going through this, she’s 5 now, when we got involved, been taking 4 to 5 insulin shots daily, her sugar levels (now I’m not a doctor, I’m a landscaper, so I don’t know the exact numbers) but they were running in the high 4 hundreds, 450, 500, taking shots constantly and everything else. So, she’s used to taking 4 to 5 shots a day. For a little kid, that’s terrible, you hate to see it. Well, 10 months ago, 11 months ago when we got in we got her on the product. There’s active and there’s original. The only difference is the Active has added glucosamine and celadrine, which is good for your joints, muscles, kind of lubes you up and that's what makes you feel good. Um, pretty much everybody drinks the Active, except children 12 and under and pregnant or nursing women. So we got her on the original. Jackie, her mother, she goes to St. Mark's Catholic School over there. Every day the teacher would test her with a little tester, call Jackie up and say hey you know this is her numbers. Jackie would have to go in and give her her daily shot and everything else. Well after 4 or so weeks of being on this product, teacher calls up and says hey, her numbers are down. Jackie’s like, wow that’s odd, you know, cause she didn’t really realize what’s happening. Well this went on for a few days. Jackie would go in and sure enough her numbers were fine, she didn’t have to give her her shot. To make a long story short, the juice helped her. Her numbers went from in the high 4’s down to 150 to 200’s. The best thing about this, she went from 4 to 5 insulin shots daily to 2. It’s pretty much held stable ever since. We’ve been involved 11 months now, so to see a little girl go from 4 to 5 shots a day down to 2, that’s all worth it in itself."


Page 4 of 5


Appendix C

Stmt No.


11 Lyons: You know there is nothing better than personal testimonials and that’s kind of what I’ve seen. You know I’ve been involved now for about 11 months and it’s just absolutely incredible the testimonials I know about and everything that’s going on with this and what makes Mona Vie so potent and so powerful, because a lot of people will say oh there’s Acai out there you can buy in powder form, pill form and liquid form and you can. . . . Three years in development stages the Company has been around now for a little over 2 years and its getting phenomal ratings and everything that’s going on but its helping people with arthritis, diabetes, cholesterol, high blood pressure, aches and pains, energy levels, sleeping, just numerous ailments out there and what it is doing for people and it’s just an awesome product over all and what’s going on there.*** We've personally in 11 months sponsored 46 people. It may sound like a lot to you, it's really not. When you get some testimonials and everything and see what's going on with this product, it's pretty easy to do.

CP‐2792 Lyons Video (AX766) at 0:59‐1:17, 1:26‐44, 23:03‐12

Page 5 of 5


bailey glasser llp magleby greenwood p.c....knowledge, the investigation of his counsel, and upon...

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