20/20 to Air Mannatech Expose on Friday

(copied from my buddy Len Clements Website FYI)

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

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

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

Commentary:

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

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

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

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

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