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| Type | Public (NASDAQ: MTEX) |
|---|---|
| Founded | Coppell, Texas, USA |
| Headquarters | 600 S. Royal Lane, Suite 200 Coppell, Texas |
| Key people | Sam Caster, Founder Steve Fenstermacher, Co-CEO Dr. Robert Sinnott, Co-CEO |
| Industry | Wellness Biotech |
| Website | Mannatech.com |
Mannatech, Incorporated, is a multinational firm engaged in multi-level marketing, research, development, and distribution of glyconutrients, the company's name for blends of sugars. Mannatech was founded in 1994 by Samuel L. Caster and is headquartered in Coppell, Texas.[1] It operates in the United States, Canada, Australia, the United Kingdom, Japan, New Zealand, Republic of Korea, Taiwan, Denmark, Germany, South Africa, Singapore, Sweden, Norway, Austria, and the Netherlands. The company's stock is traded on the NASDAQ exchange. Mannatech employs over 550 people and sells its products through approximately 570,000 independent Sales Associates. [2] In 2006, Forbes magazine named Mannatech the #5 company on its annual list of the "200 Best Small Companies" [3] and in 2007 Mannatech was ranked 12th in BusinessWeek magazine’s 2007 list of America's "Top 100 Hot Growth Small Companies". [4] Mannatech has experienced periods of public scrutiny regarding the efficacy of its products, including a class-action lawsuit in 2005 [5] and an attorney general investigation in 2007 [6], but by 2009 the company settled these issues and restructured its compliance department.[7] Mannatech now offers six-month money-back guarantees on all of its products. [8]
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As of December 31, 2006, the company offered 24 nutritional products, three topical products, seven different skin care products, and a weight-management system consisting of four different products. Mannatech is most widely known for Ambrotose, "a glyconutritional dietary supplement ingredient consisting of a blend of monosaccharides, or sugar molecules," its lead product.[9] In an SEC filing, the company stated that its products "are formulated with predominately naturally-occurring, plant-derived, carbohydrate-based ingredients that are designed to use nutrients working through normal physiology to help achieve and maintain optimal health and wellness, rather than developing synthetic, carbohydrate-based products, as other companies are doing."[citation needed]
Mannatech's products have not been evaluated for efficacy in treating any illness or curing any disease. The company stated in its fiscal year 2006 SEC filing that it contracted with several firms for the purpose of product testing.[9] In December 2006, Mannatech renewed its 2002 research agreement, previously renewed in 2004, with St George's Hospital Medical School, in London, United Kingdom to aid in the funding of a "three-year clinical trial related to dosing and optimization study" on Ambrotose."[9] St George's Hospital & Medical School employs Dr John Axford, a member of Mannatech's board of directors since 2002,[10] who serves as principal investigator in the trial. In addition to benefiting from Mannatech clinical trial funding, Dr Axford has received financial and stock compensation from Mannatech for consulting and for his duties as a board member and spokesman for the corporation.[9][11] According to the Wall Street Journal, Mannatech will be publishing some of these results, although the results will not be subject to the peer review process.[12]
A study sponsored by Mannatech in 2007 verified and published in the International Journal of Probiotics and Prebiotics suggested that a subset of human colonic bacteria is capable of utilizing complex plant polysaccharides like those found in Ambrotose.[12] The study was conducted by Mannatech's Chief Science Officer (and now Co-CEO) Dr. Robert Sinnott.
In April 2009, a company-sponsored study published in Perceptual & Motor Skills claimed that a single one-tablespoon serving of Ambrotose complex can significantly improve visual discrimination and working memory.[13] Drs. Atiya N. Stancil and Leslie H. Hicks, both of Howard University in Washington, D.C., published the randomized, double‐blind, placebo‐controlled study investigating the impact of Ambrotose complex on the brain function of 62 healthy young adults.
Independent research states that the body cannot digest Ambrotose, as it lacks the enzymes needed. [12] Prominent glycobiologist Dr Ronald Schnarr of Johns Hopkins told 20/20 in a June 1, 2007 interview, "All of the sugar building blocks that we need in our body are made from the most common foods we eat."[14] Dr Hudson Freeze, another leading glycobiologist[14] said this about glyconutrients: "There are authentic, scientific studies that have looked at people drinking these kinds of materials, and it doesn't really do anything except increase flatulence."[14]
The company has been known for its literature, websites and multilevel marketing with claims of scientific links to cellular glycobiology long disputed by the relevant individual Nobel prize winners. [15] On September 9, 2005 a class-action lawsuit was filed against Mannatech for alleged violations of the Securities Exchange Act. The plaintiff class accused Mannatech of violating the act by "issuing a series of material misrepresentations"; specifically: failing to control its sales associates and allowing them to make false claims concerning the efficacy of Mannatech products. The plaintiffs consisted of the purchasers of Mannatech stock during the period August 10, 2004 through July 30, 2007. [5] On March 20, 2008, Mannatech settled the class-action lawsuit by agreeing to pay $11.25 million to the plaintiff class. As part of the settlement, Mannatech admitted no wrongdoing. [16]
Mannatech came under investigation by the Texas Attorney General on October 27, 2006 for alleged violations of that state's Deceptive Trade Practices Act. [17] In response to this criticism, Mannatech’s founder and chief executive officer at the time, Samuel L. Caster, offered his view: "We walk the fine line of always stating our case appropriately and always training our people: We're not into the treatment, cure or mitigation of disease. We're into the improvement of quality of life. Now, who can benefit from good nutrition? Sick people, well people, everybody. Everybody benefits from good nutrition." [17] On July 5, 2007, Texas Attorney General Greg Abbott formally charged Mannatech, Inc., Sam Caster, and several related entities with operating an illegal marketing scheme in violation of state law. A press release stated, "Today’s enforcement action stems from a large-scale investigation by state authorities, who examined Mannatech’s dubious claims about the health benefits of its products." [6] In response to the civil complaint, Mannatech expanded its compliance department and began to provide periodic reports to the Attorney General's office to ensure that the marketing efforts of its affiliate network adhere to appropriate guidelines. [8]
Mannatech settled the civil complaint on February 26, 2009 by agreeing to pay $4 million in restitution to clients who purchased products and $2 million to the state to cover its costs in the case. In addition, Sam Caster agreed to pay a $1 million civil penalty and steer clear of any type of leadership position or employment relationship with Mannatech for five years. [18] When discussing the settlement at a news conference, Abbot stated, "Bottom line, this is a warning to the general public: Be wary of phony claims of magic cure-all pills or false hope in a bottle. You could be duped into purchasing something that has no real effect and no real value." [19] Mannatech did not admit wrongdoing; settling was easier than debating Abbott, according to then-CEO Wayne Badovinus. "If they do it again, we will ensure they get put out of business," Abbott said. [20] One year later, current Mannatech CEO Robert Sinnot reflected on the ramifications of the legal action, saying, "The civil action related mainly to some actions by our salesforce. We were embarrassed and also financially impacted by the attorney general suit. We learned from that chapter and it is closed. We’ve reached a settlement and we’ve paid the fees associated with it. We’ve done everything in our power to correct that and make sure we’re in compliance in the future."[7]
A 20/20 undercover investigation that aired June 1, 2007 on ABC Television showed Mannatech's sales associates teaching sales recruits how to target Mannatech products to patients with specific illnesses in a manner that purportedly does not violate U.S. federal law, including U.S. Food and Drug Administration regulations, by avoiding direct claims that the products cure any particular diseases.[14] Mannatech CEO Sam Caster was interviewed for the show and told 20/20 that Mannatech makes no specific health claims about its products. “I don’t think dietary supplements treat, cure, mitigate anything. It is not meant to substitute a doctor’s oversight, but it plays an important role in the whole health equation.” [21]
Publicity over the lawsuits began to damage the company's balance sheets and stock performance. After profits of $32 million in 2006 and $6.6 million in 2007, Mannatech reported a $12.6 million loss in 2008 and a $17.3 million loss in 2009. [22]
The company had already announced in August 2007 that Mannatech founder Sam Caster was stepping down as CEO of Mannatech, [23] to be replaced by Mr. Wayne Badovinus as the new chief executive. Several corporate initiates were undertaken, but after 17 months on the job Badovinus resigned in December 2009. [24] His efforts had not met the performance expectations of the board of directors. [25] Another member of the board resigned shortly after. [26]
Samuel L. Caster, founder and former Chairman of the Board of Directors of Mannatech, Incorporated, was an entrepreneur in other lines of business and was part of other organizations prior to Mannatech.
Sam Caster is an alumni and early cast member of Up With People, a motivational organization and musical performance troupe. The Up With People International Alumni Association has recognized Caster as an alumni who exhibits leadership, intercultural understanding, and humanitarian outreach. [27]
Sam Caster's first major business venture, Eagle Shield, was an insulation product that claimed to utilize new technology developed by NASA and could reduce heating and cooling costs by up to 40%. The Attorney General of Texas concluded that the product's technology long predated NASA and did not reduce consumers' bills in the amounts advertised. [28]
Caster's second product, the "Electrocat," was sold as a pest control device. The Electrocat reportedly emitted pulsed vibrations that repelled rats, crickets, snakes, ticks, spiders, mosquitoes, and scorpions. However, in January 1991, the Attorney General of Texas investigated the product and found that the Electrocat emitted no vibrations whatsoever. The Attorney General declared, "The device is a hoax, and stands on the same scientific footing as a perpetual motion machine." [28]
Caster then started Mannatech in 1994, coinciding with Congress' passage of the Dietary Supplement Health and Education Act of 1994, which made profitable marketing of a wider spectrum of dietary supplements a possibility. His new company quickly became a success. Caster's wife Linda later wrote and released a book titled Undeniable Destiny, in which she refers to Mannatech as a "Joseph company," based on Joseph in the Bible, who, as she noted in her book, had a divinely inspired destiny to fulfill.
On August 22, 2007, Sam Caster resigned as CEO of Mannatech.[23] The Wall Street Journal reported: "Mr. Caster suggested his own resignation so he could focus on company marketing, said (Mannatech board member) Mr. (Larry A.) Jobe. Mr. Jobe said the board wasn't displeased with Mr. Caster, but that the lawsuits gave members 'a lot of concern.'" Paperwork filed with the SEC indicate dissagreements between Caster and the board of directors were the reason for Caster's resignation. [29]
On October 19, 2007, it was reported that Mannatech Inc. had fired Grant Thornton LLP as its auditor after the accounting firm demanded that Mannatech remove Sam Caster from all responsibilities.[30]
Sam Caster is now barred by the Attorney General of Texas from serving as a director, officer, or employee of Mannatech until 2014. Caster is also barred from taking a role in any other multilevel marketing programs. Despite this, then-CEO Wayne Badovinus stated Caster will work as a consultant answering directly to him. [19]
Mannatech founded the MannaRelief non-profit organization in 1999. The organization has assisted in providing dietary supplements to over 83,000 orphans in over 80 countries.[31] In March 2006 the organization and Mannatech founder Sam Caster were given the James E. MacLennan Everyday Hero Award from the Up With People International Alumni Association. [27]
   | 200 Best Small Companies - #5 Mannatech - Forbes.com |
| | About Mannatech - Mannatech: Enriching quality of life |
 | Form 10Q SEC Public Filing, August 8, 2004 - MANNATECH INC - MTEX Quarterly Report (10-Q) PART I - FINANCIAL INFORMATION |
| | ''Texas Attorney General probing Mannatech.'' - Texas Attorney General probing Mannatech - MarketWatch |
| | Cure for Your Disease or Empty Promise? - Cure for Your Disease or Empty Promise? - ABC News |
| | Dr John Axford BSc, MD, FRCP Profile - Corporate Executives & Directors Search Directory |
| | Health Claims by Sales Force Boost Supplement Firm - Health Claims by Sales Force Boost Supplement Firm - WSJ.com |
| | Caster Resigns as CEO of Mannatech - WSJ.com - Caster Resigns as CEO of Mannatech - WSJ.com |
| | Mannatech Fires Its Auditor Amid Dispute Over Founder - Mannatech Fires Its Auditor Amid Dispute Over Founder - WSJ.com |
| | Texas Attorney General probing Mannatech. - Pyramid Scheme Alert |
| | Mannatech, Inc. - Mannatech: Enriching quality of life |
| | Stock quote for MTEX - MTEX: Summary for Mannatech, Incorporated - Yahoo! Finance |
| | MLM Watch's page of information on alleged Mannatech misbehavior - Index to Information about Mannatech and Ambrotose |
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