Organo Gold & Holton Buggs Ordered to Pay $3.4 Million in AmeriSciences Case
A jury verdict stripped Organo Gold and Holton Buggs of any remaining doubt about their legal liability. On May 15, 2018, jurors found them liable for raiding a defunct nutritional supplement company and walking away with its most valuable assets. Now, with their appeal denied, they face a $3.4 million judgment.
The case traces back to 2012, when AmeriSciences was hemorrhaging money. The company, founded in 2005 by Barry Cocheu and chairman Louis Gallardo, had $1.2 million in assets against $4.1 million in liabilities by the end of 2011. Survival as an MLM operation looked impossible.
That's when Cocheu and Gallardo turned to Organo Gold and Holton Buggs, a Gallardo neighbor with ties to the more profitable company. After a trip together in January 2012, Buggs sketched out a deal in an email: Cocheu and Gallardo would drop AmeriSciences, promote Organo instead, and hand over the distributor database. In return, each would pocket $50,000 monthly for nine months.
The catch? Buggs never formalized the deal on paper.
On April 10, 2012, Cocheu and Gallardo gathered ten of AmeriSciences' top distributors and announced the company was discontinuing its MLM model and ditching commission payments. They were leaving to join Organo. Four days later, without AmeriSciences receiving a dime in payment, Cocheu ordered the IT director to transfer the entire distributor list to Organo Gold. The company's Warehouse Management Software went with it.
AmeriSciences limped through the summer before filing for Chapter 11 bankruptcy in October 2012. The Chapter 11 converted to Chapter 7 liquidation, and a new bankruptcy trustee, Rodney Tow, took over.
In November 2014, Tow sued 20 defendants—later narrowed to Organo Gold, Buggs, and Cocheu by the time the case hit trial in May 2018. Tow accused them of misappropriating trade secrets, tortious interference with contracts, breaching fiduciary duties, unjust enrichment, and fraudulent transfer. His theory was straightforward: these men had conspired to kill AmeriSciences by stripping its assets.
The jury agreed. The May 16 judgment held all three jointly liable for $3.4 million.
Despite the loss, Organo Gold and Buggs pushed ahead with an appeal. That avenue closed when the Fifth Circuit denied it, leaving the judgment intact and the $3.4 million demand still on the table.
🤖 Quick Answer
What was the outcome of the Organo Gold and Holton Buggs case against AmeriSciences?A jury found Organo Gold and Holton Buggs liable for unlawfully acquiring AmeriSciences' assets in May 2018. Their appeal was subsequently denied, resulting in a $3.4 million judgment against them for their involvement in the transaction involving the defunct nutritional supplement company.
Why was AmeriSciences in financial distress in 2012?
AmeriSciences, founded in 2005, faced severe financial difficulties with liabilities of $4.1 million against only $1.2 million in assets by end of 2011. Operating as an MLM became unsustainable, forcing founders Barry Cocheu and Louis Gallardo to seek external solutions for the struggling company.
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