The trouble with MLM companies offering shares is that such undertakings are rarely done within the required legal framework.

If a new class-action lawsuit is to be believed, Visalus’ Founders Equity Incentive Plan is a typical example of why 
any
 internal MLM company share offering should be approached with nothing less than extreme caution.

The class-action lawsuit alleges Visalus and its management engaged in securities violations, pertaining to the offering of shares to affiliates.

Visalus’ founders Nick Sarnicola, Blake Mallen, Ryan Blair and Nick’s wife Ashley Sarnicola, along with Todd Georgen (Visalus COO) and affiliates Gary Reynold and Vincent Owens are named defendants.

Visalus itself is described in the lawsuit as a “failed pyramid scheme”.

Since approximately 2005 the company’s only real business was to conduct a massive recruiting scheme for promoters.

The company persuaded people that they could make money selling weight loss shakes to overweight people and pushed $500 or $1,000 boxes of samples and magazines on them to use to start their new business.

The new distributor soon learned that very few people wanted to buy shakes from him for $50 or $60 a bag, and that he had to keep on selling or buy $125 worth of shakes a month to get a commission.

Or, he could act on the company’s real “business opportunity” and start to recruit one, two, or preferably more people under him and have them order a $500 or $1,000 kit and convince them to recruit more people under them to buy a $500 or $1,000 kit.

For that the company would pay real money.

BehindMLM
reviewed Visalus
back in 2012 and one of the potential issues identified was retail customer retention.

Another lawsuit recently filed against the company by a top earner also claimed
retail marketing of Visalus’ products was not viable
.

2012 is identified as the “high water mark” for Visalus sales, after which they “plummeted”.

As with all pyramid schemes based on endless downline replication, the “business opportunity” for distributors to sell weight loss shakes to each other becomes saturated as distributors trip over each other in the same market.

The number of distributors enrolling in the “business opportunity” fell from well over 200,000 in 2012 to a fraction of that number by 2014.

The company began to lose money and needed cash loans from its Founders to survive 2014.

This string of events, the lawsuit alleges, lead to the offering of shares to Visualus affiliates.

The Founders (of Visalus) did have luck on their side.

This came in the form of a stock purchase agreement they reached in 2008 with a publicly-traded company, Blyth, Inc., (“Blyth”) to sell their interest in ViSalus.

Lucky for them, the agreement was negotiated by Blyth’s CEO, whose family interests included 25% ownership of ViSalus it had purchased for a little money in 2005.

Blyth performed for a while, while the CEO’s family got a rich payout paid by Blyth, but by 2012, as the pyramid scheme w

🤖 Quick Answer

What is the Visalus Founders Equity Incentive Plan lawsuit about?
A class-action lawsuit alleges that Visalus and its management violated securities laws by offering shares to affiliates without proper legal framework. The lawsuit names founders Nick Sarnicola, Blake Mallen, Ryan Blair, Ashley Sarnicola, COO Todd Georgen, and affiliates Gary Reynolds and Vincent Owens as defendants, describing Visalus as a failed pyramid scheme.

Why are MLM company share offerings considered problematic?
MLM share offerings to distributors frequently lack required legal compliance and regulatory oversight. Such internal equity incentive programs present significant risks, as demonstrated by the Visalus case, necessitating careful legal scrutiny before implementation or participation.

Who are the named defendants in the Visalus lawsuit?
The defendants include Visalus co-founders Nick Sarnicola

🔗 Related Articles

- Bitcoiin promotion continues in secret following fraud cease and desist
- FTC want Vemma’s “irrelevant evidence” excluded (Koscot)
- Divvee Review: $9.95 a month for access to discounts?
- Chen fighting SEC on monetary relief (USFIA)
- Hanieh Sigari abandons Qyral to launch Ellie MD