Xango, a health and nutrition multi-level marketing company, began operations in 2002 from Utah. Gary Hollister served as its first Chief Executive Officer from 2002 to 2006, leading the firm during its initial years in the market.
Hollister's involvement in the MLM industry started earlier, as CEO of Enrich International in 1997. Aaron Garrity, Joe Morton, and Gordon Morton also worked at Enrich International during Hollister's tenure. Their business relationship formed there, leading to the launch of Xango. Kent Wood was also among the initial five founders. Aaron Garrity now holds the titles of Xango's CEO, Chairman, and President.
The company faced its first major legal challenge in 2003. Tahiti Noni International, now Morinda, sued Xango, alleging its executives stole the concept for a mangosteen-based supplement. Tahiti Noni claimed the theft occurred while these executives were employed by its parent company. Xango filed a counter-suit. Both cases were ultimately settled out of court, with no public disclosure of the settlement details.
Xango's primary product, a mangosteen-based juice, drew scrutiny from the U.S. Food and Drug Administration in 2006. Company affiliates used marketing materials promoting over 20 human health benefits for the juice. These claims included "anti-inflammatory," "anti-microbial," "anti-fungal," "anti-viral," "anti-cancer," "anti-ulcer," "anti-hepatotoxic," "anti-rhinoviral," and "anti-allergic" effects. The FDA did not approve these health claims for a dietary supplement.
Angel Investors LLC, holding a roughly 1% stake in Xango, sued the company in 2007. The lawsuit accused Xango management of "corporate looting and mismanagement of millions of dollars." Founders allegedly used company funds for personal expenses, including luxury cars and performance-enhancing medical treatments. They were cited for taking millions in personal loans and paying themselves excessive salaries. Specific expenditures detailed in the suit included $6,000 monthly auto allowances, family vacations, and a $20,000 charge for home furnishings.
A 4th District Court initially dismissed the Angel Investors suit. But the Utah Supreme Court overturned this decision in 2009. Xango settled with Angel Investors rather than proceeding to trial. The terms of this settlement were also not publicly disclosed.
In May of this year, a sixth founder, Bryan Davis, filed his own lawsuit against Xango. Davis, who is not credited on the company website, accused his partners of spying, threatening employees, and falsifying distributor positions to siphon off funds. He also alleged fraud concerning Xango's taxes and the founders' personal taxes.