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Texas AG sues supplements seller Mannatech
More articles on this topic: MannatechTexas Attorney General Greg Abbott said Thursday that he has filed a lawsuit against dietary supplements seller Mannatech Inc., claiming that the Coppell-based network is operating an illegal marketing scheme.
Exaggerated claims about the therapeutic benefits of Mannatech’s supplements and nutritional products were unlawfully used to increase sales, Abbott said.
“Aided by an army of multi-level sellers and their fictitious claims about its products, Mannatech has aggressively marketed supplements to countless unwitting purchasers,” the attorney general said in a written statement. “With today’s enforcement action, the Office of the Attorney General seeks to shut down an elaborate scheme to defraud innocent consumers across the nation.”
The suit, filed Thursday in state district court in Travis County also names Mannatech owner Sam Caster.
A phone listing for Caster provides the company’s main number. He did not immediately return a message left by The Associated Press on Thursday night.
In a September interview with the Fort Worth Star-Telegram, Caster defended the company and its training of sales agents.
“We walk the fine line of always stating our case appropriately and always training our people,” Caster said. “We’re not into the treatment, cure or mitigation of disease. We’re into the improvement of quality of life … everybody benefits from good nutrition.”
The company is accused of violating the Texas Deceptive Trade Practices Act, which can result in civil penalties of $20,000 per violation. Mannatech is also accused of violating the Texas Food, Drug and Cosmetic Act, which carries possible fines of $25,000 per day, per violation.
Shareholders filed a series of class-action lawsuits against Mannatech in 2005 after an article in Barron’s detailed some of the company’s business practices. The lawsuits claim the company failed to control sales agents and allowed false claims to be made about the supplements.
Mannatech has said the suits are without merit.
Mannatech was founded in 1994, the year Congress eased regulation of the supplements industry.
Mannatech claims that its supplements contain plant extracts that provide essential sugars to the body. Executives of the company tie their products to glycobiology, the study of how sugar molecules function in biology and medicine.
But some leading scientists in the field say Mannatech’s chief product, called Ambrotose, is ineffective and hasn’t been subjected to clinical trials.
Mannatech sells nutritional supplements in 10 countries through more than 500,000 independent sales distributors, Abbott said.
The firm reported in May that first-quarter earnings rose 17 percent on higher sales. First-quarter net income jumped to $6.9 million, or 26 cents per share, from $5.9 million, or 22 cents per share, a year ago.
Net sales rose 6 percent to $104.8 million, from $99 million in the prior year.
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