What is the story behind Mannatech fraud?


Quick Answer

In 2005, Milberg, Weiss, Bershad and Schulman brought a class action suit against Mannatech, citing false claims and lack of internal controls, according to Business Wire. In 2007, the Texas Attorney General filed a lawsuit against Mannatech, which is based in Coppell, Texas, for fraudulent practices. The state settled with the company in 2009 and suspended the founder and chief executive officer Samuel L. Caster for five years, according to the office of the Attorney General of Texas.

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Full Answer

The settlement awarded damages of $4 million to Mannatech customers in Texas, $2 million in legal costs and $1 million in civil penalties. Under the terms of Caster’s suspension, the company could not directly employ Caster and he could not act as director or chief officer of the company. Instead, the company contracted Caster as a consultant to the CEO, and Caster continued to appear as a spokesperson for the company and operate in a key capacity in new product development, explains The Dallas Morning News.

Caster had numerous past troubles with the Texas Attorney General for selling products based on fraudulent or exaggerated claims in the 1980s and 1990s, notes Barron’s. His Mannatech venture advertises the healing properties of sugar supplements, or glyconutrients. Research does not support these claims, and the U.S. Food and Drug Administration does not endorse these products, according to the Texas Attorney General.

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