vs. DALLAS COUNTY, TEXAS 1 r z~~ISTRICT...BUS. & COMM. CODE 17.47{b) for the reason that Defendant...

NO. g-1-- / J '-f g - J< STATE OF TEXAS,

Plaintiff,

vs.

UNITED SCIENCES OF AMERICA, INC.,

Defendant

§ § § § § § § § § §

IN THE DISTRICT COURTS OF

DALLAS COUNTY, TEXAS

1 r z~~ISTRICT COURT

PLAINTIFF'S ORIGINAL PETITION

TO THE HONORABLE JUDGE OF SAID COURT:

COMES NOW THE STATE OF TEXAS, hereinafter called

Plaintiff, acting by and through Attorney General Jim Mattox,

complaining of and against United Sciences of America, Inc.,

hereinafter called Defendant, and for cause of action would

respectfully show the Court the following:

JURISDICTION

1. This suit is brought by Attorney General Jim

Mattox, through his Consumer Protection Division, in the name of

the State of Texas and in the public interest under the

authority granted to him by §17.47 of the Texas Deceptive Trade

Practices-Consumer Protection Act, TEX. BUS. & COM. CODE ANN.

§17.41 et seq. ("DTPA") upon the ground that Defendant has

engaged in false, misleading and deceo•·ve acts and practices in

the conduct of trade and commerce as defined and declared

unlawful by the DTPA.

PLAINTIFF'S ORIGINAL PETITION - PAGE l

1. ...

DEFENDANT

2. Defendant United Sciences of America, Inc. {"USA,

Inc.") is a Delaware corporation doing business in this State.

Defendant may be served with process by serving its registered

agent, CT Corporation Systems, 1601 Elm Street, Dallas, Texas

75201.

VENUE

3. venue of this action lies in Dallas County on the

following grounds:

a. On the basis of TEX. CIV. PRAC. & REM. CODE §15.036

for the reason that the cause of

thereof accrued in Dallas County,

Paragraphs 8-39 below.

act ion or a part

as set forth in

b. On the basis of DTPA §17.47{b) for the reason that

the principal place of business of Defendant is located

in Dallas County at 2724 Realty Road, Carrollton, Texas

75006.

c. On the basis of TEX. BUS. & COMM. CODE §17.47{b)

for the reason that Defendant has done business in

Dallas County, as set forth in Paragraphs 8-39 below.

PUBLIC INTEREST

4. By reason of the institution and operation of the

unlawful practices set forth herein Defendant has caused and

will cause immediate and irreparable injury, loss and damage to

the State of Texas, and will also cause adverse effects to

legitimate business enterprise which conducts its trade and

PLAINTIFF'S ORIGINAL PETITION - PAGE 2

I .

·- ,

commerce in a lawful manner in th is _State. Therefore, the

Consumer Protection Division of the Attorney General of the

State of Texas believes and is of the opinion that these

proceedings are in the public intere~t.

TRADE AND COMMERCE

S. At all material times herein, Defendant has engaged

in conduct, more fully set forth herein, which constitutes

"trade" and "commerce" as those terms are defined by §17.45(b)

of the DTPA.

NOTICE BEFORE SUIT - RULE 1.3 CERTIFICATION

6. The Consumer Protection Division has not contacted

Defendant to inform Defendant in general of the alleged

unlawful conduct of which complaint is made herein, as provided

by §17.47(a) of the DTPA, because, in the opinion of the

Division, there is good cause to believe that Defendant would

destroy relevant records if prior contact were made, and because

such an emergency exists that immediate and irreparable injury,

loss, and damage will occur as the result of such delay in

obtaining a temporary restraining order. For the same reason,

and because to the best of Plaintiff's counsel's knowledge the

Defendant is not represented by counsel in the matter made the

basis of this suit, no attempt has been made to locate and

notify counsel for Defendant before presenting the State's

application for a temporary restraining order. Counsel for the


,

State further certifies that to the best of his knowledge this

case is not subject to transfer under Rule 1.1 of the local

rules.

7. Whenever

Defendant did any act

ACTS OF AGE.NTS

in

or

this petition it is

thing, it is meant

alleged that

that Defendant

performed or participated in such act or thing or that such act

was performed by the officers, agents, or employees of Defendant

and in each instance the officers, agents, or employees of

Defendant were then authorized to and did in fact act on behalf

of Defendant.

FACTS

Defendant's Operation--An Overview

8. USA, Inc. is engaged in sales of an alleged

"nutritional plan" ("Plan").

9. These sales are accomplished using a pyramid sales

scheme. Under this pyramid sales scheme, USA, Inc. solicits

"associates" who a re promised profits based on the sales of

additional salespeople whom the initial associate draws into the

pyramid sales scheme. USA, Inc. claims to have 140,000

associates across the United States.

10. The products sold through this pyramid scheme are

(1) Master Formula, (2) Formula Plus, (3) Fiber Energy Bar, and

(4) Calorie Control Formula.


;·

11. By its promotional literature and by its

associates' oral and written representations, USA, Inc. causes

representations to be made that these four products are designed

and/or intended for use in the cure, mitigation, treatment,

and/or prevention of a myriad of human diseases and conditions -

including AIDS, cancer, osteoporosis, heart disease, diabetes,

arthritis, excessive weight, colitis, diverticulosis,

pre-menstrual syndrome (PMS), acne, and dandruff. USA, Inc.

also represents that these four products can prevent or

alleviate the adverse affects of cigarette smoking, air and

water pollution, and x-rays.

12. The Federal Food and Drug Administration ("FDA")

has notified USA, Inc. that its review of these four products

and their labeling demonstrated that USA, Inc. had violated

federal law by marketing these products as drugs that have not

been approved by the FDA for use in humans. The FDA also

advised USA, Inc. that these products were branded in a false

and misleading manner, as well as a variety of additional

labeling violations and other violations of the Federal Act. See

December 12, 1986 Regulatory Letter attached hereto as Exhibit A

and incorporated herein by this reference for all purposes.

13. Accordingly, as set forth in more detail below,

USA, Inc. has violated the Texas Deceptive Trade Pr act ices Act

( 11 DTPA") and the Texas Food, Drug and Cosmetic Act, TEX. REV.

PLAINTIFF'S O~IGINAL PETITION - PAGE 5

-CIV. STAT. ANN. art. 4476-5 ("Food and Drug Act"). USA, Inc. is

liable for $10,000 civil penalties for violations of the DTPA

and the Food and Drug Act.

Pyramid Sales

14. In an illegal pyramid, or multi-level, sales

scheme, salespeople ("associates") are recruited by promises of

profits based on their finding other salespeople to sell the

product, who find other salespeople to sell the product, and so

on. The primary incentive is to recruit additional salespeople,

and not actually to sell the product.

15. USA, Inc.'s plan falls squarely within the

framework of an illegal pyramid scheme. See "USA, Inc. Profit

Plan Introduction," attached hereto as Exhibit B and

incorporated herein by this reference for all purposes.

16. As set forth in detail in Exhibit B, USA, Inc.

associates profit by sponsoring at least three new salespeople,

who then must each sponsor three more, who in turn must each

sponsor yet three more. This results in 39 salespeople in the

three levels below (or, in the argot of pyramids, "downline")

the original associate.

17. To qualify as an associate, a person must buy a

sales packet called a "Success System," at a cost of

approximately $24.50 (see "Associate Application and Agreement,"

attached hereto as Exhibit c and incorporated herein by this

reference for all purposes) and must further pay USA, Inc. at

least $100. 00 per month for the wholesale purchase and use of


·- II ,

-USA, Inc. products. Thus, USA, Inc. sells the right of

participation in this pyramid scheme for an initial $124.50,

plus an additional $100.00 per month.

18. USA, Inc. promises· to pay rebates to each

associate, conditioned on that associate securing at least 39

additional salespeople, all of whom must also pay Sl00.00 per

month-- for a total monthly payment to USA, Inc. of $4, 000. 00

from this group alone.

19. The rebates are paid based on the wholesale

purchases of USA, Inc. products. For example, Exhibit C

promises a rebate of $114 .00 to an associate who signs up 39

additional salespeople, each of whom purchases $100.00 per month

of products at wholesale from USA, Inc.

20. In sworn te~t imony, the USA, Inc. Director of

Ethics and Policy, Linda Pulido, has confirmed that the rebate

is based on wholesale volume and that the percentage of

wholesale sales is 99% of their total sales. Only 1%, according

to Ms. Pulido, is sold at retail. See •investigation Deposition

in Re: United Science of America, Inc. (December 3, 1986)," an

excerpt from which is attached hereto as Exhibit D and is

incorporated herein by this reference for all purposes.

21. Because the rebate is neither conditioned on nor

in relation to proceeds from the retail sale of goods, Defendant

has violated §§17.46(a) and 17.46(b) (20) of the DTPA.


JI .

Violations of Food and Drug Act

22. Defendant's promotional materials include numerous

videotapes, some of which are narrated by the actor William

Shatner--Captain Kirk of "Star Trek" ·fame.

23. USA, Inc.'s labeling, advertising, and other

promotional materials boldly go where no one has gone before by

claiming that the four products are designed and intended for

use in the cure, mitigation, treatment, and/or prevention of a

broad spectrum of human diseases--including AIDS, cancer,

osteoporosis, heart disease, diabetes, arthritis, excessive

weight, colitis, diverticulosis, PMS, acne and dandruff.

24. One such promotional piece is "USA, Inc.'s

Products, n produced and distributed by Defendant, and attached

hereto as Exhibit E and incorporated herein by this reference

for all purposes. In that document alone, USA, Inc. represents

that:

The Master Formula may be used in the cure,

mitigation, prevention or treatment of cancer,

osteoporosis, periodontal disease, and hypertension.

- The Calorie Control Formula may be used in the cure,

mitigation, prevention or treatment of hypoglycemia

and diabetes.

25. Another promotional piece is •usA Update, Volume

1, Number l", an excerpt of which is attached hereto as Exhibit

F and incorporated herein by this reference for all purposes. In

this document, USA, Inc. represents that:


,_

The Master Formula may b~ use~ in the cure,

mitigation, prevention, and treatment of cancer,

hypertension, and osteoporosis.

- The Formula Plus may be used in the cure, mitigation,

prevention, and treatment of heart disease,

atherosclerosis, arteriosclerosis, and high blood

pressure.

26. Through these and many other promotional

materials--including endorsements from such athletes as Dallas

Cowboys running back Tony Dorsett, Houston Astros pitcher Nolan

Ryan, San Diego Padres first baseman Steve Garvey, marathoner

Bill Rodgers, San Francisco Forty-Nine rs quarterback Joe

Montana, and tennis star Chris Evert-Lloyd--USA, Inc.

aggressively markets its four products.

27. The manner in which USA, Inc. promotes and

advertises these products causes them to fall within the

definition of "drug" under Section. 2 (4) of the Food and Drug

Act.

28. These products are not generally recognized, among

experts qualified by scientific training and experience to

evaluate the safety and effectiveness of drugs, as safe and

effective for any use. Therefore, these products fall within

the definition of •new drug" under Section 2(14) of the Food and

Drug Act. See also the FDA Regulatory Letter, Exhibit A,


wherein the FDA has made a similar detecminati?n with respect to

the parallel provisions of the Federal Food, Drug and Cosmetic

Act.

29. The FDA has not a~proved any of these four

products as required by the Food, Drug and Cosmetic Act, at

Section 18, nor do any of the Act's exceptions apply.

30. Al though USA, Inc. is engaged in the wholesale

distribution of its products in Texas, it has not filed with the

Commissioner of Health the registration statement required by

Section 27 of the Food and Drug Act.

31. Defendant's representations regarding its products

are false and misleading. The products are therefore

misbranded.

32. Defendant's promotional materials constitute false

advertising because they are false and misleading in general. In

particular, Section 23 of the Food and Drug Act provides that

any advertisement is false which represents that a food or drug

has any effect in:

- infectious diseases, - nutritional diseases, - immunity disorders (~, AIDS), - diseases of the circulatory system, - diseases of the respiratory system, - diseases of the digestive system, - diseases of the skin, - poisoning, and - symptoms, signs and ill-defined conditions.

Defendant's promotional materials represent that its products

have beneficial effects on all of these problems, and are

therefore deemed false by operation of law.


-(>.

33. Therefore, USA, Inc. haS' viola.1;.ed the Food and

Drug Act in the following ways:

- Selling, offering for sale, holding for sale, and delivering new drugs, in viola~ion of Section 18.

Engaging in the wholesale distribution of drugs without first registering with the Commissioner of He~lth, in violation of Section 27.

- Misbranding its products, in violation of Sections 11 and 16.

Falsely advertising its products, in violation of Section 23.

These actions constitute unlawful and prohibited acts under

Section 3 of the Act.

34. These violations create an immediate threat to the

health and safety of the public. These violations have occurred

in Dallas County as well as in many other Texas counties.

35. All of these products within the State of Texas

are subject to detention pursuant to Section 6 of the Food and

Drug Act. All such products should be condemned by this Court

and destroyed at Defendant's expense.

Deceptive Practices

36. As part of its promotional plan, Defendant has

represented that it and its products have sponsorships,

approvals, certifications, connections, associations, and

affiliations that they do not, including representation of such

with the American Heart Association, the National Academy of

Sciences, and the American Cancer Society.


·- ,,. l

37. In its advertising materials, De(endant represents

and implies that its Scientific Advisory Board was responsible

for the "product development" and content of USA's products, and

for designing the "USA, Inc. Nutritional Plan." Such

representations are false, misleading and deceptive in that the

USA Scientific Advisory Board neither developed the products

Defendant USA has for sale nor designed the USA Nutrition Plan.

38. In its advertising materials, Defendant also

heavily promotes the existence of the Scientific Advisory Board

and the personalities and experience of its 15 members as the

basis for the validity of its products. Such reliance is

improper and its use is false, misleading and deceptive in that,

although seven of the original 15 members of the Scientific

Advisory Board have resigned, Defendant has neither modified its

advertising materials to recall those which contain improper

identifications nor informed its distributors to cease referring

to these resigned individuals as members of the USA Scientific

Advisory Board.

39. Defendant's acts and practices, as set forth

herein in paragraphs 8-38 above, are false, misleading, and

deceptive, in violation of §17.46(a) and §17.46(b) of the DTPA,

including but not limited to:

- Distribution of products prohibited by the Food and Drug Act.

- Adulteration and misbranding of its products.

- Falsely advertising its products.


o,

- Causing confusion and misunderstaoding as to the sponsorship, approval or certification of its goods.

- Causing confusion and misunderstanding as to affiliation, connection or association with another.

- Representing that its . goods have sponsorship, approval, characteristics, uses and benefits which they do not.

- Representing that USA, Inc. has a sponsorship, approval, affiliation, or connection which it does not have.

- Representing that an agreement confers or involves rights, remedies, and obligations which it does not.

- Failing to disclose known information with the intent to induce consumers to enter into transactions into which they would not have entered had the information been disclosed.

INJURY TO CONSUMERS

40. By means of the foregoing unlawful acts and

practices, which were producing causes of injury to the persons

affected, Defendant has acquired money or other property from

identifiable persons to whom such money or property should be

restored, or who in the alternative are entitled to an award of

damages.

PRAYER

By reason of the institution and continued operation of

the acts and practices described hereinabove, Defendant has

violated and will continue to violate the law as hereinabove

alleged. Defendant, unless restrained by this Honorable Court,

will continue violations of the laws of the State of Texas and

immediate and irreparable injury, loss and darnage will result to

the State of Texas and to the general public.


0

WHEREFORE, PREMISES CONSIDERED., Plai.ntiff prays that

Defendant be cited according to law to appear and answer herein;

that before notice and hearing a Temporary Restraining Order be

issued1 that after due notice and hearing a Temporary Injunction

be issued: and that upon final hearing a Permanent Injunction be

issued restraining and· enjoining Defendant individually and by

its officers, agents, servants, employees, and attorneys from

doing the following acts and engaging in the following practices

in the pursuit and conduct of trade or commerce within the State

of Texas:

A. Transferring, concealing, destroying or removing

from the jurisdiction of this Court any books, records,

documents, invoices, or other written materials relating to the

business of Defendant, presently or hereafter in its possession,

custody or control except in response to further orders or

subpoenas issued in this cause.

B. Transferring, spending, hypothecating, concealing,

encumbering or removing from the jurisidiction of this Court any

money, stocks, bonds, assets, notes, equipment, funds, accounts

receivable, policies of insurance, trust agreements, or other

property, real, personal or mixed, wherever situated, belonging

to or owned by, in possession of, or claimed by Defendant,

insofar as such property relates to, arises out of or is derived

from the business operation of Defendant within the State of

Texas.


C. Selling, delivering, offering for .sale, holding for

sale, or giving away its (1) Master Formula, (2) Calorie Control

Formula, (3) Fiber Energy Bar, and (4) Formula Plus, until such

time as an application with respect. thereto has been approved

under Section SOS of the Federal Food, Drug and Cosmetic Act.

o. Selling, delivering, offering for sale, holding for

sale, or giving away any drug until such time as an application

with respect thereto has been approved under Section SOS of the

Federal Food, Drug and Cosmetic Act.

E. Soliciting or accepting any money or payment of any

kind from any person who has sold or purchased any of

Defendant's products, until such time as Defendant can

demonstrate to the Court that, under its marketing plan, all

rebates to its salespeople are exclusively conditioned on and in

relation to the retail sale of its products.

F. Engaging in the wholesale distribution of its

products until it has filed a registration statement as a

wholesale drug distributor with the Texas Commissioner of

Health, and the Commissioner has not refused to register

Defendant and has not cancelled, revoked or suspended

Defendant's registration.

G. Falsely advertising any of its products.

H. Representing that its products have any effect in:

1) infectious and parasitic disease: 2) neoplasms; 3) endocrine, nutritional, and metabolic diseases and

immunity disorders; 4) diseases of blood and blood-forming organs: 5) mental disorders: 6) diseases of the nervous system and sense organs;


7) diseases of the circulatory system; 8) diseases of the respiratory system; 9) diseases of the digestive system;

10) diseases of the genitourinary system; 11) complications of pregnancy, childbirth, and the

puerperium; 12) diseases of the skin and subcutaneous tissue; 13) diseases of the musculoskeletal system and

connective tissue; 14) ·congenital anomalies; 15) certain conditions originating in the perinatal

period; 16) symptoms, signs, and ill-defined conditions; or 17) injury and poisoning

I. Misbranding its products.

J. Engaging in any of the false, misleading, or

deceptive acts and practices set forth herein.

Plaintiff further prays that this Court authorize the

continued detention of Defendant• s products as allowed by the

Food and Drug Act, pending final hearing herein.

Plaintiff further prays that, upon final hearing, the

Court enter an order directing Defendant to recall all of its

products and literature from all those persons known to have

purchased the products and/or to have obtained the literature,

and to refund all amounts paid by these persons therefor.

Plaintiff further prays that, upon final hearing, the

Court enter an order directing that all of Defendant's products

be destroyed at Defendant's expense, under the supervision of an

officer appointed by the Court.

Plaintiff further prays that upon final hearing this

Court order Defendant to pay civil penalties of $10,000 to the

State of Texas for violations of the Consumer Protection Act.


Plaintiff further prays for- judgm~nt against the

Defendant restoring all money or other property taken from

identifiable persons by means of unlawful acts or practices, or

in the alternative for damages to compensate for such losses.

Plaintiff further prays for its costs of investigation,

costs of Court, reasonable attorney fees pursuant to TEX. REV.

CIV. STAT. ANN., art. 3917, and such other relief to which

Plaintiff may be justly entitled.

Respectfully submitted,

JIM MATTOX Attorney General of Texas

MARY F. KELLER Executive Assistant Attorney General

DAVID TALBOT Assistant Attorney General Special Assistant, Consumer

H. CLYDE FARRELL Assistant Attorney General Chief, Consumer Protection Divisi

EP E Assistant Atto ney General Consumer Pr ction Division 714 Jackson St. Suite 700 Dallas, Texas 75202 (214) 742-9698 State Bar No. 107660600


STATE OF TEXAS ) COUNTY OF DALLAS )

BEFORE ME, the undersigned authority, on this day personally appeared Stephen Gardner who, after being by me duly sworn, upon his oath deposed and said that he is an Assistant Attorney General for the State of Texas and a member of the Consumer Protection Division and as such is authorized to make this affidavit, that he has carefully. read the allegations in the foregoing .pleading, and that, as required by § 17. 47 (a) of the Consumer Protection Act, he has reason to believe that each and all of said allegations are true and correct.

ST HE Assis t Attorney General Consumer Protection Division

Subscribed and sworn to before me on the 27th day of January, 1987.


DEPAR. £ENT Of HEALTH&. HUMAN SERVIL PUBLIC HEAL TH SERVICE

FOOD ANO DRUG ADMINISTRATION

REGION VI

C E R T I F I C A T E

OFFICE OF THE REGIONAL.

FOOO ANO DRUG DIRECTOR

3032 BRYAN STREET

CAL.LAS. TEXAS 7520•·6191

TELEPHONE: 21•·767-0317

Pursuant to the prov1s1ons of Rule 44 of the Federal Rules of Civil Procedure, I hereby certify that the attached documents, as identified in the attached affidavit, are true copies. A copy o( each said document is on file in the F~ and Drug Administration of the Department of Health and Human Services, and is part of the official records of said Administration and Department.

In witness thereof, I have, pursuant to the provisions of Title 42, United States Code, Section 3505, and 21 CFR 5.22 hereto set my hand and caused the Seal of the D;partment of Health and Human Services to be affixed this 20th day of January, 1987.

l)n.LE HUNTER Acting Regional Food and Drug Director By direction of the Secretary of llealth and llwron Services

H &. HUMAN SERVICES

AFFIDAVIT

Public Health Service FOOd and Drug Administration

Dallas District 3032 Bryan Street Dallas, Texas 75204-6191

'rheodore L. Rotto, being first duly sworn, deposes and says:

1. I am .the Acting Director of the Dallas District Office, United States Focxl and Drug AC!ministration.

2. In this capacity, I have custody of official records of the United States FCXJd and Drug Administration, Dallas, Texas. ,.

3. Attached is a c:opy of the Regulatory Letter (87-oaL-06) issued to Mr. Robert M. Adler, II, Chainnan, United Sciences of America, Inc., Carrollton, Texas, on December 12, 1986.

4. Copies of the administrative records are part of the official records of the United States Food and Drug Administration, Dallas, Texas.

TiiEOOORE L. ROTro Acting District Director

County of Dallas

State of Texas

Subscribed and sworn to before nc, the undersigned authority, on this 20th day of Januacy, 1987.

My caunissioo expires November 10, 1987.

--------------------------- ----

DEi ·' TMENT OF HEALTH a. HUMAN SE1' .CES PUBLIC HEALTH SERVICE

FOOD AND DRUG ADMINISTRATION REGION VI -

tecember 12, 1'986

REF: 87-DAL-06

Rro.JIAroRY lETrER

BAND IEUVERED

Mr. R:>bert M. Adler, II, Olairman lhited Sciences of America, Inc. 2724 Realty !bad Qarrollton, Texas 75006

Dear Mr. Adler:

OFPICE OF THE REGIONAL FOOD AND DRUG DIRECTOR 3032 BRYAN STREET DALLAS, TEXAS '7!520•·1111 TELEPHONE: Z .. ·717·0317

An inspection conducted in May 1986 of your facility at the above addre~s and subsequent investigation by the Food and Drug Administration (FDA) has disclosed that your firm is marketing the products Master Fo1:1m.1la, Fomula Plus, calorie Control Fonnula aro Fiber Energy Bar. '!he pranotional materials such as printed brochures and a video tape which we have reviewed represent and suggest that these products are useful in preventing and treating serious disease conditions.

Although you refused to provide specific product formulations at the time of our inspection, we conclude, based on our review ot other materials, that your products CCXltain in part: Master Formula - vitamins A, C, E, beta carotene, selenhn and cysteine, calcu.m, magnesum, mixed tocopherols, L-glutathione, selenanethionine, L-taurine, PABA (Para Amioobenzoic Acid), Alliun Sativun (garlic extract), and bioflavonoids: Calorie Control Focnula - protein fran various sources, "Ultraprotein" blend; fiber tran various sources ard fnJCtose; Fiber Ene?)ly Bar - fiber fran various sources, and Foonula Plus -eicosapentaenoic acid (EPA), docosahexaenoic acid (CHA), Alliun sativun (garlic extract), d-alpha-tocopherol and ascorbyl palmitate.

A brief review of the labeling available to us indicates that these products are offered as safe and etfective for the prevention and/or treatment of conditions such as (examples only): .• :

Master Fom11la - protects against cellular toxins am pollutants through use of anti-oxidants, antithranbotic effect, eliminates chronic degenerative diseases, reduces blood pressure, protects fran cancer, protects fran free radicals, reduces risk of rhellMtoid arthritis, la.1ers uric acid levels, utilizes blood sugar better, converts insulin to its active fonn, stimulates collagen production, has toxic effect against rhinovirus, shortens duration and severity of colds, prevents AICS, stimulates and strengthens inmune system, reduces frequency and severity ot asthnatic attacks, helps colitis, reduces the negative effects of estrogen, improves acne, prevents cancer, reduces dargerous free radical diseases· such as alcoholisn,

.-

_. ........ ~--~-------------.__._ ______ ,, .......... -.... ~ ....... ~-----.._.-~---· - --·-

,..

United Sciences of llnerica Page 2

protects lungs fran snake and reduces risk of emphysema, reduces risk of kidney stone fonnation.

Formula Plus - helps lower blood pressure~ provides anti thranbotic activity, inhibits breast tuners (in mice), protects tissues fran inflC111Mtion, won't increase your risk of cancer, has beneficial effects on. vision, raises imnunity, has beneficial effect on PMS S)WPtans, prevents cancer.

Calorie Control Formula - reduces insulin response.

Fiber Energy Bar - lowers cholesterol, reduces risk ot diabetes, treats diabetes, helps blood sugar, controls hyperglycemia, delays the deterioration of the imnune system, prevents AIOS, lowers incidence of heart disease, and stabilizes blood sugar.

Because such labeling includes statements which .represent and suggest that the articles are intended to be used in the cure, mitigation, treatment or prevention of disease, or are intended to affect the structure or any function of the body of man, these prcx:lucts are drugs as defined in section (§) 20l(g) of the Federal Food, Drug, and Cosmetic Act (the Act). Further, we are unaware of any substantial evidence which demonstrates that these drugs are generally recognized as safe and effective for their intended uses. AccordiB,;1ly, continued marketing of these drugs constitutes serious violations of the Act as follows:

502(a)

502(f) (1)

,,

BRIEF DE.SCRIPrIOO

1he articles are misbranded in that their labeling is false and misleading by representations and ·suggestions that there is substantial scientific evidence to establish that the articles are safe and effective for the prevention or treatment of those conditions specified above, or for any other drug uses.

the articles are misbranded in that their labeling fails to bear adequate directions for the uses for which they are represented or suggested, as described above, and they are not exempt fran thlJ; : requirement under regulation 21 CFR 201.115 since the articles are new drugs within the meani~ of s 20l(p) and no approvals of applications filed pursuant to S SOS(b) are effective for the drugs.

The articles are further misbranded in that their labeling does not contain adequate directions for use as this te1111 is defined in 21 CFR 201.s since nDSt of the conditions for which they are offered are not anenable to self-diagnosis and treatment by the laity; therefore, adequate directions for use cannot be written under which the layman can use these drugs safely and for the purposes for which they are intended.

United Sciences of America Page 3

SOS(a) 'lhe articles are _drugs within the meaning of S 201 ( g) of the Act which may not be introduced or delivered for introduction into interstate.camnerce under S SOS(a) of the Act, since they are ·new drugs_ within the meaning of S 20l(p) of the Act and no approvals for applications filed pursuant to S 505(b) are effective for such drugs.

Ren.:>val of all statements which represent and suggest that the articles are intended to be used in the cure, mitigation, treatment or prevention of disease, or are intended to affect the structure or any function of the body of man or other animals would transfer your products into the category of foods as defined by § 20l(f) of the Act, and the products would then be in violation of Chapter Four of the Act as follows:

402(b) (1)

40J(a)(l)

403(a) and (j)

403(j)

IESCRIPI'IOO

"Fiber Enegy Bar" coded 81396 is adulterated in that our analysis revealed that the product contained less protein per serviR1 (55.2% on original and 63.9% on check analysis) than declared.

The products are misbranded in that their labeli~ bears numerous false and misleadiR1 claims regarding alleged properties and functions of vitamins, minerals, other nutrients, and substances (e.g., "vitamin E and selenilltl have an enhancing or synergistic ef tect on each other when precisely balanced", "ultra protein blend... provides the highest protein efficiency (P.E.R.) of any plant or seafood source", · "calcium may be assimilated almost twice as etficiently in the body if taken in a canbined multivitamin form than if taken alone"). '!here is no scientific evidence to support such claims and no such dietary efficacy has been demonstrated for these nutrients and substances.

The product "Calorie Control Formula" is falsely represented as a "low calorie" drink in that it fails to comply with the r~q~irements of Title 21 CFR 105.66(c) which defines a low calorie fcxxi as one which provides no more than 40 calories per serving and no more than 0.4 calories per gram.

The products "calorie Control Formula" and •Master Fo:cmula" are represented as hypoallergenic foods, halever, their labels fail to bear the information required by Title 21 CFR 105.62.

In addition to these more serious violations our review also shows the following label violations which should receive pranpt attention.

8'


Fiber Energy Bar, carton label

1. The term •Fiber Energy Bar" is not an appropriate identity statement for the product. We would not object .to the name "A SWeetened oat, Rice, Barley and Cottonseed Bar" or another sufficiently descriptive name which explains the basic nature of the focxj, its characterizing prcperties or ingredie~ts.

2. '!he nutrition labeling must be declared in the cxrnplete focnat prescribed by Title 21CFR101.9.

1'he declarations of percentage of U.S. ~·s required by§ 101.9(c)(7) and the number of servir~s per container required by S 101.9(c)(2) are not declared on the label.

J. The specific form ot the "cottonseed protein" and "chickpea protein" should be declared in the ingredient statement (e.g., "cottonseed protein isolate", "chickpea protein concentrate", or "cottonseed flour").

4. The declaration of dietary fiber content per serving should not be a part of the nutrition labeling but may be declared as a separate statement elsewhere on the label.

s. •carrot fiber" and "yucca fiber" and "apple bran" are not caunon or usual names of any food ingredient.

6. Guar gum is permitted to be added to toods under the provisions of Title 21 CFR 184.1339. Guar gum may be used as an emu ls if ier, a stabilizer, thickener and formulation aid at the specific levels stated in the regulation. 'Ihere is no provision for its use as a source of fiber.

The specific form ot the cellulose used is not declared in the ingredient statement however, scx1il.D'll carlx>xymethylcellulo.se is regulated by Title 21 CFR 182.1745 and methycellulo.se is regulated by Title 21 CFR 182.1480. Although there are no explicit restrictions on their uses in foods, the data which forned the basis for these regulations did not include its use as a source of fiber.

we therefore, conclude that the aQdi.tion of guar gun, and methycellulose or &Odil.ID carboxymethylcellulose (if. they are being used in the product) for the purpose of adding fiber is not in cxrnpliance with the applicable regulations. If you wish to pursue this matter, you may wish to sul:mit a petition under Title 21 CFR 170.35 or 171.l for the use of these substances as sources of fiber.

7. The specific source of the lecithin should be declared in the ingredient statement as required by Title 21 CFR 101.4(b) (e.g. ·~ lecithin").

...

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a. The type size of the ingredient statement, manufacturer's name, and nutrition infonnation fail to meet the minimum 1/16 inch height requirements of Title 21 CFR 101.2(c).

9. The type size of the quantity of contents statement fails to meet the minimum 1/8 inch height requirenent of Title 21 CFR 101.105(i)(2).

FomW.a Plus

1. Eicosapentanoic acid (EPA) and docosahexaenoic acid (DHA) are not deemed to be generally recognized as safe nor are there present food additive regulations which prescribe conditions for their safe use in foods.

2. You should be aware that we expect to soon publish a proposal regarding the use of health claims on food labels in the Federal Register. lbe present claims on the label regarding the usefulness of EPA and IEA in the diet may need to be revised in accord with the provisions of the proposed policy statement.

3. The EPA, DHA, and alliun sativun (garlic) should not be declared in teens of potency (milligrams) because they are not essential and therefore, are not dietary supplements. '!hey should be declared only in the ingredient statement in descending order of predaninance by weight.

4. Carob is not presently permitted for use in foods as a color. In addition, the statement "colored naturally with carob" is incorrect. Since all added colors result in an artificially colored food, we object to the declaration of any added color as natural.

calorie Control Ponnula

1. The percentage of U.S. ~ of phosphorus in the nutrition labeling is not declared to the nearest 5 percent increment as required by Title 21 CFR 101. 9(c)( 7 )( i).

2. The individual ingredients of the "surimi" must be declared in the ingredient statement; either parenthetically or separately in descending order of predaninance by weight as .f~ired by Title 21 CFR 101.4(b)(2).

3. The terms •Apple Fiber" and "Yucca Fiber" are not appropriate ca111ion or usual names for food ingredients. The common or usual name of the specific i~redients used must be declared in the ingredient statement.


4. The specific source of the lecithin should be declared in the ingredient statement (e.g. "soy lecithin").

s. 'lbe term •French Vanilla• is an inappropriate flavor designation for the product.

6. 'Ihe declara~ion of fiber per servirg should not be a part of the nutrition labeling format, but.may be declared as a separate statement on the label.

Master Fomul.a

1. lhe principal display panel fails to bear an identity statement (e.g. "Dietary Supplement of 11 or "Multivitamin Multimineral Supplement").

2. Bioflavonoids, PABA (para aminobenzoic acid), and alliun sativun (garlic) · •. are not essential nutrients and therefore should not be declared in terms of potency (milligrams) but should be declared in the ingredient statement in descendirg order of predaninance.

3. Taurine is not deemed to be generally recognized as safe, nor is there a present food additive regulation which prescribes conditions for its safe use in foods. If you have infonnation which dennnstrates its safety, this infonnation should be subnitted in the format of a food additive petition, Title 21CFR171.1, or a petition for generally reccgnized as safe status, Title 21 CFR 170.30.

'Ihe violations listed above are not intended to be all-inclusive. It is your responsibility to market products which are in full canpliance with the Act.

We request that you schedule a meetirg with Daniel L. Michels, Director, Office of Conpliance, Center for Drugs and Biologics, lb::kville, MD 20855, telephone number 301-295-8054, within ten (10) days of your receipt of this letter to inform us of what action you intend taking to bring your products into canpliance with the law. If corrective action is not undertaken pranptly, Fili\ is prepared to initiate legal action to enforce the law. 'Dle Act provides for seizure of violative products or injunction against the manufacturer or distributor of these products (21 USC 332 and 334).

cc: Jerris Ieonard, President

.. : nly yours,.

r~<rtiPC,~ IDNALD C. HFALTON Regional Director Food and Drug Mninistration

.. '.:i. . ·. ..

;.. l •••• ,.

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USA, Inc. Profit Plan Introduction

United Sciences of America, Inc. has meticulou)ly created a (Ompcnsation plan designed to meet two objectives: (1) to provide Independent Associates with lucrative financial rewards, and (2) to ensure corporate growth and long-term stability.

The USA, Inc. Profit Plan is both fair and generous. It is well-grounded in rewards, incentives and bonuses for everyone-from the newest Associate to the top Presidential Director.

USA, Inc. offers men and women from all walks of life a dual financial opportunity: the opportunity to earn income by selling products at the retail level, and the chance to share the USA, Inc. business opportunity with others.

All Independent Associates begin their relationships with USA, Inc. by being sponsored into the company by other Independent Associates. From that point on, they earn their income. award level and special privileges through their own honest. dedicated efforts.

The USA, Inc. nutritional products can be purchased from authorized USA, Inc. Independent Associates at the suggested retail price. This system rewards Independent Associates for introducing new people to the USA, Inc. Nutritional Plan. After retail customers have become involved with this plan, and have explored the part-time and career opportunities in USA, Inc., they may complete and submit' an Independent Associate Application form with the help of their sponsoring USA, Inc. lnd0pC'ncknt Associate.

Upon acceptance of the application. the retail customer twcomL·s an Independent Associate in his or her own right, and may purchase USA, Inc. products at wholesale prices and sell them at retail prices. The suggested retail ptice of USA, Inc. products reflects 25-35 percent mark-up. This creates immediate retail earnings for the Independent Associate. Retailing is an important aspect of the USA, Inc. Profit Plan.

Through the income opportunities provided by the Start Up Plan-a combination of retail 'profits and monthly bonuses earned by sharing this opportunity with others-Independent Associates can earn extra income or offset the cost of the nutritional products purchased for their own use.

USA, Inc. offers a positive Profit Plan that works with you anci for you. It is your road to health, independence and f mancial opportunity

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Start Up Plan

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You can begin by sponsoring three new Independent Associates into the USA, Inc. team (we will call them your f1rst·level Associates). You then help each of these 3 people sponsor three of therr friends. This will give you a total of 9 Independent Associates in your second·lev~I If edch of you (as a team of three) help those 9 people sponsor three friends each, you will have 27 Independent AssociatC's in your tlurd · k·Vl'I

This is how your group (or network) would grow:

You sponsor 3 youi fir~t-levL'I ~~uc..1cHL'S x 3

9 your second-level A~soc1ates

x 3 27 your third-level Associates

Adding up each level in your group (3 in your first level. 9 in your second level, and 27 in your third level) you have a total of 39 Independent Associates in your USA, Inc. network You have spon~ored only 3 people personally, yet your network has grown to 39 people!

Personal Wholesale Volume (PWV) S100 l C'VC'I Bonus

1 2% 2 3% 3 3%

United Sciences of America. Inc pays you a monthly bonus on your Group Volume (GV) Based on the following numbers of your Associates purchasing $100 of product every month-your bonuses would be as follows:

Number of Distributors 3 9 n

Total Bonuses

Group Volume $ 300 $ ~uo $)700

Bonus ]'~.

j'Jri,

3%

Total Bonuses

Amount $ 6.00 $ 27.00 $ 81.00 ------$114.00

Tiu· ~I.HI lJp Pl.11111111·1·, y11111111· 11pp111 ll11111y lu l'cllll (•xlr.i me onu· and <'njoy lhe USA, Inc. nut1111011c1l lorrnuld'> month .11!1 ·r month At ltll' same.• time, you can offset tlw 0111 of poc ~"' c 11•.111l lh1• l11111111l.1·. 111•11·\ how 1t wrnko.,

Monthly Nutritional Plan/Wholesale Cost

1 Master fo11nul..i . . . . . . . . . . . . . . . . . . $2600 1 Formula Plus . . . . . . . . . . . . . . . . . . . . $16.50 2 Calorie Control Formulas ............ $20.00

Total $6250

Retail Cost $35.00 $21.50 $29.00

$85.50

Retail Profit $ 9.00 $ 5.00 $ 9.00

$23.00

As an example', if you r;ta.il just one Nutritional Plan per month (as outlined abovd. you Llll l\llll d ll't,111 p1 olit tit $23 00

Monthly bonus ................................. $114.00 Income from retail sales ........................... $ 85.50

Tat.ii Gro~s lncomP ....................... $199.50 Less wholesale product cost (personal use) ....... S 62.50 NC't E.mllrnJ'l IP':>\ Nutrrt1on.1I Pl.m .............. S 74.50

As you can c;rc' 111 tlw rxamplP, hy \flOll\minq lndrprnrl<'nt As\ociates and ~l'lhny llK· µl.m tu JU'lt 01\1' lU'>lOllll'I p1·1 IJll)flllt, you lolll lOVl'' thL· co~t of your lifetime USA, Inc Nutritional Pl~n. And additional monthly t'arnings can be usCld as dl':>CI Piion. 11 y 11 u t >llH' or I 11 nltt.1111 .11ld1l11111.il l JI,/\, h 11 pre H Jue I•, for your c,pou·.<• or family

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(} Career Plan

PHASElASSOCIATE

If your Personal Wholesale Volume is:

you receive: Level One

Level Two

Level Three

Level Four

Level Five

The Career Plan consists of the following 3 phases: I. Associate II. Supervisor Ill. Leadership

This plan features one of the most extraordinary financia l opportunities ever developed 1n Amencan business, meeting the needs of the career-minded professional looking for a lucrative and rewarding lifetime business. Professor Mark S. Albion, Ph.D .. of the Harvard Business School has structured management and leadership bonuses as motivating incentives that w ill build USA, Inc. into an American institution

The USA, Inc. Career Pl.in r<wards rts Associates with the following Phase I bonuses:

$100

Associate Bonuses Are Permanent

5250 $400 ssoo

4%

Continuing income rs as~ured by mainlainmg the required monthly minimums-an important feature of the Profit Plan. As an active Assocrate. you will receive your honusf''> rpgardlcss of the slatus you achieve or the status achieved by any Independent Associate in your USA, Inc. organization. You may or may not choose to qualify as an active Associate on any given month. This is your choice. If you order less than $ 100 Personal Wholesale Volume you will not qualify for a bonus that month, but you can still qualify for bonuses the next month simply by meeting the $100 Personal Wholesale Volume requirement for "activity."

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PHASE 11-SUPERVISOR BONUSES

Totar Group Volume

Bonus

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A':J 1 .JU learn more about the opportunity offered t., .ne USA, Inc. Profit Plan, 1t is natural for you to want to advance The first promotion is that of Supervisor As a Supervisor. you are eligible to receive an add1t1onal 4-6% bonus on your USA, Inc. Group Volume You will continue to receive yaur Associate bonuses based on your Personal Wholesale Volume You receive your 4% or 6% Supervisor bonus on the month following qualif1cat1on

$2,000 to $9,999 $10,000 and up

QUALIFICATIONS FOR SUPERVISOR

Three months to Supervisor

• You must wait a minimum of two months and one day from the date the Associate application i'l 1e(eivt>d al lhl· U'.::>/\. Inc corporate heauquarters.

• You muc..t p1·r•,rn1.illv pur< h.1w i 100, \]00 and $300 rn mm<' in Pach of thrc•P con!>ecutiw trill'flUJr monlh':J µ11rn lo 4uuhlic.at1un.

• You must prrc;on.11ly sponc,or ell h•,1\l 5 <,0paratc legs rarh containing a minimum of one active Associate in your first or second level.

• You must have' at least 18 acttvC' A~soc rates in your total organization.

• You must have a Group Volum() of $1,000, $2,000. $3,000 or more in each of the three consecutive months prior to qualification.

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Fast Start to Supervisor

An Associate may al~o qualify for promotion to the Supervisor status on the first day of th(' month after attci1rnng all thci following quahf1cat1ons during the preceding month:

-a minimum of $1.000 in Per~on.JI Whol('sah: Voluml•

- a minimum of $10,000 in Total Group Volume.

-5 personally-sponsored first-level active Associates.

-a total of 50 active Associates within your personal group·

(NOTE: Sponsor 5 f1rst·levrl active Associates and build an organization of 45 additional active Associates within your personal gro~p. with each Associate main· taining a minimum of $100 or more product in the qualifying month.)

REQUIREMENTS TO MAINTAIN SUPERVISOR STATUS

• To continue receiving the 4%·6% bonuses on your Total Group Volume at the Sur.wrv1sor l('Vl'I. you must purchac..c• a minimum of $100 of product each month in Personal Wholesale Volume.

• You must maintain a $2,000 nurnmum Group Volume. This does not include the Group Volume of promoted Supervisors in your organization.

• After three months of personal inactivity, an Independent Associate will lose his/her Supl'rvisor st.1tus

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PHASE 111-LEADERSHIP BONUSES

I.

QUALIFICATIONS:

Level One

Level Two

Level Three

Level Four

Level Five

Number of qualified front-line Supervisors (1st generation):

Number of qualified Supervisors in group:

Personal Wholesale Volume required to qualify for Phase Ill bonus:

Group Volume required to qualify for Phase Ill bonus:

Personal Volume required to earn 4% (five levels) from Phase I

Leadership Awards and Bonuses

As you progress in Phase Ill of the Profit Plan, many exciting rewards are available to you. When you nave develop_ed Supervisors within your organization, these groups form "promoted Supervisors.· You will receive Leadership Bonuses on all promoted Supervisors which spring from your organization.

Leadership Bonuses will be based on the actual status for which you qualify during each month For example, even though you have attained the Senior Director status in a previous month, suppose this month several of your Supervisors did not maintain tbeir qualification. If you have 3 qualified Supervisors in your first level with a total of 7 in your first 3 levels, you would qualify to be paid as if you were a Director.

By helping your Supervisors remain active and qualified and continue to develop new Associates, you can be assured of continued success in Phase Ill of the plan.

In addition to the Leadership Bonus. you will continue to receive the Phase I bonuses on all first. second, third, fourth, and fifth Associate levels. depending upon your Personal Wholesale Volume (retail sales).

LEADERSHIP LEVELS AND BONUSES

Senior Manager Manager Director

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Senior Director

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Executive Presidential Director Director

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4% 5%

4% 5%

Leadership bonuses are paid on Personal Group Volume.

1 . : ..

3 4 5 5-10

1 ., 7 11 2C 30-40 • ..>

100 1 [· ... 1(;0 100 10C 100

1000 1 ~,(l ·.no 250 10C 100

500 4 f: ~ ].~.o 250 10() 100

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r .. Leadership Qualifications

1. To achieve the status of Manager. you must develop 1 qualified first· generations Supervisor You must also maintain a Group Volume of S 1,000 {excluding your promoted Supervisors}, and have a $100 Personal Wholesale Volume' each month (retail sales).

2. To achieve the Senior Manager stJtus. you must develop 3 qualified Supervisors within your first three generations, of which at least 2 qualified Supervisors are in your first Grneration You must also maintain a $ 750 Group Volume (excluding your promoted Supervisors) and have a $100 Personal Wholesale Volume (retail sales.)

J. To achieve the Director status. you must develop 7 qualified Supervisors within your first 3 generations. of which at least 3 qualified Supervisors are in your first generation. You must also maintain a $500 Group Volume (excluding your promoted Supervisors) and havt• a S 1000 Personal Wholesale Volume (retail sales.}

4. To achiNe the S~nior Dir[~ctor •.· ·•lus. you must meet the qualilu:.a l h 1 • of a Director and have 11 01

more qualified Supervisors within your first 4 generations-4 of which m~ 1irst·generation qualified Supervisors You must also maintain a $250 Group Volume (excluding your promoted Supervisors) and have a S 100 Personal Wholesale Volume (retail sales).

5. To achieve the Executive Director status, you must meet the qualifica· tion of a Senior Director and develop 9 more qualified Supervisors within S generations, for a total of 20 qualified Supervisors within your first 1 st S generations. of which at least 5 qualified Supervisor~ arc first generation. You must also maintain a S 100 Group Volume (excluding your promoted Supervisors) with $100 Personal Whole· sale Volume (retail sales).

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6. To achieve Prt•>•ck•ntial DirClctor status, you must (a) meet the quali· f 1cat1on of Executive Director an cf cirvPlop 1 S mmP qu.1hf 10d Sup<•t visors (for a totJI of 3~ Supcrv1:,tw-.) w1ltun 5 q<•np1,1l1<lll\ ol winch .11

least 5 qual1f 1ed Supervisors ar P

first C)C'l1Pr.it1on. oi (b) ITit't'l 1111·

qualtlicatiun> lur Lxt•cut1vt•.011t•ltor stntus iln<i clt•vcfop a 101,11 of 30 qualified Supervisors w1th111 tht- tw.,t 5 qenNattono:, (of which at lcw~t 10 quahfted )upl'tVl'>UI'> drt' m lht· hr>I generation You must also mamtilm d $100 Group Volume 111 cJdd1tion to the Leadprsh1p Bonus. you will continue to receive the Phd'>l' I bonuses on all first second. third. fourth, anci fifth Associate lt'veh, depending upon your Personal Wholesale Vt )lun H • (1 Pt.ul >alt"-.)

After three months of pNsonal 111·

activity, an Assoc1atf' w1ll lose his or her Leadership status

USA, Inc. Retirement Plan

Th<:' opportunity to grow both pl't'>Oll ally and as a leader with USA, Inc. includes the urnquC' option of a con tinuing "retirement" inco!'Jle:

An Associate who achieves the position of Presidential Director and carries the responsibility for two years may retire-and continue to receive all earned bonuses for life. This mcludt's having no requirement for either Group Volume or Personal Wholes'11" Volume each month This option for rctircml'nt I'> th<' ullmMtt• hP1l<'f11 111 ltu• USA. Inc. Profit Plan. Those who retire will certainly have l'JrnL•d thl' pnv1I< ·qt· because they will have en1oyed an incredibly \UCCP\\ful \,ill''> c.m·1•1 with USA, Inc.

Disqualifications

A11y Compc·n-..alion Plan that 1s riC' signed for growth and long-term per· f ormancc• mu\t h.ivf' targets and maintenance requirements. Without mainlC'nancP rrquirements. research shows that productivity will not reach 1tc.. maximum lc•vf'lt. Low productivity pl'nalazes everyone m the total bus.mess C\ffort. and fosters mediocrity and d1>couragmg performances.

An lnd0prndent Associate is dis· qualified when he/she does not have $100 minimum Personal Wholesale Volume for 3 consecutive months.

The disqualification procedure is as follows:

After three (3) consecutive months of inactivity. the computer will skip over the inactive Associate or Supervisor. paying the upfine sponsors as if the inactive' Associate or Supervisor had been removed from the computer. If the inactive Associate places a $1 00 minimum order during the next 3 months. hl'lshc.· will automatically regain his/her status and immediately hPrnme <'hgihlr- for Phnc.e I incom0 If the inactive• Associate does not place' this minimum order. his/her name will be removed from the hne of sponsorship and his/her downlme will permdncntlv move up to h1\/her '>f H>rl\or In llu• {1l'>f' of Supervisor\ who are unquahfted for a period of 3 m< mths. group volumfl will roll up to thl' I 1r>I quJlihl•U )upL•rv1sor a> 11 the unqualified SupC'rv1sor had been removed hum the computer. Supervisor bonuses (Phase II) will therefore roll up. If at any future time the unqual1f 1ed Supervisor becomes qualified, the roll· up will discontinue.

(

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Definitions Leadership Bonuses: Bonuses Supervisor: An Independent • paid to Leaders on the Personal Associate who has met the USA, Inc. Group Volume of their-promoted ... qualifications to reach the Super-Supervisors. visor status. •

Leg: A downline organization be- Supervisor Bonus: Bonus paid Because we use various terms with ginning from each of the first level to a Supervisor on his/her personal which you may not be familiar, we Associates you have pNsonally Group Volume. now list specific definitions for them: sponsored. Total Group Volume: The total Active Associate: An Associate Manager: A Leader who has accumulated Personal Wholesale who orders from the company at developed 1 first generation Volume of all Independent Associ-least $100 in Personal Wholesale Supervisor. ates in your personal group. Volume each calendar month. USA,

PWV: An Abbreviation for Personal Unqualified Supervisor: A Inc. bonuses are paid on·ly to "active Wholesale Volume, or your per- Supervisor who has not met his/her Associates.· sonal wholesale purchases each Personal Wholesale Volume and

Associate Bonuses: As an active calendar month. minimum Group Wholesale Volume. Associate. you receive bonuses on

Presidential Director: A Leader Wholesale Cost The amount the ·Personal Wholesale Volume .. generated by all of the Independent who has developed 30 or more that Independent Associates pay for

Associates in your organization as Supervisors within his/her organiza· USA, lnc.'s products.

defined in Phase I. tion, at least 10 of whom are in the Your First-Level Associates: Director: A Leader who has de-

first generation. All Independent Associates spon-or sored personally by you. veloped 7 Supervisors within his/her A Leader who has developed 40 or

first four generations. At least four more Supervisors within his/her Your Second-Level Associates: must be in the first generation. organization. at lea~t 5 of whom are All Independent Associates spon-

Executive Director: A Leader in the first generation. sored by your first-level Associates.

who has developed 20 Supervisors Qualified Supervisor: A Super- Your Third-Level Associates: • within his/her organization. at least visor who has m£'t h1\/h0r minimum All Independent Associates spon-five of whom are in the first Personal Wholesale Volume and sored by your second-level generation. minimum Group Wholesale Volume. Associates.

Generation: In Phase Ill the first Roll up: Whl'n dll A\\OCltltC" i\ Your Fourth-Level Associates: downhne Supervisor in each leg ·inactive" for four or more months, All Independent Associates spon-represents the first "generation," or his/her bonuc; will "roll un" to the sored by your third-level Associates. generation Supervisor The next _first quJhhed uphill' )IJOn~or l hat Your Fifth-Level Associates: downline Supervisor below each sponsor's bonus will. in turn, roll up Ali independent Associates spon-first generation Supervisor is callc.'d to his/her next qualif 1ed uplmc sored by your fourth-level the second "generation," etc. sponsor, and so on. Bonuses will be Associates. Inactive Associate: An Associ· computed a~ if lhl' 111,1tllvt• A!>so· Your Organization: All Associ-ate who maintains less than the ciate no longer was in the ates sponsored by you and your minimum $100 Personal Wholesale organization. downline INCLUDING the personal Volume. Senior Diredor: A Lc-ader who groups of your promoted Independent Associate (As- has developed 11 Supervisors within Supervisors. sociate): An individual whose his/her first four genN ahon!>. At Your Personal Group: All application has been approved by least four mu·st be in the first Associates sponsored by you and USA. Inc. An Associate has the right generation. your downline EXCLUDING the per-to retail USA, Inc. formulas and to Senior Manager: A Leader who sonal groups of promoted Super-sponsor other retailing Associates. has developed 3 Supervisors within visors. There is no limit to the depth The term ·1n~pendent Associate" is his/her first three generations. at of your personal group. usually used to refer to all individ- least two ol which are hr!>t·genera· uals at all levels of achievement in tion Supervisors. the marketing structure.

Sponsoring: The act of an lnde· • Leader: A Supervisor who has pC'ndent A~soc 1.itl' mtr oduc ing and developed other Supervisors within supporting another pNson who is his/her organization. accepted by USA. Inc. as an lnde-

pendent Associate.

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r UNITED SCIENCES OF AMER/r A, INC. ~™ Data Processing Headquarters ~-P.O. Box 112069 Carrollton, TX 75011·2069 (214) 323-6400

This .. rour "1SA. Inc. LD. Nuft'lbr. . . . Fiio Ref~ '."~J...:.. ;:

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Associate Application and Agreement

Soctal Security NO:.. . . -- , Federal 1.0. No. . _J"' HOME OFFICE COP~ f .. J~ .. Ll=.LJ ... J-' . .J ... 1 ... J ~OR 1-1 I .I J . I I J . . ·- ---~,· _,, ~;.; .. J Name of Associate (This ia your personal name or your business name. Recognition and checks will be in this name). • •

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1 r Rua• Tax No. (II An~

• (..,) :::J Partnership 0 Corponltton iJ Sole Proprietorship Mantel S1atul O Married O Single

Sponsor lnfonutlon Name (last. First. Initial)

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United Sciences of America l.D. No. Sponsor Phone No. ~

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O PleaM Hftd mt lhl USA. Inc. Succns Srstem. I hllYe enclOMCI 124.50 plua apptlcable 1tat1 sales tu.

0 I 19C91Wlld mr USA. Inc. Success System from Inf Sponaor far 124.SO. I Mw ettached the Certificate of Veriflcatlan to mJ AaaocWte Appllaltlons and Agreement.

8. I acknowledge that I have famlllarlzed myself with the USA. Inc. products: that they are dietary supplements only and not medicines for the treatment of any specific disease or phySicaJ or mental disorder, that neither I nor USA. Inc. may engage In any diagnosis, prognosis, desct1ption, evaluation, treatment, remedy or management of any such disease or phySical or mental disorder.

9. I undM&t&nd that If thla AQl88m8flt is terminated by either myself or USA. Inc. that f haw the right to retum alt unused, unopened. undamaged and resaleable products purchased by me from USA. Inc. In conformity with USA. Inc. 's purchase pollcies, within fifteen (15) days of the receipt of such products for a 100% purchase refund less any bonuses paid to upllne Associates that can not be '9CCM)red by USA. Inc. t further understand tha1 it la my responstbiHty lo pay the freight or postage on such returned prOCluct or pn:iducta.

10. I undefat&nd that this Agl98m8nt may not be assigned to any other person, pannerstttp, or corporation without the prior wrttten consent of USA. Inc., such consent wm not be unreasonably wlthhetcl.

11. I undlratand that USA, Inc. does not dl&crlmlnate In Its acceptance or rejeCtJon of USA, Inc. Asaodate Applicants because of race. Cl98d. sex. COior or nataanal ortotn and USA. Inc. Associate posltlON are open to all persons who eachlblt the requlsfte business judgment. ethics, responslbillty and desire ID be a USA, Inc. Associate. USA, Inc. doe& n1S8Mt the right to refuse USA. Inc. Aaaacl1te ltatua ID those persona who do not meet such standanls.

12. I ecknowlec:lge and understand 1hat this Agreement shall not become binding on either pwty until It has been .ccepted by USA. Inc. at its Headquarters In DalJaa. Teu and shall be governed by the 111Wa of the State of Tex.u.

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For Office UH Onlr

•• Amount ~ ! .. . l == -.. ~ Card No.

Accepted By:

USA. Inc. Date

Amt.

Data Entry

8·100

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THE STATE OF TEXA~

INVESTIGATIVE DEPOSITION

OF MR. DAVID LOUGH

MS. KATIE LEONARD,

MS. LINDA PULIDO AND

DR. JOHN WISE

IN REGARD TO:

UNITED SCIENCES OF AMERICA, INC.

APPEARANCES:

MR. STEPHEN GARDNER Assistant Attorney General Ms. Zoleta Courtney 714 Jackson Street, Suite 700 Dallas, Texas 75202-4506

APPEARING FOR THE STATE OF TEXAS

MANATT, PHELPS,. ROTHENBERG, TUNNEY & EVANS 1200 New Hampshire Ave. NW, Suite 200 Washington, D.C. 20036

By: Mr. Jerris Leonard

ALSO PRESENT:

MS. MARION MOSS MS. DIANE PATTERSON

.... # ••

REPRESENTING UNITED SCIENCES OF AMERICA, INC. NOT PRESENT

'"- :

ORAL TESTIMONY of MR. DAVID LOUGH, MS. KATIE LEONARD,

MS. LINDA PULIDO AND DR. JOHN WISE, witnesses produced on·

behalf of The State of Texas, taken in the above styled

matter on the 3rd day of December 1986, before Susan .. ------------·i ~~x Q._'" ~ •.. £ w; .. ·~~~C ~7-·,~·!·Z·~8~~ -·~-~-~-E~-~u;:;_~~;.L=m=-=-=-==-=-=~~:R~V~l=C:E:·•:N:C:· ____ _

,.

1 Minshull, a Certified Shorthand Reporter in and for the

2 State of Texas, in the offices of The.~ttorney Gene~al of

3 Texas, located at 714 Jackson Street, Suite 700, in the

4 City of Dallas, County of Dallas and State of Texas.

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l MS. PULIDO: Yes.

• 2 MS. COURTNEY: Whoever wants to describe how you

3 move up in your marketing plan, 90 ahead, after I become

4 an associate.

5 MR. LOUGH: Linda, why don't you take that?

6 MS. COURTNEY: If you would, also describe the

7 commission plan.

8 MS. PULIDO: As far as the commission plan is

9 concerned, first you come in for your twenty-four fifty,

10 and you have to recruit five people. And really it's a

11 very technical marketing plan, and I really didn't bring

12 it with me, David, and don't feel, if I'm under oath, to

13 go step by step and give you step by step, giving the

14 actually outline of the marketing plan. But I can bring

15 it to you and submit it to you.

16 MR. GARDNER: How is it set f6~~h? Do you have

17 a set of policies?

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MS. PULIDO: The policies are not there, but we

have a marketing plan, which I said is at the office.with

20 the percentage that is ~iven.

21 MS. LEONARD: It should be in the brochure.

22 MS. COURTNEY: I just wanted to hear you-all tell

23 me versus what I've read in the brochure. Can you just

24 tell me in general terms?

25 MS. PULIDO: Well, in general terms, I come to

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you, right, or I become an associate. I buy my product,

and I recruit as many people as I feel possible. And I

generally go with a five group of people and get them to,

if they like the product,.sign· up as associates. And then

they purchase their product, and they in turn 90 down and

they recruit. five more. It starts building up. Each

level has a percentage on a payout, and that's the way the

commission is structured with a certain percentage.

MS. COURTNEY: On the first five people that I

recruit, what percentage am I paid on the product they

buy, or am I paid on the twenty-four fifty?

MS. PULIDO: No, you're not paid off the

twenty-four fifty. You're paid off the product they buy.

MS. COURTNEY: Do you know what the percentage is

that I'm paid?

MS. PULIDO: It just depends on .. the wholesale

volume of the group. That is the other thing. You almost

have to sit with whatever the person is purchasing to

figure out the commission on it.

MS. LEONARD: !~~s all done by computer.

MS. PULIDO: It's all done by computer. For

example, if I take all the group of you, you may just

purchase what you wanted for yourself this month, and you

maybe somebody that's very active in it and purchase five

or $600.00. And whatever that group accumulates or that

UNDA llDD REPORTING SERVICE, INC. __ __. ____ 111111':11 _______ •

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1 volume would be the percentage that you're paid out on.

" 2 MR. GARDNER: It's paid on the wholesale price?

3 MS. PULIDO: Yes.

4 MS. COURTNEY: So the more my recruits buy

5 increases my commission?

6 MS~ PULIDO: It's done by volume.

7 MS. LEONARD: As well as how much you personally

8 buy. So there's two factors, how many your group buys and

9 how many you -- your eligibility would be depending upon

10 how many levels -- your eligibility would be dependent

11 upon how much you personally buy, personal volume. So

12 it's kind of a two factor --

13 MS. COURTNEY: How do those two factors relate to

14 one another? How do they --

15 MR. LOUGH: One of the intents of the plan is so

16 that if I join the program and introduce"people in this ... 17 room to the program, that if I myself am not doing

- 18 anything, the plan is structured so that I wouldn't unduly

19 or unjustly benefit. So that's the reason why there is a ... 20 purchase requirement fo~ myself. In other words, if I am

21 inactive, the intent of the plan is so that I don't

22 - benefit from what you folks might be doing. I mean that

23 is somewhat typical with other types of marketing plans in ....

24 the industry.

25 MS. COURTNEY: Now, why would any of your

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recruits buy from you if they can buy from the company?

MR. LOUGH: They may buy just because of

convenience. If you live next door or you are a relative,

to save the shipping charge. which the company may -- so

you might acquire wish to acquire the product from me,

directiy, just as a matter of convenience.

MS. COURTNEY: So you might order product that

you might sell to your recruits?

MR. LOUGH: That's correct. You might order .

product for, I guess, for, what, three different reasons.

One would be for your own use, the use of your own family.

The second one would be use to sell to retail customers

or, you know, other people, regardless of what price, who

are nonassociates. And the third reason would be to

supply product to somebody that you may have sponsored or

some other previously sponsored associate as a matter of

convenience.

MS. COURTNEY: Even though it's more expensive

than buying it wholesale?

MR. LOUGH: Oh, nb; no. Typically, -- again, the

company cannot set the price. We sell to these people,

and we suggest retail price: but what price they

transfer -- like if we role play here. I sponsored you,

and we lived right down the street from one another. We

can buy a bottle of our vitamins for $10.00. I can buy it

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for $10.00 directly from the company. You can buy it for

$10.00 directly from the company. As a matter of

convenience, because you're coming to a meeting at my home

or something like that or tQ save the shipping charges, I

might buy it at 10 and simply. sell it to you at 10. Okay.

MR •. GARDNER: What is the retail going to be?

MR. LOUGH: The retail would typically be

thirteen fifty to $14.00. That would save you the trouble

of placing the phone call to the company, which would be

an expense to you and then shipping charges. And then

there's a mechanism under which -- the bonus volume. And

this is where we get into the nature of the plan. The

bonus volume on which you are paid can be transferred from

me to you so that in a sense you are indifferent as to

whether you acquired the product from me or directly from

the company, other~than the fact that the shipping costs

and the phone call.

So you could be, in a way, better off having

acquired the product from me rather than getting it. But

if we role play again and·~ay that you lived a thousand

miles away, then as a matter -- and we don't have that

close of a connection, it might well be that much more

convenient for you to be able to order directly.

MS. COURTNEY: Bow many associates do you-all

have now,

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MR. LOUGH: My unde~standing on our computer

" records at the time we have in the region of 140,000, and

maybe give or take 5,000,

MS. COURTNEY: Do you keep records on who's

buying your product that are not associates?

MR. LOUGH: No, because we can't. If I

MS. COURTNEY: It would come from your

associates, obviously, if you had those records.

MS. PULIDO: Would you repeat the question,

please?

MS. COURTNEY: Do you have records on people that

are not associates but who buy your product?

MS. PULIDO: Yes, we do. The reason I initiated

keeping those kind of records is because -- but the only

way we get them is through associates saying, you know, I

have some people .:_ a group in California" 'l~hat, you know,

that only buy the product now and then, ·and they want it

retail or they want it -- know that they can go and pick

this up. Because we do have will-call centers where you

can just walk right up and:pick up your product there if

you've already ordered it. And I've just manually kept

records of individuals that just buy the product.

MS. LEONARD: Excuse me. Linda, do we not also

have associates -- I've seen the sales receipts. We

receive sales receipts.

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MS. COURTNEY: I would think they would have to

show you what they had sold.

MS. PULIDO: Yes.

MS. LEONARD: We.have· that in the computer. What

they bought or what they sold?

MS. COURTNEY: Well, both I would think.

MS. PULIDO: Yes, we have both.

MS. COURTNEY: In order for an associate to be

paid his commission, he's got to report back to you what

he has, well, sold and bought.

MS •. PULIDO: At the time the order's taken, it's

all in the computer. When I call in -- when I call in for

my order -- to place my order, it goes into the computer

immediately. So then, again, the computer computes the

volume that it has for the order -- that has been placed

by the person, the individuals and the group. And that's

how that's done.

MS. COURTNEY: When an associate is placing an

order on behalf of a retail customer, is there any record

of~that retail customer's ~ame in the order?

MS. PULIDO: ~he only way that we receive records

is to call, as I've said before, or write letters, which

are on file, to request, you know, retail receipts and the

name of your customers. And that's from where I have

compiled the list of customers that I do have.

UNDA EIDD REPORnNG SERVICE, INC • . ~-------------- ---------

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1 MS. COURTNEY: Do ~OU understand what I'm getting \

2 at? I'm getting at what percentage of the people that buy

3 this product

4 MS. PULIDO: Retail?

5 MS. COURTNEY: -- .are retail versus people who

6 are associates.

7 MS. PULIDO: It's a very small percentage.

8 David, do you -- I would even speculate--

9 MR. LOUGH: We don't have any research. We have

10 the spot checks and those kinds of things.

11 MS. PULIDO: And the list of people -- but the

12 percentage, it's not even probably it's probably about

13 one percent.

14 MS. LEONARD: Of retail? I think it's higher

15 than that. - .....

16 MR. LOUGH: I would certainly think it's higher

17 than that, but the fact of the matter is we do not have

18 detailed research that would confirm if it's one percent

19 or --.. 20 MS. PULIDO: No· •. :

21 MR. LOUGH: -- if it's forty percent.

22 MR. GARDNER: If you think it's higher, do you

23 have a ballpark figure that you think it is?

24 MR. LOUGH: My guess is certainly in the thirty ".O

25 to -- 30 percent -- 25 to 30 percent range. Now, again,

LINJ:M BIDD REPORTING SERVICE, INC.

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1 we have to make sure we have our nomenclature straight.

2 That doesn't necessarily mean that it's being sold at the

3 suggested retail price, but it's being sold to people

4 outside the program. Often~ime what we will find is that

S people will have a relative or a neighbor next door who .

6 they "share" the product with.

7 And these people, for whatever reason, don't want

8 to become involved as an associate. They don't want to

9 pay the money, but as a friend or, you know, -- they talk

10 about it and the people become interested. And they might

11 supply those people at a price, maybe even at the

12 wholesale price, or something just a touch above. But

13 that's -- and that's the area that's so hard to quantify

14 without doing an extensive amount of research.

15 MR. GARDNER: So that we're clear on retail, I P""

- .... 16 think when we're asking the numbers sold at retail, we're

17 talking about sales to an end user other than someone

18 affiliated will USA products.

19 MR. LOUGH: I think that's maybe what Linda

20 the amount actually sold a(•true suggested retail price

21 may be very fairly small.

22 MS. PULIDO: Just from the indications that I've

23 received and, like I've said, it's not a formal procedure

24 that has been set on a computer or something. It's just

25 been a request by the associates throughout the u. s.

LINDA RIDD REPORTING SERVICE, INC.

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.... ·,

l asking for sales receipts and submitting lists of their ·- ~

2 names and retail customers.

3 MS. LEONARD: I'd just like to add to that that

4 just from the associates. that I personally know, since the

5 company does have the poli~y where anybody can buy from

6 the company, I think that -- I see that most of the people

7 who are associates do move a lot of the product to retail -8 people. Now, if they sign up somebody who's been a retail

9 customer, they decide to become an associate, they -- I'm

10 seeing, just naturally order from the company themselves • •

ll That's what I've personally seen •

• 12 I mean, I wish we had some stats on it, but it

13 seems to me that there's high retail sales, at least in

14 the people that I personally know who are associates.

15 Because it doesn't make sense for somebody if they join up - .....

16 as an associate not to go ahead and buy it right from the

17 company.

18 MS. COURTNEY: Once they're an associate, they're

19 no longer a retail customer anyway. ·'lo. ;

20 MS. LEONARD: Right.

21 MR. GARDNER: But you-all just don't have the

22 numbers? I'.

23 MS. LEONARD: Right.

24 But I do know that you've received lots and lots

25 of retail sales. And also we have the statement in their

LINDA llDD REPORTING SERVICE, INC. __ _...._. .......... ~t·~~•--1 ... mz~ .................... ------

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t.lSA, I?C.'S P~

Fran the mass of docwnented stmies-and the expert interpretaticn by the SCientif ic Advisory Board members--ccnes USA, Inc. •s first~ breakthrough nutritional Formulas.

MASTER!O~

'J.'tle MASTER POJHJLA is a high-potency anti-oxidant rich blend of essential vitamins, minerals, trace elements, amino acids and nutrients. !.\rery one of the 36 different elements is a MOST for· nutritional enrichment. · -q>timal lbrmulation: tJsing the latest scientific research, this exclusive formulation ensures that your &x!y receives not only the right nutrients, but in the r13ht amounts. Vitamins, minerals and anti-oxidants w::>rk together with different integrat metabolic reactions--but the absence of just cne nutrient can lead to chemical imbalances and other reactions. Similarly, nutrients such as vitamin E and selenium have an enhancing or synergistic effect on each other when precisely balanced. OJr formula assures total nutritional synergy anCI balance.

Antioxidant Rich: R!search on the biochemical, physiological and nutritional importance of anti-oxidants bas emerged as one of the Jll)St significant areas of a:ientif ic lnvestigatiai in the 80'&. Rltrients such as vitamin A, beta carotene, vitanin C, vitamin E, selenim and cysteine have been shown to have critical anti-oxidant qualities in the bxly. 'lhese anti-oxidants interact with and neutralize highly reactive anc! harmful free radicals-chemical CClllp)unds that arise in the body fran various environmental pollutants, toxins, carcinogens and peroxidation (rancidity) of fats.

'Jhe MASTER PORM:JIA, with its rich blend of anti-oxidants, insures proper p:>tency of these critical nutrients.

Calcim ard Magnesim: s=ientists are now recou1nencUng higher intakes of calcim, partlCUiarly for wanen, since recent stooies indicate that osteoporosis, alveolar tale loss with periodontal disease, and hypertension are all linked to low levels of dietary calcim ana inadequate anounts of magnesim. In addition, research now lrdicates that calcim may be assimilated alnDst twice as efficiently in the body lf taken in a ccnbined multivitamin form than if taken alcne. s

• 'lhe M1Bit:R IOJHJLA prcwidea 100\ of the reco111uenc!ed levels of calcim and rnagnesim.

Jdditicnal Nutrients: USA Inc.•a Scientific Advisory Board has incla!ed a n\lllber of nutr lents lD our MASTER IOJMJIA that are not comnonly foe.ind in other procJucts. Dtensive research st.xllea on mixed tooopherola, Irgluthathione, aelenanethionine, L-taurine, anCI bioflavinolds indicate the potential benef ita of these nutrients and their inclusion makes our formula the most scientifically advanced prod\l:t en the market tllday.

. .. ----. -···-·· - ' ..... . ~.

I t 1

. ,. . Continuous E>'lhanoement: \-Mr MASTER !OJHJLA will continue to be enhanced as new research warrants. DSA Inc.'& canprehensive ccxnputer database will continue to acamaulate and categorize all new ongoing reseatch findings en nutritiCll. o.tt Scientific Advisory Board will incorp:>rate any fully doCumented and clinically tested lnformatiat into our formulas. As a result, we can guarantee that our MASTER 10JHJIA will remain cm the cutting edge as the most up-to-date and acientif ically based product en the market.

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.. • .

. , . Vitamins .ts Supply: ' U.S. RDA

Vitamin A (Acetate) Beta carotene 'lbiamine ('.dliamine.B:l) Ribofiavin Miacin Niacinamide Pantothenic Acid (d-ctlcian Pantothenate) Vitamin B-6 (Pyr idoxine •BCl) Vitamin B-12 (Q>balamin O:>ncentrate) Vitamin C (Ascorbic Acid) Ascorbyl Palmitate (Lipid Soluble Vitamin C-42 mg as Vit.C) Vitamin D-3 . lblic Acid Biotin

Vitamin E·Q:ln~ex vitamin E (d- pfia-'lbOOpherol Acetate) Mixed 'IbcOpherols (Beta, Garrroa, Delta 'lboopherols)

lmino kid Antl-OXidant QJnplex IrCYstelne (~stelne•B:l) L-Methicmine IrGlutathione

selenium ~lex &Cdim se en te seleno-Methicmine

Limenlc~lez dio ne ( ne Bitartrate) Inositol L-Taurlne

Minerals and Olelatea ca1cl\ID (Calcim carbOnate) Magneslmn (Magnesim Qclde) Potasslmn (Potassim Ollor lde) line (Zinc Gluconate) °'l:'per (°'l:'per Gluconate) Manganese (Manganese Gluoonate) Iodine (Potassim Iodide) Jbly1bc!enm (Scdium M:>lybdate) Craaimn (Natural Trivalent O'lrard.m)

Mdltlonal Rltrlents Bloflavinolds (Hesperldin Q:nplu) PABA (Para Amino Benmlc lcid) Alll111 aatlwn (Pure Gar)

s,ooo m 25,000 m

SO mg 201113 25 mg

100 Ilg so Ilg 20 mg 30 ·mcg

1500 D'd 100 mg 200 IU 400 mcg 150 mcg

400 IU 100 mg

200 Ilg 50 Ill.ii lS mg

• 50 1ICg so 1llC9

250 Ilg 250 JllJ 150 83

800 83 500 llJ 99 mg 30 lllJ 2 mg

2.s llJ so mog

125 mcg 2SO lllCg

250 DJ 25 ma

250-.a

•Determined to be an essential nutrient but actual requirements bave not been establlaha!.

••11> nutrltlcnal requirenent established.

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100 500

3333 1176 125 500 500

1000 500

2500 70 so

100 so

1333 333

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80 12S :s

200 100

* 33 • •

** ** **

, ~ ... E aHI'ROL PORMt1IA ' FIBER E:NERl__ BAR

'J'he CAtDRIE CCN.l'ROL POJMJIA and the FIBER mERGY BAR form USA Inc.'s weight control program. Olr total concept in wight control c:anbines the latest clinical research which enphasims a low fat, high fiber diet, as recommended by the American Heart Association, the Haticnal Academy of Sciences, and the American cancer Society.

OUr CALORIE CXNl'.RCL POJlll1.U\ is a aclentif ic and technical breakthrough-incorporating all elements necessary for a proven weight loss program in a delicious, nutritious, IOW calorie drink.

!bis exclusive proprietary formula contains exciting new sources of protein fran cottonseed and surimi - proteins that have the highest known protein efficiency (P.E.R.) of any plant or aeafocx1 eource.

: 'IJSA's CALORIE CXNrRJL POJMJIA also contains an important blend of 10 fibers fran natural fruits, vegetables, and grains.

'Jhey incllde: oat bran Rice bran Barley bran Pectin Apple Piber

carrot powder Broccoli powder Beet powder Cellulose Qar gum

Onplex Carbohydrates in our formula assure a slower, nore sustained netabolism, and natural fr1.1:tose sweetener results in a redteed insulin response. Both types of carbohydrates are beneficial for hypoglycemic or hyp!rglycemic (diabetic) calditions, ana are aided by the effect of our fiber blend in regulating blood sugar and insulin levels.

In delicious Dutch Ovxx>late and French Vanilla flavors, the Calorie Cbntrol Formula mixes w1 th water, juice, or non-fat milk and substitutes for two meals a day for safe austalned weight loss. cnce J0'.1 reach your ideal weight, JOU replace cnly one meal per day to control calories and maintain target weight.

OSA's FIBER ENERi! BAR is another nutriticnal first - again a proprietary formula of cottonseed anc5 sud.mi protein, 10 different dietary fibers, canplex carbohydrates low in calories. anerous research ata5ies have denonstrated the dietary value of bran, pectin, guar gum and cellulose - fibers wich are low in the aver~e American diet anCI which tJSA's Scientific Mvisory !bard incorporated into our exclusive fiber blend for use as a canplete nutritious meal or a wholesane snack for sustained energy.

' . .;

FOlMJIA PWS

OUr fourth proCluct, POJM:JIA PLtJS, is a marine lipid concentrate, rich in the highly unsaturated Qnega-3 fatty acids, eicosapentaenoic (EPA) and docosahexaenoic acid (DIA) •

!he Qnega-3 fatty acids are founcS only at r~latively low levels 1n the average American diet, and cannot be manufactured t7f the body. Scientific evidence now suggests ~at an increased dietary supply of EPA and DHA may be inq;ortant in the maintenance of 9ood health.

Clinical stmies of Eskino and Japanese p:ipulaticns who eat large ano.mts of fish revealed surprisingly low levels of blood cholesterol in spite of otherwise high fat conslJllPtiai. S:ientlsts now believe that fish diets containing these unsaturated fatty acids, such as EPA and DHA, may be resp:>nsible for lowering bleed cholesterol.

Q\ited Sciences of America's FOJMJIA PWS product ls part of its total dietary plan to reduce fat and cholesterol intake anC! substitute these special marine unsaturated fatty acids for saturated fats. 'Jhese nutritiaial concepts follow the general reccmnendatiClls of the American Heart Association and the Naticmal &!art, Lung, and Blood Institute. PORKJIA PWS contains Marine Lipid O>ncentrate, obtained fran selected cold water fish fran deep glacier-fed N:>rwegian waters. Special cold processing results in the highest quality of Qnega-3 fatty acids en the •rket today.

POJMJL1\ PLUS also contains allillll satlwm, a special decdorimd garlic extract, and d-alpha-tocopherol and ascorbyl palmitate as a synergistic blend of anti-oxidants ..tilcb ensure maximum stability and p:>tency of the highly unsaturated marine lipids.

P01MJIA PIDS

lecamlended use: 3 capsules once per day with a 11eal.

'Jhree capsules daily aupply1

EPA .. (eicosepentaneoic acid) DHA (docosahexaneoic acid) Alli\lll satiVllll extract (deoc!orlrad) d-alpha-tccopherol Ascorbyl palmltate

540 mg 360 8J 150 mg*

21 Ilg

'llJ *Cbntalns a certified alllcln content.of J D.J as determined by the Boerlnger

Mannheim analysis •

... ···- -· ·-··· •· .... --- "' .,, _________ -· -

•

•

Soaring With Eagles -

One hundred thousand Independent Associates. The number is impressive. It is aJI the more impressive when you consider that barely nine months ago we just had four Formulas, an overall nutritional program concept and the rudiments of a dynamic marketing force. Now USA, Inc. is a formidable presence in the marketplace , steadily making progress toward its corporate goal: a healthier America.

Having reached this milestone, it is most appropriatc.: that we congratulate and reward you with the first issue of the long-awaited infonnational and promotional magazine, USA Update . This magazine epitomizes the USA, Inc . concept, USA for Life. It brings to you six times each year the most up-to-date nutritional, marketing and lifestyle news, packaged with unprecedented sophistication.

As you read and admire this publication, remember that you play a major role in its production. USA Update is a tribute to the many people who support the USA for Life concept and work so hard to make it prosper. I sincerely hope you enjoy the magazine and share it

with>""' fellow and future As9 ~ ~ .,..,.._f

Jerris Leonard. Esq .

USA Update Staff Editorial Dirtclor Alan L. Kinsella

Editor Cary E. C~mpbeU

EdiloriaJ lusistanJ Rene J. Beretsky

Publication Dtsign Larry DameU Ann Darnell

7. .• Scleotific Advisory Board -~· .~· .. · Julius Aulrod. Ph.D. ·'-; ~. Anbur Balin, M.D.

. ' •.. Pera Cerulli. M.D .• Ph.D .

Irving Dardik, M.D.

Michael DcBakey, M.D.

Philip J. DiSaia. M.D.

Robcn Good, M.D. , Ph.D.

.Maarcen Hendmon, M.D .• D.P.H.

.. .....

._:. ,

.. -·

Rashida Karm&li, Ph.D.

Robert J. Morin. M. D.

Lea.ta Packet. Ph.D •

William Pr)or, Ph.D.

Eli Scihcr, Ph.D.

Andrew V: SchaJly. Ph.D.

.. C. Norman Shealy, M.D .• Ph.D.

USA UpdJJI~ nuiguinc is published by United Sciences d Amen..:1, Inc., 1'860 Ludm.art Boulevard, Dallu, Teus 7S240. 11Wd c:lau pouaae paid • CatrolllDG, lau. Special bWk sub$Crlpcioo ra1es are

. lftillble. USA Uptlmt maga.Une does Id ii::c:qic umolic:il£d 11w11uc:ripu • lhia lime. Quaiet IDd leaen io lhc cd.i1or *'8ld be ~ io edi1or's ldtntioa • CIOmpUly llddftsa lisl£d below. Copyrighl 0 1916 by Unil£d Sciencu d America, r.:. C'ooleftts d Ibis publicalioa rn1y DDI be rc:product.d ill &DY fonn wilhout 111rri11CO pamisaioe from lhc publisher.

l\Jltmls&rr. Send llddreu c:bangca IO USA Upt/M6. P.Q Bo• 112069, Cmolltoo, 1Gu 7'°11-2069 .

SA. Inc. believes in nutritional synergism: an interacting or working together of elements. We used the most current research studies available to

develop the four complementary products tha1 form the basis for USA, Inc. ·s Nuttitional Plan.

The Master Formula The Master formula is a 3~ele

ment, genera.I nutritional supplement thal contains scientifically selected levels of all essential vitamins, minerals and anti-oxidants. The Formula was developed through the collaborative work of several of the world's foremost nutrition and health researchers. Their goal was to contribute to optimal health by providing nutrients frequently found lacking in the typical American diet.

In a proper diet, vitamins, minerals and anti-oxidants work together in an integrated metabolic reaction. Vitamins are essential for growth and health maintenance. Minerals help build bone and ICCth. Anti-oxidants help the body neutralize free radicals. Free radicals are chemical compounds thal enter the body as environmental pollutants, toxins or carcinogens.

Among the other ingredients in the Master Fonnula are zinc. amino 11eids, and the critical .;lement calcium. Calcium helps i.nhibit the development of ailments ranging from

l Based on timely

research and scientifically balanced formulas,

USA, lnc.'s Nutritional Plan

represents the leading edge in the promotion of

nutrition and health.

hypertension to osteoporosis, a condition in which the bones become porous and fragile. Calcium is an important link in many bodily process~s. keeps the heartbeat normal, and helps the body absorb iron.

According to the National Research Council (NRC), more than half the women in America over the age of 15 have a calcium intake below NRC's Recommended Dietary Allowance (RDA). In order to meet the NRC standards, American women need to drink al least three eight-ounce glasses of milk daffy. Or, they can take the Master Formula which contains l ,000 milligrams of calcium, the RDA sci by the National Research Council.

USA, Inc. recommends a daily dosage of nine Master Formula tablets taken three tablets al a lime immediately before or during each meal. Why do we recommend taking as many as nine tablets a day? Because the Master Formula contains so many

Tt~ tJw P, n~ 11/ IN U.t4. /#IC. Ntllrititm Pbt pnwidr J6 ..U....UU untl ttMll'intls.

~ JWr unJ •"""' liptlJ pnMilu.

by Miu Flian1

vitamins, minerals, anti-oxidants and nutrients, the quantity of all these elements makes their compression into one tablet physically prohibitive.

There are other factors, too. Because many of the vitamins and minerals in the Master Formula are water-soluble, they cannot be stored in the body. Dividing the dosage throughout the day allows a fairly constant blood level of these vitamins and nutrients. Nuttients arc absorbed in specific localions along the intestinal tract. A single time-release tablet would also be ineffective for

- ....

• ..

use in the Master Fonnula, because it is unable lo provide blood levels of all nutrients at once. Taking the ingredients all al once defeats the purpose of sustained nutrition.

Mealtime is definitely the best time to take the Master Fonnula tablets. Food enhances the absorption of vitamins and minerals. and they in rum enhance absorption of many of the nutrients in our foods . One eumplc of this occurs with iron and Vita.min C. The Vitamin C in the Master Formula makes the iron prescn1 in )Qur cwrent diet more available to )10Ur body.

Although it would be nice to take just one or two tablets a day, it is best to take the Master Formula as prescribed, so )QU can achieve the desired level of nutrition.

Formula Plus Fonnula Plus is a marine lipid

concentrate of fish oil that is rich in the highly unsaturated Omega-3 fany acids. These acids come from coldwaier fish and mammals, and research indicates that the acids arc instrumental in the extemety low raies of heart disease and atherosclerosis in Japanese and Eskimo populations.

Specifically, the Omega-3 fany acids have been shown to help decrease blood cholesterol, reduce the tendency to fonn blood clots in the arteries, lower blood pressure, and reduce the migration into blood vessels of inflammatory substances which can increase the risk or arteriosclerosis. or hardening of the arteries. Unfonunaiely these fatty acids - eicosapcntacnoic acid (EPA) and docosaheuenoic acid (DHA) -are not manufactured by the body and arc found in relatively low levels in the average American diet.

... .....

•

USA, Inc. has designed Formula Plus capsules in such a way that the dosage can be variable. We consider three tablets to be a maintenance dose, meaning that this dose will not have an impact on your cholesterol level. Higher dosages are designed to reduce cholesterol and keep it from rising.

Like the Master Formula, Formula Plus is more efficiently absorbed by the body when you take the tablets with meals. The Omega-3 fatty acids are fat-soluble and ar.: stored by the body. Therefore, you only need to take the capsules once a day. If )'Ou prefer, you may take one capsule with each meal. instead of taking all three a1 one time.

Remember: food enhances the absorption of Formula Plus. Take the capsules just before or during your meals. If you take all the capsules with one meal, it's best to take them with your largest meal, and then during thal meaJ.

Calorie Control Formula Contrary to popular opinion, diets

do not have to be hard work, cost a fonune, or produce hunger pains. USA, Inc . 's Caloric Control Formula provides a scientific and comfonablc way of not only losing weight, but also of maintaining or even increasing your desired weight level. The for· mula blends 10 fibers from natural fruits , vegetables and grains, and has a very high protein efficiency rating. Its UJua-Procein Blend is an exclusive formula that includes surimi (a totally fat-free fish protein) and a full range of amino acids.

To maintain weight: blend one level scoop of Calorie Control Formula crys1als with six ounces of water or )40UJ' favorite fruit juice. You may

also mix a scoopful of the Formula wi1h eight ounces of nonfat 11'!-ilk. For a rich milkshake effect, add crushed ice. Either way, this serving ac.:ts as a meal replacement. Your other two meals should consist of carefully selected foods and nutrients. Used in this manner, the Caloric Control Formula serves as the nutritional foundation for your weight management program.

To lose weight: prepare rhe Calorie Control Formula in the same manner, but substitute the drink for two regular meals insread of one. The Calorie Conuol Fonnula helps you reduce calories and increase fibc:r without sacrificing good nutrition. Each serving consists of nine grams of protein and four grams of fiber. These water-soluble fibers help suppress your appetite because their bulk tends to have a satisfying effect. The fonnula's complex carbohydrates assure a slower, more suslained

i

., . • -

metabolism, and the natural fruct· ose sw~etener, in connection with the fiber, reduces insulin response . The Calorie Control Fonnula also contains iron, because its primary design is to serve as a meal substitute.

Mixed with water, the Calorie Control Formula contains only 100 calories. Try the formula with )'OW'

favorite fruit juice, too. Even when mixed with grape juice, which contains the highest amount of cal~ ries in fruit juices, the drink has only 234 calories.

The Calorie Control Fonnula can be mixed early in the day and then refrigerated for later use. Also, try heating it or mixing it with hot liquids. Hot or cold, 1he Dutch Chocolate and French Vanilla ftavors arc delicious.

I

To gain weight: cat three wellbalanccd meals 1 day. Along with )QUr regular exercise program and )QUr daily vitamin supplements, add one serving of the Caloric Control . Formula. The very high protcincfficicncy Rting makes it particularly effective in building Jean muscle mass. Each serving has less than one gram of fai.

Remember: when taking the Calorie Control f.orrnuJa as a meal replacement, use the formula in conjunction with the Master Formula. The Master f.ormula contains the vitamins, minerals and anti-oxidants )QUr body needs.

Fiber Energy Bar The Fiber Energy Bar works

closely with the Caloric Control Formula to help )IOU lose, maintain or gain weight. The bar has surimi ;JrOICin, 10 natural fibers and complex carbohydrates. Thai means )IOU can use the bar either as a complete ~eal replacement or as a wholeiOITle snack.

Each bar consists of nine grams of fiber, eight grams ~ protein, six :rams off at and only 200 calorics. :he bar's fibers and complex carbohy!rates have a positive effect on blood ugar and cholesterol, and their indi·idual pack.aging makes them onvenient to cal anywhere, anytime. To lose weight: lake one or two

,ars a day IS a meal replacement or :s a snack. If )IOU are using the ::aloric Control Fonnula for two meal eplacemcnts. try caring one Fiber :ncrgy Bar IS a mid-day snack. Two

JS!. . Inc's Co/nrir CDfltrul Fonnula C'an IH' Jf,Nlnl M'ith j"iC'rs, •ilk. ~wn )'Ol"rt 10

:1n't' us o C'Otll'rnirnt rnrol 1"1'1'1''"'"' or rwal rrplUC'nMnl.

---Calorie Control Formula shakes and one Fiber Energy Bar have only 400 calories and only eight grams of fat. Because they are both very efficient sources of protein and fiber, you . can main1ain proper nutrition while losing wci~ht.

To maintain weight: cal one Fiber Energy Bar a day as a meal replacement. The bulk in the bar has

To get the maximum benefit from USA, Inc. products, it's essential to follow label ini.tructions. In addition, the company recommends that all four products be used together. After all, the program was designed to accomplish several complementary goals. The Master Formula provides vitamins, minerals and anti-oxidants in their most bioavailable forms. Formula Plus adds the benefits of marine

USA . /11c . 's FilH-r En"'K.'' Bar is a StJti.ifyinR srwcl.: or can rwn bt a meal ill itsrlf Far maximwn · btnc'fils, ft(' surt' to ciririJ. 8 tiunr') of ICM•·t·u/wh· li'l"id whrn you rat a Fibtr Enugy Bar.

a satisfying effect without being a chemical .appetite suppressant .

To gain weight: try one or two bars a day as a meal supplement. Remember to eat three carefully balanced meals and to maintain a regular. consistent exercise pauem.

As with the Calorie Control Formula, it's best to use the Fiber Energy Bar with the Master Formula. That way )OU may be assured o_f proper nu1rition while you lose-weight.

h 's also important lo drink at least eight ounces or water or low-calorie liquid with each bar you cat . Thi: Fiber Energy Bar has both soluble and insoluble fibers. Soluble fibers may absorb two to four times their weight in liquids. If you do not drink sufficient amounts of liquid with the bar, )OUr body could lose waler or even gastric juices 10 the insoluble fibers .

1ipids. The Caloric Control f.onnula aids in fat- reduction and in maintenance of desired weight, and the Fiber Energy Bar provides additional fiber and nutrients that help )IOU sustain energy. Together these products help to assure a sufficient quantity and a high quality of nutrition in a safe. convenient program.

NO. %*{- ( ( lfg'-1(_ STATE OF TEXAS, IN THE DISTRICT COURTS

Plaintiff

vs. OF DALLAS COUNTY, TEXAS

UNITED SCIENCES OF AMERICA, INC.,

Defendant. t92h"UDICIAL DISTRICT

TEMPORARY RESTRAINING ORDER AND

ORDER SETTING HEARING

ON THIS DATE came on to be considered, in the above

entitled and numbered cause wherein the State of Texas is

Plaintiff and United Sciences of America, Inc. is Defendant, the

application of the State of Texas represented herein by Attorney

General JIM MATTOX for a Temporary Restraining Order. It

appears to the Court that the State is probably entitled to a

temporary injunctjon1 that unless the Defendant herein is

immediately deterred from the practices set forth below it will

violate the laws of this State through commission of these acts

before notice or hearing on a temporary restraining prder or

temporary injunction can be had1 and that if Defendant is not

immediately restrained from the practices set forth below,

Plaintiff and its citizens, well as the citizens of other

states, will suffer irreparable injury through violations of the

Texas Deceptive Trade Practices Act and the Texas Food, Drug and

TEMPORARY RESTRAINING ORDER AND ORDER SETTING HEARING - PAGE 1

NO. B?-1148-K

' STATE OF TEXAS, ~ IN THF. DISTRICT COURTS s

Plaintiff ~ §

vs. § OF DALLAS COUNTY, TEXAS ~

UNITED SCIENCES OF AMERICA, ~ INC., ~

~

Defendant. ~ 192nd JUDICIAL fHSTRIC'r

AGREED TEMPORARY INJUNCTION

On this day came on for hearing the above entitled and

numbered cause, in which the State of Texas is Plaintiff and

United Sciences of America, Tn~. is n,~fcndant. Roth Pl a i n t i f f

and ne fendan t appe.1 n~d hy and thrnugh their- t"cspect i ve attorneys 1

of record, at which time the partieq announced ready for

hearing.

tt is stipulated that. nefendant., by agreeing to the

entry of this Agreen Temporary Injunction, (10,~s not admit to the

violation of any law or statute or: to the cornmission of any

wr~ngful act, but instead denies any violations or wrongdoing.

It is further stipulated that nothing herein shall be

deemed to be an approval of Defendant's products, acts,

practices, forms or methods of solicitation by the State of

T~xas, the Attorney General, or any other agency of the State of

Texas.

AGREED TEMPORARY INJUNCTION - PAGE 1

' "

Having n:?ad the pleadings and having heard and

considered the agreement of parties, it appears to the court

that both Plaintiff and Defendant agree to the entry of th is

temporary ~njunction, restri'ining Defendant from engaging in

certain practices alleged to be unlawful.

It further appears to the court that by virtue of the

agreement Pl a i n t i f f is en t i t 1 e d to the temporary in j un ct ion as

hereinafter granted.

IT IS THEREFORE ORDERED by this court that the clerk of

this court shall forthwith issue a temporary injunction,

restraining United Sciences of America, Inc., its officers,

agents, servants, employees, representativ~s and attorneys and

' those other persons in active concert or participation with it

who receive actual notice of this order by personal service or

otherwise, from engaging in the following acts:

A. Transferring, concealing, destroying or removing

from the jurisdiction of this Court any books, records,

documents, invoices, or nther written materials relating to the . business of nefendant, presently or hercaf ter in its possession,

custody or control except in respon~e to further orders or

subpoenas issued in this cause.

B. Selling, delivering, offering f.or sale, holding for

sale, or giving away Defendant's (1) Master Formula, (2) Calorie

Control Formula, (3) Fiber Energy Bar, (4) Formula Plus or (5)

AGREED TEMPORARY INJUNCTION - PAGE ?.

'

any other product of Defenda.nt, except Current Product sold,

offered for sale, or delivered pursuant to paragraph I of this

Agreed Temporary Injunction.

c. Soliciting or accepting nny money or. payment of any

kind from any person who has sold or purchased any of

Defendant's products,

accepted for Current

except money o~

Pr.odu ct sold ,

payments solicited

offered for sale,

or

or

delivered pursuant to paragraph I of this Agreed Temporary

Injunction.

o. Engaging in the Wholesale Distribution of any drug

until Defendant has filed a registration statement as a

wholesale drug distributor with the Texas Commissioner of

Health, and the Commissioner has not refused to register '

Defendant and has not

Defendant's registration.

E. Manufacturing

cancelled, revoked

Food Products until

or suspended

Defendant has

filed a registration statement as a food manufacturer with the

Texas Commissioner of Health, and the Commissioner has not

refused to register Defendant and has not c~ncelled, revoked or

suspended Defendant's registration.

F. Making any false or mi5leading statement concerning

any of Defendant's products in any advertisement or in any

communication to a potential di~tributor, distributor, potential

purchaser or purchaser of Defendant's products.

G. Representing that Defendant's products have any

effect in:

AGREED TEMPORAP.Y INJUNCTION - PAGE 3

1) infectious and pd~asitic disease:

2) neoplasms:

3) endocrine, nutritional, and metabolic diseases and

immunity disorders (including ACDS);

4) diseases of blood and blood-forming organs;

5) mental disorders;

6) diseases of the nervous system and sense organs1

7) diseases of the ci-rculatory system:

8) diseases of the respiratory system:

9) diseases of the digestive system:

10) diseases of the genitourinary system:

11) complications of pregnancy, childbirth, and the

puerperium:

12) diseases of the skin and subcutaneous tissue:

13} diseases of musculoskeletal system and

connective tissue:

14) congenital anomalies;

15) conditions origin:=1ting in th,-~ perin.,tol period;

16) symptoms, s i_ gns, nnrl i l l-d~ f i nerl conditions; or

17) injury and poisoning.

H. Misbranding Defendant's products; provided,

however, that Current Product may be sold, offered for sale or

delivered pursuant to Paragraph I.

AGREED TEMPORARY INJUNCTION - P\GF. 4

I • Se 11 i ng , of fer i n 1J f · > r :-:>a 1 e , or de 1 i v er i ng Current

Product un;ess each unit shipped is accompanied by a disclosure

statement acceptable to the Attorney General, and unless each of

Defendant's distributors is sent a correction letter acceptable

to the Attorney General 10 days prior to the sale, of fer for

sale, or delivery of any Current Product.

J. Selling its products through a Multi-Level

Distributorship: provided, however, nothing herein shall be

deemed to prohibit Defendant's use of a marketing plan which is

not prohibited by law.

K. Representing, directly o~ indirectly, that the

State of Texas, the Attorney General, or any other agency of the

State of Texas has approved or will approve the Defendant's '

products, acts, practices, forms or methods of solicitation.

The following definitions ~hall be used for purposes of

this Agreed Temporary Injunction:

"Current Product" includ~s only the units of

Defendant's (1) M'1ster Formula, (2) C:aloric Control Formula, (3)

Fiber Energy Bar, or (4) Formula Plus that are in the

Defendant's or one of the Defendant's supplier's possession on

the date of this order.

11 Drug" means any a r t i c 1 e . rec og n i zed i n the of f i c i a 1

United States Pharmacopoeia, National Formulary or any

supplement to it, any articles designed or intended for use in

the diagnosis, cure, mitigation, treatment, or prevention of

disease in man or other animals, any arti~les (other than food)


i nte ndcd lo affect the st rue tu re of. any f.u net ion of the body of

man or other animals, and any articles intended for use as a

component of any article specified in this paragraph.

"Wholesale Distribution" means distribution to other

than the consumer or patient and shall include distribution by

manufacturers, re-packers, own label distributors, jobbers, and

wholesalers.

"Food" means articles used for food or drink for man,

chewing gum, and articles used for components of any such

article.

"Manufacturing Food Products" means the process of

combining or purifying articles of food and packaging same for

sale to the consumer, either by wholesale or retail. Any'

person, firm, or corporation who represents itself as

responsible for the purity and the proper labeling of any

article of food by placing or having placed its name and address

upon the label of any food shall be deemed to he m~nufacturing

food productR.

"Multi-Level Oist.rihutnr·nhip 11 lll•.•nn~-; ii !hll•?S plan for

the distribution of goods or services in which promises of

rebate or payment are made to individuals recommending or

securing additional individuals to assume positions in the sales

operation, and where the rebate or payment is not exclusively

conditioned on or in relation to proceeds from the retail sale

of goods.

~GREED TEMPORARY INJUNCTION - PAGE 6

It. further apper.lrs to the court that no bond is

required of the State of Texas.

This temporary injunction will remain in full force and "'Jt..,,.·1 111 C'lf7 ~ ~f'M

effect pending a final trial i,erei~r further orders of the

court.

Signed and entered this ;/(day

a ner Assi tant Attorney General

for the State of Texas

R bert Adler President of

Inc.

United Sciences of America, Inc.


- -----DISTRICT JUDGE

'

•• . . ··-

NO. 87-1148-K

STATE OF TEXAS,

Plaintiff,

vs. UNITED SCIENCES OF AMERICA, INC., et al.,

Defendants

§ § § § § § § § § §

IN THE DISTRICT COURT

OF DALLAS COUNTY, TEXAS

192ND JUDICIAL DISTRICT

AGREED PERMANENT INJUNCTION AND FINAL JUDGMENT

On this day ca~e on for hearing the above entitled and

numbered cause in which the State of Texas is Plaintiff and

United Sciences of America, Inc. (nUSA"), Robert M. Adler II,

Jerris Leonard, Joseph s. Ventura, David Lough, Jeffrey Fischer

and Haydon Cameron are Defendants.

It is stipulated that the parties have compromised and

settled Plaintiff's claim for damages, attorney's fees, court

costs and penalties.

. ;.,

AGREED PERMANENT INJUNCTION AND FINAL JUDGMENT - PAGE 1

• • . 1"'

:'°' ..

It is further stipulated that Plaintiff and Defendants

agree to and do not contest the entry of this judgment. However,

it is further stipulated that defendants' consent to the entry

of said judgment does not constitute any evidence or any

admission of any kind by the defendants regarding any issue or

fact alleged in the complaint and does not constitute any

admission of any liability whatsoever herein.

The Court then proceeded to read the pleadings and

stipulations of the parties. It appears to the Court that all

parties agree to the entry of this judgment, that all Defendants

have made their appearances herein for all purposes, and that

all parties have approved the entry of this judgment· by the

signatures of their attorneys below.

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED as

follows:

I.

This court has jurisdiction of the subject matter and

the parties hereto, and retains jurisdiction pursuant to Section

17.47(e) of the Texas Deceptive.Trade Practices Act.

The term "multi-level distributorship" as used herein

means a sales plan for the distribution of goods or services

(1) in which promises of rebate or payment are made to

individuals, (2) conditioned upon those individuals recommending

" •.I


. . •· . . .

. . ~

or securing additional individuals to participate in the sales

plan, and ( 3) where the rebate or payment is not exclusively

conditioned on and in relation to the retail sale of goods.

The term "retail sale" as used herein means a sale

( 1) to persons who are not part of the sales plan ("plan") ,

(2) to persons who are not buying to become part of the plan, 2E

(3) to persons who, although a part of the plan, are not buying

for purposes of advancement, increased bonuses, or to meet a

purchase or sale quota requirement but are buying for their own

personal or family use.

II.

Defendants United Sciences of America, Inc., Robert M.

Adler II, Joseph s. Ventura, David Lough, Jeffrey Fischer, and

Haydon Cameron, and their officers, directors, employees,

agents, representatives, attorneys, successors and assigns and

all others in active concert or participation with them are

hereby permanently enjoined and restrained from engaging in or

performing, directly or indirectly, any and all of the following

acts with respect to the operations of USA and its products:


. . . ·

.. . • .

1. Using or causing to be used any advertising

materials promoting USA' s products and/or marketing plan

(including, but not limited to videos and printed literature)

which bear a copyright date of 1986 or earlier.

2. Misrepresenting the role that any individual or

group of individuals, including but not limited to USA's

Scientific Advisory Board or any member thereof, has played, is

playing, or will play in the development, modification, testing

or formulation of USA' s products or nutritional plan or its

marketing plan.

3. Representing or implying that statements made by

any individual or group of individuals, including but not

limited to Defendant USA's Scientific Advisory Board, were made

about Defendant USA' s actual products unless such statements

were in fact made specifically about defendant USA's product(s)

and defendants have written authority from such individual or

group of individuals to use the representation in the manner and

for the purpose for which defendants are using it.

4. Representing or. implying that any of Defendant

USA's products has the sponsorship or approval of the American

Heart Association, the National Academy Of Sciences, the

American Cancer Society or any other organization, unless


• ,.

Defendant USA has written authority from such organization to

use that organization's name for the purpose for which it is

used.

5. Representing that Defendant USA's products "assure

total nutritional synergy and balance" unless defendants also

clearly and conspicuously inform potential users of Defendant

USA's products that one cannot obtain proper nutritional balance

solely by taking these products, but that users must also take

into consideration the food that one ingests.

6. Making any false, misleading, or deceptive

representation concerning any of Defendant USA's products in any

advertisement or in any communication to a distributor or

potential distributor or to a purchaser or potential purchaser

of Defendant USA's products.

7. Manufacturing, selling, delivering, holding or

offering for sale, or giving away food or drug products of USA

which are advertised through the use of untrue or misleading

representations.

8. Selling or delivering any drug which has not been

approved by the Federal Food & Drug Administration ("FDA").

9. Representing, except as permitted by law, that

USA' s products have an effect on: blood disorders: cancer:

diabetes: heart and vascular diseases: high blood pressure:


·. '.

infectious and parasitic diseases; injury; neoplasms; endocrine,

nutritional, and metabolic diseases; immunity disorders (~,

AIDS); mental disorders: diseases of the circulatory system,

respiratory system, or digestive system1 diseases of the skin or

subcutaneous tissue1 poisoning1 diseases of the nervous system

and sense organs1 complications of pregnancy, childbirth, and

the puerperium1 diseases of the musculoskeletal system and

connective tissue; congenital anomalies: conditions originating

in the prenatal period: diseases of the genitourinary system;

and symptoms, signs, and ill-defined conditions.

10. Representing or implying that any USA product

diagnoses, cures, mitigates, treats or prevents disease if the

product is a new drug which has not been approved by the FDA.

11. Selling or offering for sale any product of

Defendant USA which is a drug unless it is safe and effective

for its stated purposes or any product which is a food unless it

is safe and defendants have substantial evidence to support the

claims made for such product, whether a drug or food.

12. Representing through the use of testimonials,

whether in printed, oral, live, video or broadcast format, the

experience the individual giving the testimonial had with one or

more of Defendant USA's products unless such experience reflects


' "

the typical or ordinary experience of users of the product or

products and defendants have substantial evidence to support the

typicality of the experience.

13. Using testimonials or endorsements of any USA

product by public figures, whether in printed, oral, live,

video, or broadcast format, which represent or imply that such

public figures use or endorse defendants' product(s) unless said

individual does in fact use defendants' product(s) and the

testimonials and/or endorsements fully comply with Title 16 Code

of Federal Regulations Section 255 attached hereto as Attachment

A and incorporated as if fully set forth herein. Further, if

such individual is receiving remuneration of any type whatsoever

for his or her testimonial or endorsement that fact shall be

clearly and conspicuously disclosed each time the testimonial or

endorsement is used.

14. Making any representations with respect to

Defendant USA's marketing plan or the amount of money a

specific participant or participants in USA' s marketing plan

have earned by the use of .testimonials or articles about

participants, whether in printed, oral, live, video or broadcast

format, unless the experience related or the amounts earned are

the typical or ordinary experience of participants in USA• s

marketing plan and such defendants have, and keep for three


. . ' .

years after making the representation, accurate books and

records which substantiate the typicality of the represented

experience.

specific

relating

15. Making any representation with respect

goals for participants in USA' s marketing

to: (a) the number of new customers

to any

program

or new

participants a participant may obtain within a specific time

period or (b) an amount of money a participant may earn through

bonuses and overrides unless the goals represented are the

typical or ordinary experience of participants in USA's

marketing plan and defendants have, and keep for three years

after making the representation, accurate books and records

which substantiate the typicality of the represented experience.

16. Using testimonials or endorsements of public

figures whether in printed, oral, live, video or broadcast

format, which represent or imply that such public figure has

first hand knowledge relating to the financial opportunity

becoming a participant in USA' s marketing plan offers, unless

such individual is personally .a participant in USA' s marketing

plan, has earned an amount as a participant commensurate with

the representation being made and if such individual is

receiving remuneration of any type whatsoever, other than that

earned as a participant in defendants' marketing plan, for his


•• tr •

or her testimonial or endorsement, that fact is clearly and

conspicuously disclosed each time the testimonial or endorsement

is used.


offering for sale any misbranded product.

18. Advertising any products for sale which are

misbranded.

19. Selling, delivering, offering for sale, holding

for sale, or giving away any of USA's (1) Master Formula, (2)

Calorie Control Formula, (3) Fiber Energy Bar, (4) Formula Plus

or (5) Youth Formula.

20. Soliciting or accepting any money or payment of

any kind from any person who has sold or purchased any of

Defendant USA's products.

21. Representing, directly or indirectly, that the

State of Texas, the Texas Attorney General, or any other agency

of the State of Texas has approved or will approve the products,

acts, practices, forms or methods of solicitation of any

defendant. Provided, however, defendants may represent after the

entry of this judgment, that the action evidenced by the

complaint on file herein, has been settled and is no longer

pending.


. . '

III.

Defendants USA, Robert M. Adler II, Joseph s. Ventura,

David Lough, Jeffrey Fischer, and Haydon Cameron, their

officers, directors, employees, agents, representatives,

attorneys, successors and assigns and all others in active

concert or participation with them are hereby permanently

enjoined and restrained from engaging in or performing, directly

or indirectly, any and all of the following acts with respect to

any future marketing operations in which any or all of them

engage:

1. Selling or offering to sell, either directly or

associated with the sale of goods or services, a right of

participation of a multi-level distributorship, including any

plan or distribution system for any product:

(a) Whereby a participant in the plan pays a

valuable consideration for the chance, in whole or in part, to

receive, either directly or indirectly, compensation based on

other than retail sales for introducing one or more additional

persons into participation in. the plan or for the chance to

receive compensation, either directly or indirectly, when the

participant introduces a new participant into the plan.


·,

(b) Whereby the plan pays or participants receive

any compensation, however denominated (including but not limited

to "commissions," "bonuses," "overrides," "leadership bonuses,"

or any term of similar import), unless such compensation is

based upon the actual retail sale of products to the public.

(c) Whereby a participant can obtain any specific

level in the distribution system based upon criteria other than

the amount of retail sales made by either the participant or

person(s) introduced into the plan by the participant.


offering for sale food or drug products which are advertised

through the use of false, misleading, or deceptive, untrue or

misleading representations.

3. Selling or delivering a new drug unless it has been

approved by the FDA.

4. Selling or offering for sale any product which is a

drug unless it is safe and effective for its stated purposes or

any product which is a food unless it is safe and the defendant

has substantial evidence to support the claims made for such

product, whether a drug or food.

5. Misrepresenting either (a) the extent or volume of

sales of products or ( b) the numbers of persons who sell such

products.

.. 'I

AGREED PERMANENT INJUNCTION AND ·FINAL JUDGMENT - ·PAGE 11

. . ·~

6. Representing, except as permitted by law, that any

product has an effect on: blood disorders; cancer; diabetes;

heart and vascular diseases; high blood pressure; infectious and

parasitic diseases; injury; neoplasms; endocrine, nutritional,

and metabolic diseases; immunity disorders (e.g., AIDS); mental

disorders; diseases of the circulatory system, respiratory

system, or digestive system; diseases of the skin or

subcutaneous tissue; poisoning; diseases of the nervous system

and sense organs; complications of pregnancy, childbirth, and

the puerperium; diseases of the musculoskeletal system and

connective tissue; congenital anomalies; conditions originating

in the prenatal period; diseases of the genitourinary system;

and symptoms, signs, and ill-defined conditions.

1. Representing or implying that any product

diagnoses, cures, mitigates, treats or prevents disease if the

product is a new drug which has not been approved by the FDA.




more products unless such experience reflects the typical or

ordinary experience of users of the product or products and

defendants have substantial evidence to support the typicality

of the experience.


...

9. Using testimonials or endorsements of any product

by public figures, whether in printed, oral, live, video, or

broadcast format, which represent or imply that such public

figures use or endorse the product unless said individual does

in fact use the product and the testimonials and/or endorsements

fully comply with Title 16 Code of Federal Regulations Section

255 attached hereto as Attachment A and incorporated as if fully

set forth herein. Further, if such individual is receiving

remuneration of any type whatsoever for his or her testimonial

or endorsement that fact shall be clearly and conspicuously

disclosed each time the testimonial or endorsement is used.

10. Making any representations with respect to any

marketing plan or the amount of money a specific participant or

participants in the marketing plan have earned by the use of

testimonials or articles about participants, whether in printed,

oral, live, video or broadcast format, unless the experience

related or the amounts earned are the typical or ordinary

experience of participants in the marketing plan and such

defendants have, and keep for three years after making the

representation, accurate books and records which substantiate

the typicality of the represented experience.

,, ,,, , ,


11. Making any representation with' respect to any

specific goals for participants in any marketing program

relating to: (a) the number of new customers or new




typical or ordinary experience of participants in the

marketing plan and defendants have, and keep for three years

after making the representation, accurate books and records

which substantiate the typicality of the represented experience.




first hand knowledge relating to the financial opportunity

becoming a participant in any marketing plan offers, unless such

individual is personally a participant in the marketing plan,

has earned an amount as a participant commensurate with the

representation being made and if such individual is receiving

remuneration of any type whatsoever, other than that earned as a

participant in the marketing plan, for his or her testimonial or

endorsement, that fact is clearly and conspicuously disclosed

each time the testimonial or endorsement is used.


...


offering for sale any misbranded product.

14. Advertising any products for sale which are

misbranded.

15. Representing, in trade or commerce, that goods or

services have sponsorship, approval, affiliation, connection,

association, or certification by or with another, when they do

not.





defendant. Provided, however, defendants may represent after the

entry of this judgment, that the action evidenced by the


pending.

IV

Defendant Jerris Leon~rd, without this Agreed Permanent

Injunction and Final Judgment constituting evidence or an

admission by this Defendant regarding any issue or fact alleged

by Plaintiff and without said Defendant admitting any liability


...

herein, stipulates and consents and is permanently enjoined and

restrained from engaging in or performing, directly or

indirectly, any and all of the following acts:

1. Selling or offering to sell, either directly or

associated with the sale of goods or services, a right of

participation of a multi-level distributorship, including any

plan or distribution system for any product:

(a) Whereby a participant in the plan pays a

valuable consideration for the chance, in whole or in part, to

receive, either directly or indirectly, compensation based on

other than retail sales for introducing one or more additional

persons into participation in the plan or for the chance to

receive compensation, either directly or indirectly, when the

participant introduces a new participant into the plan.

(b) Whereby the plan pays or participants receive

any compensation, however denominated (including but not limited

to "commissions, 11 "bonuses," "overrides," "leadership bonuses, ..

or any term of similar import), unless such compensation is

based upon the actual retail sale of products to the public.

(c) Whereby a participant can obtain any specific

level in the distribution system based upon criteria other than

the amount of retail sales made by either the participant or

person(s) introduced into the plan by the participant.


2. Using or causing to be used any advertising

materials promoting USA' s products and/or marketing plan

(including, but not limited to videos and printed literature)

which bear a copyright date of 1986 or earlier.

3. Soliciting or accepting any money or payment of any

kind from any person who has sold or purchased any of Defendant

USA's products.




more products unless such experience reflects the typical or

ordinary experience of users of the product or products and

defendants have substantial evidence to support the typicality

of the experience.

· 5. Using testimonials or endorsements of any product

by public figures, whether in printed, oral, live, video, or

broadcast format, which represent or imply that such public

figures use or endorse the product unless said individual does

in fact use the product and the testimonials and/or endorsements

fully comply with Title 16 Code of Federal Regulations Section

255 attached hereto as Attachment A .and incorporated as if fully

set forth herein. Further, if such individual is receiving


• . .

remuneration of any type whatsoever for his or her testimonial

or endorsement that fact shall be clearly and conspicuously

disclosed each time the testimonial or endorsement is used.

6. Making any representations with respect to any

marketing plan or the amount of money a specific participant or

participants in the marketing plan have earned by the use of

testimonials or articles about participants, whether in printed,

oral, live, video or broadcast format, unless the experience

related or the amounts earned are the typical or ordinary

experience of participants in the marketing plan and such

defendants have, and keep for three years after making the

representation, accurate books and records which substantiate

the typicality of the represented experience.

7. Making any representation with respect to any

specific goals for participants in any marketing program

relating to: (a) the number of new customers or new




typical or ordinary experience of participants in the marketing

plan and defendnants have, and keep for three years after making

the representation, accurate books and records which

substantiate the typicality of the represented experience.


.. • • ...




first hand knowledge relating· to the financial opportunity

becoming a participant in any marketing plan offers, unless such

individual is personally a participant in the marketing plan,

has earned an amount as a participant commensurate with the

representation being made and if such individual is receiving

remuneration of any type whatsoever, other than that earned as a

participant in the marketing plan, for his or her testimonial or

endorsement, that fact is clearly and conspicuously disclosed

each time the testimonial or endorsement is used.

9. Representing, in trade or commerce, that goods or

services have sponsorship, approval, affiliation, connection,

association or certification by or with another, when they do

not.





defendant. Provided, however, defendants may represent after


. .

the entry of this judgment, that the action evidenced by the


pending.

v

Defendant USA is further ORDERED to give a full copy of

the injunctive provisions of this judgment to each officer, each

director, each employee and each agent, who controls, manages,

directs or otherwise takes part in developing Defendant USA' s

products or marketing plan. Defendant USA shall report to

plaintiffs on the manner of its compliance with this section

within thirty days after entry of judgment.

VI.

Defendant Robert M. Adler II hereby stipulates as

follows:

1. He is the sole owner of the property located at

10522 Egret Lane, Dallas, County, Texas, more fully described

as: Lots 3 & 4 in Block A/5187 of University Hill Addition, an

addition to the City of Dallas, Texas, in Volume 3, Page 96 of

the Map Records of Dallas County, Texas (hereinafter referred to

as the "Dallas duplex").

AGREED PEkMANENT INJUNCTION AND FINAL JUDGMENT - PAGE 20

2. The Dallas duplex has at no time been his

homestead.

3. He intends to of fer the Dallas duplex for sale

immediately and to reside in Florida in the near future. After

he does move to Florida, he will no longer occupy the Dallas

duplex.

4. He is also the sole owner of property located at

400 North Flagler, Apt. D2, West Palm Beach, Florida, 33401

(hereinafter referred to as the "Florida house").

5. The Florida house is his homestead.

6. If any homestead character ever attached to the

Dallas duplex, it is his intention permanently to discontinue

all such homestead use of the Dallas duplex. He hereby states

that he has actually discontinued any such homestead use.

Based on these stipulations, the Court FINDS that the

Dallas dupiex is not now, and at no time has been, the homestead

of Robert M. Adler, II, and FINDS that the foregoing

stipulations were made voluntarily and without coercion.

IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that the

property located at 10522 Egret Lane, Dallas, Dallas County,

Texas is not the homestead of Robert M. Adler, II.


. . ....

VII.

The Defendants set forth in Section II, jointly and

severally, are ORDERED to pay Plaintiff the total sum of

$35,000.00: $20,000.00 as costs of investigation and $15,000.00

as attorney's fees. Payment of th is sum is to be mad~ as

follows: $3,000.00 upon signing of this Judgment and $3,000.00

every 90 days following the date of signing of this Judgment,

until fully paid. Defendant Robert M. Adler II is ORDERED to

deliver security to Plaintiff which is acceptable to Plaintiff

and which guarantees that payments will be made as set forth

above. If the security posted is transferred to any third

party, the entire unpaid balance owing under this Judgment is

immediately due and

Signed and entered.

<fJ2 J. M,

APPROVED:

General Texas

1987, at

DISTRICT JUDGE __ _


\ .. . ,

.. -

By: ERT M. ADLER, II

President of United Sciences of America, Inc.

ROBERT M. ADLER, II, Individually,

By: 4ftttl/!L tU!tt/1

JOSEPH S. VENTURA

By:

By:

JEFFREY FISCHER

By: ~6~ HAYDOr:E~ON

By:~v\. ___ L ____ --_--~ ---- )

' ·•. AGREED PERMANENT INJUNCTION AND FINAL JUDGMENT - PAGE 23

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