A proposed class-action is suing the Trustee of the Isagenix Employee Stock Ownership Plan. The Plan is made up of current and former Isagenix employees.

The exact number of Plan participants isn’t provided but was estimated to be just over 550 back in December 2019.

Plaintiff Shana Robertson is seeking to represent Plan participants in a proposed class action.

The named defendant in Robertson’s lawsuit is Argent Trust Company, a for-profit corporation incorporated in Tennessee.

At issue is a trade Argent executed via the Isagenix Employee Stock Ownership Plan (ESOP, “the plan”).

As per the ESOP, on June 14th, 2018,

Argent, in its capacity as Trustee of the Plan, purchased 30,000 shares of Isagenix’s preferred stock for $382,500,000, representing a 30% ownership interest in Isagenix.

The paid amount comes to $12,750 a share.

The Plaintiff former employee claims to have had no prior knowledge of the purchase.


Isagenix provided financial projections to Argent for the valuation for the ESOP Transaction.

The financial projections were unreasonably optimistic.

The ESOP Transaction was structured as a purchase of preferred stock rather than common stock in order to inflate the purchase price paid by the ESOP.

On the other end of the trade were Jim Coover, Kathy Coover and Tammy Pierce.

The Coovers are Isagenix’s co-founders. Together with Pierce, they are Isagenix shareholders and sit on the board of directors.

The ESOP Transaction allowed the selling shareholders, Jim and Kathy Coover and Jim and Tammy Pierce, to cash out a portion of their Isagenix stock at a high price at a time when Isagenix’s business was deteriorating and also placed excessive debt on the company.

To fund the purchase, the Plan took out a loan with Isagenix for the purchase amount $382,500,000.

The terms of the loan would see the Plan repay Isagenix ‘over 39 years in equal annual payments at an interest rate of 3.05%’.

Seems a bit strange to me to borrow money from a company to buy shares in said company but the lawsuit doesn’t make anything of it.

Admittedly I’m not well versed enough in this particular area of finance to make a definitive call.

In any event, to finance the loan Isagenix turned to three investment firms.

The ESOP Transaction placed excessive debt on Isagenix.

By 2020, the Coovers and the Pierces were forced to inject $35 million into Isagenix to avoid default on the Inside ESOP Loan and the Outside ESOP Loan.

In 2020, Isagenix used this money and other funds to retire over $60 million of the principal amount of the Outside ESOP Loan at approximately sixty-five (65) cents on the dollar.

After paying $12,750 a share in June 2018;

On December 30, 2018, the Plan’s Isagenix stock was valued at $6,051.15 per share.

On December 29, 2019, the Plan’s Isagenix stock was revalued at $3,648.71 per share.

The December 29, 2019 valuation represents a decline of over 70% from the purchase price paid by the ESOP.

The lawsuit alleges, as a result of the trade;

The Plan paid more than fair market value for Isagenix stock due to the flawed valuation of the company.

Argent did not perform due diligence in the course of the ESOP Transaction similar to the due diligence that is performed by third-party buyers in large corporate transactions.

Argent’s due diligence in the ESOP Transaction was less extensive and thorough than the due diligence performed by third-party buyers in corporate transactions of similar size and complexity.

The Plan overpaid for Isagenix stock in the ESOP Transaction due to Argent’s reliance on unrealistic growth projections, unreliable or out-of-date financials, improper discount rates, inappropriate guideline public companies for comparison, and/or its failure to test assumptions, failure to question or challenge underlying assumptions, failure to apply a discount for lack of control, and/or other factors that rendered the valuation of Isagenix stock in the ESOP Transaction faulty.

Argent has received consideration for its own personal account from Isagenix for its services in the ESOP Transaction in the form of fees.

Argent failed to fulfill its ERISA duties, as Trustee and fiduciary, to the Plan and its participants, including Plaintiff.

The Plaintiffs lawsuit seeks to recover

the difference between the price paid by the Plan and the actual value of Isagenix shares at the time of the ESOP Transaction.

It’s worth noting that the lawsuit is light on evidence. The Plaintiff states with respect to most of their allegations, that they

will likely have evidentiary support after a reasonable opportunity for further investigation or discovery.

Robertson’s lawsuit was filed on Just 8th in Georgia’s Northern District.

Other than some administrative filings, there haven’t been any significant developments since filing.

I’ve added the Isagenix ESOP lawsuit to our docket calendar. Stay tuned for updates as we continue to monitor the case.


Update 5th October 2021 – In mid September Shana Robertson filed a Notice of Voluntary Dismissal.

The court accepted the notice and terminated Robertson’s case on September 20th.