Jeunesse takes over Monavie, employees get shafted?
Monavie as it stands is but a shell of its former itself.
Mid 2014 saw founders Dallin Larsen, Randy Larsen and Henry Marsh abandon ship, leaving Mauricio Bellora remaining in charge as CEO.
Buying up debt owed to TSG-MV Financing, Jeunesse pretty much purchased Monavie back in March.
Last Wednesday, not even two months later, it was announced that Monavie had defaulted on the debt. Bellora then revealed that
the board intended to agree to a “strict foreclosure.” That meant MonaVie would voluntarily transfer “substantially all” of its assets to Jeunesse.
In effect Jeunesse would absorb Monavie, above and beyond the acquisition advertised back in March:
Under the ownership of Jeunesse, MonaVie will have a strong financial partner offering them an enhanced balance sheet, significant economies of scale and an efficient operational infrastructure to support the company’s growth plan.
With the support of Jeunesse, MonaVie will continue its planned product rollout and international expansion.
Just one problem…
Monavie’s employees and their not wanting to get completely shafted.
Said employees were sold shares in Monavie for $186 million back 2010. Those shares promptly plummeted to worthlessness, losing ‘nearly 100 percent in value‘.
Now Monavie employees who were sold the shares, through an employee stock ownership program, have sued the Bankers Trust of South Dakota, the firm in charge of the program.
The lawsuit alleges Bankers Trust failed to fulfill its duties as trustee of the program by allowing MonaVie to sell shares at a highly inflated value using a loan carrying an exorbitant interest rate.
Worried they’d be left holding the bag, Bankers Trust turned around and sued Monavie, ‘alleging it was failing to pay the bank’s legal bills as their agreements require.‘
As part of that lawsuit Bankers Trust have also asked for a temporary restraining order halting the Monavie foreclosure, claiming that ‘procedures for carrying out a strict foreclosure had not been followed.‘
So basically you have Monavie riddled in debt, Jeunesse buying some of that debt from TSG-MV Financing LLC and telling everyone it’s going to be business as usual… and now a less than two months later announcing a foreclosure because Monavie can’t pay its debt…
…thus screwing over Monavie employees, who as I understand it won’t have any stake in Jeunesse if the foreclosure goes through, and are instead left with shares in nothing that they paid $182 million dollars for.
Again, this is what Jeunesse was selling the general public back in March:
Under the ownership of Jeunesse, MonaVie will have a strong financial partner offering them an enhanced balance sheet, significant economies of scale and an efficient operational infrastructure to support the company’s growth plan.
Yeah, not quite fellas.
Personally I have to agree with Troy Dooly on this one (and a hat tip for the heads up!):
This ESOP deal seems as convoluted as ENRON!
It seems on the surface that the majority of MonaVie shares were sold to the hardworking employees of MonaVie, while the assets of MonaVie which were for the most part the only real value of the shares, were sold (I guess I should say mortgaged) off to another group, without the knowledge of the one group that should matter most… the EMPLOYEES!
When independent professionals who are part of the network marketing community realize the company they have been promoting, recruiting and selling for, is a sinking ship, they will seek out other income opportunities.
In the case of MonaVie, the reps didn’t have to go seeking out a new home, one came to their rescue.
Be it a white knight in shining armor, or a wolf in sheep clothing (as the (Salt Lake Tribune) article kind of alludes), Jeunesse and the Jeunesse network marketing arm seems to be the biggest winners at the moment.
Pretty much. If the foreclosure plans go through they get all of Monavie and leave the employees with nothing!
Needless to say there was also probably some major shenanigans going on between Monavie’s Founders and Bankers Trust. How else did they convince them to pay $182 million dollars for worthless shares, only to bail on the company a few years later.
And bear in mind, Monavie’s employees are hardly the first party Jeunesse have recently screwed over. They do seem to be rolling in controversy of late.
As per the Salt Lake Tribune (read the article comments for a giggle), a ‘hearing is set for Monday‘ regarding Bankers Trust’s injunction request.
Stay tuned…
Update 13th May 2015 – Following a hearing held on Monday, Judge Bruce Jenkins has temporary halted Jeunesse’s Monavie foreclosure plans.
Another hearing on the matter has been set for May 29th.
When people can’t make it in other companies they go to Jeunesse.
Don’t believe me? Ask Dr. Darryl See, formerly of Mannatech.
He screwed up so bad to make a few bucks from Mannatech, he is believed to have invented a drug trial involve a Mannatech product and falsely claimed to involve NIH grant at UC.
Except he resigned from UC months ago, his wife is a Mannatech rep, and he never got NIH grant. The school did.
Sam Castor was so embarrassed, he sued See and See skipped town and went to Jeunesse before eventually losing his medical license.
In an ESOP, the employees usually don’t actually put up any of their own money per se.
Usually, the company puts up their pension fund, the owners cash out, a group of Trustees runs the company for the ESOP and most of the time.
After a few years, the ESOP sells the company to new buyers and the pension fund gets the proceeds, which are then distributed to the employees either in lump sum taxable payments (which can be diverted tax deferred to individual retirement accounts) or put back into a company sponsored retirement plan they have a vested interest in in the new, ongoing company.
It is important to also note that the employees in an ESOP do not have an immediate vested interest in the ESOP Trust, they don’t for several years depending on how its set up.
They also most certainly don’t own the company, they own beneficial interests in the trust that owns the company which is splitting hairs but is an entirely different thing.
Surely, if this goes through, the employees are getting the shaft, but their not out of pocket, they haven’t contributed any of their own money to this, they are just losing a pension interest.
The entity that actually wrote a check to the old owners and expected to be paid by the new trustees out the company profits is problably Banker’s Trust or some other bank or financial institution that funded the ESOP.
If the new company finds a way to weasel out of paying, or file bankruptcy whilst the assets go to this other company, that transaction can be contested as a preferential or even fraudulent transfer in bankruptcy court, where they have a good chance of winning, having the earlier claim. I expect this wil be settled.
Sometimes the ESOP does have a continuing role in running the company, effectively becoming the new buyer, but still, until the initial round of funding is repaid, its not employees who are out of pocket, its a bank.
And if Troy Dooley was half the expert he makes himself out to be, he’d know at least the high points of all this and wouldn’t once again be making a fool of himself by complaining of things that he knows little to nothing about.
If this does turn out to be a crooked deal, and it does look like someone is trying to pull something, the Trustees have fiduciary responsibilities to the employees and it won’t be allowed.
Banker’s Trust indeed did loan the ESOP $182 million to buy the company, and they have the earlier, superior claim on the assets of the company and the stock.
If nothing else they can vote the shares to stop it. And they will, because if this happens, they’re the ones who wrote a check and won’t be getting paid back for the loan they made.
ESOP’s [employee stock ownership program] are the only kind of retirement plan which can be leveraged, ie the ESOP can raise a loan from a financial institution, through it’s trustee.
this loan amount is then used by the company for its expenses, growth, expansion etc, and paid back through the ESOP in yearly installments.
the financial institution that gives the loan will have the first lien on the assets of the company. in this case it appears TSG-MV Financing LLC, was the lending institution.
Bankers Trust of South Dakota, appears to be the trustee which holds the ESOP shares and had a fiduciary duty to work in the interests of the ESOP employees. if they allowed monavie to raise funds from TSG-MV at an inflated stock price, then it affects the ESOP members, because assets of the company will be used to pay the [inflated] loan first.
if a company fails, and the stock price goes to near zero, then the lending institution has the first lien, and any remaining assets will go to ESOP. this is what happened in Enron too, ESOP became worthless.
so, in this case i’m thinking TSG-MV has the right over the assets of monavie, and if jeunesse bought off the loan they have the right to monavie’s assets.
having said this, ESOP is very complex, and i’m no expert, so lets see what the court says, and i’m hoping i’m getting this right! 🙂
This is not at all what happened to Enron, Enron didn’t have an ESOP they were a publicly held company whose employees happened to own a lot of shares.
The ESOP funds used to buy the company for the trust were paid to the former owners, the guys who bailed. Jeunesse may have a loan from the company, but if that loan entitles them to any assets is far from certain and if management entered the deal giving them a lien on the assets that they’re trying to foreclose on, that deal would have to have had prior approval from the trustees.
Yes, ESOPs funding firms trot out the “this loan amount is then used by the company for its expenses, growth, expansion etc, and paid back through the ESOP in yearly installments.”
But in many ESOPs, and in this one in particular, the money is used to buy out the old owners, the Larsons and Marsh, leaving Mauricio Bellora who may have had a secret under the tabledeal to set up the loan and foreclosure later.
Again, the Trustees, as the actaul holders of the stock, most of which is unallocated to employees this early in a plan can file a bankruptcy petition to prevent the foreclosure under the terms presented by the lender as a fait accompli.
While ESOPs are pushed as wonderful plans for employees, and they somethimes are, the fact is in small companies of less than 200 employees, they are ways for the old owners to sell the company, sometimes while maintaining control over its operations, and avoiding paying some substantial tax on the sale.
Quit trying to sensationalize it by screaming ENRON, they have nothing in common at all beyond a few crooks at the top of the organization of mostly honest employees. And I don’t expect this foreclosure on the assets to be allowed if the trustees contest it in court.
If the deal was less than arms length, if the terms were odious or the interest rate usurious, all of these things can remand the whole thing back to the trustees to come up with their own plan.
It ain’t over yet. Having said that, I in fact am an expert and yes, ESOPs are very complex, I have set some up for companies.
We’ll still have to see what the court says, but I don’t seet his going through as they tried it here.
enron definitely had an ESOP, in which employees paid only a small percentage [10-15%] of the stock value from their salary.
when enron collapsed, esop collapsed, and the retirement funds of enron employess were washed away.
enron employees alongwith the DOL [department of labor] took the esop trustee, enron corp, individual directors of enron and even the enron accounting firm, to court for failing in their fiduciary duty to esop.
it ended with settlements between esop and each of the defendants.
the difference i see between enron and monavie is that in enron, employees were paying some amount [however small] from their own pocket towards ESOP, hence they had a stronger case.
in monavie, employees were not paying themselves for the stock, this may explain why monavie employees are going after only the trustee for failing their fiduciary duties, and have not filed a case against the company itself or the directors.
as i said in post#4, when ESOP is leveraged, the lending institution has the first lien on the assets of the company.[this assumes the deal is clean, with no shadiness]
in the case of monavie/ TSG-MV/ bankers trust /jeunesse, if they have made shady deals against the interests of the ESOP or are not ‘following foreclosure procedures correctly’, then of course the court can stay the foreclosure.
so, if the court stays the foreclosure, what happens next?
I would appreciate Tory reporting on the positives as well as the negatives. A good reporter argues the facts, and both sides. He doesn’t take a side either.
If Monavie didn’t find a buyer for the TSG note what would have happens after Monavie filed bankruptcy? How bad for the industry this would have been…. what about the thousands of distributors?
Jeunesse Global is a great company. They stepped up and took a chance. Wendy Lewis is a brilliant owner. Dallin and his partners created something special. Decisions are made when running a company some good some bad.
Employees have always been treated beyond good at Monavie…
Early founding share holders who actually invested real money, were paid handsome dividends, some even cashed out entirely, from what I’ve heard.
2015 Jeunesse will all by it self achieve over $1 billion in sales. With Monavie distributors becoming Jeunesse distributors should had a huge contribution to annual sales. Jeunesse has double sales annually since inception 9/9/09 9:09pm
The Monavie leadership is excited for the future. One family Jeunesse Global.
The employees wouldn’t be in the situation they are now?
Monavie didn’t go under due to randomness. Products weren’t getting sold to retail customers.
There’s no such thing as “too big to fail” in MLM.
Mathew Nestler would probably disagree.
until they were sold a dud deal and then a few years later Jeuenesse took over.
The founders did not leave on their own. They were forced out.
The employees were fired, and several new comers who helped start “mynt” helped sell the company to Juenesse right out from underneath the founder… All that glitters is not gold.
By whom?
Were they also forced to sell shares and make big bucks… y’know, before they were “forced out”?
Again, fired by whom? And where did “the newcomers” come from?
Let’s get to the bottom of this!
Judge wants answers, halts takeover of MonaVie — for now.
sltrib.com/news/2500617-155/judge-wants-answers-halts-takeover-of
Thanks for the heads up Bernado!
Note sure why that update didn’t pop up in the news feed…
I need information that should come from Native Americans. after all every Jeunesse products are approved by the responsible bodies?
and another question: The American women wear? market in the USA? I am Portuguese Lisbon.
@Pedro — you need words from “American Residents”. “Native Americans” means something very different in the US.
merriam-webster.com/dictionary/native%20american
Jeunesse products are sold as cosmetics or nutritional supplements, and thus is NOT regulated by the American FDA. As long as they are not poisonous, or claim to affect your body like a drug would, they are “legal” to be marketed.
Here is FDA website explain what they approve (and what they do NOT approve)
fda.gov/ForConsumers/ConsumerUpdates/ucm047470.htm
I will also urge you to study this lawsuit by a former Jeunesse member who essentially had his positions and downline stolen, with tacit approval of Jeunesse, by another member.
thompsonburton.com/mlmattorney/2015/02/20/nestler-vs-jeunesse/
when I refer to Native Americans … I mean people born and living in USA. American women use “Instantly Ageless”, whose main component is argireline?
@Todd Hartog
WTG for standing up for MonaVie and the inevitable buyout. I saw you and your wife in St. Louis a few years ago. I was in Lance and Tracey Smith’s group.
Nevertheless, I am one of the many distributors who jumped ship because at the time I didn’t understand that there was a buyer for the company and it looked like MonaVie was disappearing.
Knowing what I know about MLM being the “New Economy” (Eric Worre, Go Pro), I have found a new home somewhere else with another great company. But I just want to say GOOD ON YOU!
It takes guts to stand up for what you believe in and set the record straight for those who don’t know any different.
And yes, a GOOD reporter reports BOTH sides and let’s the reader make the final decision. Shame on I’m for such a biased piece of rubbish!
Dear Shareholders, Employers, and other Interested Parties,
When an entity gets to the end of it’s ability to pay it’s bills, etc., there often isn’t a lot of good things that happen, that’s just life! there are too many stories floating around here each telling what happened from it’s own perspective, and with it’s own bias, so who knows what really happened and who got screwed , if any one did!
I fairly recently went thru a bankruptcy experience and it wasn’t pretty nor are they ever baring unusual circumstances! I don’t take much stock from what I have read and am glad there is the product that is obtainable still, and it is a good one, namely Monavie.
I’ll move on to take more of it than I’m currently taking, hopefully the price will go down a little bit as it has really gotten “pricey”, eh what?
god bless those that went thru this and were honest and forthright with their dealings.
God bless you and yours,
Larry-Proverbs 11:30
PS. don’t be lured in by any of the “who struck john, just take everything with a grain of salt and pray for the Employees and the company that it can remain afloat and no one gets creamed.