WakeUpNow file $70 million lawsuit against Kirby Cochran
When reports surfaced last week of Wake Up Now having gone bankrupt, one of the first things I did was check to see if anything official had been filed in court.
A search of Pacer turned up nothing, so I left it at that.
That WakeUpNow are effectively bankrupt remains in question, with the company thus far having failed to publicly issue a statement regarding most of their affiliates leaving and the lack of commission payments for months.
What has surfaced though is a lawsuit filed by WakeUpNow on January 27th, in Utah’s Fourth Judicial District Court.
Before we get into the lawsuit itself, I did some snooping around the Utah Courts websites and discovered they run their own records system. It’s called XChange and Utah charges $25 to set up an account and then $30 a month on a rolling subscription.
That’s just for access to search Utah’s records mind, with court document downloads incurring additional fees.
Needless to say I won’t be signing up anytime soon.
Thankfully a reader sent in Wake Up Now’s complaint, which is filed against former CEO Kirby Cochran, staff of Global Connection Network, Elaine Cochran (Wake Up Now’s lawyer until October 2014) and Juan Carlos Lozano.
Wake Up Now identify Lozano as
an individual residing in Mexico (who) has travelled to the U.S. multiple times (including Utah), committed acts in the U.S. and Mexico that adversely affect commerce (pertaining to Wake Up Now) within the United States.
In their lawsuit, Wake Up Now incorrectly allege that their affiliates are retail customers:
Wake Up Now makes its products available to retail customers, whom Wake Up Now categorizes as “insiders,” “preferred customers,” and “IBOs.”
The company states it ‘sells a majority of its products via direct sales‘.
Its beef with Kirby Cochran?
Kirby Cochran Gets His Nose Into The WUN Tent (Ozedit: Yes, that’s the actual title used in the complaint)
In December 2010, Kirby Cochran, who previously had no involvement with Wake Up Now, learned through his brother Gary C. that the management of Wake Up Now was interested in going public.
Kirby Cochran, acting as a middle-man, orchestrated a going public shell merger wherein Wake Up Now, an operating Utah corporation, was acquired as a subsidiary by a Delaware publicly traded corporation, trading/ticker symbol “WORC”.
In connection with the merger, the Delaware publicly traded shell corporation parent changed its name to Wake Up Now, but kept its trading/ticker symbol WORC.
Wake Up Now later discovered that, near the time of the transaction, Kirby Cochran’s brother and co-defendant Gary C. secretly purchased a large percentage of WORC’s public float.
Wake Up Now has also recently discovered that, at the time of the transaction, Kirby Cochran, who was not a licensed broker, was negotiating both sides of the deal.
He induced the public shell company to issue significant shares of stock to Wake Up Now founder Troy Muhlestein to close the acquisition, but then surreptitiously induced Muhlestein to deliver to Kirby Cochran’s possession, medallion guaranteed stock certificates evidencing at least 6,412,500 of those shares, which Kirby Cochran promised to hold for Richard Smith and others.
Troy Muhlestein is credited with founding WakeUpNow in 2009.
The naïve and trusting Mr. Muhlestein complied as directed by Kirby Cochran, leaving him with only 2,137,500 shares for the company that he founded and continued to run.
Kirby Cochran, who was an adjunct business professor at the University of Utah, requested that one of his business students set up a company to hold the 6,412,500 Nominee Shares in a name not traceable to Kirby Cochran.
On January 24, 2011, Kirby Cochran’s student complied and incorporated Vestry Consulting Services, L.L.C. (“Vestry”) in Utah. Cochran then caused the Nominee Shares to be transferred to Vestry.
With Cochran in control of a large portion of WakeUpNow’s shares, allegedly this is when things got dodgy.
Kirby Cochran Infiltrates WUN
Notwithstanding his secret, undisclosed and significant ownership of Wake Up Now through the Nominee Shares, Kirby Cochran had minimal involvement with Wake Up Now as he was then attempting to wind down Castle Arch Real Estate Investment Company, L.L.C. (“CAREIC”), where he had served as CEO between 2004 and November 2010 and director from 2004 through late 2011.
Kirby Cochran was also busy working as CEO and Director of Clear Peak Energy, Inc., (“Clear Peak”).
Later in 2011, with CAREIC and Clear Peak both driven to insolvency and ultimate bankruptcy due in large part to Kirby Cochran’s gross mismanagement and insatiable appetite for uncapped expense accounts, first class travel, fine hotels, fine restaurants, company cars, home office allowances, and salaries to his children, spouse and siblings (including defendant Nathan C., Elaine C. and Gary C.), Kirby Cochran targeted Wake Up Now as his next “piggy bank”.
Wow WakeUpNow, tell us what you really think…
Kirby Cochran’s first step in infiltrating Wake Up Now was to locate an investor.
He located Phil Polich, a real estate investor, and induced him to commit to make an equity investment in Wake Up Now.
Kirby Cochran induced Mr. Polich to invest in Wake Up Now in large part due to Kirby Cochran’s claims that he had already invested $1.5 million of his own money into Wake Up Now. Mr. Polich later discovered that Kirby Cochran had lied to him and at no time did Kirby Cochran personally ever have any material amount of his own money at risk at Wake Up Now and at no time did Kirby Cochran pay anything but nominal consideration for his WUN stock.
Kirby Cochran also concealed from and did not disclose to Mr. Polich his secret control of the 6,412,500 Nominee Shares.
After getting a commitment from Mr. Polich to invest approximately $1 million into Wake Up Now, Kirby Cochran then contacted the Wake Up Now management and indicated that he could raise millions of dollars for Wake Up Now, but that nobody in his network of investors would invest unless Kirby Cochran was appointed CEO of Wake Up Now.
And so it was.
After some thrashing among the Wake Up Now management team, the Wake Up Now Board of Directors agreed to appoint Kirby Cochran as CEO on August 1, 2011 with several dissenting members of management leaving WUN.
Biased as hell sure, but the picture WakeUpNow paint of Cochran is nothing short of a corporate tyrant:
As he had done at CAREIC, as CEO at Wake Up Now, Kirby Cochran attempted to take total control of Wake Up Now by causing the resignation of all dissenting board members, such as founder Troy Muhlestein and early director Jon Holbrook, causing the Board to grant him two board votes, ceasing all stockholder meetings, and ceasing all formal board meetings.
Indeed, during his tenure, Wake Up Now held no stockholder meetings and only one board meeting. Kirby Cochran also caused the termination or resignation of all dissenting employees and members of management.
As another tactic to ensure his desire to control matters, Kirby Cochran created a substantial number of secret side-deals and promises with employees, managers, and investors with the implicit requirement that in order for the counter parties to profit from the side-deals, loyalty to, and protection of, Kirby Cochran was required.
Kirby Cochran also installed cameras around the Wake Up Now offices at 5252 Edgewood Drive, and even admitted to at one time secretly wiretapping executive offices there.
Sounds like WakeUpNow’s own version of Kim Jung Il.
In Wake Up Now’s eyes, Kirby Cochran’s conduct was responsible for the financial state of the company.
However, due to the fact that Kirby Cochran had over $1 million in judgments against him, and was being threatened by a bankruptcy trustee who later sued him for breach of fiduciary duties and fraud in late 2014 for his actions as CEO of CAREIC, Kirby Cochran was unable to acquire voting control of Wake Up Now’s stock, a problem that later allowed him to be jettisoned from Wake Up Now after his leadership had, pursuant to his modus operandi, placed Wake Up Now in a precarious financial situation.
Oft times we hear of secret deals between MLM companies and their top affiliates, but what of executives themsleves wheeling and dealing?
Due to the fact that he had over $1 million in judgments against him, and was being threatened by a bankruptcy trustee (a forensic accountant) who later sued Kirby Cochran for tens of millions of dollars for fraud and breach of fiduciary duties in late 2014 for his actionsas CEO, Kirby Cochran insisted that WUN pay him only minimum wage (so that he qualified for health care and other corporate benefits).
However, Kirby Cochran secretly arranged that he be compensated in ways outside of his creditors reach or knowledge by causing WUN to pay his credit card bills which featured tens of thousands of dollars of charges each month, including significant personal expenditures.
In addition, Kirby Cochran caused WUN to pay for dozens of unnecessary personal trips across the world which included first-class and business class international air accommodations, nights in some of the world’s finest hotels, and meals at fine restaurants.
And Cochran its alleged was rather generous with WakeUpNow’s money, extending his secret benefits to family members.
Kirby Gets “Loving Brother” Gary C. In On The Action
Kirby Cochran and his brother Gary C. have been padding each others pockets for years.
In the 1990s, Gary C. cut Kirby Cochran into ABS, Inc., Gary C.’s speaking and sales company.
The Cochran brothers lived a lavish lifestyle at the expense of ABS, which included fine meals, travel, homes, personal use of the ABS “company” jet, and apparently gross mismanagement.
With all of its resources depleted, in large part due to the lavish spending by the Cochran brothers, ABS was unable to pay dividends to its investors, much less a return of principal, or to pay its creditors.
Moreover, ABS became subject to a myriad of regulatory and tax issues across a number of states and went into bankruptcy.
Trustee Roger Segal, Esq. and John Morgan, Esq., now a U.S. Trustee, pursued the Cochran brothers in the courts for years.
Once the dust settled from ABS, the Cochran brothers once again commenced padding each other’s pockets and cutting the other into business deals, more recently through WUN and now Global.
Pertaining specifically to WakeUpNow,
In the days leading up to Kirby Cochran’s official appointment as CEO of WUN, Kirby Cochran duped WUN’s management into signing a sham “consulting agreement” with Kirby Cochran’s nominee company Vestry.
In exchange for illusory services that were never intended to be, and never were, performed by Vestry, the consulting agreement required WUN to pay Vestry $4.00 per month per active salesperson.
At no time has WUN’s profit exceeded $4.00 per active salesperson per month, meaning that Kirby Cochran masterminded a contract to suck 100% of the profits from WUN into his secret nominee Vestry.
Now this I didn’t entirely understand. Did Kirby promise WakeUpNow a barrage of new affiliates, for which he was to be paid $4 a month for?
Huh? Surely WakeUpNow’s then management couldn’t have been that stupid?
After becoming CEO and Chairman, Kirby Cochran fired the WUN officer who signed the consulting agreement on WUN’s behalf.
On January 20, 2012, Kirby Cochran caused the entire sham Vestry contract to be assigned to Gary C.
On that same day, Kirby Cochran caused to be transferred the 6,412,500 Nominee Shares to Gary C.
Based in the average trading price of WUN’s stock at the time, the 6,412,500 Nominee Shares were valued at approximately $2,565,000. Based on WUN’s current stock price, the current paper value is $6,540,750.
As if the obligation for WUN to pay 100% of profit margins through the Vestry sham “consulting contract” were not enough, Kirby Cochran also caused WUN to hire Gary C. as a “consultant” with no responsibility or oversight.
Kirby Cochran caused Gary C. to be paid $167,953 “salary” and “dividends” between February 23, 2012 and the time that the Cochran brothers were removed in September 2014.
On information and belief, Gary C. directed some of this money back to Kirby Cochran.
I still don’t get the $4 a month per affiliate thing, but the rest is pretty messy. Getting your brother on board, transferring the shares you effectively hold onto him and paying him a salary for consulting… which is really money you want to pay yourself, but can’t because of the bankruptcy mess you’ve created in other companies.
This next part is particularly interesting, as it pertains to possible stock market shenanigans:
In addition, based on information and belief, between March and August 2013, Gary C. sold a significant portion of WORC’s public float in the market during a stock run-up.
The sales resulted in great personal profit to him.
All in all, Gary Cochran is credited with profiting greatly from WakeUpNow – whilst offering little to nothing in return.
Gary C. did virtually nothing for WUN and only spent his time ghost-writing a disorganized vanity book for Kirby Cochran entitled “The Wolf Mentality”.
Despite the fact that WUN has been unable to sell enough copies to cover the book’s printing costs, Gary C. is astonishingly demanding that WUN pay him additional cash royalties for the book.
It is little wonder that Gary C. made a Facebook post on January 20, 2015 refuting claims circulating that Kirby Cochran is a con-man, while admitting to aiding and abetting Kirby Cochran, Wach and Rosales involvement with Global, and admitting that Kirby Cochran “helped to enhance my life both personally and financially”.
As we get closer to Cochran’s termination from WakeUpNow, various greivences are aired pretaining to Cochran’s keeping of WakeUpNow property (a 2014 Jeep Grand Cherokee, an iPhone 6 and Macbook).
A sense of cult personality sculpting is also brought to the surface:
WUN also tasked Kirby Cochran with maintaining relationships with certain important IBOs. While CEO, Kirby Cochran had access to lists containing contact information and other information for WUN’s best IBOs and leaders.
Kirby Cochran regularly met these IBOs, spoke before them, interacted with them, and developed close personal relationships with them. Kirby Cochran also directed WUN to build him up as a “visionary” leader.
In this way, WUN reposited in Kirby Cochran a significant amount of its IBO and customer goodwill.
Based on the goodwill vested in Kirby Cochran over the years, many of WUN’s IBOs identified WUN through Kirby Cochran.
Part of that publicity machine was Troy Dooly, who referred to Cochran as “someone I’ve come to admire and look at as a mentor” in mid 2014:
Update 3rd August 2021 – As at the time of this update the Cochran marketing video featuring Troy Dooly has been marked private.
As such I’ve removed the previously accessible YouTube link. /end update
In addition to providing to Kirby Cochran access to WUN’s IBOs and customers, WUN entrusted Kirby Cochran with developing much of WUN’s Latin American markets.
Kirby Cochran even hired his son and co-defendant Nathan C. to act as WUN’s VP of International with a focus on Latin America due to Nathan C.’s Spanish speaking abilities.
Like Kirby Cochran, Nathan C. was also subject to the Confidentiality, Non-Compete, NonSolicitation, and Non-Disclosure Agreements.
Before we get into why those agreements are of significance, here, in WakeUpNow’s own words, is how the firing of Kirby Cochran as CEO went down.
In the months leading up to it…
As CEO, Kirby Cochran caused excessive personal and corporate expenditures despite the Corporation’s relative cash positions, engaged in side-dealings with employees and affiliates, engaged in undisclosed and/or veiled agreements with family members, including Gary C., failed to adequately plan to avoid repeated financial emergencies, nearly unilaterally caused multiple severe business disruptions and costs due to his personal insistence on internally developing software to perform critical business processes despite the existence of cost-effective off-the-shelf alternatives, distraction from personal judgments and other legal issues due to past business dealings, and negatively affecting corporate morale by installing surveillance cameras throughout employee work areas, and creepily commenting to attractive young women that he was watching over them.
Moreover, members of WUN’s board and certain large investors had discovered that Kirby Cochran manufactured personal credibility by dishonestly taking credit for the success of a company called Headwaters, Inc. (formerly known as Covol, Inc.).
In reality, Kirby Cochran was president of Covol for 9 months in 1995-96. During the time that he was President at Covol, its gross revenues were only a few hundred thousand dollars with millions of dollars of investor funded losses.
Facing millions in losses, Kirby Cochran quit in 1996 citing health issues.
Despite Kirby Cochran’s representations, when he left Covol, its stock price (if adjusted for stock splits) differed little from the stock price at the time he started (despite a brief $250 million market capitalization spike during his brief tenure).
After Kirby Cochran’s departure, Covol changed its management, significantly changed its business, raised new money, and changed its name to Headwaters and most significantly, hired Kirk A. Benson, as chief executive officer & chairman of the Board who continues to serve in that capacity today.
Many years after Kirby Cochran’s departure, and under Mr. Benson and his team’s leadership, Headwaters started to gross millions of dollars in sales, showed its first profit, and became publicly listed on the NASDAQ.
Despite having little or nothing to do with its success, as Headwaters reached a billion dollar market cap in 2004 (8 years after his departure), Kirby Cochran started to falsely claim that it was he that built Headwaters into a billion dollar company.
Moreover, WUN’s largest investor, which by September 2014 had invested approximately $3 million in order to meet a series of cash shortfalls WUN faced from time to time due to Kirby Cochran’s rampant and reckless spending, lost faith in Kirby Cochran’s honesty due to his falsely claiming that he had personally invested over $1.5 million in WUN when in reality, he had no, or negligible, investment in WUN.
Kirby Cochran also wasted approximately $2 million dollars by purchasing and attempting to reboot the Southeast Asian operations of Veyea, Inc., a failed MLM started by James Watson, a former HR director of Utah based MLM Neways.
Together with Mr. Watson, Kirby Cochran and his son collectively spent months in Malaysia, Thailand and Vietnam without evidence of any work being accomplished.
Kirby Cochran even caused WUN to hire private, personal security to stop IBOs from being able to interact with him.
Most significantly, Kirby Cochran’s desire to control all aspects of WUN’s business resulted in WUN irrationally shunning third-party “commission engine” software used by substantially all direct sales companies with a multi-level compensation structure.
Kirby Cochran created a false narrative that third-party commission engine software, despite being used by substantially all of WUN’s competitors, was prohibitively expensive and problematic.
Those WUN employees and consultants with technical backgrounds who objected to WUN creating its own commission engine were marginalized and often terminated.
Kirby Cochran requested that his long-time acquaintance, Ben Anderson, who is a trained and experienced computer scientist and former Senior Vice President of Novell, Inc. from 1998-2002, advise Wake Up Now in building its own software platform and commission engine (referred to by WUN as the “HUB”) which would integrate all IBO sign-ups, facilitate marketing, customer sales, charge customer credit cards, facilitate credit card refunds, calculate and deliver sales commissions, and other functionality fundamentally essential and at the core of WUN’s business.
Unsurprisingly, Mr. Anderson spoke in terms of years of development and beta testing and millions of dollars of development costs. Kirby Cochran never again invited Mr. Anderson back to WUN.
Kirby Cochran instead turned to a couple of ambitious young developers to “complete” the development of the HUB.
Chad Jardine, WUN’s head of marketing at the time, who was closely aligned with the needs and interests of both WUN’s customers and IBOs and had enough technical knowledge to digest the “progress” of Kirby Cochran’s chosen developers, vehemently objected to the quick creation of a new HUB.
Mr. Jardine was quickly marginalized and eventually fired by Kirby Cochran.
Over the objection of a number of advisors and management team members who were powerless to stop it, Kirby Cochran and his young developers launched the new HUB in October 2013, just 3 months after Ben Anderson had assessed the need for years of development.
Mr. Anderson was right.
Kirby Cochran caused the HUB to be launched without sufficient development and with no beta testing.
The HUB was virtually non-functional at the time of launch.
Astonishingly, Kirby Cochran’s hand-picked development team had somehow destroyed the former functional HUB system in the process of launching the new HUB. There was no going back.
The result of the HUB debacle was disastrous. WUN became nearly totally blind to its business functions.
It was unable to confirm delivery of its product, unable to determine whether products were paid for. WUN’s call center had wait times for over 4 hours with disgruntled customers and IBOs who were unable to purchase product, unable to log-in to receive product, and IBOs unable to view their accrued commissions.
WUN, which already had an extremely liberal refund policy, commenced honoring substantially every refund request, even where products had been used and commissions paid.
Many customers, understandably enraged by multi-hour call center wait times, simply charged-back their purchases.
Despite what by necessity became a nearly no-questions-asked-refund policy, hundreds of people inquired with, or made actual complaints to, governmental agencies, including the U.S. Federal Trade Commission (“FTC”), and the Better Business Bureau.
Competitors pounced causing great damage to WUN’s business and reputation.
WUN was forced to spend significant money to increase its customer support staff and even hired a third party call center, which spoke for WUN, but lacked the training and skill of most of WUN’s in-house customer support agents.
Kirby Cochran’s gross mismanagement, side-deals with family members to pay out all of WUN’s profits, lavish expenditures, failed business initiatives, and the botched HUB launch placed WUN in a position where it needed millions of dollars to survive.
Now contrast that with what is presented in Troy Dooly’s video above.
But I digress, back to Kirby Cochran and his sensing that his time at WakeUpNow wasn’t going to end well…
Likely remembering the negative result to them when ABS imploded, the Cochrans returned $371,000 to WUN via two unilateral Wells Fargo Bank counter transfers to WUN in September 2014.
The Cochrans excluded WUN’s management and Board of Directors from any knowledge of the transfers back to WUN. Only the CFO became aware of the transfer when the teller at Wells Fargo called him after-the-fact to inquire as to why a large sum of money was being transferred into the WUN account.
After the fact, the Cochrans created a writing deceptively suggesting that WUN’s 32 year old CFO had somehow coordinated with the Cochrans and induced the Cochran brothers to act.
As the Cochran brothers inevitably knew would occur, the $371,000 was instantly absorbed to pay the most pressing creditors, including WUN’s IBOs and employees, with millions of dollars of other accrued liabilities still unmet.
The payment of the $371,000 to WUN creditors occurred prior to Kirby Cochran’s termination.
In order to meet the acute cash shortfall caused by the gross mismanagement and obscene spending, WUN commenced several rounds of reduction in force, even terminating a number of low-paid support workers.
In a display of Kirby Cochran’s lack of touch, he demanded that one of WUN’s remaining staff members program his new, expensive company iPhone 6 (replacing his iPhone 5) even as the staff member’s colleagues were cleaning out their desks.
About that time, he berated another employee tasked with preparing his daily smoothie for neglecting to include carrots in
Due to the foregoing, on September 27, 2014, WUN stockholders owning a majority of the voting shares of WUN removed Kirby Cochran from the WUN board of directors.
That same day, the remaining members of the Board of Directors voted to have Kirby Cochran take an unpaid leave of absence as CEO for a period of at least 6 months, leaving him with the title of “Chairman” (despite being terminated from the Board).
Kirby Cochran was instructed that day that he was no longer welcome to have an office on the WUN premises.
And that was that.
Kirby Cochran was indignant. He immediately went to the home of Richard Smith, one of WUN founder Troy Muhlestein’s original key advisors, and invited Mr. Smith to join him in creating a new company to compete with WUN during a wild drive where Kirby Cochran sped through a windy canyon road.
Moreover, a few days later Kirby Cochran attempted to cherry-pick and recruit several of WUN’s employees, including Josh Daily, who was the primary contact point for all of WUN’s primary digital product vendors.
Cochran also solicited its principal office manager.
Some of Kirby Cochran’s comments turned from defamatory to threatening.
Kirby Cochran claimed to at least one WUN employee that he had major leverage over WUN and that it was “safe” to follow him, explaining that “If I don’t get everything that I am asking for, I’m going to drop an atomic bomb on this place”, suggesting that he would devastate WUN.
Due to the behavior described above in the preceding paragraphs, on October 16, 2014, WUN’s board of directors permanently terminated Kirby Cochran from all positions at WUN, including CEO and “Chairman”.
Prior to October 16, 2014, Kirby Cochran gave no notice that he had resigned as Chairman or any other position with Wake Up Now.
And that was that.
Kirby Cochran then launched a full-scale assault on WUN. First, Kirby Cochran recruited his family who he had already inserted in positions of power and profit in WUN, including his son Nathan C, the former leader of WUN’s Latin American markets.
Kirby Cochran recruited his brother Gary, one of WUN’s highest paid, tasked with building up Kirby Cochran’s image.
Kirby Cochran recruited his wife Elaine C. despite her continuing to serve as legal counsel to WUN with the specific duty of providing personal estate planning services to WUN’s top IBOs and leaders who reach “pearl rank”; the very people who the Cochrans were targeting.
Kirby Cochran then formed and/or become involved with as CEO of “Global Connection Network” and caused it to commence competing directly against WUN.
Now, remember the confidential and non-compete agreements Cochran had signed?
Kirby Cochran is now aggressively marketing to many of WUN’s most important IBOs and customers using the IBO customer information entrusted to his while he served as WUN’s CEO.
Toilet paper as per Cochran’s actions, and something WakeUpNow are none too happy about.
Referred to as “Kirby Cochran’s atomic bomb”, the complaint then proceeds to detail just how little those agreements meant to Cochran.
Cochran induced Defendants Nathan C., Gary C., Rosales and Wach to join Global. Wach, who speaks fluent Spanish, participated in Global’s January 1, 2015 launch webinar where he introduced Kirby Cochran as president and CEO, Gary C. as marketing strategist, and Nathan C. as head of international finance.
Through his involvement at WUN, Kirby Cochran created a relationship with Adam Rosales, the top IBO and country manager in Chile. Kirby Cochran and Rosales contacted WUN’s product manufacturers in both Chile and Ecuador and requested that they produce products for Global.
The Chilean factory agreed and Rosales, Kirby Cochran and Wach designed a new label to place over cans of what is, based on information and belief, an energy drink substantially similar to or identical to WUN’s energy drink produced in Chile and manufactured in the same factory.
On top of being contractually prohibited from competing against WUN at all, the Defendants have engaged in a campaign of smearing Wake Up Now with confidential information which they are contractually and/or ethically forbidden from disclosing, as well as with false and malicious lies.
In particular, Defendants have carefully designed and broadly executed a coordinated plan to disparage and defame Wake Up Now with outrageously false and malicious claims.
Many of the disparagements include confidential information which they are contractually prohibited from divulging, and in the case of Elaine C., whose legal ethics as current WUN legal counsel, prohibited her from divulging privileged information and from competing against her client.
Among the baseless attacks, Defendants recently have contended that WUN has never been registered in Mexico and has no legal entity there, that Wake Up Now’s management was dishonest, that WUN betrayed Kirby Cochran, that WUN’s management stole Kirby Cochran’s stock, that WUN’s management was negligent, that despite being CEO, Kirby Cochran had no responsibility for anything negative occurring at WUN, that WUN’s compensation plan was unsustainable, and that WUN would not survive more than a few months.
Each of these statements is false, disparaging, and made with actual malice with the intent to harm WUN.
Whether WakeUpNow management knew they’d be effectively terminating their MLM operations just a few weeks after filing this lawsuit is unclear.
On October 8, 2014, Kirby Cochran, Nathan C. and Elaine C. invited WUN’s top leader and IBO in Mexico, Juan Carlos Lozano into their home in Orem Utah and over a three day period between October 8 and October 10, 2014 poisoned Mr. Lozano against WUN and its management with false, confidential and/or privileged information.
Poisoned and encouraged by Kirby Cochran, Nathan C. and Elaine C. divulging both confidential information and injurious falsehoods in October 2014, Lozano stopped making efforts to sell WUN products.
He also commenced private meetings where he disparaged WUN among its IBOs, leaders and customers. Lozano encouraged WUN’s Mexican customers to stop purchasing WUN products.
Lozano encouraged WUN’s Mexican customers, all of whom had received the product that they purchased from WUN, to fraudulently demand refunds of their purchases and even charge-back credit card purchased.
Indeed, as a result of Kirby Cochran, Nathan C., Elaine C. and Lozano’s efforts, product revenues in Mexico decreased by $3,623,476 in October, November and December.
Product refund demands increased over ten-times in November compared to the average requests in the prior months. By December 2014, revenues in Mexico were approximately 10% of August 2014 revenues.
On December 7, 2014, Lozano sponsored a conference call attended by dozens of carefully selected WUN IBO leaders in Mexico and falsely stated that WUN was not a legal entity in Mexico. That it was never registered in Mexico; and was therefore operating illegally.
The forgoing statements by Lozano are false.
Cochran evidently wasn’t the only one sticking boot into WakeUpNow, with the company also laying a series of allegations against Michael Wach (a WakeUpNow affiliate).
On or about January 16, 2015, Wach’s direct IBO enrollee, and close associate, Ludwig Agurto was linked to a despicable email stating, among other things, false claims that WUN is attempting to steal IBO commissions and imploring WUN’s IBO’s to contact the FBI and SEC and file complaints against WUN.
The libelous email believed by WUN to be conceptualized and/or written by Wach and Kirby Cochran and distributed by Agurto even provide links for people to file FBI and SEC complaints against WUN.
On January 13, 2015, Wach made a Facebook post announcing that he and Kirby Cochran would be holding events in South America on behalf of Global.
The post makes thinly veiled attacks on WUN claiming that “Global pays commissions on-time”.
But back to Cochran…
On December 1, 2014, Kirby Cochran contacted Rodrigo Mastrangelo, WUN’s key manager of its interest and operations in Brazil and disparaged WUN and its management, indicated that he had been betrayed, that WUN would not last, and inviting Mr. Mastrangelo to join him in his new rival MLM in South America and to lead its operations in Brazil.
Except for statements relating to WUN’s financial condition ironically caused by Cochran himself, which is protected confidential information, none of the above statements are true. They are all false.
The true facts are that Kirby Cochran was fired for cause, Kirby Cochran failed as a manager, nobody at WUN betrayed Kirby Cochran. Instead, Kirby Cochran and his codefendants are engaging in a false and disparaging smear campaign to attempt to harm Wake up Now’s business and to personally profit from it in breach of their obligations.
As far as damages go, WakeUpNow are seeking nine claims of relief:
- Breach of contract (Kirby Cochran)
- Intentional interference with economic relations
- Injurious falsehood
- Trade libel
- Deceptive practice/false advertising
- Civil conspiracy
- Injunctive relief
- Breach of contract (Elaine Cochran)
- Breach of fiduciary duty
All in all, WakeUpNow are demanding they be awarded $70.2 million dollars. A temporary restraining order, preliminary injunction, or permanent injunction has also been sought.
Putting aside the obvious “why didn’t anyone at WakeUpNow research Cochran before he got involved?”, it’s hard not to look at WakeUpNow’s lawsuit as an attempt to put a face on the failure of the company.
There’s a lot of disillusioned WakeUpNow affiliates out there and Kirby Cochran’s mismanagement shenanigans do make it easy to see him as the sole reason the opportunity collapsed.
I maintain that there’s absolutely no doubt Cochran’s conduct, if even a fraction of what WakeUpNow managment allege is factual, had some bearing on the demise of WakeUpNow. That’s indisputable.
But it wasn’t the sole contributing factor.
WakeUpNow had a flawed business model, one that saw it pay commissions on the recruitment of new affiliates and relied on constant recruitment to generate revenue.
You can try to explain that away with excuses such as “but affiliate’s didn’t have to…” or “we had some retail customers”, or even attempt to classify affiliates as retail customers as WakeUpNow did in this very lawsuit.
But at the end of the day, by and large, the vast majority of funds entering WakeUpNow were from affiliates. Affiliates who joined, purchased products and services to qualify for commissions and then recruited others to do the same.
Everyone paid their monthly fees and as long as they had recruited affiliates who did the same, everyone got paid.
Well, except those at the bottom.
That in and of itself is a train-wreck of a business model. Throw Cochran’s misadventures into the mix and that WakeUpNow would go under was inevitable.
Footnote: The lawsuit referenced in this article can be viewed in its entirety over at DropBox.
Update 9th September 2015 – The lawsuit between WakeUpNow and Kirby Cochran has been settled.
The terms of the 22nd of June settlement agreement reached between the two parties are confidential, with a Utah District Court signing off on the agreement on the 23rd of July.
The agreement was reached as part of Kirby Cochran’s Chapter 7 bankruptcy proceedings, filed on February 4th, 2015.
sounds like WUN sat down with some very smart lawyers, and ‘created’ their own private version of kim jung. the attack, on kirby cochran, is too viral, and seems too constructed.
‘speeding down a windy canyon road’, ‘berating employees for not adding carrots to his smoothie’, and ha, even ‘hinting at exploitation of female employees’, right upto ‘stealing shares’, and ‘IBO’s’ and ‘whole markets’ and ‘manufacturers’ and…and…!!
there is NO thing kirby cochran has not done, to create ALL the problems WUN has, which simply stated is that WUN is Broke. cochran singlehandedly spent ALL the affiliate money on flights and food!
this is an ancient art, that when in trouble- DEFLECT DEFLECT DEFLECT. set up a straw man to take the shoehits.
1] if WUN shuts down in the US, affiliates will file cases in utah for their money, and raise allegations of a pyramid/ponzi scheme.
2] if WUN files for bankruptcy, the trustee will get behind them for bankruptcy fraud, just like cochran got pursued by a trustee for bankruptcy in his other defunct company.
3] so, WUN carefully creates a soapbox to stand on and weep,- we’re not a defunct company, we just suffered some really bad mismanagement, we would have paid affiliates if we hadn’t gotten screwed over by cochran. see, our products are so great we will continue store format sales, we just cant sell through our affiliate base, because we got screwed over by cochran.
4] WUN wants nobody , including the courts, to talk about its product based pyramid scheme, and wants to hang cochran on the public square.
5] i don’t know , if the US judicairy allows it, but WUN affiliates should intervene in this case, alleging that WUN is pulling wool over the courts eyes, and trying to find an excuse not to pay them, because they were a pyramid scheme which collapsed, and this is not the doing of one-man-cochran.
6] cochran may be a ass**** but nobody can be so stupid to believe that he is responsible for WUN’s pyramid crash and burn.
^^^^ these are headings on a legal complaint.
uh, so who on the lawyer team hired by WUN, is a secret aspiring hollywood script writer ?
don’t forget that – ‘wild drive where Kirby Cochran sped through a windy canyon road’….—THAT sirs, is poetry! they could have put a Song There!
Fantastic work as always, Oz. You may also be aware of a fascinating and enlightening exchange in the comments section of an article published on Seeking Alpha titled “Exposing the risk in WakeUpNow” between Kevin Thompson and Duane Bair. SA requires free registration.
Like any good businessman, he will get away with it too:
yeah, the big bosses len clements and kevin thompson have come out to play.
BUT, no one is saying why WUN is not a product based pyramid scheme, so….
even troy dooly in his carefully produced video , says that ‘critics’ like to call companies like WUN, pyramid schemes, because they dont have the facts.
then troy dooly says , people like him know WUN is not a pyramid scheme because they Know the Facts which they share with people.
then troy dooly goes ahead and Doesn’t Share Nothing.
why start the topic, if you wont see it through?
Can never admit you guys are wrong huh? WakeUpNow does the same thing Avon/Amway/Mary Kay does, except its a flawed Business model lol come on OZ…Kirby screwed WakeUpNow, done deal point blank period….
they don’t, because there’s no retail.
Stop making up bullshit and then supporting yourself with it. If you want to quote someone saying what you assert, then fine – otherwise you just come off looking like a moron.
“Hay guys, so (insert stuff you made up here), hahaha you guys don’t know anything.”
Kirby did a lot of stuff, as per WakeUpNow’s complaint – but he didn’t come up with the recruitment-driven compensation plan.
no they don’t. no they don’t.
Avon/Amway/Mary Kay have a large percentage of consumers. WUN has a large percentage of affiliates on the commission plan, buying products, to earn commissions. this is the key difference.
kirby, may be responsible for mismanagement, he is not responsible for the pyramid that WUN was.
kirby was merely mismanaging a ‘fraud’.
What Retail? Its all affiliate driven…WakeUpNow went as far as allowin distributors to partner with businesses and actually sell retail…how much denial can you be in?
Regardless of what they attached to the core business model, it was still about recruiting affiliates and getting to pay a monthly fee to qualify to earn off of recruits who did the same.
Denial is your middle name son.
Well that’s not accurate, let’s just call it for what it is. You were in the thick of the pyramid scheme scam and now you’re clutching at “but you could…” “but we had the option of…” straws.
If there was any significant retail activity taking place, WakeUpNow wouldn’t have blown through millions of dollars every year.
^the definition of NETWORK MARKETING. We had thunder in Stores and WUNFit just launched, whether it cought on or not doesnt determine if it was a pyramid scheme…
By your logic, any business that does retail sales is going to succeed.
(Ozedit: Offtopic whinging removed)
Who’s “we”? If you’re talking about you “and your team”, those are affiliate purchases.
In any event, product in stores != retail sales unless actual retail customers were buying the product.
Which they obviously weren’t, at least not in any significant number, otherwise WakeUpNow wouldn’t have blown through millions of dollars every year.
It’s right there in their filed statements, as sales increased so did overheads (affiliate commissions). Why, because there were no retail customers.
Affiliates got paid to recruit and due to the shabby model WakeUpNow used, the company lost and continued to lose money on an unsustainable compensation plan.
What did I say about making up dumbass statements to support yourself?
i invite you formally, to say this in court.
so, WUN was giving recruits the spiel that they could earn through retail, and building a downline, while concurrently allowing retail through store formats?
did new recruits Know they had this kindof retail competition? how could they feasibly build a downline in such a locality?
this falls under the head of ‘misrepresentaion’ and if you check caselaw, courts put a LOT of emphasis on ‘misrepresentation’ in pyramid cases.
Oz: “WUN is a recruitment based pyramid scheme which will soon collapse”
Rick: “No it’s not”
Oz: “WUN collapsed”
Rick: “Well yes, but not because it is a recruitment based pyramid scheme”
And around and around we go.
Happens every time.
lol. well, no. it would fail if they didn’t make any retail sales………hmmmm
(Ozedit: Where you store your product is irrelevant to retail sales. If WakeUpNow had any significant retail activity, it would not have lost millions of dollars each year.)
And what everyone else is saying about Thunder being in stores is irrelevant. Every IBO was told they could do B2B Partnerships…and theres 8-10 other products that werent in stores they could push like WUNFit or Awaken Coffee.
But they didn’t. Instead they just recruited new affiliates, who paid a fee to qualify to get paid when they recruited new affiliates, who paid a fee to qualify to get paid when they recruited new affiliates etc.
That was, after all, the core of WakeUpNow’s compensation plan.
Whatever was later attached to that is irrelevant, as clearly no significant retail activity was taking place. Otherwise WakeUpNow wouldn’t have burned through millions of dollars each year.
Instead of continuing to demonstrate your naivety in such matters, go read up on product-based pyramid schemes.
At best, you’re doing what Herbalife does. That’s why SEC and FTC are investigating.
Avon had been losing money ever since it went MLM.
So apparently, your company picked the wrong companies to follow.
Being told they *can* ain’t worth much if you recruit “average Joes” who has no such connections.
I recall a lengthy report on WUN that was published a few months ago where the author stated,
So it looks like you weren’t the only one who called this shot months ago, Oz.
Hmm… what was that other guys name?
Is it any surprise? Wun’s track list was full of white collar criminals. Phil polich was just as bad.
That other guy?
Hurr, we don’t speak his name in these parts… he’s always late to the party!
so, its voldemont?
shit, len clements came and went without sharing his opinion on WUN. he could have said, WUN is/is not, a product based pyramid scheme. just to help the amateurs.
len clements came and went without sharing his opinion on WUN—anjali [on an embarrasing learning curve]
len clements has actually published a looong ‘treatise’ on WUN, in 2014, and has actually quoted from it in post#21.
here’s the article:
i think, after being polite a lot, len clements mostly concludes, WUN is a recruitment based, valueless product based, pyramid scheme.
two statements from len’s article;
1] i somewhat disagree with this:
[ it will be impossible to demonstrate that distributors who are on commissions, are purchasing products for intrinsic value alone. some opposite logistic is required to prove this, ie how many consumers NOT on the comp plan, are buying the product [for self consumption or retail]]
2] i completely agree with this, about WUN:
i hope len clements does not construe my slight disagreement as rude.
ha, it was you sir, mr clements. got it ! 🙂
Maybe we should pool funds to have Mr. Clements write a review on Vemma or some other suspect MLMs. 😀
Wouldn’t be the least bit surprised if someone is already trying to re-boot WUN as… Wake Up Now Again: Part Deux.
“‘Cause the first time around wasn’t fun enough.”
They just might be successful if they hire anyone not named “Kirby” again.
a lot of people. where were you? guess your check didn’t clear eh? ever decide if that amega wand actually works yet? lmao.
Estimado OZ, solo quiero decir que soy un miembro que espero lo mejor para Wake Up Now.
Ud. hace regencia a Amway, yo le puedo decir que sigo al líder más grande de Amway en Latinoamérica des hace más de 6 años y le puedo decir que la construcción de su organización ha sido creada en la “NO VENTA”, el mismo insta a sus distribuidores a no verde, sino más bien a educarse y reclutar más personas, (la venta viene sola y a las personas que no quien el negocio). Tiene su lógica cuando quieres construir un negocio grande, ya que si te pones a vender, te quedaras en un simple vendedor.
Entonces mi pregunta para usted señor Oz, ¿Es Amway una empresa piramidal?
Personalmente también creo en un modelo en el que el distribuidor no sea el que venda, mas bien la propia empresa se encargue de vender al distribuidor y al cliente también.
¿Si no me gusta la venta de productos, tengo que limitar mi negocio y no reclutar a nadie porque estaría construyendo una pirámide?
Creo que deberíamos dejarnos de prejuicios a día de hoy, creo que si hay un producto de por medio, se venda o no se venda a un cliente objetivo final, es un negocio legal ya que se está comercializando un producto en un mercado cerrado de personas que hacen el negocio y que consumen ese producto.
Cuando hablemos de caso como el de Telexfree que te pagaba por no hacer nada, ni comprar los distribuidores mismos algún producto y de donde el dinero salía del dinero que metían los nuevos afiliados, entonces si es preocupante.
Dear OZ, I just want to say I’m a member I hope the best for Wake Up Now.
You. Regency Amway ago, I can tell you that I’m still the greatest leader of Amway in Latin America des over 6 years and I can tell you building your organization has been created in the “NO SALE”, it urges its distributors not green, but rather to educate and recruit more people, (the sale comes alone and people who no business). Makes sense when you want to build a big business, because if you start to sell, you stay in a single vendor.
So my question to you sir Oz, Is Amway a pyramidal business?
Personally I also believe in a model in which the distributor is not the selling, rather the company is responsible for selling the distributor and the customer as well.
If I do not like selling products, I have to limit my business and not recruit anyone because he would be building a pyramid?
I think we should allow ourselves of prejudice today, I think if there is a product involved, is sold or not sold to a customer ultimate goal, is a legal business as it is marketing a product in a closed market of people that make business and consuming that product.
When we talk about Telexfree case like you paid for doing nothing, or buy them some product distributors and where the money out of the money that they put new members, so if it is worrisome.
Yes, that’s the rosy theory. In reality getting paid to recruit affiliates with no sales to retail customers = pyramid scheme.
think of MLM as a train track. you need both rails running alongside, to run the business successfully.
unless you are ‘selling’ your products to consumers, on an equal footing, with ‘recruiting’ commissionable distributors under you, you will fail, and your MLM company will also fail.
companies like amway , have their recruiting active distributors at 25-35% of the entire distributor float. so commissions are payable to only these distributors, and the financial bottomline stays healthy.
companies like WUN, have their recruiting active distributors at over 90%. everybody has to be paid commissions on products they have bought at approx 50% discount. where is the company going to generate that kind of money. so they crash and burn.
amway is a profit making MLM.
WUN has been a loss making company right from the first year of its incorporation. when Sales Ricocheted, over the last two years, Losses Ricocheted!
sales should mean profits, not losses. this tells you that these are not REAL sales of products, and closed markets, do not generate profits.
I am still trying to take this all in. I never had, not even for a moment, expected anything but for WUN to come down in flames- sort of like The Hindenburg.
But, quite frankly, going through this whole legal drama they are having all I can say is that MLM is one of the few places where one can see manure stacked this high.
WUN — WhatUtterNonsense
Do you sell enough to satisfy the Amway safeguard rules, i.e. “10 sales to 10 different people every month” and all that?
Are your recruits selling to themselves (i.e. they are buying, even though they count it as their “sales”) or are they selling to the public (i.e. people NOT a member of the company)?
In other words, *whose* money are you earning? Money of people who actually bought Amway products because they wanted to… or money of your downline (who have to spend them so they can stay ‘qualified”)?
It seems as though some big leaders in WUN are plowing their teams into Wealth Generators.
I haven’t looked too deeply into it, but at first glance it looks sketchy. I would be interested in seeing a report from you and/or Len on it.
wealth generators appears to be an out and out ponzi/pyramid scheme, with some useless ‘binary options trading software’, tagged to the scheme as a ‘product’.
if WUN leaders are leading their packs to wealth generators, it just goes to show that WUN was a similar ponzi/pyramid scheme. like attracts like.
This lawsuit is being dropped by WUN. I wonder why?
I have known Kirby for 20 years. He is a man of great character. It is a shame to see such one sided views published on the internet.
I have known Kirby for many years. He is a brilliant man and a very hard working and decent entrepreneur!
Business lawsuits frequently greviously misrepresent the facts and the truth in presenting one side of the story.
Anyone with 50 bucks can file a lawsuit. Have you ever been falsely accused? Media stories are notoriously inaccurate.
^^ So you’ve got an obvious hard on for Cochran, but are you categorically stating WakeUpNow are lying in their lawsuit?
If so, what are you basing that on?
As a former WUN corp employee, as crazy as that lawsuit sounds, it’s true. We lived it in the office.
The Carrot story was retold many time throughout the whole office. He was the running joke at corporate.
i’m sure cochran was a krazykook. on the other hand, most offices have their versions of crazyboss stories, which are passed down from one office drinking party to another. that’s just corporate life! what’s unique about crazy cochran!
as a Former WUN Employee, could you tell us how many WUN affiliates were on autoship? now that would be interesting and relevant information!
Re. comment #37, there’s nothing about WUN dropping the suit in this report published yesterday:
Meanwhile how does a “successful entrepreneur” rack up $500 million in debt?
And Cochran dickriders, if you’re going to post claims regarding the lawsuit at least have the decency to back them up.
We where promised a $ 20,000 + sponsorship for the PDL Soccer team Ogden outlaws.
We trusted in Kirby Cochran to deliver on his promise so we can house and help feed and run this Top Utah soccer team in a semi pro highly competitive environment.
He Kirby, bought the rights to our main logo on the front of our uniform and authorized the printing and making of the uniforms as he would reimburse in entirety their cost and then some besides the regular sponsorship agreement.
As the weeks went by he assured us of more backing to include our Trip planing and away games expenses. As the Season started he started to ignore our calls and personal visits that we made every week from our Ogden base to his Provo Main office.
His right hand man Darren Olayan even came to one of our Home games reassuring the coaching staff and players of his position and the complete support of Wake Up now, and his personal reassurance that he would personally step in will all money promised even if Wake up now didn’t do so for some reason.
The team was forced to close it doors at the end of the season and Northern Utah no longer has a “PDL” Premier Development League team called the Ogden outlaws.
An end to an era in large due to this man and his empty agreements, contracts and promises.
So any company that has retail sales will succeed WOW what a statement. Have you talked to people at Sears or JC Pennys or Radio Shack. They really need you.
We only deal with MLM here. Attempts to derail by introducing non-MLM elements into the discussion are pointless.
Ditto quoting statements nobody said and then trying to build a discussion around them.
hey, why isn’t kirby cochran replying to the suit?
giddy up kirby, don’t make us wait!
That’s okay, Anjali. My parents claim I made a mistake when I was very young, back before I can remember, and I definitely made one in February of 1991, and June of 2005.
Eh, and then there’s my claim that Zeek Rewards was a pyramid scheme and illegal security, but not a Ponzi scheme.
The jury’s still out on that one. But for *sure* that’s three. So it can happen to anyone.
My description of the FTC’s position on internal consumption, and their emphasis on the motive for such distributor purchases, was based on their explicit declaration, “Much has been made of the personal, or internal, consumption issue in recent years.
In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme”, which can be found within their letter to the DSA here:
In WUN’s case, there were several examples of product being purchased where the motive was obviously unrelated to its intrinsic value.
For example, the entire first run of Thunder completely sold out before a single can was shipped.
Why would so many people want a 24 pack of an energy drink they’ve never even tried? It could not possibly have been due to the great taste, or the level of energy it provided.
And, of course, the most obvious example, which was the Platinum package. I strongly suspect, over the entire history of WUN, there was not ONE sale of this product to a SINGLE customer who’s motive for the purchase was purely, or even mostly, due to their being in the market for travel discounts AND an online financial program AND a tax tracking program AND an internet security system AND three more magazine to read AND they wanted to learn a new language… not only *all at the same time*, but they were also willing to pay an additional $40 a month just for the convenience of it all being together in one place online.
Seriously. If there were no comp plan to qualify in, forget meeting some arbitrary 50% or even 10% benchmark – would even ONE person… EVER… have purchased this product?
Actually, I like disagreements, which can be educational, as long as they’re presented honestly and respectfully.
Unfortunately, that occurs within internet message boards about as often as a sale of a Platinum package to a retail customer.
I’m still in shock from all this, but considering I warned some Corporate and executive leaders at WUN about this debacle with Peter pan KirbyCockran on August 2013, I can’t really defend WUN about it.
I had made statistic analysis and an internal network program follow up with the government about all this and it all came back screaming “WUN will flounder”, which made me extremely upset.
I was scheduled to go into Utah and speak with some leaders and executive corporate leaders about everything I had encountered and how even the Latin market was suffering, but couldn’t make it because I had to leave the country on an assignment.
I come back and from being an executive leader, I realize I was a Founder 3.
Not only that was unsatisfactory but I had No responce from customer service what so ever.
Later come to find out all this happened… Well it was bound too.
But no one can sit here and get all Bruce lee on keyboard to say WUN was a disaster waiting to happen, when everyone in MLM period knows that ONE PERSON can single handedly be the cause of such a disaster in this market.
Thank God I had amazing leaders too who were waiting for this to take park on Plan B.
I apologize if I hurt CockrAn disciples or spies but reality about this is simple. All atrocities were compliments of ONE MAN.
That man is NOT Jason or Polich, that’s for damn sure!!!
Article updated with news of confidential settlement between Kirby Cochran and WakeUpNow.