Former President Stuart MacMillan has sued Monat and founder and CEO Luis and Rayner Urdaneta.

MacMillan claims he owed millions pursuant to a signed Profit Sharing Agreement.

MacMillan (right with Luis (C) and Rayner Urdaneta (L)), joined Monat in 2014.

At the time MacMillan was fresh off his his stint as interim CEO at the notorious TelexFree Ponzi scheme.

Nonetheless, MacMillan claims he

built Monat from nothing to a skincare and hair product company generating hundreds of millions of dollars in revenues, with hundreds of employees, millions of customers, and market partners numbering in the hundreds of thousands worldwide.

MacMillan claims he signed on as Monat’s President after the Urdanetas promised

him that the three of them would work to maximize Monat’s profits and MacMillan would be paid a three percent profit share while he worked for Monat and for a certain amount of time thereafter.

In addition to being President of Monat, MacMillan was also on its Board of Directors – a position he represents was symbolic.

Monat’s Board of Directors only met three times while MacMillan was a Director of Monat. It did not hold annual meetings, except for a brief period of time as insisted by MacMillan and their Chief Legal Officer.

It did not record meeting minutes. There was only a Secretary three of the nine years MacMillan was a Director or Monat. And MacMillan was not even permitted voting rights.

MacMillan claims problems with the Urdanetas began in 2019.

L. Urdaneta and R. Urdaneta threatened to terminate MacMillan if he did not agree to a noncompete agreement and non-solicit agreement.

MacMillan claims the Urdanetas “felt threatened by Monat’s employees and independent contractor market partners’ loyalty and affection towards MacMillan.”

MacMillan agreed to the Urdanetas demands and signed a new agreement with the Urdanetas in October 2019.

The Profit Sharing Agreement incorporated certain previous understandings, added a non-compete and non-solicit, and added a few extra terms. Defendants’ attorney drafted the Profit-Sharing Agreement.

L. Urdaneta and R. Urdaneta’s promise to maximize Monat’s profits was inherent and in line with their fiduciary duties to Monat.

Fast Forward to June 2023, MacMillan resigned from his position as Monat’s President.

Between the date of his resignation from Monat in June 2023 and the initial postemployment payment deadline of March 2024, L. Urdaneta and R. Urdaneta demanded that MacMillan have no contact with approximately 3,000 people associated with Monat in order to receive the post-employment payments owed pursuant to the Profit Sharing Agreement.

MacMillan claims this “demand has no basis in law or contract. The demand was a pretext to justify not paying MacMillan.”

According to the extreme positions of L. Urdaneta and R. Urdaneta, Monat could only be successful after MacMillan’s departure if Monat’s employees and independent contractor market partners had zero contact with MacMillan.

And for that to occur, according to L. Urdaneta and R. Urdaneta, MacMillan essentially had to disappear from his previous business circles.

Notably, L. Urdaneta and R. Urdaneta even demanded that MacMillan distance himself from members of MacMillan’s friends and family.

MacMillan claims he “rejected this baseless and outrageous no-contact demand”.

Pursuant to his signed agreement,

MacMillan expected payment of the higher of three percent of Monat’s profits each year through 2031, or a $1,000,000 floor payment per year if Monat was not profitable in any given year.

MacMillan claims, again pursuant to his signed agreement, his first payment of $500,000 “first post-employment payment of $500,000 was due on or before March 31, 2024.”

MacMillan claims he has not been paid.

In justifying not paying MacMillan, the Urdanetas claim “MacMillan has lost all profit-sharing with L. Urdaneta, R. Urdaneta, or Monat”.

MacMillan states he’s owned between $8 million and $16 million, and the Urdanetas are still binding him to the non-compete and non-solicit clauses of his Profit Sharing Agreement.

Central to MacMillan’s Complaint is the Urdaneta’s screwing him over financially.

Examples of this include:

  • “shutting down” MacMillan’s attempt to make Monat’s manufacturing more competitive (Monat’s products are manufactured by B&R Products, a company owned by the Urdanetas);
  • the Urdanetas generating “contrived and improper expenses” through employment of “Urdaneta insiders, family members and friends” in “no-show, non-existent jobs (sometimes paying them under the table)”;
  • the Urdanetas maxxing ” out Monat’s credit cards on their personal luxury lifestyles, including private airplanes, expensive dinners, and luxurious travel and accommodations (including a $50,000 room service bill in Dubai, for example)”;

  • the Urdanetas paying for “personal and household expenses from Monat bank accounts”;
  • the Urdanetas paying for family members and friends to attend company incentive trips (these are supposed to be incentive rewards Monat distributors qualify for);
  • the Urdanetas using Monat funds to pay off their personal credit cards for non-business expenses ($150,000 a month is cited);

Finally, L. Urdaneta and R. Urdaneta severely diluted Monat’s meager profits in select years, and refused to retain revenues to invest in Monat to generate reasonable profits.

Members of the Urdaneta family, other than L. Urdaneta and R. Urdaneta, acted like they were owners and managers of Monat. Urdaneta family members, other than L. Urdaneta and R. Urdaneta, even disciplined and fired some Monat warehouse employees.

Urdaneta family members acted as though Monat’s property was their own personal property.

All up MacMillan claims the Urdanetas “appropriated approximately $100,000,000 since Monat’s inception”.

MacMillan claims he objected to all of this conduct and in response the Urdanetas “created a hostile work environment”.

Any complaints from employees or independent contractor market partners were met with skepticism, criticism, and retaliation.

Because L. Urdaneta and R. Urdaneta made up two-thirds of the Monat Board of Directors, they did whatever they wanted without consulting MacMillan.

This in turn led to MacMillan, not the Urdanetas, fostering relationships with Monat’s distributors, and employees.

While L. Urdaneta and R. Urdaneta were treating Monat like a mafia family behind the scenes, MacMillan was developing relationships with Monat’s independent contractor market partners and employees.

MacMillan ran Monat’s motivational conferences and incentive trips to better the company.

MacMillan being the face of Monat … threatened L. Urdaneta and R. Urdaneta and eventually resulted in tension between them.

One interesting tidbit in MacMillan’s Complaint is a timeline from Monat’s “best every year” in 2020, to “significant losses” from 2022.

Monat had its best year ever in 2020, with revenues exceeding $800,000,000 and profits exceeding $35,000,000.

When the economy took a downturn in 2022, Monat suffered significant losses.

L. Urdaneta and R. Urdaneta insisted on increasing revenues at any expense, including cutting commissions to Monat’s independent contractor market partners and delaying payments to suppliers. As a result, morale at Monat plummeted.

Oddly enough, when it came time to calculate MacMillan’s Profit Sharing amount, the Urdanetas excluded 2020 because it “did not count as a year”.

Yeah, I don’t what that means either.

Framed as “disagreeing with the Urdaneta’s business strategy and ethics”, this is purportedly the reason MacMillan resigned in 2023.

MacMillan resigned as the President of Monat on July 31, 2023.

MacMillan retired. He did not start working for another company and did not start a company himself.

MacMillan maintained his Board of Directors position but, despite disagreeing with the Urdanetas, claims he “never spoke poorly of” them.

Seeking payment, MacMillan engaged legal counsel in early 2024.

On January 22, 2024, MacMillan, through counsel, requested, among other things, a copy of Monat’s books and records for the year 2020 to conduct an audit regarding Monat’s profits in 2020.

Defendants never provided MacMillan with the requested books and records for the year 2020.

After this request was made was when the Urdanetas trotted out the “no contact with anyone in Monat”.

Defendants claimed that Monat would pay MacMillan only his compensation under the Profit Sharing Agreement if he:

(a) agreed not to have any contact whatsoever with approximately three thousand people affiliated with Monat,

(b) agreed to block numerous people associated with Monat on social media, and

(c) agreed not to host or speak at any events or conferences of any nature, including religious events, if any Monat associated persons would participate or be in attendance.

MacMillan claims his daughter was fired as a Monat employee, after the Urdanetas caught wind of a December 2023 Christmas Zoom during which no business was discussed.

Interestingly, MacMillan claims the Urdanetas are adamant he have no contact within Monat because

according to R. Urdaneta, Monat’s products are irrelevant and for Monat to succeed, Monat’s employees and independent contractor market partners must completely forget about their previous leader (MacMillan) in order to be loyal and dedicated to Monat’s new leader (R. Urdaneta).

R. Urdaneta describes Monat to be more like a cult than a business.

To be clear, that’s not what MacMillan thinks – it’s what CEO Rayner Urdaneta has purportedly stated.

According to R. Urdaneta, MacMillan hosting a religious event at a church, focused on faith, work-life balance, and marriage, would be a threat to Monat because it may disrupt worship of Monat and its new leader.

R. Urdaneta pointed to a specific event hosted by MacMillan on April 20, 2024 at Grace Family Church in Clearwater, Florida called the Lighthouse Collective Live as a primary reason why Monat refused to pay MacMillan in compliance with the Profit Sharing Agreement.

MacMillan invited R. Urdaneta and L. Urdaneta to attend and participate in the Lighthouse Collective Event. Both declined.

Instead of just not attending the event, MacMillan claims Rayner Urdaneta “sabotaged” it.

First, R. Urdaneta told the DJ who was set to perform at the Lighthouse Collective Event, that he could not perform because MacMillan was violating the Profit Sharing Agreement and that if he did, he would never perform at another Monat event again.

As a result, the DJ cancelled his performance at the Lighthouse Collective Event.

Second, R. Urdaneta told the production company assigned to the Lighthouse Collective Event, Katapult Events, that it could not proceed because MacMillan was violating the Profit Sharing Agreement and that if it did, Monat would never work with Katapult Events in the future.

As a result, Katapult Events pulled out of the Lighthouse Collective Event.

MacMillan states, despite Rayner’s efforts, that the Lighthouse Collective Event went ahead on April 20th.

The event had nothing to do with Monat or its business.

MacMillan’s Complaint against Monat and the Urdanetas brings forth eleven causes of action, including:

  1. breach of contract
  2. breach of duty of good faith and fair dealing
  3. constructive fraud
  4. fraud in the inducement
  5. defamation and
  6. breach of fiduciary duties

MacMillan also seeks declaratory judgment, pertaining to him being owed “a share of the profits of Monat and in what amount.”

MacMillan’s lawsuit was filed on April 24th in Miami-Dade County in Florida.

Stay tuned for updates as we continue to track the case.

 

Update 25th May 2024 – The Urdanetas have filed a counterclaim against MacMillan, refuting many of his claims.

 

Update 30th November 2024 – The parties have advised the court that mediation has been scheduled for January 9th, 2025.