Master Distributors sue Nerium International for over $100 million
Mark and Tammy Smith aren’t just top earners in Nerium International, they’re the top earners.
As Master Distributors of the company, Mark and Tammy Smith were held up as posters of Nerium’s success.
As of late 2014, Ted Nuyten’s BusinessForHome clocked the Smith’s at $9 million career earnings and around $2.4 million in commissions annually.
That makes their $100 million dollar plus lawsuit against Nerium International all the more interesting.
Mark and Tammy Smith’s lawsuit was filed on February 23rd and names Nerium International, JO Products LLC (JOP) and Jeff Olson as defendants.
Jeff Olson (right) is the Founder and CEO of Nerium International. He is also cited as the manager of JOP.
Detailing a successful MLM career with Prepaid Legal, the Smiths allege they “became acquainted” with Olson while they were still promoting the company.
Olson attempted to entice the Smiths to leave Prepaid Legal and join Nerium International.
This was right before the time Nerium International started to gain notoriety for secret backroom deals.
Mark and Tammy Smith’s own Nerium backroom deal is a perfect example of why;
The Smiths advised Olson that they had made many significant sacrifices to build their business at Prepaid Legal and they would not leave Prepaid Legal without assurances of an ownership interest in Nerium International and significant compensation based on their sales (a significant royalty payment).
Olson told the Smiths that the compensation they would receive as “Brand Partners” at Nerium International would look like “play money” in comparison to the equity distributions they would be entitled to as equity holders in Nerium International and the 15% monthly royalty fees from “Nerium Edge”.
That wasn’t enough to seal the deal right then and there, but it was enough to get the Smiths to meet again with Olson to ‘further discuss the Smiths’ opportunities at Nerium International‘.
And so a meeting took place “in or about September of 2011”;
During this meeting, Olson made the following promises to the Smiths on behalf of himself and Nerium International:
1. Mark Smith and Tammy Smith would each receive a 5% equity interest in Nerium International (the Smiths would together own 10% of Nerium International);
2. The Smiths would be named “co-founders” of Nerium International and;
3. Nerium International would pay the Smiths a combined 15% royalty, in perpetuity, on all the back office subscription fees generated by Nerium International, which was subsequently referred to as “Nerium Edge”.
To the best of my knowledge neither Mark and Tammy Smith, Nerium International or Jeff Olson ever publicly revealed or acknowledged this agreement.
And now you can probably guess why the Smiths’ filed their lawsuit…
Prior to the Smiths leaving Prepaid Legal, Olson told the Smiths that Prepaid Legal’s standard practice was to sue anyone who left to join a competitor.
Olson told the Smiths that because the Smiths generated such tremendous sales for Prepaid Legal, Prepaid Legal would almost certainly sue Olson and Nerium International the moment they started working for Nerium International.
In anticipation that Prepaid Legal would sue Nerium International and the Smiths, Olson told the Smiths that Olson could not document and could not put into writing the ownership promises until after potential litigation with Prepaid Legal had been resolved.
Olson indicated that any written agreement which documented the ownership promises would be discoverable in litigation with Prepaid Legal and would be used against Olson, Nerium International and/or the Smiths.
ProTip: If your secret backroom MLM deal can be used against you in a court of law, it’s probably an agreement not worth signing.
As anticipated by Olson, immediately after the Smiths joined Nerium International, Prepaid Legal initiated litigation against Nerium International and the Smiths.
Ultimately, the cases filed by Prepaid Legal against the Smiths were settled on or about mid-2013.
And then, as agreed, Jeff Olson upheld his deal with the Smiths, right?
Immediately after the settlement of the Prepaid Legal lawsuits, the Smiths began requesting that Olson memorialize the ownership promises into writing.
Olson provided excuse after excuse why the timing was not right to memorialize the ownership promises, but repeatedly assured the Smiths at all times, from prior to joining Nerium International to the present, that Olson would honor the ownership promises.
On or about May of 2016, lawyers working for Nerium International and the Smiths began working on multiple drafts of a formal agreement to put into writing the ownership promises.
Six years after the ownership promises were initially made, after almost two years of drafting by each party’s attorneys to hammer out the finer points of the ownership promises, and after numerous meetings in California to discuss the oral promise and agreement to formalize the ownership promises, to date Olson and his attorneys refuse to sign off on an agreement.
The “finer points” the Smiths mention?
These ridiculous and unfair terms have included:
(1) a provision that Olson must receive tens of millions of dollars before the Smiths would receive a penny;
(2) a provision that Olson would have power of attorney over the ownership interests granted to the Smiths and could take control of the 10% ownership interest at any time and;
(3) that the 10% ownership interest would be in JOP instead of Nerium International.
After seven years, the Smiths claim
it is now apparent that Olson has no intention of honoring the ownership promises, and has merely been leading the Smiths along to buy himself more time (and retain for himself significantly more profits).
Make no mistake though, while it doesn’t excuse Olson’s alleged behavior, the Smiths aren’t downtrodden victims by any stretch.
The Smiths were able to generate an astonishing $100,000,000 in sales in their first year of business.
Since then, the Smiths have helped Nerium International achieve record-breaking global sales of over $500,000,000 annually and over $1,500,000,000 in aggregated sales in its first five years of business.
The secret to their success?
Most of the Smiths’ sales leaders at Nerium International came from the network they developed at their own expense and on their own time while at Prepaid Legal.
In 2016 Olson also agreed to pay the Smiths a ‘Live Better Bonus permanently when earned‘, which ‘would ensure the Smiths were compensated at the highest level achieved under the Nerium International compensation plan‘.
The Smiths frame the agreement as bait, designed to get them to ‘agree to turn away from their personal interests and focus on the company as a whole‘.
Not surprisingly, the Smiths claim that after qualifying for the highest compensation level in October, 2016, they haven’t been paid at the same level as promised.
This, the Smiths allege, equates to around a half million in unpaid commissions.
In addition to unkept promises and broken business deals, the Smiths lawsuit also details allegations pertaining to “personal attacks, erratic behavior and gross mismanagement” on Olson’s behalf.
Olson … represented to the Smiths that he was an honest and ethical businessman and treated his customers, employees, and brand partners honestly, with integrity, and respect.
Instead of an honest businessman, Olson revealed himself to be (among other things) dishonest, insincere, duplicitous and anti-Christian.
Moreover Olson revealed himself to have a nasty habit of spreading hurtful falsehoods about the Smiths (and others) behind their backs.
Olson’s behavior created an extremely uncomfortable and hostile work environment, which the Smiths found insufferable and at times completely unbearable.
Olson would tell others in the company that:
(1) the Smiths did not work hard;
(2) the Smiths added no value to the company;
(3) no one wanted Tammy Smith to work at the company;
(4) the Smiths were “not who you think they are”;
(5) the Smiths have marriage problems and;
(6) the company’s mistakes were attributable to the Smiths’ decision-making, among other things.
Olson also started to express disdain for the multi-level marketing industry.
Olson began to disparage other MLM companies saying they were terrible companies with bad products and other disparaging things.
Somewhat ironic that such sentiments were purportedly only aired after Olson made millions of dollars as an MLM company owner.
Some of those millions, the Smiths allege, was put toward ‘bully(ing) individuals and companies with litigation and the threat of litigation‘.
This significant litigation was siphoning millions upon millions of dollars of cash from Nerium International creating significant cash flow issues, which has crippled the company’s ability to function.
And to hear the Smiths tell it, Olson also isn’t above manipulating religion for his own personal gain.
On one occasion, at a public restaurant, Olson loudly proclaimed that Christian and the Mormon religions were “frauds”.
This particular meeting was over breakfast at a Dallas hotel that the Smiths called upon to discuss memorializing the ownership promises.
Olson explained how the story of Jesus Christ is so unbelievable “far-fetched and stupid” that he could not believe so many “idiots” fall for it.
Olson knew that the Smiths were Christians. This was not an isolated incident.
However, when Olson is in front of audiences trying to promote Nerium International, Olson has been known to quote Bible verses or discuss his spirituality.
The Smiths were highly offended by Olson’s conduct, in particular his demeaning statements about Christianity, and have felt discriminated against.
Personally I don’t find it offensive if Olson wants to shit on religion, but to do so at what was effectively a business meeting is pretty unprofessional.
In general, Olson is a very rude and aggressive person. He treats subordinates very poorly.
The Smiths have witnessed Olson engage in numerous hostile encounters with flight attendants, service people and innocent bystanders.
Olson frequently makes rude and insensitive comments towards such persons calling them “fat”, “ugly”, “stupid”, “disgusting”, just to name a few.
Nerium Biotechnology’s 2015 lawsuit against Nerium International and Olson is also cited, and provides fascinating incite into what went on at the time.
In anticipation that Nerium International would lose the above mentioned lawsuit, and that as a result Nerium International would lose access to the “Nerium” product line, Olson directed Nerium International to begin developing alternative products.
The SMiths were told that the clinical trials for the new products developed at Olson’s direction were inferior to the existing products in certain respects.
Despite the trials of the new products, Olson represented to Brand Partners and customers that the clinical trials for the new products produced better results than the old products in certain respects.
The Smiths were vehemently opposed to these false representations about the new products, and Olson was extremely unhappy that the Smiths’ refused to participate in his dishonesty.
Immediately after the Smiths refused to participate in Olson’s dishonesty and disregard for the truth, Olson embarked on a pattern of conduct designed to demean and belittle the Smiths, including repeatedly slandering them to their Brand Partners and publicly insulting their religion.
Across sixteen counts of action Mark and Tammy Smith are suing Nerium International, Jeff Olson and JOP for
- breach of oral contract
- breach of partially oral and written contract
- breach of implied covenant of good faith and dealing (oral contract)
- breach of implied covenant of good faith and fair dealing (partially oral and written contract)
- breach of fiduciary duty
- civil conspiracy
- breach of contract (implied in fact)
- violations of Business and Professions Code Section 17200
- constructive trust
- declaratory relief (oral contract)
- declaratory relief (partially oral and written contract)
- intentional infliction of emotional distress
The Smiths have asked for compensatory, incidental, special, punitive and exemplary damages.
The Smiths estimate their interest in Nerium International alone has a value “in excess of $100 million dollars.
The ethics of secret backroom deal aside (I’m certainly no fan), personally I can’t see Nerium International defending this.
I’d be very surprised if the company doesn’t settle with a (confidential) payout.
Meanwhile the question emerges of whether Nerium International can survive without its Master Distributors.
No doubt Mark and Tammy Smith have been advised to steer clear of any MLM opportunity while this plays out, but from the sounds of it most of Nerium’s Brand Partners are connected to the Smiths from Prepaid Legal days.
I have a feeling some people’s personal loyalties will be pitted against their hip-pockets over the coming months, which without knowing those involved could go either way.
Unfortunately I don’t appear to be able to track the Smiths’ lawsuit through Pacer. Nonetheless I’ll do my best to keep you informed of any updates I come across.
Update 27th June 2020 – The Smiths lawsuit against Neora was voluntarily dismissed on June 1st.
So the Smiths represented themselves as successful ‘Nerium’ reps to the poor schleps in the audience.
All the while, they brought their team from ‘years of recruiting’, and were supposed to receive money outside the comp plan? Nice.
MLM is such a fraud, and every word in this article comes as no surprise.
It is beyond belief that Mark and Tammy Smith want the court to ignore that the oral contract with Olson was born out of a desire to defraud PrePaid Legal.
They must have paid their attorney a substantial retainer, because I am sure he has Googled a concept commonly referred to as “The Clean Hands Doctrine”.
Ouch this one might hurt. It’s not the first attack the CEO has to undergo but when the number one couple bring out the dirt people might start to reflect faster.
Seriously what he promised to them, should make all distributors reflect on the value of the plan and products.Simple maths !
Wow! I see a settlement in the works.
From my point of view, some companies would rather risk losing their top money earners than continue to pay them top dollar knowing someone else would be waiting and willing to take the top spot for less.
If Olson really intended to make good on his promises, he would’ve paid the Smiths what he agreed to pay them years ago and not have let the situation drag out this far.
Unfortunately, this won’t be last case of secret backroom deals gone wrong.
Imagine having been part of the PrePaid Legal (Legal Shield) lawsuit and reading this now. Ouch.
This is Karma. I gave two years of my life to build Nerium in Japan.
The company had a policy of not registering before opening. I had nine major leaders with hundreds and thousands in their groups.
A few weeks before opening, Mark helped to move all my leaders under his puppet Ken Horseface, using money, lies and invitations to his Hawaiian retreat, stories of extra commissions, access to all referrals from the company etc.
My appeals to Mark and Tammy, with all their promises of loving the baby brand partners, fell on deaf and greedy ears.
Mark personally met with my prideful Japanese leaders and directed them to move to his puppets. A deal had been made to give kickbacks to Tomomi Saito, a prominent MLM blogger in Japan, along with Mr Sone who took the proposal to the Smiths.
Company officials, both in Japan and the States knew of these happenings, but there is an absolute lack of integrity.
What this company and its leaders did to me, almost killed me. I witnessed first hand the damage Nerium does. Bring on the Karma.
Certainly makes you wonder how many secret backroom deals Mark and Tammy Smith might have brokered on Nerium’s behalf, knowing full-well their own secret deal was a sham.
What is the source of this article? I’d love to read the lawsuit itself.
The source of the article is the lawsuit itself. Anything in a green box is quoted verbatim.
Gotcha… is the lawsuit public record? Or any way I could access it?
I accessed it on Facebook, courtesy of the “Mark and Tammy Smith Sue Nerium International” Facebook page: facebook.com/marktammysmithneriumlawsuit/posts/953796351436189
What is sickening is Mark and Tammy stood on stage repeatedly and told poor Brand Partners that they must have Edge in order to adequately run their businesses.
They made it where it was impossible to use the back office without it–and the fair price of $29.95 a MONTH.
This is for people who were making nothing–and having to constantly pay out to keep up the “dream.” All because they were getting 15% of the profits.
The Smiths are dirty rotten scoundrels, too.
Ken Horseface also stole huge teams in Australia. He had that company opened and closed meetings being held LONG before it was even announced to the field.
It’s a sad fact that sometimes when the good times are rollin’ and the money’s flowin’, ethics and integrity take a back seat to greed and pomposity.
Well I am hoping that Ken Horseface is leaving too. Does anyone know for sure? I am glad the Smiths are going I never felt that Mark was honest.
So sad…… wish more people would wake up to the scam of mlm. Its not just a problem with Nerium!
Well over 90% of people never make a dime in any of the companies and most actually lose money, all you are doing is providing a very nice living for the very few at the top, while being extremely lucky to break even or to make a couple of dollars an hour.
Please! Dont take my word for it…… Google is your friend! Do some serious research before you make a mistake and lose hundreds if not thousands of dollars!
Nerium products are terrific and really do work. I don’t know anything about this lawsuit or backroom deals. But I DO know the products work well.
Not as well as the previous products, as per Nerium’s own internal testing.
There are those who are even now on an NMD retreat being coddled. New deals are no doubt being made and hoped for.
I’ve seen it all before with TPN (Olson’s company that was bought by Pre-Paid Legal).
Entire downlines were moved under Darren H_rdy who eventually sold the distributorship and went on to become publisher of a SUCCESSful Magazine, you know, the one that did all those special editions promoting Nerium.
Deals WERE made and offered from day one, to numerous ‘hitters’.
I know because I was told by a co-founder that $ was available if I brought hitters.
That stuff is a very slippery slope that has been going on at the top levels of pretty much all of the mlm companies for decades.
I feel for the innocents who had dreams crushed, for the dozens and dozens of leaders who helped build Nerium and left feeling dishonored and unappreciated.
I feel for the ones still believing and who just don’t yet know the dark chapters in Nerium history.
It has not ended, but it is dying. Too late now to redeem the ‘last run club’ promise.
Wondering, will Ron and Leslie, who brought as much to Nerium as Mark & Tammy did, stay much longer?
Stay tuned. Or not. It needs to be over. We need closure.
Oz – There are more products than the original Nerium products. The Optimera line may work better but it is not available in the US. The Nerium products work great.
Additionally there are other skin care and nutritional supplements marketed by Nerium that are neither Nerium oleander nor Optimera and they are wonderful.
Patti – Ron and Leslie were with Nerium from the beginning. Mark and Tammy actually were not.
I will continue to use and market Nerium products because they are wonderful and they do work.
I met Jeff back in his NSA and Quorum days. He is a super talented guy but he is A-Moral with an outrageous ego.
There is a reason his top producers (most multi millionaire networkers) from those companies did not move on with Jeff.
The Smith’s “backroom deal ” with Jeff is a disgrace and an insult to their entire team and ALL Nerium sidelines who did not get such special treatment.
If I was a leader with them and Nerium, today I am either “out of integrity” or “I am out of Nerium.” I would chose the later.
This will ultimately be the end for Jeff Olson and Nerium. Sad for so many good and decent Brand Partners.
(Ozedit: Offtopic derail attempts removed)
Nerium is an awesome company that has helped thousands of people. They will get through this.
This is about money in the end. Let’s pray that this is resolved soon and that people can be successful in many MLM’s including Nerium International.
If Nerium’s products are working for you then great. That’s what MLM should be all about.
It’s interesting to see all of the negative comments about “backroom deals” Are you guys upset because some top producers are able to use their past success to negotiate better than “street level” deals OR is it that they are “secret?”
What are the specific reasons why these “special compensation plans for leaders” are viewed with so much emotional outrage?
Note: As I have indicated numerous times on this site (and my username shows) – I am not a big fan of the MLM model of:
1. Overpriced Products
2. Recruit to Sell
3. Sell the Opportunity
…..just to name a few of my favorites.
People who receive secret backroom deals are touted by companies as earning $x, which without a secret backroom deal is unobtainable in the time it took.
This isn’t disclosed to affiliates who receive the marketing material, which is deceptive.
Effectively the incomes of people who receive secret backroom deals are used to recruit new affiliates, who have no hope of duplicating that success through the compensation plan.
This can go on for years and dupe thousands of people over time.
If the deals were publicly disclosed there wouldn’t be a problem.
@ Oz – yep, you nailed it.
It comes down to this. How can a new distributor sell their overpriced products in the digital world. Well, how does JCPenny’s sell their products in a digital world.
The answer – they don’t.
So, how can a modern day MLM company recruit more investors/distributors and grow their sales numbers?
Answer – “deception”.
As you stated, they hand-select a few top distributors who have the following and skill of persuasion as “success stories”.
Then, they pump the check up for all to see – and let the need for greed do it’s thing. Most people make their decisions emotionally and only later justify that decision rationally.
When will it end?
As the old saying goes, “The music continues to play – – we just change partners”.
Still can’t believe Jeff put the current President of the company in that position.
I wonder what dirt she has on him for THAT to happen? Wowzer!
What I didn’t like about Nerium you had to pay 29.95 a month for edge and also if you didn’t meet the quota you had to pay another 100.00 each month.
I wasn’t successful at all with Nerium I had a hard time getting people to sign up. (Ozedit: Spam removed)
Well, of course not – it’s an MLM. Sure hope you realized that and aren’t trying to pimp another one.
You might have benefited from this read before joining Nerium (an MLM):
Chapter 7: MLM’s ABYSMAL NUMBERS
You stated you weren’t successful because you “had a hard time getting people to sign up.” Funny you make no mention of retail selling. I’m not surprised. Read the FTC article.
I was with Nerium for 2 1/2 years. I LOVED it. My business was very successful. And I LOVED the Night & Day Cream.
My husband was in a life altering motorcycle wreck & I was unable to continue working the business.
All of this makes me SO SAD. While with Nerium, I earned the IPad, the Lexus, the cruise to the Bahama’s.
I miss my Nerium family. I really am sad that all of this has happened to the company.
I LOVED my time with Nerium.
The products were amazing. I still use Night and DAy cream and have tried other stuff and havent found a better replacement.
I loved the conventions and positivity- it truly brought me out of a dark place.
Like Kim, I am so SAD to read this! I was duped by the top leaders. 🙁
I LOVED… I LOVED… sure you did. The hun-bots are out in force on this thread.
“Oh woe, I do so miss the positivity and the chance to take other people’s money that I enjoyed as part of a scammy cult.”
Many things can and will be said about all this..but I can only think of a few at a time – Using the common sense approach.
— The master distributor…brings some friends from other MLM business..but NOT ALL BPS to NERIUM– YET Demands compensation for all the Pie..> ok..?
–The Master distributor did not invent, developed or manufactured the product , nor financed the company to its inception but wants the whole enchilada.> (He is already making millions but wants more) ok?
–The master distributor— SUES HIS CURRENT MLM /EMPLOYER–AND AT THE SAME TIME..COERCES HIS MINIONS TO START CROSS RECRUITING ALL THE BPS’ OUT OF THE -NERIUM MLM– ONTO THE NEW MLM HE HAS SECURED HIS POSITION WITH (JENUESSE ) BUT SOMEHOW THAT IS ETHICAL? OK…???.?>>>>>>???
CONCLUSION: GREED can make you Stupid!!
Not sure why you have to make stuff up, it’s already all laid out for you in the complaint.
I did okay with Nerium. I really don’t care what’s going on with the upper level management. I love the night cream and I will continue to use it.
I think at the end of the day, it’s all about the bottom line, which is money. That’s too bad.
@Danielle, what other $100 did you have to pay? I don’t pay for Edge and I haven’t really work the business, so I haven’t met the requirements but I don’t pay extra for anything.
I’m just confuse as to what you pay extra for.
I had to pay each month 100.00 if I didn’t get three vip. (Ozedit: recruitment spam removed)
Danielle – why did you have to pay $100 each month if you didn’t “get three?”
I’m a Nerium brand partner and know of no such requirement.
Brace yourselves… “Jeunesse has the best products I’ve ever tried” testimonies are coming.
I personally know everybody involved in the suit on both sides.
Yes it’s a very sad that this happened to the company when it was rolling well. I think I guess greed always shows his ugly face.
I’m so glad I found a new home that I can make double and triple what I made it Nerium in less time and keep all my ethics and place LOL.
The industry is an awesome industry it’s just things like this but always trying to shine a bad light on us. Karmas definitely biting now.
Valerie – I believe she was rounding up.
In order to stay a Brand Partner without having customers, you need to continue your ADO which costs around $100.
Now mark and Tammy are at juenese. Haha, a company that was routinely bad mouthed at our meetings. So are the rest of the elite… that or world or modere.
How can anyone really buy into their BS. All the leaders are doing is figuring out how they can make a living. Everyone else is scraping for pennies.
I was a RMD with Nerium. The phone is blowing up with new opportunities everyday now… why would I do that when the only reason I joined nerium was because I believed.
All those companies sell overpriced, hyped up BS. Now everyone from my team sells spray vitamins.. good luck with that “new frontier”.
I’m not about to go to my downline and family and friends and tell them nerium was great but now I’ve got something better… I can’t stand there and lie to people anymore.
Hard to believe all this is happening. I believed in Jeff, Mark and Tammy…
Olson is making a guest appearance October 6th in Munich, Germany. My friend is a member of the cult and is at one of their seminars in Las Vegas.
She is a devout Christian, I wonder if she knows his views on God.
Unless it’s a deal-breaker for her, I don’t think religion should ever mix with business.
I know Jeff Olson for some years now, as all the other BP, high up or low down.
I never, ever have seen or heared talking bad or ugly to anyone. He is a really privat person, fair, loving, genuine, I don’t believe in what was said about him, not a word.
I know if you successful a lots people bring u down, spread bad seeds. I know who is greedy will fall deep and fast as well. Not Jeff Olson, he is a wonderful person and has a honest heart.
People who know him will not believe what was said here or anywhere else. He does not need to justify himself, the good will always succeed and sort out the bad.
A “coworker turned girlfriend” of mine was fired from our job and started doing Nerium Int.
Our dates gradually became “investment opportunities” along with spiritual awakenings on how Nerium Int. Is a Christian based company freeing people of financial bondage so as my interest “ grew in the company” so did our relationship… once I joined she displayed all the behaviors of J. Olson.
Everyone who gathered to influence me and get me to sign up and pay $300 all of a sudden disappeared and treated you like a failure if asking for insight and help.
It was a sham of an experience I thought would be entertaining but really showed how cut throat people were to get ahead.
I’d love to see this circulate now on ALL THOSE FB ACCOUNTS. Who sold this snake oil and see how they’re doing these days haha.