AG's case hits home in small town
By DANNY ROBBINS
Star-Telegram staff writer
SPECIAL TO THE STAR-TELEGRAM/ASHLEY LANDIS
Loretta Lewis holds a portrait of her daughter, Angel Montgomery, who died of bone cancer last year. A Mannatech sales associate tried to persuade her to stop chemotherapy in favor of taking a supplement called Ambrotose, a product of Mannatech Inc. SMITHVILLE -- Even after five years, Loretta Lewis vividly recalls the day she visited the home of her daughter, Angel Montgomery, to hear a talk by Max Brache, a sales associate for Mannatech Inc.
Much of Brache's presentation was focused on Montgomery, who only months earlier had been diagnosed with a rare form of cancer.
And, in Lewis' view, much of it was frightening, making the case that her daughter could conquer her illness by stopping her chemotherapy and taking Mannatech's dietary supplements instead.
"The thing that still galls me is how you can look somebody that sick in the eye and give them that kind of hope," she said.
For Lewis and others close to Montgomery, who died in November at 31, old emotions have been stirred by the lawsuit Texas Attorney General Greg Abbott filed against Mannatech last month.
Montgomery's experience with Brache is among the incidents cited in the suit, which accuses Mannatech, a Coppell-based multilevel marketer, of allowing its supplements to be sold as cures for cancer and other diseases.
What occurred in Smithville, a town of 4,000 about 40 miles southeast of Austin, underscores many of the issues confronting Mannatech, depicted in Abbott's suit as a company that has long turned a blind eye toward the questionable activities of its associates.
When Mannatech learned of Brache's alleged conduct, it took disciplinary action that, in essence, kept him from selling for only one month.
"I would have loved for him to go through a lot more hell than that," Lewis said.
She said she contacted Mannatech about Brache and was told that he would be "harshly reprimanded."
Abbott's suit describes how the Texas Department of State Health Services was informed by Smithville police in 2002 that Brache had encouraged Montgomery to stop her chemotherapy and purchase $1,100 in Mannatech products, known as glyconutrients.
The agency, then known as the Texas Department of Health, subsequently notified Mannatech, according to the suit.
But a matter noted by two paragraphs in the lawsuit is something far more personal in Smithville, reviving memories of how a glib Australian blew into town selling supplements and locked onto a young mother of two with a daunting fight on her hands.
'You need this stuff'
Brache regularly said Montgomery wouldn't need chemotherapy if she used Mannatech's signature product, Ambrotose, according to Jason Montgomery, her ex-husband.
"[Brache] was constantly beating that into us: 'You don't need the stuff [chemotherapy]. You need this stuff, because it's going to help your cells communicate and fight off the cancer,'" he said.
Jason Montgomery said his wife never ceased her chemotherapy, although she seriously considered it.
"She was sure thinking about it," he said. "We both were, because [Brache] was pretty convincing."
When the company learned of Brache's actions, it deemed them "unacceptable" and "aberrant," but it did not remove him as an associate, according to correspondence obtained by the Star-Telegram. Instead, it placed him on six months' probation, with a one-month suspension from doing business. It also required that he receive regulatory training.
Brache, who was well-connected within Mannatech's network of associates, remained part of the company's sales process, records show.
In January 2003, he was part of a group that formed a corporation in Florida called GlycoWorx. Its purpose was "to produce, sell and distribute nutritional educational materials," according to its articles of incorporation.
Mannatech associates have long used such items as sales tools, purchasing them at corporate events or online. Some of the best-known items are cited in Abbott's suit for making illegal health claims.
Brache had a heart attack and died in March 2003.
In response to questions from the Star-Telegram regarding Brache, Mannatech issued a written statement saying the company couldn't comment on pending litigation. The statement also noted that the company has taken steps to police sales practices after Abbott's suit was filed.
Coming more than five years after Smithville police reported Brache to state health officials, the attorney general's suit has some in town wondering why it took so long for something to be done.
The lawsuit "should have happened a long time ago," Smithville Police Chief Rudy Supak said.
A mystery man
Brache remains something of a mysterious figure in Smithville, where he lived off and on in 2001 and 2002 while doing carpentry work for Yerger Hill III, an attorney and chairman of the board of First State Bank.
Although Brache was a journeyman carpenter driving a 20-year-old pickup truck, he was able to persuade 50 to 100 people in the area to purchase Mannatech products, Hill said.
"He could sell," said Hill, who bought some of the products himself. "There's no doubt about it. He had the ability to sell."
While Brache was in Smithville, he made several trips to Mannatech's corporate headquarters, Hill said. He also was in frequent phone contact with a husband and wife who have built one of the company's most lucrative sales organizations, or "downlines," he said.
Hill said he knew little else about Brache other than that he was originally from Australia and previously worked as a carpenter for a friend of Hill's in Kaufman.
Montgomery's dealings with Brache began not long after she was diagnosed with Ewing's sarcoma, a form of bone cancer that most often strikes males between the ages of 10 and 20. At the time, she was undergoing a grueling regimen of chemotherapy in which a device pumped the drugs into her body around the clock.
"It was odd that this happened right when we found out she had cancer," Jason Montgomery said. "We were like, 'Maybe it's a godsend.' But it definitely wasn't."
The situation concerned Lewis enough that she contacted Smithville police, for whom she used to work as a dispatcher.
"I didn't know what else to do," she said. "All I could think of was, 'This man is taking advantage of people who are wanting a miracle.'"
In a report summarizing an interview with Angel Montgomery in January 2002, Supak wrote: "[Brache] told her that he had a product that could keep [her] from dying. ... He told her that he could see people's auras, and he could tell that if she did not take his product, she would die."
Mannatech's response
After the Texas Department of Health notified Mannatech of the complaint in June 2002, the company responded with a letter from Terry Persinger, its president and chief operating officer.
In the letter, Persinger said Mannatech was already aware of "these unacceptable practices by Mr. Brache." He also outlined the disciplinary measures that had been taken.
"We believe that the company has an effective mechanism in place to address aberrant conduct such as that indicated by this incident and that the compliance process was utilized swiftly and appropriately to modify the acts of this one individual," he wrote.
Lewis said Brache stayed away from her daughter after the police became involved, but she often wondered what, if anything, was being done by the company or authorities.
"We knew he wasn't just [selling] here," she said. "It used to make us think: How many other people did he approach? And how many actually bought into what he said and suffered because of it?"
Mannatech's legal woes
Texas attorney general's lawsuit
Mannatech is accused of deceptive trade practices and violations of the Texas Food, Drug and Cosmetic Act in a lawsuit filed July 5 by Texas Attorney General Greg Abbott. The suit contends that Mannatech has engaged in a "deceptive scheme for monetary gain" by enabling its sales associates to sell its dietary supplements as cures for numerous diseases and conditions, including cancer and Down syndrome. The suit also says that the company has used two nonprofit organizations to promote its products. Defendants include Sam Caster, Mannatech's chairman and chief executive, and H. Reginald McDaniel, a physician who has been heavily involved in the company.
Class-action lawsuit
The basis of the class-action lawsuit is that shareholders were deceived by Mannatech when they purchased its stock. The action was prompted by a 40 percent drop in the company's stock price after an article about its sales and marketing tactics appeared in Barron's in 2005. The plaintiffs have filled their pleadings with statements from unnamed former company employees, some of whom allege that the company has been lax in dealing with excessive claims by certain company officials and high-level associates. An amended complaint was filed July 12 to include Abbott's lawsuit.
Shareholder derivative lawsuits
Four shareholder derivative suits have been filed against Mannatech. Most of the allegations are similar to those in the class-action suit.
drobbins@star-telegram.com
DANNY ROBBINS, 817-390-7248