N A T U R E O F T H E A C T I O N
1. This Action arises out of Defendants’ illegal, unethical and unconscionable conduct including engaging in fraudulent and unfair or deceptive acts and practices in response to a competitive challenge in t he marketplace from a start up direct competitor, Ocean Avenue. As described below, the complained of acts amount to violations of the Racketeer Influenced Corrupt Organization Act ( “RICO”), the Utah Pattern of Unlawful Activity Act (“UPUAA”), Interception of Communications set forth in 18 U.S.C. § 2511 and Utah Code Ann. § 77-23a-4, Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a),
the Unfair Competition Act under Utah Code Ann. § 13 -5a-1 et seq., the Truth in Advertising act under Utah Code Ann. § 13-11a-1 et seq., and acts of Trespass and Theft, Tortious Interference with Prospective Economic Advantage, Defamation,
Business Defamation, Unfair Competition, and Fraud under the common law of the State of Utah.
The complaint is posted over on MLM HelpDesk (nice job with the disclaimers Troy).
This is rather striking:
Visalus Engages in Corporate Espionage, Computer Hacking and Theft
To Damage Ocean Avenue and its Owners
28. In response to Ocean Avenue entering the market as a competitor with Visalus, Nic Sarnicola, , and Mallen on behalf of Visalus hired a private investigation firm called “Moser & Associates”, in Menlo Park California (the “P.I. Firm”).
29. Nate Moser (“Moser”) and Peter Siragusi (“Siragusi”) are the private investigators with the P.I. Firm.
30. Moser represents himself as having been a civilian operative working for Blackwater in Afghanistan and Iraq and an expert in investigations and personal protection.
31. Moser has stated he is friends with the head of security for ViSalus who he knows from his military background.
32. Moser has attended and participated in various ViSalus events. See Exhibit E.
33. The P.I. Firm at the direction of Visalus, and Nic Sarnicola hired a computer expert located in India referred to as “Sumit Vishoi” to access the email accounts of the former Visalus distributors working with Ocean Avenue, Ocean Avenue employees, Ken Dunn and Fred Ninow .
And later, the always popular animal downline:
Enrolling Pets and Fake People as ViSalus Distributors and Assignment of
False Sales Volume
161. Another common practice that ViSalus is aware of and supports is used by its leading distributors to sign up new distributors is to create fake or phantom sales volume in order that ViSalus may falsely represent to unsuspecting recruits that those who have recently joined have achieved immediate outrageous success.
162. This scheme includes knowingly setting up fake distributor accounts (often in the name of pets or other fictitious people with fake social security numbers) in order to create false downline money that new distributors will believe is guaranteed income in the future. ViSalus’ “sales pitch” to keep momentum going is that “You too can achieve success quickly. ”
163. In fact, Plaintiffs are aware of numerous ambassadors for ViSalus engaging in a practice of using rollover money which they hold in what is known as a “waiting room.” This by itself is not improper [nor does it] create any false impressions. However, instead of putting this volume in the waiting room to be assigned to the next distributor who signs up, ambassadors often enroll fake people as distributors and assign the volume to alleged “legs” underneath the new distributor. The new distributor is led to believe that he or she already has a “leg” of business in his or her downline, and thus becomes qualified to receive bonuses/commissions, without having to do any work and that by signing up; he or she will be guaranteed that, at least this sales volume will be there. Thus, ViSalus lulls the new distributor into a false sense of security that the amount of money credited at the start up is essentially a given.
Don't you hate it when family fights?
I can't yet confirm but the following is being reported as Visalus' response:
On October 29, 2013, Ocean Avenue filed a lawsuit in Federal District Court in Utah against ViSalus which alleges that ViSalus violated certain of its legal rights.
ViSalus believes that this lawsuit, along with the resulting negative publicity encouraged by Ocean Avenue and its distributors, is merely a desperate attempt by Ocean Avenue to pressure ViSalus into settling the 9 separate lawsuits dating back to November 2012 that ViSalus filed against Ocean Avenue and 9 of its distributors for breaches of non-competition and non-solicitation agreements.
As ViSalus believes this lawsuit is entirely without merit, it intends to vigorously defend itself against these untrue allegations.
ViSalus is undeterred by this most recent action by Ocean Avenue and will continue to use all available legal remedies to aggressively pursue the enforcement of its contractual and other legal rights which include seeking the recovery of substantial monetary damages from Ocean Avenue and its distributors.