When a top affiliate of an MLM company departs after nineteen years, you expect some fallout.
What you don’t expect though is systematical sabotage from within, an orchestrated campaign to run a company into the ground if you will – all in the name of launching a new venture.
Our characters in this lawsuit are
- Todd Smith – Wakaya Perfection co-founder and former “trusted, top-level distributor” in Youngevity through Total Nutrition Inc.
- Blake Graham – former “top-level distributor” in Youngevity and part-owner of Total Nutrition Inc.
- Total Nutrition Inc. – a Utah corporation formed in 1996 that owned a Youngevity affiliate position up until March, 2016
- William “Bill” Andreoli – former President of Youngevity with purported “undisclosed financial interests in Wakaya Perfection”
- Andre Vaughn – former “top-level distributor” in Youngevity
- Patti Gardner – former Youngevity Vice-President of Sales and co-President of Heritage Makers (acquired by Youngevity in 2013) and
- Brytt Cloward – former Youngevity Vice-President of Marketing and co-President of Heritage Makers
Youngevity refer to Todd Smith as a “disgruntled former Youngevity distributor” and root his motivation for launching Wakaya Perfection in jealousy.
Todd Smith, once loyal to Youngevity, came to resent it as the growth of the company brought in more distributors with status equal to his own and income exceeding his.
Youngevity was evidently growing outside of Smith’s downline, leaving him stung by the pang of being left behind.
In an attempt to catch up, Smith began marketing Youngevity in Mexico “without Youngevity authorization or Mexican legal approvals”. That stunt earned him reprimand on behalf of Youngevity corporate.
Smith translated his dissatisfaction with those reprimands and his increasing immersion in a sea of up and coming new Youngevity leaders into a design to induce Youngevity distributors to defect from the company.
Seeds of resentment were purportedly first sown at an expenses-paid Youngevity cruse for affiliates held in early 2015.
Tom Chenault, a well-known top-earner in Youngevity, organized a meeting between top Youngevity affiliates at the event.
At that meeting, coconspirators Dave Pitcock (a top-level Youngevity distributor), his wife Barb Pitcock (a top-level Youngevity distributor), Andre Vaughn (a top-level Youngevity distributor), Bill Andreoli (President of Youngevity), and Todd Smith (a top-level Youngevity distributor), all publicly expressed dissatisfaction with Youngevity and condemned company officers.
Oh to have been a fly on the wall of that meeting…
Remarkably, due to his current position of President of Youngevity, Bill Andreoli purportedly told those in attendance that ” if anyone left Youngevity, he would leave with them.”
Chenault’s position at the meeting is not disclosed in Youngevity’s lawsuit. Nor is there any reference to him participating in the communal condemnation of Youngevity corporate.
Nothing concrete was discussed or proposed at the Youngevity event meeting, however it purportedy kick-started preparations for the launch of a new MLM company.
Acting as a Youngevity representative, Todd Smith began to sabotage the company from within.
One example provided by Youngevity is Smith’s dealing with the Great American Clay Company.
In 2015, a member of Smith’s Youngevity “downline” introduced Todd Smith to David Smith, the owner of the Great American Clay Company (GAC) based in Austin, Texas.
GAC expressed interest in contracting with Youngevity to provide bentonite clay products, which are helpful detoxifying agents.
GAC also indicated its willingness to work with Youngevity’s founder, Dr. Joel Wallach, on a book publishing project related to Youngevity’s business.
Todd Smith met with GAC as a representative of Youngevity. He led GAC owner David Smith to understand that he, Todd Smith—and he alone—was the contact for Youngevity.
GAC had been scheduled to meet with Youngevity’s Dr. Wallach in October of 2015 in North Carolina.
Todd Smith asked GAC to cancel that meeting with Wallach, stating that he (Smith) was already working on the account and had been given Youngevity’s authority to develop new products himself.
Those representations were false.
Todd Smith asked GAC not to disclose the reasons for cancelling GAC’s meeting with Wallach and Youngevity’s representatives.
Meanwhile, Todd Smith continued his negotiations with GAC for the development and formulation of four GAC products all the while still purporting to do so on Youngevity’s behalf.
Todd Smith then prepared a contract for GAC which named as contracting parties not Youngevity and GAC but instead Wakaya Perfection and GAC.
This led GAC’s owner to engage in email correspondence expressing confusion as to why Wakaya and not Youngevity was the named contracting party.
Given further assurances by Todd Smith, GAC then contracted with Wakaya to prepare its four clay products developed at Todd Smith’s request for the exclusive marketing of Wakaya.
At no point did Todd Smith inform Youngevity that GAC had been seeking to contract with Youngevity.
Although not disclosed in the lawsuit, I believe GAC are behind Wakaya Perfection’s “Calcium Bentonite Clay Powder” and “Detox Cap” products.
GAC now provides products exclusively for sale through Wakaya, and continues to develop products at Wakaya’s direction.
The Wakaya-GAC products include nutritional supplements or products that now compete directly with Youngevity nutritional products.
Among other things, Youngevity label Smith’s conduct “unquestionably tortious, unlawful, and deceitful”.
As the concept of Wakaya Perfection as a rival MLM opportunity gained traction, Youngevity’s affiliate-base was purportedly plundered.
To promote Wakaya, Wakaya employees and distributors conducted conference calls.
During those calls, Wakaya has used Youngevity distributors, including Pitcock and Vaughn as primary presenters, which calls, text messages, and related social media posts are then communicated to a broad audience of Youngevity distributors, derived from Youngevity’s confidential distributor lists.
With Youngevity his primary source of income while all this was going on, Smith sought to preserve commissions Youngevity was paying him each month.
Here Blake Graham enters the picture, as co-owner of Total Nutrition Inc.
To preserve his prior income stream from Youngevity business, Smith purported to convey his interests in Youngevity distributorships to his long-time personal friend, partner, and fellow Youngevity distributor, Blake Graham.
Smith conveyed those interests through a strawman transaction wherein no valuable consideration was exchanged and Smith continued to derive income and resources from Graham and TNT despite conspiring with Graham to convince Youngevity that Graham had not defected from Youngevity and should thus be entitled to receive all distributorships and commissions previously divided by Graham and Smith.
Youngevity claim Smith and Graham pulled the wool over their eyes, with Graham collecting commissions on Smith’s behalf.
All the while dismantling Smith and Graham’s TNT downline from within;
Graham continued operation of TNT purportedly without Smith as a named partner, but in fact permitted the direct recruiting and cross-recruiting of TNT distributors and the diversion of business opportunities by Wakaya.
Both Graham and Smith profited at Youngevity’s expense while Graham permitted Smith to drive Youngevity business, resources, and opportunities away from Youngevity to Wakaya.
How Smith and Graham managed to keep this all secret from Youngevity management is nothing short of amazing.
Top Youngevity affiliates and employees were approached throughout 2015 to join Wakaya Perfection. Those that signed on ‘were advised and encouraged to maintain secrecy about their dealings‘.
Most continued working for Youngevity at a superficial level, while concurrently gathering Youngevity information and using Youngevity relationships to lay the foundation for and promotion of Wakaya.
The company claims it had no idea what was going on until Smith publicly announced the formation Wakaya Perfection in late 2015.
Aware of Todd Smith’s actions to form a competing company that would cross-recruit Youngevity distributors, Graham withheld that information from Youngevity for months.
In addition to calculated betrayal, Youngevity claim commissions paid to TNT were used by Smith and Graham to “further the business interests of Wakaya”.
In addition, Graham purported to receive, at or before the start of 2016, a transfer, assignment, or purchase of all Youngevity distributorships in which Todd Smith held an interest or received income, but the alleged transfer was a sham.
Graham attempted to mislead Youngevity into believing Smith was no longer involved in or receiving income from any Youngevity distributorship when in fact Smith remained involved in and received income from Youngevity distributorships.
He did so in an effort to have all distributorships previously held jointly or from which funds were divvied up between the two restructured to be in Graham’s name only but with no restrictions as to Graham’s dispensation of the funds, including payment back to the defecting Todd Smith or to Wakaya.
Graham falsely informed Youngevity that TNT, a Youngevity distributor, had been assigned to him exclusively and that it had nothing to do with Smith or Smith’s company Wakaya.
Using commissions paid by the company you’re actively working against to fund your upcoming competing venture?
Ballsy to say the least.
For their efforts, Graham and Smith were suspended as Youngevity affiliates sometime in early 2016.
It was then that Graham orchestrated something even more ballsy.
On February 22, 2016, Graham sent an email and text letter to all Youngevity distributors using Youngevity’s confidential distributor list without Youngevity authorization.
Graham’s unauthorized correspondence, issued while under suspension, complimented Todd Smith on his departure and wished him well in the new venture, as if written with Youngevity’s blessing when it was not.
How a suspended affiliate gained access to the Youngevity affiliate database, much the less while he was suspended as an affiliate, I have no idea.
Graham used the email and text communication and the confidential distributor list to convey the false impression that Youngevity had no issues with Todd’s departure or formation of a competing MLM, thus implying that further moves by Youngevity distributors to become Wakaya distributors would likewise not offend the company.
Perhaps the biggest triumph of Todd Smith’s defection was the unofficial enlisting of Youngevity President, Bill Andreoli.
Due to his placement directly under CEO Steve Wallach, Andreoli was in a position to provide Smith and Wakaya Perfection with a wealth of insider information.
In 2011 Youngevity purchased FDI Management, FDI Realty and MoneyTRAX from Andreoli. In their lawsuit, Youngevity describe the businesses as “not successful” companies.
The acquisition of the FDI companies from Andreoli saw him continue to work out of an existing office in New Hampshire.
Effective December 30, 2015 in accordance with its lease agreement Youngevity closed its New Hampshire office.
A Youngevity employee, John Taylor, flew to New Hampshire to pack up the office equipment, including computers and data contained within same.
That office employed Mike Randolph, a Youngevity Executive Vice President and “consiglieri” to Andreoli. Youngevity also employed Mike Randolph.
When John Taylor attempted to obtain the computer used by Mike Randolph’s son, Taylor discovered that the computer was missing and had been replaced by an older computer.
Taylor was unable to recover the contents of the computer, which had included proprietary Youngevity information. In addition, at Andreoli’s request, Taylor did not remove approximately $40,000 worth of office furniture to which Youngevity was entitled.
If the apparent theft of company property wasn’t bad enough, Andreoli allegedly was also very much active in hindering Youngevity’s business operations.
Youngevity also employed Jimmy Hyun, Andreoli’s brother-in-law, at the New Hampshire office.
Hyun refused to supply Youngevity with passwords essential to updating Youngevity’s distributor information sections on Youngevity’s website. Youngevity was therefore required to expend employee hours to rebuild and replace that part of their website.
Oh and evidently, Youngevity management aren’t above manipulating the affiliate-base for financial gain either:
Andre Vaughn and Monique Vaughn are married, share their assets, and co-mingle their funds. Andre was a top distributor for Youngevity.
While both Andre and Monique maintained Youngevity distributor accounts, Andre was by far the more active in Youngevity business.
Over a period of approximately four years, Andreoli in his capacity as President of Youngevity, caused in excess of a dozen “forced qualifications” or automatic rank advancements to be bestowed upon individuals and entities who did not earn those advancements.
The effect was to cause the company to pay those individuals and entities higher than justified commissions, bonuses, and car bonuses.
Among those given these forced qualifications were Andreoli’s parents, his wife and children, Andre Vaughn, and Monique Vaughn.
For example, as a result of Andreoli’s forced qualification of Andre Vaughn, Youngevity paid Vaughn $40,000.00 in car bonuses and in excess of $600,000.00 in commissions and other bonuses over a four year period.
Why nobody else in Youngevity corporate noticed Andreoli was falsely promoting family and friends for four years is a mystery. Ditto whether he was/is the only Youngevity executive to manipulate the compensation plan.
What exactly sparked the beef between Andreoli and Youngevity corporate isn’t disclosed in their lawsuit. As referenced at the beginning of this article, in early 2015 Andreoli told top Youngevity affiliates that if they were thinking of ditching the company, he’d leave with them.
By mid 2015 Andreoli’s dissent was a full-blown public spectacle.
While serving as Youngevity’s President in August 2015, Andreoli acted to encourage widespread dissention from Youngevity management during key distributor meetings and on occasional visits to other Youngevity offices.
In August, 2015, Andreoli, acting as President of Youngevity, had Youngevity’s key employees, its marketing team, comprised of Mike Casperson, Brytt Cloward, and Patti Gardner, fly to Andreoli’s Youngevity office in New Hampshire purportedly to work on Youngevity’s marketing.
On information and belief, however, Andreoli had those three Youngevity employees travel to New Hampshire to discuss in secret Wakaya and their prospective employment by that company.
In October 2015 Andreoli contacted other Youngevity distributors in an effort to induce contract breaches by causing them to become distributors for Wakaya Perfection.
Andreoli made additional contacts with distributors in November 2015, again soliciting their involvement in the Wakaya venture.
Also in October 2015, Andreoli contacted world renowned oncologist and immunologist Dr. Charles B. Simone, who had been in talks with Youngevity concerning possible licensing of a Simone health product to Youngevity.
Andreoli informed Simone that Andreoli was involved in a new MLM venture and urged Simone to join Andreoli in consummating a deal with that venture.
The offer to Simone was not made known to Youngevity’s CEO or other officers or directors, and Simone declined to accept the offer.
Andreoli hosted Wakaya corporate events at his New Hampshire facilities (and) was unquestionably a participant in and promoter for the Wakaya venture.
To what specific extent insider information gleaned from Youngevity to create Wakaya Perfection is unclear.
Youngevity’s lawsuit however does reveal an abnormal effort to retain what Youngevity considers “confidential information”.
Patti Gardner was employed by Youngevity as Vice President of Sales.
While at Youngevity, Gardner reported directly to Andreoli and became close with Andreoli.
Gardner was in charge of making Youngevity’s travel reservations and making reservations for Youngevity’s events.
Gardner has a “travel agent number” which allows her to receive commissions on such reservations. While in Youngevity’s employ, Gardner was required to forward all commissions she earned from making reservations for Youngevity back to Youngevity.
Gardner currently owes Youngevity in excess of $20,000.00 from such commissions.
When Gardner left Youngevity, she failed to return several binders of information to Youngevity, which included contact information for Youngevity’s distributors.
Gardner is now the Vice President of Sales at Wakaya.
Mike Casperson, Brytt Cloward, and Patti Gardner all worked within close proximity to Bill Andreoli.
In October 2015 they simultaneously resigned from Youngevity, to “pursue some other options” and “work on some new projects.”
As part of their resignation, Casperson, Cloward, and Barney all asked to keep their Youngevity work computers.
Youngevity refused to release those work computers, and sent an employee to the Utah office to retrieve the computers where Casperson, Cloward, and Barney worked.
That employee discovered each computer’s hard drive and memory to be completely erased of content so that Youngevity could not retrieve any of its confidential information contained therein and any of Casperson’s, Cloward’s, or Barney’s work product.
Why on Earth would Youngevity’s marketing team wipe their company-supplied laptops before they left?
Those laptop computers had contained sensitive and proprietary Youngevity data and work product.
The laptops also included Youngevity marketing materials, graphics, and data belonging exclusively to Youngevity.
Well alright Oz, the data belonged to Youngevity and was wiped. So what?
Barney is now the Senior Creative Director, Corporate Visual Branding, at Wakaya.
Mike Casperson and Brytt Cloward are also employed at Wakaya in different capacities.
New publications and promotional content published by Wakaya have adopted the format and content developed on those computers by these same employees for Youngevity during the times Barney, Cloward, and Gardner were employed at Youngevity.
What’s the bet the data contained on those laptops was cloned before the owners wiped the drives?
Quantifying tangible losses to Youngevity as a result of the formation of Wakaya Perfection is difficult.
The company is claiming “millions of dollars” in damages, with financial injury first cited in October 2015.
In October 2015, Youngevity began to experience injury from Wakaya’s campaign to induce Youngevity employees and distributors to break their contracts with Youngevity.
Those employees abruptly departed Youngevity in unison under suspicious circumstances that reflect a conspiracy—a uniform effort or agreement to participate in Wakaya and disadvantage Youngevity long before discontinuing their service to or within Youngevity.
All of those individuals have become executives in, employees of, or distributors for Wakaya Perfection.
Wakaya, through its agents, intentionally converted Youngevity business opportunities through misrepresentation, deceit, and trickery.
Wakaya met with potential Youngevity acquisitions while holding its agents out as Youngevity representatives, only to direct those accounts to Wakaya through subterfuge, concealment, and misrepresentation.
the Defendants’ solicitation to join Wakaya conveyed implicit as well as explicit false connotations that doing so would not offend Youngevity, would be legally protected, and would be accepted by Youngevity without further recourse.
Since its launch, apparently Wakaya Perfection have continued to raid Youngevity downlines.
In an effort to secure more business from Youngevity directly, Wakaya has attempted to cast Youngevity as a financially bereft corporation on the brink of bankruptcy when in fact it is financially robust and profitable, having experienced considerable success and growth.
No doubt an exodus of top affiliates and management would affect any MLM company negatively.
Where though is the ethics in claiming a company is on the brink of bankruptcy, when your own departure and that of your colleagues is a major contributing factor?
Wakaya is a company formed almost entirely from a select few disgruntled Youngevity employees, distributors, and executives who came to believe that a competing direct network MLM venture would bring greater fortune than possible through Youngevity alone, despite their high salaries and large volume commissions from Youngevity.
Rather than expanding their fledgling venture through traditional means, however, the Defendants have relied substantially on business stolen or converted from Youngevity’s operations.
The Defendants have attempted to secure business opportunities through unlawful means.
The nine counts cited in Youngevity’s lawsuit are:
- Intentional interference with prospective advantage
- Intentional interference with contract / Inducing breach of contract
- Breach of contract
- Misappropriation of trade secrets
- Misappropriate of likeness
- Lanham Act false or misleading advertising
- Breach of fiduciary duty and
- Unfair competition
The company is seeking judgement in its favor awarding punitive damages and a permanent injunction against Wakaya Perfection and those that defected.
If granted, the requested injunction would see Wakaya Perfection prohibited
(1) from using any of Youngevity’s proprietary and confidential information in any manner not expressly authorized by Youngevity;
(2) from profiting from any of their illegal activities, including profits made from Wakaya employees and/or distributors who were employed by and/or distributors for Youngevity;
(3) from recruiting any additional Youngevity employees or distributors; and
(4) from maintaining distributorships with those recruited from Youngevity through unlawful means, including through cross-recruiting.
Youngevity are also seeking the establishment of a “compliance plan” for Wakaya International, as well ‘all Wakaya sales receipts and proceeds from the sale of GAC products exclusively licensed to Wakaya‘.
As per the case docket, Wakaya International, Todd Smith and the other named defendants have been given until May 18th to file an answer.