Usana Health Sciences filed a lawsuit on March 15 2007 against Private Investigator, Barry Minkow and his firm, the (if I may suggest, deceptively named) Fraud Discovery Institute for defamation. Usana's suit relates to indications that Minkow attempted to manipulate the price of Usana stock, as per a recent Wall Street Journal article. In a recent news release about the case, Usana reps had this to say:

"USANA believes Mr. Minkow's statements are part of a coordinated public relations program financed by a paying client and from which Mr. Minkow will profit personally. According to reporting in the March 15, 2007 edition of The Wall Street Journal, Mr. Minkow "...has bought 'put' options on USANA's shares in a bet the price will fall." Mr. Minkow admits that he has been paid to conduct his "investigation" against USANA. Further, he has engaged a public relations firm to propagate his false and misleading statements about USANA to the media

Minkow, not one to take things lying down or miss a chance to keep his name in the papers, responded with the following (via BloggingStocks):

We disclosed to 4 law enforcement agencies in writing back in February when we submitted the report our put option positions and we also disclosed our put option positions to Usana directly as well as the Wall Street Journal. Meaning we made full disclosure up front.

We have never charged a victim of fraud a fee to uncover their case nor are we paid by the government. However, this case involved so much time and effort and lab reports and experts that we had to off set these expenses. But it means nothing if our information is wrong.

The Wall Street Journal does not print a thing if they do not first corroborate everything we write -- and they did for several weeks. I can short any company I want to and if they are legit, they will Bury me with reasoned answers. Usana cannot, so they attack the person and ignore the arguments.

See the full BloggingStocks post for a link to the full Fraud Discovery Institute report on Usana.

The SEC recently began an informal investigation of Usana. Usana President, David Wentz said of the SEC probe, "We believe that this is a routine inquiry made in response to a series of false and defamatory statements about our company that have appeared on the Internet and in the mass media."

More here on Usana, Minkow and the SEC.

-- MDT

Labels: Barry Minkow, homeland security, investigation, supplement industry, Usama Health Sciences