USANA Cleared of Informal SEC Inquiry

Hello Success Team International,

If anyone you know has concerns about the drama which Barry Minkow stirred up in 2007, then the two releases below will be a good read for them to bring understanding and closure to this. Perhaps, save a copy of this email in your file in case someone has concerns around Minkow antics in the future. Keep in mind that USANA is dedicating considerable attention and resources to prosecute Minkow. If USANA's case goes as planned, he will most likely end up back in prison.

The more successful public companies become (examples: USANA #3 in Hottest Growth of Business Week, top 20 in Forbes for past three years, record sales for five years), the more likely it will be a target. However, rest assured that your Independent Distributor Council and USANA Senior Management are implementing several preventative measures so that we are much less vulnerable in the future to short selling schemes or critics.

Keep spreading the vision and charging to your dreams!
Jeremy StansfieldUSANA 8-Star Diamond Director

News ReleaseSEC Closes Informal Inquiry of USANA

SALT LAKE CITY--(BUSINESS WIRE)--Jan. 11, 2008--USANA Health Sciences Inc. (NASDAQ:USNA) announced today it has received a letter from the Salt Lake Regional Office of the Securities & Exchange Commission stating it has completed the informal inquiry regarding the company and is not recommending any enforcement action be taken.
USANA voluntarily disclosed the SEC's informal inquiry in March 2007, which the company believes was related to assertions appearing in the mass media. The company cooperated fully with the SEC during its inquiry.

"USANA greatly appreciates the diligence of the SEC in completing its informal inquiry, and we are pleased to put this matter behind us," said David A. Wentz, president of USANA Health Sciences Inc. "We have always been confident about the integrity of our company and take pride in our direct selling business model. All of us at USANA look forward to continuing to provide our tens of thousands of Associates and Preferred Customers worldwide with the finest nutritional products and an excellent home-based business opportunity."

Usana Health Sciences Vindicated against Stalker
Usana Health Sciences Vindicated against Stalker- January 11, 2008

David Patch
Any researcher of the Securities and Exchange Commission website looking for information on a scheme of manipulation called the ‘short and distort’ will find themselves hard pressed to find anything of substance. Unlike the extensive warnings and enforcement hearings issued by the Commission on the ‘pump and dump’ method of stock manipulation there is no such information or enforcement track record on the equally abusive ‘short and distort’.

At the present time, there are near a dozen lawsuits littered across this country where executives of public companies have accused short sellers of using access to financial media to disseminate false and misleading information about their companies. The issuers further allege that these same parties will file false claims to the Commission in order to create a bogus SEC investigation into the issuer to distort market sentiment.
The intent of the distortion of fact is to create fear and panic and drive down the market of the public issuer creating profit to any preexisting short position held prior to the news releases.

Usana Health Sciences (USNA) is one such company under the alleged attack of a ‘short and distort’ campaign.

In March 2007 USNA was trading at a market price above $60.00/share. But that was before felon Barry Minkow came calling through his access to the Wall Street Journal.

Barry Minkow has served prison time in the 1990’s for security fraud and since obtaining his freedom has developed a research company called Fraud Discovery Institute. The primary focus on the operation is to identify and then publicly trash companies Minkow perceives of running a scam.

Like former Crazy Eddie CFO and convicted felon Sam Antar, Minkow goes out and stalks public companies and presents his unsubstantiated allegations through his site distribution. Each disseminates relentless levels of negative information on the targeted companies under the guise of more material makes the story more credible.

In the disclosure statement on Fraud Discovery Institute Minkow admits that he may hold short positions in the issuers they are stalking. The disclosure statement is buried deeply into his Privacy Policy and Disclaimer statement located elsewhere and not on the individual accusatory publications.

Like Antar, Minkow has no actual evidence to support his allegations instead dressing up public information and investigative information in a manner that looks convincing but with a flaw, it is not always accurate.
Minkow and Antar use their history as a criminal in the stock market to ultimately justify the accuracy of their findings. After all we have all heard the “takes one to know one” phrase. These two should seek out patent rights to the phrase as they use it so much in their self-advertisement of who they are and why they now do what they do.
In March 2007 Minkow and the Wall Street Journal discussed his baseless allegations of fraud taking place within Usana. Minkow accused the firm of running a pyramid scheme and the WSJ ran the report in a ‘Heard on the Street’ report. The impact of the article was definitive.
Shortly after the Wall Street Journal article was released the $60.00/share market for Usana began an abrupt shift and by April 30th the market in Usana was trading below $40.00/share. By August 7 the stock had fallen to levels below $30.00/share. The market cap in Usana had dropped nearly $480 Million in a matter of 4 months after the article was relased.

A look into Minkow’s site documents the level of public stalking by Minkow during this period of ‘market adjustment’.

In fact, the attention Minkow was creating brought in the standard package of support networking as the Securities and Exchange Commission initiated an informal investigation into Minkow’s allegations and the associate firm to short sellers, Milberg Weiss, initiated a Class Action lawsuit against the company within days of the report.

Why Milberg Weiss?
Milberg Weiss is presently under indictment for providing kickbacks to planted plaintiffs in class action lawsuits filed. The federal indictment contains language stating that Weiss had advanced knowledge of companies whose market was about to come under pressure and planted lead plaintiffs in the company as long investors just prior to the market collapses.

The US Attorney has not yet detailed exactly how Milberg Weiss had the foreknowledge of the upcoming market adjustment and likewise, the SEC appears disinterested in investigating insider trading and stock manipulation charges on this foreknowledge. I would certainly want to know how this takes place if market regulation was my career responsibility and I certainly would want to understand the frequency and mechanics of how such takes place.

As for the allegations against Usana Health Sciences Minkow, Weiss, and the SEC were all proven to be wrong this week.

The Securities and Exchange Commission has concluded their informal investigation into Usana Health Sciences and issued them a clean bill of health.

The negativity about Usana created by the financial media, Minkow, and Milberg Weiss were all shown to be nothing but distortions of the truth. The distortions initiated by stock fraudster Barry Minkow created nothing short of a venue for market manipulation that benefited all short sellers in the company.

Barry Minkow himself is accused by Usana of holding a short position in the company during this window of extreme financial opportunity. The short position acting as his catalyst to increase the public dissemination of more and more distorted facts.

Under SEC policy, the SEC would not confirm or deny whether an investigation exists into Minkow or his site publications of false material. Minkow has made no public disclosures on his site of a possible SEC investigation but he does not have to either. Only public companies are required to disclose such material events.

How many more stock manipulation opportunities like this exist in the capital marketplace? Opportunities where intended distortions of fact are confused by authorities with free speech rights when it comes to public issuers.

A FOIA Request into the SEC would not shed much light on this question. The SEC responded to my request by declaring that the agency fails to maintain records of how investigations are initiated and what source created such investigations. There is no way to identify patterns of abuse by interested third parties using the complaint process to create bogus investigations and manipulate markets.

That would of course be logical in a non-logic orientated agency.

What we are aware of through public information is that court transcripts of the trail against convicted felon Anthony Elgindy provide significant insight into Mr. Elgindy’s ability to generate SEC Investigations into public companies. Convicted Felon Sam Antar has likewise admitted to gaining access to several bureaus of the SEC to launch his allegations against public issuers, and former SEC Enforcement Attorney Richard Sauer admitted in a NY Times Op-Ed piece that he utilized the short seller frequently when initiating investigations. Sauer used the Op-Ed space provided by the NY Times to canonize the short seller as the unsung hero for maintaining market controls.

At the time of the Op-Ed piece Sauer had left the SEC and was employed by the short interest hedge fund that previously provided Sauer with many of his cases. No conflict of interest there and no full and transparent disclosure in the Op-ed piece published that his employer was one and the same with the investigations he conducted.

With this evidence before us it dos not take a rocket scientist to figure out that a significant flaw in SEC enforcement exists. The financial press has provided stock manipulators with access to the public and instead of investigating the validity of such access, and taking appropriate actions against those distorting the facts the SEC focuses on the issuers and in the process aiding the manipulation process. The problem is exacerbated when felons, convicted of securities fraud, become the point of credibility in this process.

So you ask, what did the SEC’s clean bill of health disclosure have on the market in Usana? The stock gapped open up 25% today providing credence to the negative impact a bogus SEC investigation can have on a public issuer.

Usana has sued Minkow for defamation based on the allegations presented on his website and public statements issued through the financial press.

Such a lawsuit, win or lose, will never provide comfort to all those investors who lost hundreds of millions in losses. With 16 Million shares issued and outstanding the $30.00 drop in market value erased $480 Million in market capitalization. Such a decline also limited the company’s access to capital, a business impact that can never be fully evaluated.

So the next time you peruse the SEC web site take that search on the ‘short and distort’ and compare the results to the ‘pump and dump’. When you see what I have seen, write to your Congressman and ask why the SEC has turned a blind eye to this method of abuse. The evidence proves it exists, why hasn’t the SEC taken the necessary steps to clean it up? Worse, the SEC has become a major player in the fraud itself.

UPDATE: Court Documents in the Usana v. Minkow case has revealed that Sam Antar is a major financier of Minkow in this stalking attack. (See Page 4 of this attachment)

For more on this issue please visit the Host site at www.investigatethesec.com Copyright 2008


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