Archives1995

2010 UpDate Archives 1995, 1st Quarter

January 1995 MLM WATCHDOG From The MLM Insider Magazine

By Co-owner - Publisher - Editor Rod Cook

STERLING HEALTH AND HORPHAG IN LITIGATION ABOUT PYCNOGENOL™. Sterling Health of Prospect, Oregon, is in a legal struggle. It is in the U. S. District Court Eastern District of New York over the trademark PYCNOGENOL™. This information stunned the investigative staff of the MLM insider. We were doing research on the OPC wars (see article else where in this issue) when this came in! The information will no doubt rumble through the natural foods' industry. Information given to us indicates Dr. James Masquelier discovered and named antioxidant extracts as Pycnogenols. Dr. Masquelier had adopted the mark PYCNOGENOL ™ for worldwide use. Horphag Ltd. was a broker for Masqueliers non-profit company. The trademark was filed without the good Doctor's consent. Dr. Masquelier is supporting the Sterling Health legal action to free the trademark. For further information, call Sterling Health at 503-560-4111.

THE PYCNOGENOL™/ OPC WARS – If we ever thought the MLM industry was rough, you should look inside the world of manufacturers, brokers and importers. We had the opportunity to interview Mark Timon of T AAG Division, Primary Services Interna¬tional. They are the importers and distributors of professor¬ Masquelier's original, patented, standardized OPC extracts. Following is an excerpt from our conversations where we asked him about the validity of some of the claims and comments made by Horphag and their major marketer, Kaire International. If you have questions for Mark, you may FAX them to 203-435-3576. Following are claims followed by a summary of TAAG’s replies.

1. TAAG (Masquelier's OPC importers), Int. Nutrition Company (Dutch master broker for Masquelier's OPC) and SARPAP (Masquelier's manufacturer) are all broke.

TAAG REPLY - No, we are all quite solvent. Haimoff (Horphag owner) uses his "they're bankrupt" story frequently against any competitor and has been doing it for years. His claim is so old, it's a real yawn!

2 From Charles Haimoff: President and sole employee of Horphag, Sept. 1989 to U. S. import agent. "The first thing Dr. Masquelier wants us to do is trademark the name "Pycnogenol" in North America. TAAG REPLY- ¬In July of 1989 Dr. Masquelier sent Haimoff (Horphag) a letter forbidding him from obtaining the trademark in any country whatsoever!

3. From Haimoff/Horphag. (1989): The reason Pycnogenol is so expensive is Masquelier gets such large royalties. TAAG REPLY – Haimoff/Horphag (H/H) never paid Dr. Masquelier any royalty. . Masquelier's Lab CEP paid H/B 15% broker fee for the period H/B distributed M's invention.

4. OPC-85 (pine bark) and OPC-92 (grape seed) are contaminated with pesticide and solvents. TAAG REPLY - Lab tests showed that Horphag's Pycnogenol™ (made by DRT) contained up to 10,000 parts per million ethyl acetate. SARPAP's (Masqueliers producer) OPC only showed several thousand parts per million which meets pharmaceutical standards. Pesticide residue is at the level of nearly non-existent.

5. Horphag's Pycnogenol™ is extracted through an exclusive water process. No solvents are used. TAAG REPLY - This claim is absurd Solvents are used to extract all proanthocyanidins, including Pycnogenol™. DRT who makes Pycnogenol™ for Horphag uses solvents. Yes, they first pump hot water through the crushed plant material, which removes the OPCs, dis¬solved bird droppings, dust, dirt, some plant oils, tars, and other materials. Then solvent extracts the OPC's. This is what Masquelier’s patents were all about. The latest analysis we have seen from and independent laboratory found residue of seven solvents in Horphag’s DRT produced material. Amounts ranged from insig¬nificant to very high.

6. Kaire's Pycnogenal is more bioavailable than any other. All other proanthocyanidin products are inferior, with bioavailability around the 33rd percentile while Kaire's is 95% bioavailable. TAGG REPLY – A proanthocyanidin is a proanthocyanidin no matter what plant it comes from.. The studies which established the nearly instantaneous bioavailability of OPCs were con¬ducted with grape seed extract from SARPAP.

7. Kaire's president, Nick Mangeris, met at dinner with Professor Masquelier in France, and asked the professor what could be done to make Pycnogenol™ most bioavailable. The professor jotted down a secret formula on a napkin and handed it to Mangeris. That secret formula is the reason why Kaire's products are so much better than anyone else's. To this day, Mangeris keeps the napkin safely locked away in a bank safe deposit box. TAAG REPLY - From Professor Masquelier: "Who is Nick Mangeris? I never met the man. "

8. Professor Masquelier was under contract to and paid by Horphag as head of Horphag's research department. TAAG REPLY - Horphag and Dr. Masquelier did work together starting in 1971. A succession of contracts followed with the latest we have on file written in 1986.

These contracts indicate that Dr. Masqueliers lab CEP was the principal (boss) and Horphag was the distributor (salesman). The agreement goes on to say Horphag will receive a maximum commission of 15%... Horphag NEVER contributed to or paid for any research. The agreement also clarifies that "costs and fees" for the filing and registration of patents would be borne by Dr. Masquelier's company

9. Dr. Masquelier sold his patent and that's why other people are incorrectly making claim to it .TAAG REPLY - Dr. Jacques Masquelier is truly the father of OPCs. He discovered them. He isolated them. He named them. He characterized them. He invented very specific tech¬niques to extract them and only them from plants. He financed, conducted and oversaw numerous animal and human studies to establish the safety and efficacy of OPCs. In 1987, the U.S. Patent Office issued patent no. 4,698,360 to Dr. M covering the use and application of proanthocyanidiins as free-radical scavengers. Dr. M assigned his 1987 patent to two entities. The first assignee is now International Nutrition Company (INC) of the Netherlands. The second assignee at the time was Horphag Overseas. At the time, Charles Haimoff was Dr. M's trusted distributor. Although Haimoff and Masquelier have since ceased their relationship, both retain the right under law to practice the invention. In a February 19941etter to the American Natural Foods Industry Dr. M states: "I have retained my interest NOT to do business 'at gunpoint' as others have done but simply to make my knowledge freely available together with my rigidly quality controlled OPC extracts, be they from pine bark or grape seen extract. These extracts are manufactured by the French company SARPAP “In the U.S/Canada they are available from TAAG”.

10. SARPAP'S OPC- 85 patented pine bark is contami¬nated with turpentine. TAAG REPLY-This bit of slander is totally untrue. Pharmaceutical grade OPC-85 produced by SARPAP is Masquelier 's invention it does not use turpentine in processing and contains no turpentine residues of any kind The turpentine claim is a fabrica¬tion.

As you, our observant reader can tell this issue is really heating up. USANA's proanthocyanidin brochure gently and scientifically blasts pine bark based products. In addition, it has a photo of Dr. Myron Wentz consulting with Dr. Jacques Masquelier. Dr. Michael Murray of Vital Communications put out a release indicating, "The studies and patent on the tree-radical scavenging activities of proanthocyanidins have shown the grape seed extract is substantially more potent and effective that pine bark extract. Bert Schwitters who has written the best book ever on OPG' s is involved Mr. Schwitters who owns International Nutrition Company is taking a TV film crew to southern France to do a film interview with Dr. Masquelier. Why? Dr. M. is tired of calls and letters. The video-taped interview should put all of the untruths and questions to rest. The MLMINSIDER has been promised one of the first copies of the film to hit the U.S. We will report the results directly to you as soon as humanly possible. There is even talk of doing a satellite uplink of the tape to Galaxy 5 or 7 for MLMers who have satellite bowls. We will keep you posted as the wars go on. This will probably affect several MLM companies and some will crash. This won't do Kaire's growth any good and perhaps even reverse it. Kaire may survive because they have diversified their product line. Other companies won't.

PAT ROBERTSON COULDN'T TAKE HEAT ¬SELLS KALO VITA! In our last issue, we reported the beating Dr. Robertson was getting from the media over his MLM adventures. Evidently he didn't like it one bit!

He sold Kalo Vita to Royal Body Care of Dallas. Clinton Howard, President of Royal Body Care, Stated, "The addition of the Kalo Vita distributor organization will virtually double Royal BodyCare revenues with only a small increase in revenues. We expect to provide all former Kalo Vita distributors complete support and ser¬vice from our headquarters in Dallas." I hope this goes well for RBC. I have gotten several calls from K. V. distributors that were angry the Pat Robertson had sold them out! They felt they had joined an ethical, steadfast, and religious MLM. I assured them Clinton Howard was an honest ethical President but that didn't seem to satisfy them!

DIAMOND FALCON SELLS OUT MLMers Houston, TX. Entourage Int. (Biogime). Biogime purchased the Home care division of Diamond Falcon. Corp. Included was the greatest of all cleansers SWIPE. Diamond Falcon is going to focus on retailing their Diamond Seal tire sealer through new car dealers. Biogime is one of few MLM companies that has been able to operate skin care retail outlet centers in conjunction with networking. Happy New-year Diamond Falcon networkers you're terminated! A cheerful note, Falcon distributors are being grandfathered into Biogime.

A COLONIC IRRIGATION - THE KM CHRISTMAS - KM Matol is not only shaky; they sent bad checks to their distributors for Christmas. Reports were between 5 and 53,000 December checks bounced! An approximate reverse chronology of errors follows. Kent Ponder (Netword Hotline) finds Carl Jurak, Matol founder, does not have a Ph.D. as claimed. Jurak (pronounced Yurak) known to be a nice person but forgot to cover tracks. His son Anthony also in Matol manage¬ment presented to have a degree from Cambridge. He forgot that U.S. and UK. Both speak English! A call to Cambridge is direct dial. It takes three minutes to find out that Anthony has not frequented the local coffee houses or bars, much less been enrolled at Cambridge. If you are not familiar with Academics, enrollment is a prerequisite of graduation! More damage to the KM reputation occurs. Matol starts Freedom Net a catalog-marketing program (an AMWAY catalog spin off). High priced goods miss their target market of Matol distributors. Lure of easy money by mailing out catalogs distracts distributors from pushing the major product line, KM Matol. Computer problems plague Mail order opera¬tions. Customer's order goods, don't get them. Other people free goods that they never ordered. Rumor is $ 1 million worth of Freedom Net Sweat suits, jackets and shirts are still languishing in a warehouse. The whole project is written off. Rumored loses are $10-15 million.

Fall of 1994, Company is financially bleeding because of hits. No action is taken reducing overhead and operating costs. Staff members laid off the Monday before Christmas. A court appointed manger (Stanley Wener C.A.) from the accounting firm Earnest and Young takes over firm. Word on the street is that it will take S2.5-4 million to keep the company going and the search is on for finances. Matol E-Mail the Thursday night before Christmas promises re-organization. As we are going to press, the "word" is December-checks will be paid in January. The sad part of this whole fiasco is the damage done to the respectabil¬ity of Network Marketing. I would have bet KM Matol to be the salt of the earth. I know many of their distributors and have found them to be some of the least pretentious, honest and dedicated individuals in the in¬dustry. I hope they survive and can repair the damage, not only the company but to the industry!

I have to start this issue off with some disappointing news. Two of the companies that appeared on my" A" list in the Oct/Nov Issue now have to be removed. The first is VAXA. The reason is frankly due to the royal screwing distributors re¬ceived as result of a major compensation plan change VAXA made in September. The new plan has infinitely harder requirements that will only succeed in pumping more money up to the company at the expense of their hard working distributors. Shame on you VAXA and Dr. Young for your unjustified arrogance and greed. The second company is MATOL BOTANICAL. The company is now facing critical financial hardships and may not survive.

DIAMOND FALCON - announces the DiamondSeal™ program. DiamondSeal is a unique product that is installed in each tire prior to customer delivery. Once in¬stalled, DiamondSeal will prevent flats due to punctures up to 1/4 inch in diameter in the treaded area of the tire. DiamondSeal also prevents porosity, bead and valve stem leaks, thereby insuring constant air pres¬sure.

ENTREPRENEUR EXPOS - for Febru¬ary - April 1995 are: Feb 4-5 Palmetto Expo Center, Greenville, SC. Feb 11-12 Georgia World Congress Center, Atlanta, GA. Feb 18-19 Portland Expo Center, Portland. OR Feb 25-26 Cow Palace, San Francisco, CA. March 4-5 Denver Merchandise Mart, Den¬ver, CO. March 11-12 Ft. Worth Conven¬tion Center, Ft. Worth, TX. March 18-19 Cleveland Convention Center, Cleveland. OH March 25-26 M.E.C. C.A., Milwaukee, WI April 1-2 Baltimore Convention Cen¬ter, Baltimore, MD. April 8-9 George R Brown Convention Center, Houston, TX. April22-23 Anaheim Convention Center, Anaheim, CA. April 29-30 Phoenix Civic Plaza, Phoenix. AZ. (303) 799-9700

USANA - announces new POLY C™. Poly C is a unique blend of mineral ascor¬bates, which is the secret to a superior vitamin C supplement. Poly C is less acidic than absorbic acid and may be less irritat¬ing to the stomach. By using a variety of mineral ascorbates, USANA is able to af¬fect the way vitamin C levels are main¬tained in the body and minimize the rapid excretion problems.

ENVIRON - has announced Compensa¬tion Plan enhancements. Maximum retail bonuses are now available to every Market¬ing Associate regardless of rank. Quantity discounts on case purchases have been made permanent. Core Network Bonus has been increased to 10% on the first two levels and extends to level 3 at the Executive and Director ranks. Director' Group Bonus has been increased up to 5% at level four and beyond. Leadership Bonus has been in¬creased to 4% on Level G3 and to 5% on Levels G4 and beyond. Qualifications for the Advisor, Manager and Executive ranks have been simplified by eliminating the Cumulative PV requirement. ENVIRON markets the BioZone Programmed Nutri¬tion System.

NATURAL WORLD - has hired Brian Mahoney (former V.P. of Melaleuca) as Vice President of Sales. The company also released two new products, NUZYMES (a digestive enzyme product) and SLIM ES¬SENTIALS (a diet product with CitriMax). NW has also made a change in its Compen¬sation Plan, going to a combo Unilevel/ Generation vs. a previously straight Breakaway.

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