Organo Gold‘s network marketing division began operations in 2008 and has experienced phenomenal growth. Organo Gold offers premium everyday coffee, tea and nutraceutical products at great value prices.

This Court affirms a jury verdict finding Holton Buggs and Organo Gold International liable to AmeriSciences for trade secret misappropriation, tortious interference with contracts, unjust enrichment and fraudulent transfer.

Company Overview

ORGANO provides a premium everyday product line of coffees, teas and nutraceuticals designed to energize vitality and support overall wellness. ORGANO is proud to be the only North American company working alongside one of the world’s largest organic Reishi (Ganoderma lucidum) plantations partners.

Trademo Intel allows you to gain daily import-export insights for Organo Gold Enterprises Inc based on their Bill of Lading and Customs Declaration data, then analyzes these reports in depth for a 360deg view of their global trading activities.

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Products

This company offers coffee, tea and personal care products infused with Ganoderma Lucidum mushroom extract that purports to have health benefits. They can be purchased both through authorized representatives and online; free trials may be available. In addition, nutritional supplements and weight loss programs are also sold.

Since 2008, this multilevel marketing company has caused considerable debate. According to Federal Trade Commission records, they have received 55 complaints alleging that it makes exaggerated claims about income potential for distributors as well as misrepresenting product effectiveness.

Critics have accused the company of operating as a pyramid scheme, meaning that most of its profits come from recruiting people as distributors rather than directly selling its product or service. The company disputes these accusations.

AmeriSciences filed a lawsuit in 2008 alleging Organo Gold of violating federal racketeering and consumer protection laws by using deceptive sales practices, making false health claims for their products, misleading advertising, fraudulent promotion and engaging in pyramid schemes – among other allegations.

This lawsuit has not yet been resolved, though an appeal by the company argued that it lacked sufficient evidence of misappropriation of trade secrets and other violations, and had no say over distributor decisions to promote its products.

Organo Gold imports its products predominantly from Malaysia, according to Trademo Intel. 13 imported shipments were recorded by Organo Gold in their database sourced from public Bills of Lading and Customs Declarations across multiple countries and then normalized into 360-degree views of global trade activities for both businesses and countries alike. Trademo Intel offers subscription plans available only to qualified professionals for its data services allowing access to market trends, news updates and events happening within specific countries of interest.

Compensation Plan

ORGANO offers one of the most generous compensation plans available in network marketing. Distributors are compensated based on both individual sales and team recruitment efforts; some people have reported earning several hundred dollars monthly while others have developed six-figure businesses; however, income potential varies widely based on how much time and effort an individual puts into their business.

ORGANO offers premium coffees and teas infused with Ganoderma Lucidum (Reishi), which is said to possess numerous health benefits. As well as coffee products, ORGANO also sells supplements and personal care items; customers and distributors can directly sell these products; ORGANO positions them as healthy alternatives to traditional coffee that can help prevent high blood pressure and obesity.

Organo Gold had over one million active distributors as of February 2016. Since that date, though, its distribution numbers have been in steady decline and according to the Court it appears likely that Organo won’t be able to sustain itself as an ongoing business within just months unless its distribution losses can be stemmed.

Defendants maintain that non-compete clauses are necessary to protect the goodwill and reputation of Organo Gold, with ARMS and Norman prohibited by Agreement from recruiting Distributors into associations that directly compete with Organo Gold by offering Ganoderma products. However, the Court disagrees.

Under their Agreements, ARMS and Norman were obliged to appear for Organo Gold appearances when called upon. Furthermore, ARMS must “make its resources, including its senior managers, available for consultation when reasonably requested”.

However, defendants have made various public statements suggesting that Organo Gold is in difficulty and has lost its way. Furthermore, they have cast doubt upon Organo Gold’s claims by citing various (hearsay) statements as well as an unverified third-party research report; considering these factors the Court finds it necessary to issue both a temporary restraining order and preliminary injunction against Organo Gold.

Legal Issues

An MLM firm selling gourmet coffee, tea and supplements is embroiled in legal dispute in the U.S. Court of Appeals for the Fifth Circuit. They have been accused of running a pyramid scheme wherein distributors gain income by selling products while recruiting others as sales representatives; they deny these accusations and filed a motion for rehearing to contest that the district court misinterpretted federal law regarding pyramid schemes.

Appellants are an independent distributor network who promote and market Organo Gold products worldwide. To join, prospective distributors must first purchase a business kit which provides one year of back office support and replication websites; once signed on they can take advantage of seven different ways of making money through incentives and rewards along their distribution chains.

Ganoderma lucidum, more commonly known as Lingzhi mushroom, is used in both tea and coffee beverages to increase both their flavor and nutritional value. Furthermore, this company also offers other health products including teas, vitamins and health shakes.

AmeriSciences’ bankruptcy trustee, Rodney Tow, hired Scott Weingust to determine the value of its distributor network and testify on his findings at trial. However, appellants challenged Weingust’s testimony on grounds that his methods were unreliable and his evidence did not relate to their claims of liability; the district court rejected these arguments and allowed his testimony into evidence.

On appeal, Appellants contend that the district court misinterpreted federal law when giving jury instructions. According to these instructions, fraudulent transfers occur when completed with the intention to hinder, delay, or defraud creditors; however, these instructions did not ask whether Barry Cocheu and Holton Buggs transferred AmeriSciences distributor list and WMS software with this intention in mind.

The Fifth Circuit held that there was sufficient evidence for a jury’s finding of trade secret misappropriation, tortious interference with contracts, unjust enrichment, and fraudulent transfer by Appellants. Furthermore, it upheld the district court’s award of compensatory damages totaling $3,461,166 as awarded by that court.