Mannatech Under Possible Investigation in Texas

HOUSTON—Mannatech (NASDAQ:MTEX) is reportedly being investigated by the Texas Office of the Attorney General (AG) for possible deceptive trade practices. In an Oct. 24 response to a public information request by a MTEX stock short-seller, the AG confirmed the company is being looked at for unapproved health claims.

“Mannatech has made unproven health claims about its products, such as the ability to cure cancer and numerous other ailments,” the AG’s office wrote. “The claims are not approved by the Food and Drug Administration (FDA), making the claims potentially in violation of both state and federal law.”

Mannatech (www.mannatech.com), a direct sales company with a worldwide network of 350,000 distributors and nearly $400 million in 2005 sales, markets products such as Ambrotose, a glyconutrient that “supports cell-to-cell communications.” Customers in Texas have claimed Mannatech sales personnel circulate misinformation about the benefits of products such as Ambrotose. Complaints include a mother of a child with Down syndrome who was given a brochure by a company salesperson that stated the product could improve the health and change facial features of children with the chromosomal anomaly.

Various reports have noted three Nobel Prize-winning scientists have complained to New York Attorney General Eliot Spitzer that their research has been improperly hyperlinked to Mannatech’s dietary supplements through the Ambrotose Web sites.

Also, Mannatech was sued in 2004 in California for fraud and invasion of privacy, after they continued to promote their products using a photograph of a mother of a child who died of Tay-Sachs disease, long after the child, who used Mannatech products, died in 1997.

Mannatech issued a statement on Oct. 30, saying it had not been contacted by the Texas AG regarding any investigation. The company also reiterated its commitment to work with all regulating agencies. “The company believes its compliance programs are taken very seriously by its employees and its associates, and are a pivotal aspect of its continued success,” the company stated.