Chinese Government Said to Probe U.S. Marketing Firm
Usana Health Sciences Inc., a U.S. firm based in Salt Lake City, is being investigated by a Chinese government agency in connection with an alleged multi-level marketing scam, a U.S. source claims.
A report outlining a Chinese government notice of interrogation has been released by the Fraud Discovery Institute (FDI), a private investigation agency based in San Diego.
“It would appear that the interrogation is interested in both (an) individual and the company as a whole,” said Barry Minkow, co-founder of the FDI, in a statement.
The probe is being conducted by the Nanning Business Administration Department Branch of Economic Inspection.
The investigation concerns Web sites and Chinese nationals associated with so-called multi-level marketing activities all over the world, from Malaysia to Mexico, according to Minkow.
Multi-level marketing plans are a method of selling goods or services through distributors, who typically are promised commissions for sales and recruiting additional distributors.
The practice is also referred to as a pyramid scheme because distributors lose money when no more new distibutors can be recruited, except for those at the top of the pyramid. The U.S. Federal Trade Commission’s Web site warns against participating in such activities.
