Nerium International And Jeff Olson Sued For Over $100 Million

In a massive lawsuit, Nerium Master Distributors Mark and Tammy Smith have sued Nerium International and Jeff Olson.

They are alleging the following:

  • Fraud
  • Breach of oral contract
  • Breach of partially oral and written contract
  • Defamation
  • Civil conspiracy
  • Intentional infliction of emotional distress

What I found interesting in this case was the alleged special deals offered to the Smith’s that normal Nerium Brand Partners would not receive. Does a normal person joining this MLM really stand a chance of making money?

Here are the key details of this case:

It was during their time as representatives of Pre-Paid Legal that the Smiths became acquainted with Jeff Olson. While the Smiths were still at Pre-Paid Legal, Olson attempted to entice the Smiths to leave Pre-Paid Legal and join Nerium International. Nerium International is a MLM company that sells anti-aging skincare and wellness products under the name “Nerium.”

The Smiths advised Olson that they had made many significant sacrifices to build their business at Pre-Paid Legal and they would not leave Pre-Paid Legal without assurances of an ownership interest in Nerium International and significant compensation based on their sales (a significant royalty payment). Olson told the Smiths that the compensation they would receive as “Brand Partners” at Nerium International would look like “play money” in comparison to the equity distributions they would be entitled to as equity holders in Nerium International and the 15% monthly royalty fees from “Nerium Edge.”

(I feel sorry for the Nerium Brand Partners that have to try to make it on the play money they make.)

In or about September of 2011, Mark Smith and Tammy Smith met with Olson to further discuss the Smiths’ opportunities at Nerium International. Olson represented himself as Chief Executive Officer of Nerium International.  During the meeting, Olson made the following promises to the Smiths on behalf of himself and Nerium International:

  1. Mark Smith and Tammy Smith would each receive a 5% equity interest in Nerium International;
  2. the Smiths would be named “co-founders” of Nerium International; and
  3. Nerium International would pay the Smiths a combined 15% royalty, in perpetuity, on all the back office subscription fees generated by Nerium International, which was subsequently referred to as “Nerium Edge.”

These promises were subsequently confired by Olson in emails and/or other conversations between Olson and the Smiths, and have been repeated by Olson numerous times between September of 2011 to the present.

(This seems to be a very special deal for these Band Partners.)

Prior to the Smiths leaving Pre-Paid Legal, Olson told the Smith that Pre-Paid Legal’s standard practice was to sue anyone who left to join a competitor. Olson told the Smiths that because the Smiths generated such tremendous sales for Pre-Paid Legal, Pre-Paid Legal would almost certainly sue Olson and Nerium International the moment they started working for Nerium International.

As anticipated by Olson, immediately after the Smiths joined Nerium International, Pre-Paid Legal initiated litigation against Nerium International and the Smiths.

Ultimately, the cases filed by Pre-Paid Legal against the Smiths were settled on or about mid-2013.

(If you think you are an independent business owner in these MLM schemes, think again. In my opinion, they wish to own you.)

Olson has engaged in erratic behavior that was harmful to the interests of the Smiths and Nerium International including, but not limited to:

  1. Bringing frivolous lawsuits against individuals to chill their right to pursue employment of their own choosing; and
  2. bringing frivolous lawsuits against other companies he perceived as competitors to try to get a competitive advantage and to intimidate them.

Recently, the Smiths learned that Olson was intentinally misrepresenting the “Nerium” products sold by Nerium International in an effort to defraud other Brand Partners and customers of Nerium International. Olson and Nerium International were subsequently sued by the biotech company (which owns 30% equity interest in Nerium International) which developed the “Nerium” products – in this lawsuit, the biotech company claims that Olson and Nerium International has no right to the “Nerium” products.

In anticipation that Nerium International would lose the above mentioned lawsuit, and that as a result Nerium International would lose access to the “Nerium” product line, Olson directed Nerium International to begin developing alternative products.

The Smiths were told that the clinical trials for the new products developed at Olson’s direction were inferior to the existing products in certain respects.

Despite the trials of the new products, Olson represented to Brand Partners and customers that the clinical trials for the new products produced better results than the old products in certain respects.

The Smiths were vehemently opposed to these false representations about the new products, and Olson was extremely unhappy that the Smiths’ refused to participate in his dishonesty.

Nerium International and Jeff Olson have breached their oral contracts with the Smiths by:

  1. failing to issue Mark and Tammy Smith the promised 10% (5% each) equity in Nerium Interntional;
  2. failing to properly recognize Mark and Tammy Smith as the “co-fonders” of Nerium International until July 22, 2017;
  3. failing to install and pay Mark and Tammy Smith as the “Master Distributors,” and compensate the Smiths at the highest compensation level achieved under the Nerium International compensation plan; and
  4. failing to pay Mark and Tammy Smith a combined 15% royalty on back office subscription fees.

– Source Smith vs. Nerium International, LLC

“In the competitive landscape of MLM, in order to stimulate recruitment, companies with cash are tempted to drink from the fraud-cup and poach from the more seasoned companies. When the “top leaders” make their move and boast of the benefits of the product and company, it creates synthetic success stories. It creates the appearance of momentum, which creates a more favorable recruiting environment.”

“The non-deal receiving distributors (“lemmings”) follow the distributors because, in most cases, these deal-receiving distributors are great communicators and great recruiters. The lemmings TRUST their upline. But if the lemmings actually knew there was a little extra in it for the promoters….it would slow things down dramatically. The magic would vanish and people would be in a better position to make informed decisions.”

“… as an industry, it’s been going on for years. We’ve known about it, yet we’ve done very little to stop it (or even slow it down).

“When you see a networker making a move, never feel embarrassed to ask “Were you given extra incentives to switch over? Did the upline kick in extra incentives to get you to switch?”

– Source Keven Thompson