Multilevel marketer settles lawsuit

A Utah multilevel marketing company has settled a dispute with a critic who agreed to stop disparaging nutritional supplement maker USANA Health Sciences Inc.

Self-proclaimed fraud buster Barry Minkow said he took a critical report off his Web site. He shut down another Web site devoted to USANA's dealings in China, and he pulled interviews with failed USANA distributors from YouTube.

Other terms weren't disclosed, but USANA said Monday it was happy with the settlement.

USANA said it will withdraw its lawsuit against Minkow and his San Diego-based Fraud Discovery Institute from U.S. District Court in Salt Lake City.

USANA sued Minkow for defamation and stock manipulation, but most of those claims were thrown out March 3 by U.S. District Judge Tena Campbell. Separately from the settlement, the company paid $142,510 in attorney fees to Minkow and his institute under an order from federal Magistrate Samuel Alba.

Minkow came out with his first critical report of USANA in February 2007 when he bought "put" options on the stock in a legal bet the price would fall. USANA had accused him of market manipulation, which he denied. He agreed never to trade in USANA stock again.

Minkow had criticized USANA for its network marketing business model, once-soaring share price and series of flaps involving the credentials of top executives and sales associates.

Minkow said he was going after a much bigger multilevel marketer, Los Angles-based Herbalife Ltd., which sells nutritional supplements and weight-loss products.

"We're going to a full-court press on Herbalife. Forget USANA. We're going to put 100 percent of our efforts into Herbalife," said Minkow, who formed the Fraud Discovery Institute after serving eight years in prison for stock fraud. "They think I've gone away. In reality, I'm gearing up."

Shares of USANA rose $2.55, or 8.7 percent, to $31.90 in midday trading. The stock has traded between $18.18 and $49.89 over the last 52 weeks.

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