Former President Stuart MacMillan has sued Monat and founder and CEO Luis and Rayner Urdaneta.
MacMillan claims he owed hundreds of thousands pursuant to a signed Revenue Sharing Settlement.
MacMillan (proper with Luis (C) and Rayner Urdaneta (L)), joined Monat in 2014.
On the time MacMillan was recent off his his stint as interim CEO on the infamous TelexFree Ponzi scheme.
Nonetheless, MacMillan claims he
constructed Monat from nothing to a skincare and hair product firm producing tons of of hundreds of thousands of {dollars} in revenues, with tons of of workers, hundreds of thousands of consumers, and market companions numbering within the tons of of 1000’s worldwide.
MacMillan claims he signed on as Monat’s President after the Urdanetas promised
him that the three of them would work to maximise Monat’s earnings and MacMillan can be paid a 3 p.c revenue share whereas he labored for Monat and for a sure period of time thereafter.
Along with being President of Monat, MacMillan was additionally on its Board of Administrators – a place he represents was symbolic.
Monat’s Board of Administrators solely met thrice whereas MacMillan was a Director of Monat. It didn’t maintain annual conferences, aside from a quick time frame as insisted by MacMillan and their Chief Authorized Officer.
It didn’t report assembly minutes. There was solely a Secretary three of the 9 years MacMillan was a Director or Monat. And MacMillan was not even permitted voting rights.
MacMillan claims issues with the Urdanetas started in 2019.
L. Urdaneta and R. Urdaneta threatened to terminate MacMillan if he didn’t comply with a noncompete settlement and non-solicit settlement.
MacMillan claims the Urdanetas “felt threatened by Monat’s workers and unbiased contractor market companions’ loyalty
and affection in direction of MacMillan.”
MacMillan agreed to the Urdanetas calls for and signed a brand new settlement with the Urdanetas in October 2019.
The Revenue Sharing Settlement included sure earlier understandings, added a non-compete and non-solicit, and added a number of additional phrases. Defendants’ lawyer drafted the Revenue-Sharing Settlement.
L. Urdaneta and R. Urdaneta’s promise to maximise Monat’s earnings was inherent and in step with their fiduciary duties to Monat.
Quick Ahead to June 2023, MacMillan resigned from his place as Monat’s President.
Between the date of his resignation from Monat in June 2023 and the preliminary postemployment fee deadline of March 2024, L. Urdaneta and R. Urdaneta demanded that MacMillan don’t have any contact with roughly 3,000 individuals related to Monat to be able to obtain the post-employment funds owed pursuant to the Revenue Sharing Settlement.
MacMillan claims this “demand has no foundation in legislation or contract. The demand was a pretext to justify not paying MacMillan.”
Based on the acute positions of L. Urdaneta and R. Urdaneta, Monat may solely achieve success after MacMillan’s departure if Monat’s workers and unbiased contractor market companions had zero contact with MacMillan.
And for that to happen, in accordance with L. Urdaneta and R. Urdaneta, MacMillan basically needed to disappear from his earlier enterprise circles.
Notably, L. Urdaneta and R. Urdaneta even demanded that MacMillan distance himself from members of MacMillan’s family and friends.
MacMillan claims he “rejected this baseless and outrageous no-contact demand”.
Pursuant to his signed settlement,
MacMillan anticipated fee of the upper of three p.c of Monat’s earnings every year by means of 2031, or a $1,000,000 ground fee per yr if Monat was not worthwhile in any given yr.
MacMillan claims, once more pursuant to his signed settlement, his first fee of $500,000 “first post-employment fee of $500,000 was due on or earlier than March 31, 2024.”
MacMillan claims he has not been paid.
In justifying not paying MacMillan, the Urdanetas declare “MacMillan has misplaced all profit-sharing with L. Urdaneta, R. Urdaneta, or Monat”.
MacMillan states he’s owned between $8 million and $16 million, and the Urdanetas are nonetheless binding him to the non-compete and non-solicit clauses of his Revenue Sharing Settlement.
Central to MacMillan’s Criticism is the Urdaneta’s screwing him over financially.
Examples of this embrace:
- “shutting down” MacMillan’s try to make Monat’s manufacturing extra aggressive (Monat’s merchandise are manufactured by B&R Merchandise, an organization owned by the Urdanetas);
- the Urdanetas producing “contrived and improper bills” by means of employment of “Urdaneta insiders, members of the family and associates” in “no-show, non-existent jobs (generally paying them below the desk)”;
- the Urdanetas maxxing ” out Monat’s bank cards on their private luxurious existence, together with non-public airplanes, costly dinners, and splendid journey and lodging (together with a $50,000 room service invoice in Dubai, for instance)”;
- the Urdanetas paying for “private and family bills from Monat financial institution accounts”;
- the Urdanetas paying for members of the family and associates to attend firm incentive journeys (these are imagined to be incentive rewards Monat distributors qualify for);
- the Urdanetas utilizing Monat funds to repay their private bank cards for non-business bills ($150,000 a month is cited);
Lastly, L. Urdaneta and R. Urdaneta severely diluted Monat’s meager earnings in choose years, and refused to retain revenues to put money into Monat to generate cheap earnings.
Members of the Urdaneta household, apart from L. Urdaneta and R. Urdaneta, acted like they have been house owners and managers of Monat. Urdaneta members of the family, apart from L. Urdaneta and R. Urdaneta, even disciplined and fired some Monat warehouse workers.
Urdaneta members of the family acted as if Monat’s property was their very own private property.
All up MacMillan claims the Urdanetas “appropriated roughly $100,000,000 since Monat’s inception”.
MacMillan claims he objected to all of this conduct and in response the Urdanetas “created a hostile work surroundings”.
Any complaints from workers or unbiased contractor market companions have been met with skepticism, criticism, and retaliation.
As a result of L. Urdaneta and R. Urdaneta made up two-thirds of the Monat Board of Administrators, they did no matter they wished with out consulting MacMillan.
This in flip led to MacMillan, not the Urdanetas, fostering relationships with Monat’s distributors, and workers.
Whereas L. Urdaneta and R. Urdaneta have been treating Monat like a mafia household behind the scenes, MacMillan was growing relationships with Monat’s unbiased contractor market companions and workers.
MacMillan ran Monat’s motivational conferences and incentive journeys to raised the corporate.
MacMillan being the face of Monat … threatened L. Urdaneta and R. Urdaneta and finally resulted in stress between them.
One attention-grabbing tidbit in MacMillan’s Criticism is a timeline from Monat’s “greatest yearly” in 2020, to “important losses” from 2022.
Monat had its greatest yr ever in 2020, with revenues exceeding $800,000,000 and earnings exceeding $35,000,000.
When the economic system took a downturn in 2022, Monat suffered important losses.
L. Urdaneta and R. Urdaneta insisted on rising revenues at any expense, together with reducing commissions to Monat’s unbiased contractor market companions and delaying funds to suppliers. Because of this, morale at Monat plummeted.
Oddly sufficient, when it got here time to calculate MacMillan’s Revenue Sharing quantity, the Urdanetas excluded 2020 as a result of it “didn’t rely as a yr”.
Yeah, I don’t what which means both.
Framed as “disagreeing with the Urdaneta’s enterprise technique and ethics”, that is purportedly the rationale MacMillan resigned in 2023.
MacMillan resigned because the President of Monat on July 31, 2023.
MacMillan retired. He didn’t begin working for an additional firm and didn’t begin an organization himself.
MacMillan maintained his Board of Administrators place however, regardless of disagreeing with the Urdanetas, declare ehe “by no means spoke poorly of” them.
Looking for fee, MacMillan engaged authorized cousnel in early 2024.
On January 22, 2024, MacMillan, by means of counsel, requested, amongst different issues, a duplicate of Monat’s books and data for the yr 2020 to conduct an audit relating to Monat’s earnings in 2020.
Defendants by no means offered MacMillan with the requested books and data for the yr 2020.
After this request was made was when the Urdanetas trotted out the “no contact with anybody in Monat”.
Defendants claimed that Monat would pay MacMillan solely his compensation below the Revenue Sharing Settlement if he:
(a) agreed to not have any contact in any respect with roughly three thousand individuals affiliated with Monat,
(b) agreed to dam quite a few individuals related to Monat on social media, and
(c) agreed to not host or converse at any occasions or conferences of any nature, together with non secular occasions, if any Monat related
individuals would take part or be in attendance.
MacMillan claims his daughter was fired as a Monat worker, after the Urdanetas caught wind of a December 2023 Christmas Zoom throughout which no enterprise was mentioned.
Curiously, MacMillan claims the Urdanetas are adamant he don’t have any contact inside Monat as a result of
in accordance with R. Urdaneta, Monat’s merchandise are irrelevant and for Monat to succeed, Monat’s workers and unbiased contractor market companions should utterly neglect about their earlier chief (MacMillan) to be able to be loyal and devoted to Monat’s new chief (R. Urdaneta).
R. Urdaneta describes Monat to be extra like a cult than a enterprise.
To be clear, that’s not what MacMillan thinks – it’s what CEO Rayner Urdaneta has purportedly acknowledged.
Based on R. Urdaneta, MacMillan internet hosting a spiritual occasion at a church, targeted on religion, work-life steadiness, and marriage, can be a menace to Monat as a result of it could disrupt worship of Monat and its new chief.
R. Urdaneta pointed to a particular occasion hosted by MacMillan on April 20, 2024 at Grace Household Church in Clearwater, Florida referred to as the Lighthouse Collective Reside as a major purpose why Monat refused to pay MacMillan in compliance with the Revenue Sharing Settlement.
MacMillan invited R. Urdaneta and L. Urdaneta to attend and take part within the Lighthouse Collective Occasion. Each declined.
As a substitute of simply not attending the occasion, MacMillan claims Rayner Urdaneta “sabotaged” it.
First, R. Urdaneta advised the DJ who was set to carry out on the Lighthouse Collective Occasion, that he couldn’t carry out as a result of MacMillan was violating the Revenue Sharing Settlement and that if he did, he would by no means carry out at one other Monat occasion once more.
Because of this, the DJ cancelled his efficiency on the Lighthouse Collective Occasion.
Second, R. Urdaneta advised the manufacturing firm assigned to the Lighthouse Collective Occasion, Katapult Occasions, that it couldn’t proceed as a result of MacMillan was violating the Revenue Sharing Settlement and that if it did, Monat would by no means work with Katapult Occasions sooner or later.
Because of this, Katapult Occasions pulled out of the Lighthouse Collective Occasion.
MacMillan states, regardless of Rayner’s efforts, that the Lighthouse Collective Occasion went forward on April twentieth.
The occasion had nothing to do with Monat or its enterprise.
MacMillan’s Criticism towards Monat and the Urdanetas brings forth eleven causes of motion, together with:
- breach of contract
- breach of responsibility of fine religion and truthful dealing
- constructive fraud
- fraud within the inducement
- defamation and
- breach of fiduciary duties
MacMillan additionally seeks declaratory judgment, pertaining to him being owed “a share of the earnings of Monat and in what quantity.”
MacMillan’s lawsuit was filed on April twenty fourth in Miami-Dade County in Florida.
Keep tuned for updates as we proceed to trace the case.