On January thirteenth, as a part of a TRO granted to the FTC, the courtroom appointed a Success By Well being Receiver.
On February 10 the Receiver filed her first report on the enterprise.
Success By Well being’s Nevada Workplace
The identical day the TRO was granted, FTC and Receivership brokers visited Success By Well being’s Henderson, Nevada workplace.
This handle I imagine was utilized by Success by Media, an organization owned by Jay Noland.
Success By Media’s skilled manufacturing workforce offers you or your organization with all the pieces you have to be seen and heard.
Entry to the workplace occurred at roughly 1:45pm. On the time the one particular person current was Robert Cities, Director of Media at Success by Media and a Success By Well being affiliate.
The Receivership brokers sought to interview Cities, nonetheless he “declined to supply substantive data”.
Earlier than leaving, Cities handed over workplace keys.
Later that very same day the Receivership brokers tried to contact Yaquilin Lizaola, an administrative assistant.
Lizaola declined to reply the Receivership brokers’ questions.
The FTC have been then invited into the premises. Collectively, the brokers found there have been no computer systems on web site.
Safety system drives have been imaged by the FTC however not eliminated. 5 further exterior storage gadgets have been relinquished to the FTC.
Little or no documentation was discovered on the premises.
The one paperwork recovered consisted of a number of receipts from a latest SBM occasion, numerous occasion and product brochures, and a number of other invoices for business-related bills.
Success By Well being’s Kentucky Workplace
At round 5pm on January thirteenth, two Receivership brokers assisted by native police and Success by Well being’s landlord, gained entry to the corporate’s Winchester, Kentucky workplace.
The workplace was initially empty, nonetheless two Success By Well being associates “arrived later”.
Each got a replica of the TRO, contact data for the Non permanent Receiver, and a questionnaire drafted by the Non permanent Receiver associated to the situation of paperwork and knowledge.
Each declined to be interviewed or to fill out the questionnaire.
As with the Nevada workplace, no precise computer systems have been discovered onsite.
The Receiver did notice nonetheless that
laptop gear, a printer, and e-mail printouts addressed to “warehouse(at)successbymedia(dot)com” urged that a pc had been current in some unspecified time in the future.
The Receiver has since despatched an electronic mail to above handle, requesting manufacturing of the pc believed to have been eliminated.
To this point she hasn’t obtained a solution. Nor has Success by Well being or Nolan produced the pc.
The places of work contained SBM merchandise, delivery provides,delivery invoices, advertising supplies, and different comparable gadgets (the stock is mentioned in additional element beneath).
The widespread space contained pallets of stock.
Success by Well being’s landlord believed a lot of the stock had been sitting round “for over a 12 months”.
The Receivership Brokers additionally visited cupboard space held in Noland’s identify.
A fishing boat and fishing gear belonging to Noland was seized.
Success By Well being’s Places of work could have been cleared out
Company places of work with out no less than one laptop appears fairly inconceivable as of late. But that’s precisely what the Receivership discovered at each of Success By Well being’s listed places of work.
It wouldn’t be till January twenty eighth that Success by well being supplied the Receiver with a listing of gadgets.
Turns on the market was a pc on the Kentucky workplace nevertheless it was certainly eliminated.
The checklist additionally consists of two company-owned iPads and a company-owned iMac Professional desktop laptop, none of which have been current within the Henderson, Nevada location, and which the Non permanent Receiver has not but obtained or reviewed.
Other than the 2 companyowned laptops previously in Mr. Noland’s possession, the Particular person Defendants all use private gadgets in reference to the enterprise (in most situations, a MacBook Professional and an iPhone), and Mr. Noland additionally makes use of a Dell laptop computer.
Collectively, the Particular person Defendants have 9 private gadgets utilized in reference to the enterprise.
As of February tenth, preparations to picture these gadgets “haven’t but been made”.
The one gadgets turned over to the Receiver are two firm laptops in Jay Noland’s possession.
Non-Compliance
As a part of the granted TRO, Success By Well being is required to show over just about something to do with the corporate.
The Receiver notes in her February tenth report that she’s
encountered appreciable issue in acquiring paperwork and digital information from the Defendants.
It wasn’t till after two weeks that Success By Well being granted the Receiver “significant entry” to the digital information.
And as of February tenth, ‘a number of requests stay excellent‘.
Entry to a few of Success by Well being’s company electronic mail addresses was supplied on January twenty seventh.
By January thirtieth the Receiver had entry to 13 accounts, nonetheless six stay unaccounted for.
Discussions are persevering with between the Receivership and Success by Well being’s attorneys.
The Receiver isn’t able to file an affidavit of non-compliance simply but, however notes the choice is on the desk.
Success By Well being stored poor company data
As is widespread with topics of MLM associated regulatory busts, Success By Well being’s record-keeping left lots to be desired.
After quite a few requests, the Receiver was granted entry to the corporate’s official DropBox account.
The DropBox account comprises an “SBM Storage Staff Folder” with voluminous information, primarily video information, audio information, and supplies used at coaching occasions.
Based mostly on the paperwork and information made out there to the Non permanent Receiver to this point, the Receivership Entities don’t interact in any company formalities.
Though Mr. Noland testified at his deposition {that a} Board of Administrators exists, there aren’t any paperwork associated to its composition, notices of conferences, minutes or agenda gadgets associated to such conferences, or resolutions handed by a Board of Administrators.
There are additionally no enterprise plans or inner budgets.
The corporate doesn’t have a Chief Monetary Officer, and doesn’t have a system for monitoring invoices or quantities payable.
What was paid out was executed so by Jay Noland, instantly from Success By Well being’s financial institution accounts.
The corporate seems to have no less than two Intuit QuickBooks accounts which will observe bills.
Nevertheless, the Non permanent Receiver has not been granted entry to those accounts, regardless of her requests.
The shortage of invoicing system made it tough for the Non permanent Receiver to gather an entire checklist of present liabilities.
Nearly half one million seized
To date the Receiver has recognized and seized funds in a number of financial institution accounts.
As of February tenth, $440,538 had been seized in accounts belonging to Success By Media and Enhanced Capital Funding Corp.
One other $169,107 has been recognized in fee processor accounts.
Owed commissions is not going to be paid
Success By Well being used Affili8’s cloud providers to trace a few of its operations.
Evaluation of those providers revealed Success By Well being had $603,870 in liabilities on the time it was shut down.
Of that quantity $233,345 is payable in commissions. $213,035 is attributable to product manufacturing bills.
A revised checklist of liabilities the Receivership will really pay reduces the whole quantity to simply $62,594.
Neither affiliate commissions or product manufacturing bills made the checklist.
Success By Well being operated as a pyramid scheme
Evaluation of economic data checked for accuracy and reliability, present that Success By Well being took in $6.1 million {dollars}.
Of that quantity, 95% are attributable to affiliate purchases. Simply $250,491 of the $6.1 million Success By Well being took in is tied to retail gross sales.
Put otherwise, 95% of the cash earned by SBM was earned from individuals who needed the chance to recruit new Associates and promote merchandise versus simply buying espresso and nutraceuticals for private consumption.
From these figures, it’s fairly clear that retail exercise was not vital inside Success By Well being’s MLM alternative.
Success By Well being Administration paid themselves greater than associates
The FTC has calculated that between January 2017 and July 2019, 4913 Success By Well being associates certified for commissions.
These Associates obtained $1,028,378 – roughly 19% of the cash obtained by SBM.
Success By Well being’s advertising urged that fifty% of company-wide gross sales income was paid to associates.
In distinction, 26% (~$1.58 million) was paid to
- Enhanced Capital Funding, owned by SBH proprietor Jay Noland
- Arcadia Built-in Options, owned by SBH President Scott Harris
- Moringa Revolutions, owned by SBH Chief Visionary Officer Thomas Sacca
An instance supplied by the Receiver reveals Jay Noland drew up a $500,000 ten-year and 15% annual royalty contract, between Success By Media and Enhanced Capital Funding – two corporations Noland owned.
These royalty funds have been supposedly for ‘the system (or formulation) to sure espresso, tea, and wholesome product mixes‘.
To date nonetheless
the Non permanent Receiver is unable to find any licenses for a vendor containing a reference to those formulation – SBM doesn’t make these merchandise itself.
Nor has the Non permanent Receiver seen any communications by and between SBM and its distributors that help the concept that Enhanced Capital Funding’s secret formulation are getting used to organize any of SBH’s merchandise.
Noland, by means of Enhanced Capital Funding, additionally charged Success By Media $304,889 to make use of “affiliate software program”.
It’s not clear from the paperwork equipped to the Non permanent Receiver how, or if, SBM pays to make the most of this software program.
At this juncture it’s unclear if SBM has obtained any worth for these funds.
Jay Noland moved to Uruguay, and pretended it was a Success By Well being growth
Final 12 months Jay Noland moved he and his household to Uruguay. Success By Media footed the invoice, underneath the guise of a Success by Well being growth into the nation.
These prices embrace paying tens of hundreds of {dollars} for the household to lease their residence there, in addition to furnishing it, and shopping for a $145,000 2020 Vary Rover.
In distinction to Success By Media funds Noland spent on himself and his household relocating,
data equipped by SBM signifies that by means of the top of 2019, Uruguay had produced just one buyer – who bought a $49.00 SBM Affiliate membership.
Some growth.
Success By Well being isn’t worthwhile with a authorized enterprise mannequin
The Success By Well being Receiver acknowledges that the enterprise is “doubtlessly worthwhile”.
It has excessive margins, its worker prices are small, and – setting apart potential refund publicity and some massive unpaid distributors – the enterprise money flows.
The issue is Success By Well being’s mannequin hinges on “making guarantees … which might be unrealistic and unobtainable”.
Particular examples by Jay Noland the Receiver cites embrace:
Throughout one seminar, Noland acknowledged, “Over two million persons are a part of my workforce, and each time they do one thing, I make some cash…
What if all I did throughout the course of the 12 months was simply made one greenback off of the efforts of two million folks, what would that pay me?”
In response to Defendants’ Response and Objection to the TRO, the whole variety of Associates as of January 13, 2020, nonetheless, is simply 6,754 (of whom solely 5,003 really earned commissions).
In different phrases, statements concerning the scale of the enterprise … mislead potential Associates concerning the potential alternative they’re buying.
Two different incessantly made representations by Noland additionally seem inaccurate:
(1) that SBH makes millionaires;
and (2) that the fee construction permits Associates to rapidly make again their preliminary funding.
For instance, in one among his fee rationalization movies, Mr. Noland states: “$173,500 a month . . . is it doable? Sure. Does Jay have anyone in his networking doing it? Sure. Sure. . . . If that factor goes yet one more tier, you’re no longer only a millionaire, you’re a millionaire a month.”
None of that is correct.
Not one of the data equipped by SBM point out that any Affiliate earned $173,500 in any month – and even over the course of a 12 months. Nor has any particular person been made a millionaire by SBM.
The Receiver notes that Jay Noland himself obtained lower than $1 million from Success By Well being over three years.
Of that quantity, simply $20,092 was tied to commissions.
Regardless of Noland’s lofty advertising displays, Success By Well being’s personal tax data reveal
272 Associates earned commissions of $500 or larger in 2019; this equals roughly 4% of Associates.
You will need to notice that the commissions characterize gross, not web, revenue.
In different phrases, the fee quantities don’t have in mind the quantities the Associates spent buying the merchandise or attending related coaching occasions.
One Success By Well being affiliate who made $15,000 in 2019 agreed to talk the Receiver.
The affiliate acknowledged that after Success By Well being coaching occasion prices have been factored in, he really misplaced cash that 12 months.
Once more, though SBH markets its Affiliate alternative as a mechanism to switch an individual’s revenue, or change into financially free, the fact is that the overwhelming majority of Associates lose cash and even those who do generate income, make a really small quantity compared to the advertising guarantees made by SBM.
Finally, the Receiver concluded that Success By Well being ‘cannot be operated with out violating the TRO.‘
That’s to say that, with out the scamming, Success By Well being just isn’t a viable enterprise.
The incorrect advertising statements, the group of the fee system, and the motion of enormous quantities of money to the insiders strongly means that the enterprise is structured in such a style that stops Associates from realizing the promoted enterprise alternatives.
In gentle of that actuality – and in view of the truth that 95% of SBM’s prospects are individuals who buy not simply merchandise, but additionally the Affiliate membership alternative to promote further merchandise and earn commissions – the Non permanent Receiver believes it might be inadvisable to proceed operations pending the end result of the case.
Jay Noland filed his response to the Receiver’s report on February nineteenth.
In his response, Noland objects to the understated worth of Success By Well being.
In their very own response, the FTC notes Noland did
not object to the Non permanent Receiver’s conclusions that … “the enterprise attains profitability by making guarantees to its Associates which might be unrealistic and unobtainable” and that she “doesn’t imagine that the enterprise will be operated with out violating the TRO.”
There’s additionally some doubt raised on Jay Noland’s private wealth claims.
As per an unsigned monetary assertion filed on January twenty fourth, Noland represents he’s value -$28,000 (destructive, that’s not a typo).
At his February 5 deposition, he confirmed underneath oath that the property and liabilities on that monetary assertion have been correct and he couldn’t recall a time he had a optimistic web value.
On February eleventh Noland submitted a revised and up to date monetary assertion, nonetheless the -$28,000 web value quantity remained the identical.
In a paperwork filed on February nineteenth, Noland now claims ‘his “private web value as of January 31, 2020” was $94 million’.
That is supposedly primarily based on some Canadian lawsuit that’s been happening for over ten years and, because the FTC places it, ‘baseless and fanciful valuations of the Receivership Entities‘.
Pending a choice on the Success By Well being preliminary injunction, probably subsequent week, keep tuned…
Replace twenty ninth February 2020 – On February twenty seventh a preliminary injunction was granted towards Success By Well being and Jay Noland.