UNITED STATES DISTRICT COURT 

IN THE EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

TIMOTHY KERRIGAN, LORI MIKOVICH and Case No. 2:14-cv-12693 

RYAN M. VALLI, individually, and on behalf of all Hon. Matthew F. Leitman 

others similarly situated, 

 Plaintiffs, 

vs. 

VISALUS, INC., a corporation, 

and 

NICK SARNICOLA, ROBERT GOERGEN, SR., TODD 

GOERGEN, RYAN BLAIR, BLAKE MALLEN, FRANK VARON, 

KYLE PACETTI, JR., MICHAEL CRAIG, TIMOTHY KIRKLAND, HOLLEY 

KIRKLAND, AARON FORTNER, RACHEL JACKSON, 

TARA WILSON, ANTHONY LUCERO, RHONDA LUCERO, 

JAKE TRZCINSKI, GARY J. REYNOLDS, KEVIN MERRIWEATHER, 

domestic individuals, 

and 

ROPART ASSET MANAGEMENT FUND, LLC, 

ROPART ASSET MANAGEMENT FUND II, LLC, 

ROCK RIDGE ASSET MANAGEMENT COMPANY, LLC, 

ROPART ASSET MANAGEMENT, LLC, LIVING TRUST DATED 9/30/1991 

F/B/O ROBERT B. GOERGEN, OCD MARKETING, INC., HASHTAG ONE, 

LLC, POWER COUPLE, INC., ARRIVEBY 25, INC., BAM VENTURES, INC., 

JASON O’TOOLE INTERNATIONAL HOLDINGS, INC., 

GOODER, LLC, RED LETTERS, LLC, M-POWER PATH, INC., 

A BERRY GOOD LIFE, INC., NETWORK DYNAMICS AMERICA CORP., 

FREEDOM LEGACY, LLC, RESIDUAL MARKETING, INC., GOT HEART 

GLOBAL, INC., JAKETRZ, INC., MOJOS LEGACY, LLC 

and BEACHLIFESTYLE ENTERPRISES, LLC. 

THIRD AMENDED 

COMPLAINT 

AND JURY DEMAND 

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and 

WEALTH BUILDER INTERNATIONAL LLC, a foreign 

limited liability company, 

PROSPEX AUTOMATED WEALTH SYSTEMS, INC., and 

9248-2587 QUEBEC, INC., foreign corporations, 

and 

JASON O’TOOLE, a foreign individual, and 

LORI PETRILLI, a foreign individual

Defendants. 

_________________________________________________________/

SOMMERS SCHWARTZ, P.C. 

Andrew Kochanowski (P55117) 

Sarah L. Rickard (P78767) 

Lance C. Young (P51254) 

Attorneys for Plaintiffs 

One Towne Square, Suite 1700 

Southfield, MI 48076 

(248) 355-0300 

akochanowski@sommerspc.com

srickard@sommerspc.com

lyoung@sommerspc.com

PREBEG, FAUCETT & ABBOTT, PLLC

Matthew J.M. Prebeg 

(TX State Bar No: 00791465) 

Brent T. Caldwell 

(TX State Bar No: 24056971) 

Attorneys for Plaintiffs 

8441 Gulf Freeway, Suite 307 

Houston, TX 77017 

(832) 743-9260 

mprebeg@pfalawfirm.com

bcaldwell@pfalawfirm.com

WEXLER WALLACE LLP 

Edward A. Wallace (IL Reg. No. 6230475)

Attorneys for Plaintiffs 

55 W. Monroe Street, Suite 3300 

Chicago, IL 60603 

(312) 589-6272 

EAW@wexlerwallace.com

______________________________________________________________/ 

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INTRODUCTION 

1. This action arises out of a pyramid scheme perpetrated by a modern, 

Internet-savvy company peddling powdered weight-loss shakes. Well over 100,000 

innocent people paid the scheme up to $999 for the “business opportunity” to become 

distributors, or Independent Promoters (“IPs”), for a soy protein and sucralose 

concoction. The vast majority lost their money. The pyramid was operated by a Troy, 

Michigan company called ViSalus, Inc. (“ViSalus”). While it sponsored “Challenge 

Parties” for people to buy shakes that tasted like “cake mix,” the company’s real goal 

was for people to become “distributors”, to buy its weight-loss concoction and recruit 

others to do the same. The hook here, as with so many pyramid schemes, was the lure 

of lots of money for getting others in the door, then for those others to do the same 

on down the line, each new recruit paying for the right to recruit others. As with 

every pyramid scheme, the money from new entrants paid those at the top. As with 

every pyramid scheme, after a burst of new recruits, the scheme collapsed. And as 

with every other pyramid scheme, the scheme’s promoters got rich on other people’s 

money. 

2. When it opened its doors the company announced: 

Prosperity is something that everyone hopes for. Unfortunately, 

many individuals never find a vehicle that is simple, easily 

learned, has little risk, and still has the potential to be extremely 

lucrative. With the ViSalus business opportunity, every single 

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person with a strong desire now has a documented vehicle that 

can drive them to their goal or vision. ...With extraordinary 

ViSalus products channeling through such a lucrative 

compensation plan, this vehicle is truly a life changing 

opportunity. ....... Click on the link below and see just how 

quickly you can have your own income generating machine! 

3. The company is operated by three veterans of chain sales schemes. 

ViSalus was also financed by a Greenwich, Connecticut investment banker and his 

family’s private equity company, each of whom became intimately involved in the 

scheme’s operation. The common “business opportunity” pitched by these hucksters 

was visions of large checks, a shiny new BMW, and a fancy vacation. In reality these 

luxuries existed only for the company insiders and those willing to convince other 

people to pay the company money. The only way a distributor could make money 

was to recruit others. Not surprisingly, the company mostly sold its shakes to its new 

distributors, who in turn tried to find others to duplicate the transaction. A pyramid 

scheme only works when enrollees in the “business opportunity” in turn recruit other 

people into the pyramid. The scheme’s promoters can then tout the number of people 

who have “joined the program” as proof that there is huge demand for the product. 

To attract innocent people, ViSalus used a host of professional pyramid scheme 

recruiters, then touted their “success” at getting million dollar commissions— 

commissions that weren’t actually paid. 

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4. The scheme’s promoters knew that the vast majority of the new 

“distributors” would drop out and their enrollment fees and whatever sales are made 

to them would fund the payments to those at the top of the pyramid. The scheme 

depends on the drop-out rate of new recruits, since there isn’t enough money to pay 

everyone. Like a Ponzi scheme, this pyramid used the money paid by new recruits to 

pay-off the recruiters and the promoters until the growth of the new recruits in the 

United States stopped. The scheme is now busy in Canada and Europe hoping to find 

new recruits in those markets. 

5. The ViSalus pyramid scheme operated for a number of years. In 2008 

the scheme almost collapsed, but after an influx of money from the controlling owner 

family of Blyth, Inc., ViSalus obtained the means to expand. Beginning in 2009, and 

continuing until the market became saturated and essentially collapsed again in 2013, 

the company, its promoters and professional recruiters worked frenetically to recruit 

hundreds of thousands of others to become promoters of the ViSalus “business 

opportunity.” Among the ones recruited by the scheme were the three Plaintiffs in 

this case. 

6. The scheme attracted well over 500,000 “promoters” for the company. 

The professional marketers who recruited huge “teams” of unsuspecting people have 

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been promised millions of dollars in “commissions.” After touting absurd numbers 

throughout the Internet, posting hundreds of “interviews” and YouTube videos 

showing off the millions of dollars allegedly being made in the business, the pyramid 

began collapsing in the third quarter of 2012. Knowing that the pyramid was 

collapsing, the inside principals and the investors who helped fund it pulled out over 

$140 million profits from the enterprise. 

7. Pyramid schemes are illegal. The individual Plaintiffs named in this 

action, individually and on behalf of a class of similarly situated individuals, file this 

amended complaint against the defendants for damages and other relief under RICO 

and state law claims to recover their losses and to stop these defendants from 

perpetuating this scheme on others. 

THE PARTIES 

PLAINTIFFS 

8. Plaintiff, Timothy Kerrigan (“Kerrigan”), is an individual residing in 

Northville, Michigan. On two separate occasions Kerrigan was presented with an 

“income opportunity” to sell ViSalus weight-loss shakes. The first took place in San 

Diego, California. The meeting was a ViSalus summer “kicker” meeting attended by 

15,000 to 20,000 people. The second meeting took place in Orlando, Florida in 2013. 

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The Orlando meeting featured testimonials, awards for achieving “ranking” status 

within the distributorship chain, and speakers like Defendant Nick Sarnicola’s wife, 

Ashley Sarnicola. The meeting featured, among other things, Ms. Sarnicola’s asking 

the prospective distributors to imagine what it would be like to walk out in front of 

“20,000 people” attending the recent ViSalus Miami convention as a 5-Star “ViSalus 

Ambassador.” 

9. Kerrigan was part of the huge wave of IP’s recruited by the Defendants 

in a push to try and spin ViSalus off into an IPO in late 2013. At both meetings 

attended by Kerrigan, ViSalus made presentations that touted the visions of free black 

BMW’s and six-figure “income opportunities” or “business opportunities.” The 

presentations did not plainly disclose that ViSalus was a multi-level-marketing 

company, and made no mention of the fact that it could be (or was) a pyramid scheme. 

Both times Kerrigan was presented with the opportunity to purchase the weight-loss 

shakes and also pitched an opportunity to pay additional money to become a ViSalus 

promoter. The IP opportunity was presented three ways, as a $49 “basic” package, 

the $499 “Executive” package, and the $999 “Executive + samples” package. All of 

these were coupled with autoship programs to purchase ViSalus products, and a backoffice website that incurred a monthly fee. 

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10. A ViSalus distributor Compensation Plan (“Your Guide To 

Prosperity...Welcome To Financial Freedom,” Exhibit A) was made available to 

Kerrigan at the presentations and through the ViSalus website. The Compensation 

Plan is also coupled with advertisements and illustrations made in additional 

materials such as Exhibit B. In addition, the shows attended by Kerrigan featured 

presentations touting the business opportunity that being a ViSalus distributor meant 

to prospective enrollees like himself. Kerrigan became aware of pertinent portions of 

the Compensation Plan by reading the Plan or by explanations of the Compensation 

Plan provided to him at the presentations. Neither the Compensation Plan nor any of 

the presentations seen by Kerrigan mentioned that ViSalus was operating an illegal 

pyramid scheme. In reliance upon the representations and/or omissions in the 

Compensation Plan, and the related “business opportunity” set out in the 

presentations, in 2013 Kerrigan purchased two $499 IP enrollments and for a period 

of time was a ViSalus IP. Had Kerrigan been informed that the business he was 

paying for by participating in the Compensation Plan was part of a pyramid scheme, 

he would not have made the purchase of the distribution rights or any successive 

payments made to ViSalus to maintain such rights. 

11. After his initial $499 enrollment, Kerrigan realized that in order to keep 

being an “active” promoter, and get paid whatever “income opportunities” were being 

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touted, he needed to recruit other people into the system. He re-enrolled, as he was 

instructed to, and again paid ViSalus $499 to become a promoter. Kerrigan did not 

realize, either at the time of the meetings or during the time period that he re-enrolled 

that the only way in which he could earn money was to participate in an illegal 

pyramid scheme and recruit other people with the false promise of wealth. Upon 

information and belief, like all Michigan-based IP’s who purchased the promoter 

rights from ViSalus, Kerrigan was placed in a distribution “level” operated by 

Defendant Nick Sarnicola. Kerrigan lost money as an IP. 

12. Plaintiff, Lori Mikovich (“Mikovich”), is an individual residing in 

Livonia, Michigan. Mikovich was shown the opportunity to sell ViSalus weight-loss 

shakes. Mikovich attended a “Body By Vi” regional invitational meeting organized 

by ViSalus at a hotel near the Detroit airport sometime in 2013. She, like the other 

Plaintiffs, was presented with the opportunity to purchase the weight-loss shakes and 

also pitched a “business opportunity” to pay additional money to become a ViSalus 

promoter: one of the topics that invitees were told to expect to be covered was “learn 

how to earn income as a Distributor.” The presentations referred to making income 

eight different ways, similar to a “ViSalus Business Opportunity” video published by 

Defendant Blake Mallen, at the same general time as Mikovich attended the Detroitarea meeting, and the presentations made on the ViSalus website that, in part showed: 

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The presentations there made no mention of the fact that ViSalus was a pyramid 

scheme. 

13. Mikovich was presented with three “promoter” packages, a $49 “basic” 

package, the $499 “Executive” package, and the $999 “Executive + samples” 

package. 

14. As part of the sales pitch, Mikovich was given and/or presented with the 

Compensation Plan. She became aware of pertinent portions of the Compensation 

Plan by reading the Plan and by explanations of the Plan provided to her at the 

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meeting organized by ViSalus. Mikovich relied upon the Compensation Plan to 

become a distributor, and paid ViSalus $499 to become an IP. Additionally, she 

enrolled in the website program. She was placed in Kerrigan’s “downline,” and 

therefore was “downline” from Defendant Sarnicola. After her initial $499 

enrollment, Mikovich realized that in order to keep being an “active” promoter, and 

get paid whatever “income opportunities” were being touted, she needed to recruit 

other people into the system. She attempted to cancel her “automatic” $24.95 per 

month website, but was unable to for a period of time. Mikovich lost money as an 

IP. Had Mikovich been informed that the business opportunity she was purchasing 

was part of a pyramid scheme, she would not have made her purchases. Mikovich 

was charged for several months of monthly website charges before Defendant 

ViSalus finally canceled the monthly charge. 

15. Plaintiff, Ryan M. Valli (“Valli”), is an individual residing in Canton, 

Michigan. Valli, a friend of Mikovich, attended the same meeting as Mikovich and 

was also shown the opportunity to become a promoter to sell ViSalus weight-loss 

shakes. He, like the other Plaintiffs, was not only presented with the opportunity to 

purchase the weight-loss shakes, but was pitched a “business opportunity” to pay 

additional money to become a ViSalus promoter. Valli relied upon pertinent portions 

of the Compensation Plan, including the misrepresentations and/or omissions relating 

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to the ViSalus opportunity not being a pyramid scheme. For a period of time in 2013 

Valli became an IP. He was placed “downline” from Kerrigan and was therefore 

“downline” from Defendant Sarnicola. After his initial $499 enrollment, Valli 

realized that in order to keep being an “active” promoter, and get paid whatever 

“income opportunities” were being touted, he needed to recruit other people into the 

system. Upon information and belief, Valli was charged for several months of 

monthly website charges before ViSalus finally canceled the monthly charge. Valli 

lost money as an IP. Had Valli been informed that the business opportunity he was 

purchasing was part of a pyramid scheme, he would not have made his purchases. 

DEFENDANTS 

CORPORATE DEFENDANTS 

16. Defendant, ViSalus, Inc. (“ViSalus”) is a Nevada corporation 

headquartered in Troy, Michigan, where it maintains a “Global Headquarters” and 

several hundred employees. ViSalus originally incorporated in 2005 as a California 

corporation named FVA Ventures, Inc. FVA Ventures represented itself to the public 

as “ViSalus Sciences,” from 2005 to approximately 2010, and thereafter as 

“ViSalus.” FVA Ventures merged into the Nevada corporation on September 14, 

2012. The merged entity has continued operating as ViSalus since that time. 

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17. Defendants (1) Ropart Asset Management Fund, LLC (“Ropart Asset 

I”) a Delaware limited liability company, (2) Ropart Asset Management Fund II, LLC 

(“Ropart Asset II”) a Delaware limited liability company, Rock Ridge Asset 

Management Company, LLC, a Delaware limited liability company (“Rock Ridge”), 

and (4) Ropart Asset Management, LLC, a Delaware limited liability company 

(“Ropart Asset Management”), are each companies who invested in, then operated, 

managed and profited from the ViSalus scheme. Ropart Asset I and Ropart Asset II 

are owned and controlled by Defendant Robert Goergen, Sr. and managed by 

Defendant Todd Goergen through Rock Ridge and Ropart Asset Management. 

(Hereafter, unless specified, all of these companies will be referred to collectively as 

“RAM.”) They are headquartered in Greenwich, Connecticut. RAM’s connection to 

the enterprise described herein is as an investor in ViSalus, as a provider of 

management and strategic advice to enable the scheme to operate and grow, as a 

lender of funds, and through its membership on ViSalus board of directors and 

eventual management of the enterprise. 

18. Defendant Robert Goergen, Sr. (“Robert Goergen Sr.”) is an individual 

residing in Connecticut, a former investment banker, and formerly the CEO of Blyth, 

Inc. Robert Goergen Sr. has transacted business in Michigan since at least 2005 at 

least in part through his association with ViSalus. 

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19. Defendant “Living Trust dated 9/30/1991 f/b/o Robert B. Goergen” 

(“Trust”) is a Connecticut entity which at all times relevant transacted financial 

transactions for the benefit of Robert Goergen, Sr. Trust is operated by its trustees 

Robert B. Goergen, Sr., Robert B. Goergen, Jr., and Todd Goergen. (Hereinafter, 

unless specified otherwise, both Goergen Sr. and Trust will be collectively referred 

to as “Robert Goergen, Sr.”). Trust capitalized Ropart Asset I and Ropart Asset II, 

and received a significant portion of a $50+ million payout from the ViSalus 

operation in 2008-2012. Trust’s role was to serve as both funder to ViSalus and 

recipient of the proceeds of a payoff from the operation of the scheme through its 

interest in RAM. 

20. Defendant Todd Goergen (“Todd Goergen”) is an individual residing in 

Connecticut. Todd Goergen was the Chief Operating Officer for ViSalus. Previously 

or concurrently to that position he has run Rock Ridge and Ropart Asset Management 

for the benefit of Ropart Asset I and Ropart Asset II and their unit-holders Robert 

Goergen, Sr., himself, and for Trust. Todd Goergen has transacted business in 

Michigan since at least 2005 at least in part due to his association with ViSalus. Todd 

Goergen, at various times, has also concurrently served as the Chief Operating 

Officer of ViSalus, served on the ViSalus Board of Directors, and provided 

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management services for ViSalus on behalf of Ropart Asset I and Ropart Asset II. In 

connection with Defendants Ropart Asset II, Nick Sarnicola, Ryan Blair, Blake 

Mallen, and Jason O’Toole, through their respective companies, he is also a member 

of defendant HashTag One, LLC. Todd Goergen’s role encompassed managerial, 

strategic, and funding needs for the enterprise. 

21. Defendant, Ryan Blair (“Blair”) is an individual residing in Michigan. 

Blair is the Chief Executive Officer of ViSalus. Blair is one of the primary promoters 

of the ViSalus pyramid scheme, and refers to himself as a “co-founder” of ViSalus. 

He is a recipient of a large payout for his interest in ViSalus, and currently holds a 

minority interest in ViSalus where he partially underwrites a credit facility to keep 

the company operating. Blair also owns and operates defendant OCD Marketing, Inc., 

a Delaware company (“OCD”). Through OCD, Blair is a member of Defendant 

HashTag One, LLC. OCD was a vehicle for Blair to deposit the payoff from the 

enterprise. OCD’s role also serves, through HashTag One, to divert funds from the 

ongoing ViSalus operation. 

22. Defendant, Nick Sarnicola (“Sarnicola”) is an individual residing in 

Florida and Michigan and a “co-Founder” of the company. Sarnicola left ViSalus in 

2010 as an executive and employee, and is simultaneously one of the primary 

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promoters of the ViSalus pyramid scheme and a recipient of a large payout for his 

interest in ViSalus. He owns a minority share in ViSalus where he partially 

underwrites a credit facility to keep the company operating. Sarnicola, together with 

his wife Ashley Sarnicola, own Defendant Power Couple, Inc., a Delaware 

corporation (“Power Couple”). Sarnicola also owns Defendant ArriveBy25, Inc., a 

Delaware corporation (“AB25”). Through Power Couple and AB25, in his role as a 

ViSalus promoter, Sarnicola entered into agreements with certain other promoters, 

including several defendant promoters. Defendant Power Couple entered into a 

“Special Incentive Group” contract with ViSalus in which it received a bounty based 

on the number of $499 “Executive Success System” kits sold by it and its downline. 

Through Defendant Power Couple, Sarnicola is a member of Defendant HashTag 

One, LLC. Through Defendants Power Couple and AB25, Sarnicola and his wife 

Ashley Sarnicola operated as promoters of the “business opportunity” under ViSalus 

promoter nos. 1167, 2087094 and 2050966. These entities were paid approximately 

$10.7 million for recruiting tens or hundreds of thousands of people into the scheme. 

Sarnicola/Power Couple/AB25 report directly to ViSalus in the compensation system 

that creates “uplines” and “downlines.” Defendants Power Couple and AB25 were 

also paid varying sums by various promoters outside the commissions and bonus 

system maintained by ViSalus and billed ViSalus for other activity. Defendant Power 

Couple, on Sarnicola’s behalf, also received approximately $1 million per year in 

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assistance and performance payments, including the use of the ViSalus American 

Express card for being the top recruiter for the company. Sarnicola therefore used 

Power Couple and AB25 as the means to carry out his role in the enterprise. 

23. Defendant, Blake Mallen (“Mallen”) is an individual residing alternately 

in California and Michigan, and employed in an executive capacity by ViSalus. 

Along with Sarnicola and Blair, Mallen holds himself out as a “co-founder” of 

ViSalus. Although he does not hold a place in the ViSalus compensation plan system, 

Mallen is one of the primary promoters of the ViSalus pyramid scheme and is a 

recipient of a large payout for his interest in ViSalus. Mallen is currently a minority 

shareholder in ViSalus, where he partially underwrites a credit facility to keep the 

company operating. Mallen also owns Defendant BAM Ventures, Inc. a Delaware 

company (“BAM”). Through BAM, Mallen is a member of defendant HashTag One, 

LLC. By 2012, upon information and belief, BAM received over $30 million for 

Mallen’s interest in ViSalus. BAM was a vehicle for Blair to deposit the payoff from 

the enterprise. BAM’s role is also to serve, through HashTag One, to divert funds 

from the ongoing ViSalus operation. 

24. Defendant HashTag One, LLC (“HashTag One”) is a Delaware limited 

liability company formed in 2006 formerly known as Path Connect, LLC. Through 

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their respective companies, about 96% of HashTag One’s membership interest is 

owned by Defendants Blair, Sarnicola, Mallen, Todd Goergen and Jason O’Toole. 

HashTag One is an investment company which, among other activities, awards 

membership shares in a so-called “Founders’ Equity Incentive Plan” to highly-placed 

ViSalus promoter recruiters including a number of defendant promoters described 

below. HashTag One is receiving payments from ViSalus for unknown services. 

HashTag One is the means by which the continuing profit from the ongoing scheme 

continues to be paid for the benefit of its Defendant members. (Hereafter, where 

collectively referred to, the management/owner group of defendants shall be referred 

to collectively as “Corporate Defendants.”) 

INDIVIDUAL PROMOTER DEFENDANTS 

25. In an effort to expand the pyramid scheme described below, ViSalus 

procured a number of professional network recruiters familiar with the network sales 

industry. These individuals are sophisticated Internet and conventional marketers, 

who tout their alleged financial success in the “industry” to new recruits into 

whatever network scheme chooses their service (hereafter where collectively 

identified, this group shall be referred to as “Individual Promoter Defendants”). 

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26. Defendant Jason O’Toole (“O’Toole”) is an individual residing in 

Ottawa, Ontario. O’Toole owns Defendant Prospex Automated Wealth Systems, Inc., 

a company organized under the laws of Ottawa, Ontario, Canada (“Prospex”). As 

with many other defendant promoters, O’Toole signed up Prospex as the actual 

promoter for ViSalus. O’Toole’s ViSalus compensation for his promotional activities 

was paid to Prospex. In addition to recruiting for ViSalus, Prospex sold recruiting 

leads to third parties outside the ViSalus promotions business (hereafter, these 

defendants’ promoting business will be referred to as “O’Toole/Prospex”). O’Toole 

also owns Defendant Jason O’Toole International Holdings, Inc., a Delaware 

corporation, which is a member of Defendant HashTag One. O’Toole/Prospex 

operated under promoter no. 416848 in the ViSalus pyramid scheme, and Prospex 

was paid at least $6.4 million for O’Toole’s role in recruiting tens of thousands of 

people into the scheme. Prospex reports to Sarnicola/Power Couple/AB25 in the 

ViSalus compensation system, that is, in their “downline.” O’Toole/Prospex were 

also parties to various agreements with ViSalus, Power Couple and/or AB25, and 

other promoters, to fund promoter activity, and obtain special incentives and bonuses 

not available to regular promoters. O’Toole/Prospex were a recipient of a “Special 

Incentive Group” contract in which they received a bounty based on the number of 

$499 “Executive Success System” kits sold by them and their downline. These 

agreements allow Prospex to serve O’Toole’s promotion business and funnel money 

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outside the compensation plan system to O’Toole, allow O’Toole to make side 

agreements with other promoters, and assist in the functioning of the enterprise. 

O’Toole/Prospex still operate as a promoter for ViSalus. 

27. Defendant, Kyle Pacetti, Jr. (“Pacetti”) is an individual residing in 

Orlando, Florida. Pacetti owns and operates defendant Gooder, LLC (“Gooder”), a 

Florida limited liability company. Pacetti/Gooder operate under promoter no. 

416027. Pacetti/Gooder report to Defendant Mike Craig in the ViSalus compensation 

system. Gooder was paid at least $6.2 million for Pacetti recruiting tens of thousands 

of people into the scheme. Pacetti also received an equity interest in HashTag One as 

a result of his recruiting activity. Pacetti/Gooder were also parties to various 

agreements with Defendants ViSalus, Power Couple and/or AB25 and other 

promoters, to fund promoter activity, and obtain special incentives and bonuses not 

available to regular promoters. Pacett/Gooder were recipients of a “Special Incentive 

Group” contract in which they received a bounty based on the number of $499 

“Executive Success System” kits sold. These agreements allow Gooder to serve 

Pacetti’s promotion business and funnel money outside the compensation plan 

system to Pacetti, allow Pacetti to make side agreements with other promoters, and 

assist in the functioning of the enterprise. Pacetti/Gooder still operate as promoters 

for ViSalus. 

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28. Defendant Rachel Jackson (“Jackson”) is an individual residing in 

Magnolia, Texas. Jackson, together with her husband Joshua Jackson, owns and 

operates Defendant Red Letters, LLC (“Red Letters”), a Texas limited liability 

corporation. Jackson received ViSalus equity in 2007 as a reward for recruiting 

thousands of downline recruits, for which she was later paid a substantial amount. 

Jackson’s ViSalus compensation was paid through Red Letters. Jackson/Red Letters 

operated under promoter no. 543158, and Red Letters was paid $2.474 million for 

the Jacksons recruiting tens of thousands of people into the scheme. Jackson also held 

a position under promoter number 2356012, which was associated with the name 

“Free Enterprise.” Jackson/Red Letters reported to Jennifer May who reported to 

Sarnicola/Power Couple/AB25 in the ViSalus compensation system. Jackson/Red 

Letters were also parties to various agreements with Defendants ViSalus, Power 

Couple and/or AB25 and other promoters to fund promoter activity and obtain special 

incentives and bonuses not available to regular promoters. These agreements allow 

the company to serve the promotion business, funnel money outside the 

compensation plan system, allow side agreements with other promoters, and assist in 

the functioning of the enterprise. Jackson/Red Letters have left ViSalus as promoters. 

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29. Defendant Michael Craig (“Craig”) is an individual residing in 

Jacksonville, Florida. Craig, together with his wife Lavon Craig, owns and operates 

Defendant M-Power Path, Inc., a Florida corporation (“M-Power”). Prior to being a 

promoter to ViSalus, Craig was a management employee in sales at ViSalus. Craig 

has received an equity interest in Defendant HashTag One. Craig/M-Power operated 

under promoter no. 383868 in the ViSalus pyramid scheme, where M-Power was paid 

over $5 million for the Craigs recruiting tens of thousands of people into the scheme. 

Craig/M-Power reported to Sarnicola/Power Couple/AB25 in the ViSalus 

compensation system. They were also parties to various agreements with ViSalus, 

Power Couple and/or AB25 and other promoters to fund promoter activity, and obtain 

special incentives and bonuses not available to regular promoters. Craig/M-Power 

were recipients of a “Special Incentive Group” contract in which they received a 

bounty based on the number of $499 “Executive Success System” kits sold. These 

agreements allow the company to serve the promotion business, funnel money 

outside the compensation plan system, allow side agreements with other promoters, 

and assist in the functioning of the enterprise. Craig/M-Power continue as promoters 

for ViSalus. 

30. Defendant Tara Wilson (“Wilson”) is an individual residing in 

California. Wilson owns and operates Defendant A Berry Good Life, Inc., a 

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California corporation (“ABGL”). Wilson/ABGL operated under promoter no. 

504823 in the ViSalus pyramid scheme, where ABGL was paid $2 million for 

Wilson’s recruiting tens of thousands of people into the scheme. Wilson/ABGL 

reported to Defendant Aaron Fortner in the ViSalus compensation system. 

Wilson/ABGL were also parties to various agreements with ViSalus, Power Couple 

and/or AB25 and other promoters to fund promoter activity, and obtain special 

incentives and bonuses not available to regular promoters. These agreements allow 

the company to serve the promotion business, funnel money outside the 

compensation plan system, allow side agreements with other promoters, and assist in 

the functioning of the enterprise. Wilson/ABGL have left ViSalus, and together with 

Defendant Jackson, now promote for a Utah-based multi-level marketing company, 

LifeVantage. 

31. Defendant, Lori Petrilli (“Petrilli”) is an individual residing in Montreal, 

Quebec. Petrilli owns and operates defendant 9248-2587 Quebec, Inc., a foreign 

corporation (“9248”). Petrilli/9248 operated under promoter no. 529610. 9248 was 

paid at least $2.5 million for Petrilli recruiting tens of thousands of people into the 

scheme, often working with Defendant Frank Varon. Petrilli/9248 reported to 

Defendant Jason O’Toole in the ViSalus compensation system. They were also 

parties to various agreements with Defendants ViSalus, Power Couple and/or AB25 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 23 of 228 Pg ID 6618
22 

and other promoters to fund promoter activity, and obtain special incentives and 

bonuses not available to regular promoters. Petrilli/9248 were recipients of a “Special 

Incentive Group” contract in which they received a bounty based on the number of 

$499 “Executive Success System” kits sold. These agreements allow the company to 

serve the promotion business, funnel money outside the compensation plan system, 

allow side agreements with other promoters, and assist in the functioning of the 

enterprise. Petrilli/9248 are no longer promoters for ViSalus. 

32. Defendant Frank Varon (“Varon”) is an individual residing in Palm 

Beach, Florida. Varon owns and operates defendant Network Dynamics America 

Corp., a Florida corporation (“NDAC”). Varon/NDAC operated under promoter no. 

594171 in the ViSalus pyramid scheme. NDAC was paid $701,553.00 for Varon’s 

recruiting tens of thousands of people into the scheme. Veron/NDAC are no longer 

promoters for ViSalus, and are currently believed to spend much of their time in the 

Caribbean islands. 

33. Defendant Timothy Kirkland (“Timothy Kirkland”) is an individual 

residing in Jacksonville, Florida and Wyoming. Defendant Holley Kirkland is an 

individual residing in Jacksonville, Florida and Wyoming. Defendant Freedom 

Legacy, LLC (“Freedom Legacy”) is a Florida limited liability corporation owned by 

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the Kirklands. The Kirklands operated under promoter no. 416074. Freedom Legacy 

reports to Defendant Pacetti in the ViSalus compensation system. Freedom Legacy 

was paid $2.47 million for the Kirklands recruiting tens of thousands of people into 

the scheme. Kirklands/Freedom Legacy were also parties to various agreements with 

ViSalus, Power Couple and/or AB25 and other promoters to fund promoter activity 

and obtain special incentives and bonuses not available to regular promoters. They 

were recipients of a “Special Incentive Group” contract in which they received a 

bounty based on the number of $499 “Executive Success System” kits sold. These 

agreements allow the company to serve the promotion business, funnel money 

outside the compensation plan system, allow side agreements with other promoters, 

and assist in the functioning of the enterprise. Kirklands/Freedom Legacy continue 

as promoters for ViSalus, although they have purchased a ranch in Wyoming and are 

not active in the business. 

34. Defendant Aaron Fortner (“Fortner”) is an individual residing in the San 

Diego, California, area. Defendant Residual Marketing, Inc. (“Residual Marketing”) 

is a Florida corporation owned by Fortner. Defendant Got Heart Global, Inc. 

(“GHGI”), is a Florida company also owned by Fortner. Fortner operated his ViSalus 

business through Defendant Residual Marketing and then later transferred the 

business and continued operating through Defendant GHGI. Fortner’s ViSalus 

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24 

compensation was and continues to be paid through GHGI and Residual Marketing. 

RM/GHGI operate under promoter no. 439879 in the ViSalus pyramid scheme, where 

RM/GHGI were paid $3.1 million for Fortner’s recruiting tens of thousands of people 

into the scheme. Fortner/RM/GHGI report to Defendant O’Toole in the ViSalus 

compensation system. They were also parties to various agreements to fund promoter 

activity, and obtain special incentives and bonuses not available to regular promoters. 

They continue as promoters for ViSalus. 

35. Defendant Wealth Builder International LLC (“Wealth Builder”) is an 

Alberta, Canada corporation owned by Tanis MacDonald (not named as a defendant). 

Wealth Builder operated under promoter no. 435073. Wealth Builder was paid $2.47 

million for MacDonald recruiting tens of thousands of people into the scheme. 

Wealth Builder was also party to various agreements with Defendants Power Couple 

and/or AB25 and other promoters to fund promoter activity and obtain special 

incentives and bonuses not available to regular promoters. Wealth Builder purchased 

massive amounts of inventory from ViSalus for the purpose of fulfilling the product 

purchase requirement of its immediate downline sub-promoters, with whom it had 

contracts. These agreements allow the company to serve the promotion business, 

funnel money outside the compensation plan system, allow side agreements with 

other promoters, and assist in the functioning of the enterprise. Wealth Builder no 

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25 

longer operates as a promoter for ViSalus, as MacDonald has moved on to other 

MLM companies. 

36. Defendant Jake Trzcinski (“Trzcinski”) is an individual residing in 

California. Trzcinski owns and operates defendant JakeTRZ, Inc. (“JakeTRZ”), a 

California corporation. In reward for recruiting thousands of recruits, Trzcinski 

received equity in ViSalus in 2007, for which he later was paid a sum believed to be 

in excess of $1.2 million. Trzcinski and/or TRZ operated under promoter no. 1178 in 

the ViSalus pyramid scheme. TRZ was paid $1.5 million for Trzcinski’s recruiting 

tens of thousands of people into the scheme. Trzcinski/TRZ were also parties to 

various agreements with Defendants ViSalus, Power Couple and/or AB25 and other 

promoters to fund promoter activity and obtain special incentives and bonuses not 

available to regular promoters. Trzcinski/TRZ were recipients of a “Special Incentive 

Group” contract in which it received a bounty based on the number of $499 

“Executive Success System” kits sold. These agreements allow the company to serve 

the promotion business, funnel money outside the compensation plan system, allow 

side agreements with other promoters, and assist in the functioning of the enterprise. 

They are still promoters for ViSalus but are not believed to be active. 

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26 

37. Defendant Anthony Lucero and defendant Rhonda Lucero 

(collectively, the “Luceros”), are individuals residing in Texas. The Luceros own 

and operate defendant Mojos Legacy, LLC (“Mojos Legacy”), a California limited 

liability company. Mojos Legacy operated under promoter no. 372097. Mojos 

Legacy was paid $4 million for the Luceros recruiting tens of thousands of people 

into the scheme. Luceros/Mojos Legacy were also parties to various agreements with 

Defendants ViSalus, Power Couple and/or AB25 and other promoters to fund 

promoter activity and obtain special incentives and bonuses not available to regular 

promoters. They were a recipient of a “Special Incentive Group” contract in which 

they received a bounty based on the number of $499 “Executive Success System” 

kits sold. These agreements allow the company to serve the promotion business, 

funnel money outside the compensation plan system, allow side agreements with 

other promoters, and assist in the functioning of the enterprise. It is not known 

whether the Luceros are still active promoters. 

38. Defendant Gary J. Reynolds (“Reynolds), is an individual residing in 

Lincoln, Nebraska. Reynolds owns and operates Defendant BeachLifestyle 

Enterprises, LLC (“BeachLifestyle”), a Nevada limited liability company. 

Reynolds/BeachLifestyle operated under promoter number 264074 in the ViSalus 

pyramid scheme. BeachLifestyle was paid over $2 million for Reynolds (often with 

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27 

his wife Alita Reynolds who may have her own promoter place in the system) 

recruiting tens of thousands of people into the scheme. Reynolds also received equity 

in Visalus in 2007, and was later paid a sum believed to be in excess of $600,000 for 

his equity interest in Visalus. Reynolds had previously operated as a 

recruiter/promoter elsewhere, and is familiar with the laws and regulations 

surrounding MLMs, knows the difference between a “legal” and “illegal” MLM, and 

has continued to serve as a promoter for years notwithstanding the repeated closings 

by the FTC of identical companies such as FHTC and Vemma and his actual 

knowledge of the facts and circumstances surrounding such actions. He continues as 

a promoter for ViSalus. 

39. Defendant Kevin Merriweather (“Merriweather”), is an individual 

residing in Jacksonville, Florida. Merriweather became a promoter in 2010, and 

operated under promoter no. 422384 in the ViSalus pyramid scheme, where he was 

paid $1.9 million for recruiting tens of thousands of people into the scheme. 

Merriweather had previously operated as a recruiter/promoter elsewhere, and is 

familiar with the laws and regulations surrounding MLMs, knows the difference 

between a “legal” and “illegal” MLM, and has continued to serve as a promoter for 

years notwithstanding the repeated closings by the FTC of identical companies such 

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as FHTC and Vemma and his actual knowledge of the facts and circumstances 

surrounding such actions. 

JURISDICTION AND VENUE 

40. All Defendants are subject to the jurisdiction of this Court. This Court 

has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1332(d). This Court 

has personal jurisdiction over each defendant. As set forth above, the Defendants 

continuously and systematically engaged and engage in business in Michigan. The 

Defendants do business as individuals, limited partnerships or limited liability 

companies in Michigan. In accordance with 18 U.S.C. § 1965(a) and (b), all of the 

Defendants are subject to this Court's jurisdiction in that they “transact affairs” in the 

Eastern District of Michigan. 

41. To the extent not specifically alleged above, each of the individual 

Defendants in this case who were or are also IPs, have received numerous payments 

from ViSalus, located in Michigan. Each of those individuals has appeared in 

advertising and/or promotional materials generated from Michigan and disseminated 

for a period of years in, among other states, the State of Michigan. 

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42. Certain of the individual Defendants, including Blair and Sarnicola, 

reside or have residences in Michigan. Each of them has systematically 

communicated with ViSalus in Michigan in connection with ongoing promotional 

work performed on behalf of the company. 

43. Each of the RAM entities or the companies operating on behalf of 

individual promoters in this case has likewise transacted business in Michigan by 

virtue of systematically receiving payments from ViSalus or performing services for 

ViSalus within Michigan for a period of years. 

44. ViSalus operates in Troy, Michigan. Venue is proper in this Court 

pursuant to 28 U.S.C. §1391. 

THE PYRAMID SCHEME 

45. One reason why pyramid schemes are illegal is that they must eventually 

collapse due to market saturation as the market for potential participants fills. There 

is no natural market demand for the product sold by the scheme’s promoters, resulting 

in little to no demand for the product beyond sales made internally to new recruits. 

As the market for new distributors saturates, new distributors are left with unsellable, 

higher-than-market-price inventory and little to no chance to recoup their money 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 31 of 228 Pg ID 6626
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from legitimate customers who actually want the product for itself. The only market 

for the inventory, and the only opportunity to recoup the cost of maintaining the 

distributorship rights lies in recruiting another person. Another reason why pyramid 

schemes are illegal is that they naturally funnel money only to a small percentage of 

people at the top, money that is funded by the large base at the bottom presented by 

the pyramid’s operators with the same false “business opportunity” to make money. 

46. Pyramid schemes are uniformly held to be illegal in both the United 

States and in Canada. The FTC uses the following test (from In re Koscot 

Interplanetary, Inc., 86 F.T.C. 1106, 1181 (1975), followed by US v. Gold Unlimited, 

177 F.3d 472 (6th Cir.)) to characterize a pyramid scheme: 

[Pyramid] schemes are characterized by the payment by 

participants of money to the company in return for which they 

receive (1) the right to sell a product and (2) the right to receive 

in return for recruiting other participants into the program 

rewards which are unrelated to sale of the product to ultimate 

users. In general such recruitment is facilitated by promising all 

participants the same ‘lucrative’ rights to recruit. 

47. Michigan law, MCLA 445.1528, is part of the Michigan Franchise 

Investment Act. It defines a pyramid, which the Act deems an illegal scheme under 

Michigan law, as: 

[A]ny plan or scheme or device by which (a) a participant gives 

a valuable consideration for the opportunity to receive 

compensation or things of value in return for inducing other 

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persons to become participants in the program or (b) a participant 

is to receive compensation when a person introduced by the 

participant introduces one or more additional persons into 

participation in the plan, each of whom receives the same or 

similar right, privilege, license, chance, or opportunity. 

48. The Sixth Circuit Court of Appeals has approved the use of a jury 

instruction which defines a network-sales based pyramid scheme as follows: 

MLM [multilevel marketing] programs survive by making 

money off product sales, not new recruits. In contrast, "pyramids 

schemes" reward participants for inducing other people to join 

the program; over time, the hierarchy of participants resembles a 

pyramid as newer, larger layers of participants join the 

established structure. Ponzi schemes operate strictly by paying 

earlier investors with money tendered by later investors. No clear 

line separates illegal pyramid schemes from legitimate multilevel 

marketing programs; to differentiate the two, regulators evaluate 

the marketing strategy (e.g., emphasis on recruitment versus 

sales) and the percent of product sold compared with the percent 

of commissions granted. 

49. Substantial federal common law has evolved on the subject of pyramid 

schemes. Well-recognized elements of a pyramid scheme, particularly in companies 

attempting to masquerade as a “legitimate” network marketing company, are: (1) 

whether the entire scheme is more associated with recruiting other participants rather 

than selling the alleged product to outside customers; (2) whether sales are primarily 

made internally to new distributors rather than to outside customers; (3) whether there 

is a high drop out or “churn” rate among newly-signed distributors (indicating the 

reason why product was purchased was for the business opportunity to recruit others); 

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(4) whether the scheme’s promoters spread implied or express promises of great 

wealth or financial independence if one is to participate in the “business opportunity”; 

(5) whether the scheme’s promoters cause distributors to load up on the product 

(inventory loading) in order to receive commissions; and (6) whether there is market 

saturation leading to collapse. 

50. Each of these elements is present in the pyramid scheme devised and 

operated by the Defendants. No one Defendant, or even a small group of persons, 

could have orchestrated the operation of this pyramid scheme. It required the 

coordinated efforts and individual acts of many individuals, some of which are named 

Defendants, to achieve the size, visibility, and false sense of legitimacy that allowed 

the ViSalus scheme to lure the Plaintiffs into enrolling for this “opportunity.” Each 

of these coordinated individual acts promoted the presence and continued operation 

of the pyramid. 

51. The only way for an individual to obtain the right to sell the ViSalus 

weight loss products is to pay ViSalus money to become its distributor. ViSalus 

pitches the distributorship of its products as a “business opportunity.” ViSalus refers 

to these people, like the individual Plaintiffs and all others in the class, as members 

of the “Individual Promoter Sales Force.” By enrolling as an IP, the IP Sales Force, 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 34 of 228 Pg ID 6629
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including Plaintiffs and all members of the class, have paid for the right to sell a 

product. 

52. No training or experience is necessary to become an IP. A person can 

become an IP through a personal “event” in which information is given out by the 

company, or through another IP, who may or may not hand out written or audiovisual 

materials. A written form takes the prospective enrollee through several sign up 

steps, the most important of which involves the payment by the enrollee to ViSalus 

of a fee. The enrollee chooses whether to become a “basic” distributor (at $49), or a 

distributor with additional features of the ViSalus promoter system (at either $499 or 

$999). In written form, the enrollee may be handed a form like this: 

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53. The two high-priced distributorship rights packages, the $499 Executive 

Success System (“ESS”) or the $999 ESS with samples (also known as the “Star 

Kit”), bundle expanded rights to commissions and bonuses (over the base package) 

with some product and a quantity of product samples. The company pushed the $499 

and $999 distribution kits at prospective distributors. 

54. Kerrigan, Mikovich and Valli, were each presented with the proposal 

that they purchase these packages. The ViSalus marketers urged them (and the 

hundreds or thousands of other attendees at these or similar meetings) to buy the $499 

or $999 packages to become a distributor under the Compensation Plan because they 

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35 

will have more “success” and receive better “training” with these more expensive 

packages rather than the “basic” $49 package. 

55. In addition to Defendant ViSalus making the presentations, Defendant 

Sarnicola has appeared on videos and appeared in person at meetings such as those 

attended by the Plaintiffs (along with tens of thousands of others who subsequently 

purchased these IP kits) pushing the prospective purchasers to buy the $499 or $999 

kits for a greater “opportunity” to make money than purchase of the $49 kit alone. 

56. Upon enrolling, the new enrollee (like Kerrigan, Mikovich and Valli) 

provided ViSalus with a social security number and a credit card number. Additional 

features presented for purchase include an auto-ship program at up to $249/month of 

shakes, which creates a monthly automatic shipment of product charged to the IP’s 

credit card. New IPs were also pitched and sold a recurring, monthly website 

subscription for the sum of (depending on the year in question) $24 to $29 per month. 

The website purports to give the IP a personalized way to sell ViSalus product and to 

keep track of benefits. In reality, the website is hosted by ViSalus and the recurring 

monthly charge is virtually all profit to the company and is bundled with the IP 

distributorship purchased from the company. Various fees associated with the 

process are added as well, such as an annual “administrative fee,” $3 handling fees 

and so on. 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 37 of 228 Pg ID 6632
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57. Plaintiffs Mikovich and Valli and, upon information and belief 

Kerrigan, were enrolled in the monthly website subscription and auto-ship programs. 

They did so in reliance on the representations and/or omissions made in the 

Compensation Plan and at the presentations and in the ViSalus website that such 

purchases would be more advantageous to them in the IP business. 

58. In reality, ViSalus product sales are primarily made to new distributors 

recruited into the system. The principals of the scheme know this and know that the 

company’s sales are directly correlated to the number of new recruits. For example, 

in the 1st quarter of 2012, during ViSalus’ peak year of operation, its reported sales 

of $136.7 million were the result of purchases by and through 92,000 recruits, for an 

average of $1,485 per IP. In the first quarter of 2013, after its sales slide began in 

earnest, sales of $104.3 million were the result of 70,200 recruits, again for an average 

of $1,485 per IP. In the first quarter of 2014, sales of $57.4 million were the result of 

the work of 36,100 IPs, for an average of $1,590 per IP. 

59. The ViSalus Compensation Plan operates by promoting an IP upwards 

through a variety of tiers and structures, and paying a multitude of “commissions” 

and “bonuses” to the IP. (See Exhibits A and B). If the new IP sells ViSalus weight2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 38 of 228 Pg ID 6633
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loss shakes to legitimate outside customers the “business opportunity” only generates 

a token income. The presence of outside customers is incidental: the purpose and 

goal of the Compensation Plan is to recruit new people to become IPs. 

60. The scheme’s promoters (each of the named Defendants) know that 

without a constant stream of new recruits and sales to new recruits the whole 

operation would grind to a halt in a matter of weeks. The Defendants likewise know 

that the sole reason they were paid, or promised to be paid, massive amounts of 

money by the company was if they were successful in recruiting a large number of 

people to become promoters for the company. 

61. Simply by retailing the weight-loss shakes to legitimate outside 

customers, the IP has virtually no chance to cover the monthly cost of his product. In 

order to remain “active” and retain the right to “earn” a commission, the new IP must 

maintain a $125/month purchase level. The Compensation Plan pays a sales 

commission on sales monthly over $200. Monthly sales of between $201 and $500 

are paid 10%, or $30. Sales of $501 to $1,000 are paid 15%, or $75. Sales of $1,000 

to $2,500 are paid 20% or $300. Thus, in order to just stay ahead of the monthly cost 

to be an IP eligible to earn the bonus, the IP must find enough customers each month 

who order over $1,000 worth of weight-loss shake product. Very few IPs do that. 

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62. In contrast to these small sales commissions, the monetary incentives 

built into the Compensation Plan lucratively reward recruiting activity. Many of the 

numerous “commissions” and “bonuses” available to IPs are nothing more than direct 

payments for recruiting, or as the FTC characterizes it, “the right to receive in return 

for recruiting other participants into the program rewards which are unrelated to sale 

of the product to ultimate users,” or under Michigan law, “the opportunity to receive 

compensation or things of value in return for inducing other persons to become 

participants in the program,” or “to receive compensation when a person introduced 

by the participant introduces one or more additional persons into participation in the 

plan, each of whom receives the same or similar right, privilege, license, chance, or 

opportunity.” Among the explicit recruiting-based payments made to IPs are the 

following. 

63. Once a distribution kit is purchased, the IP receives a First Order Bonus 

when he or she enrolls a new promoter into the system. That bonus is a 20% 

commission on all products ordered by the new IP beyond their promoter cost. The 

First Order Bonus is paid to all IPs “upline” of the sponsoring IP at a decreasing 

percentage, so that an IP can get paid this bonus for the recruiting activities of 

previously-recruited distributors up to three levels below the IP. 

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64. A successful recruiter is paid a higher amount of per capita commission. 

A Fast Start Bonus is paid to an IP when he or she successfully recruits a new 

distributor who purchases a $499 ESS or $999 Star Kit. If the IP is at an “Associate” 

rank, the company pays a bonus is $50. If the IP is at a “Director” rank at the time of 

the recruitment the bonus is $100. The company’s bonus increases to $130 if the IP 

is at a “Regional Director” rank and up to $180 if the IP is at an “Ambassador” rank. 

The higher “ranks” are eligible for “override” bonuses of $10 to $15 as well. Thus, 

the IP is given a monetary incentive to rise in “rank.” The only way to rise in rank is 

to build a “team” of recruited new distributors and to “assist” them in themselves 

becoming highly-ranked by recruiting others. 

65. The company’s training materials depict the bonuses as follows: 

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2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 42 of 228 Pg ID 6637
41 

 

66. The types and amounts of bonuses offered to new distributor recruits are 

directly dependent on the recruiting success of the IP. ViSalus has summarized the 

incentives as follows: 

“An individual promoter with the rank of associate can earn 

“team commissions” on a monthly basis equal to 5% of the 

[Bonus Volume, or “the amount of each product sale that counts 

towards bonuses and commissions. In most cases, BV is equal to 

the selling price of each product”] generated during such period 

in the two down-line “levels” below him in his or her down-line 

sales organization. As an individual promoter achieves higher 

ranks, he or she is able to earn 5% of the monthly BV 

generated by an increased number of levels below them. ... 

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In addition, an individual promoter with the rank of ambassador 

can earn additional commissions through the leadership depth 

bonus, which pays 2% on all the bonus volume from level nine 

through the remaining levels in such individual promoter’s 

down-line sales organization. When an ambassador has 

another ambassador in their down-line sales organization, 

the leadership depth bonus will increase to 4% of bonus 

volume through that second ambassador’s eight levels, and 

the top ambassador will still earn a 2% leadership depth 

bonus through the remaining levels in the top ambassador’s 

down-line sales organization.” (quote appears in a ViSalus 

prospectus, 9/2012, emphasis added) 

67. These “team commissions” are depicted in the ViSalus Plan Book like 

this: 

68. The Rising Star Weekly Enrollers Pool commission is another direct 

commission for recruiting others. An IP who “qualifies” for a share of that 

commission, which amounts to 2% of the company’s revenue, is guaranteed at least 

$75 for the week he or she qualifies. A significant portion of the “qualifying” 

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requirement is enrolling or recruiting, three new IPs into the system. Thus, this bonus 

is a direct bonus for recruiting another into the system. 

69. The company has described this commission as follows: 

 “We place a portion of the BV [bonus volume] from the previous 

four weeks of company-wide production into a “rising star weekly 

enroller’s [sic] pool,” and one quarter of this pool is paid each 

week. The amount placed in the pool is shared among those who 

qualify for the pool. 

 We place a portion of BV from the month’s company-wide 

production into a “leadership pool” that is shared by promoters 

who achieve the rank of presidential director or ambassador during 

such period, with each such individual promoter being entitled 

to an amount based upon the highest rank achieved in each 

sales leg of his down-line sales organization during such period.

 We place another portion of BV from the month’s company-wide 

production into a “leadership pool” that is shared by promoters 

who achieve the rank of ambassador during such period, with each 

such individual promoter being entitled to an amount based 

upon the highest rank achieved in each sales leg of his downline sales organization during such period. 

 We offer an “ambassador bonus” to individual promoters who 

achieve one of five ambassador ranks in a given month, with the 

amount of the bonus based on the sublevel of ambassador rank 

obtained, as well as the length of the period of time for which such 

sublevel was maintained.” 

(emphasis added.) 

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70. Regardless of the token inclusion of a sales requirement into the 

distributor’s plan, all of the scheme’s promoters understood that the plan rewarded 

recruiting above all else. In a lawsuit filed in this court, ViSalus admitted, “In order 

to encourage distributors to encourage growth of product sales through the 

recruitment of other distributors, ViSalus ... rewards its top performing 

distributors through a generous compensation plan.” (Par. 8, ViSalus v. Bohn, Eastern 

District of Michigan, Case No. 2:13-cv-10366, January 29, 2013 (emphasis added)). 

According to the company, 

“As distributors meet certain goals designed to measure the sales 

success of the network of distributors that they bring to ViSalus, 

they are assigned a “rank” to recognize their success. The metric 

used to measure a distributor’s sales success and assign ranks is 

known as Growth Qualification Volume (“GQV”). The GQV 

measures the volume of sales generated by the distributor’s team. 

A distributor’s success in recruiting, training, and 

developing other distributors—which is known as their 

downline network—is measured by the number of 

distributors that they directly recruit and the rank achieved 

by these distributors.” (Par. 9, emphasis added). 

71. In a Welcome Booklet extolling “the power of 3,” ViSalus emphasizes 

that just finding three new people and helping them find three new people “do what 

you just did” generates so-called “Immediate Income” and “Leadership Income” 

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bonus levels. These bonuses are explicitly paid for successful recruiting at even the 

lowest level of participation: 

72. In various other publications ViSalus tells IPs that they can be paid in 

weekly bonuses or by encouraging others to join ViSalus and moving up the ranks to 

the different levels of so-called Directors or Ambassadors based on what the 

enrollees, that is recruited IPs, under them purchase. This emphasis on recruiting is 

made at all levels of promotion. 

73. The ranking system explicitly pays for recruiting success, and 

prospective enrollees are shown the alleged value of that success. A “new” 

Ambassador receives a $25K check, and recruits are told that “potential earnings” of 

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$10-$14K per month are available. A “1-Star” Ambassador, who helped sponsor 

another Ambassador, has represented “potential earnings” of $14-$20K per month. 

A “2-Star” Ambassador, who sponsored two Ambassadors in his/her downline, has 

represented “potential earnings” of $20-$30K per month. The Ambassador “ranking” 

continues with a represented upward tier of “potential earnings” of $40-$75K per 

month for a “5-star” Ambassador. The next tier of Ambassadors continues to 

“Diamond” and “Royal,” who may obtain “potential earnings” of up to $150K per 

month. These tiers and their explicit money claims are widely distributed on the 

Internet and in personal meetings sponsored and encouraged by the company. 

74. That the incentives tilt to recruiting over selling to outside customers is 

built into the pyramid scheme’s very operation. Defendants make virtually all their 

sales of the weight-loss product on the initial enrollment sale to a new IP and that 

IP’s subsequent transaction to his or her new recruit, and comparatively few sales are 

made to true outside customers. For example, in a lawsuit filed by ViSalus against a 

distributor in this Court, ViSalus acknowledged that a high-ranking IP had 1,755 

distributors and only 152 customers in his “downline.” The IP’s wife allegedly had 

16,300 distributors and 24,850 customers in her “downline” (ViSalus Inc. v. 

Hockmuth et al., 5:14-cv-11762), making the entire huge downline succeed in each 

distributor selling to less than two customers. 

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75. The only way that the weight-loss shakes could be sold in the market is 

through a pyramid scheme that couples the “business opportunity” with the purchase 

of the shake. Standing alone, the ViSalus weight loss shakes compete against a glut 

of similar market products, often much cheaper and available on local store shelves. 

ViSalus itself compares its products to “competitors” such as Herbalife (an MLM), 

Shaklee (an MLM), MonaVie (an MLM), Pharmanex (an MLM), Melaluca (an 

MLM), Isagenix (an MLM), Evolv, Slimfax, Myoplex and MetRx. Without the lure 

of becoming a new recruit and him/herself recruiting others and getting paid, the 

ViSalus product has little to no market appeal. Defendants know that IPs purchase 

grossly more product by dollar volume than non-IPs, and it is the IPs rather than 

outside customers who are the product’s actual “customer” base. 

76. Defendants know there is little natural demand for the weight loss 

shakes – particularly at the prices ViSalus charges for them – outside the sale to new 

distributor system. Customers buy significantly less product or at significantly lower 

volume than distributors do. A search of eBay listings, for example, shows thousands 

of failed attempted sales at full price and completed sales of the product at an average 

price well below that charged the IP. Craigslist ads show product dumping, with 

people asking for much less than the auto-ship price: 

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Selling 11 bags of ViSalus Meal Replacement Shake Mix and 1 

bag of misc. flavor packs. We used to be a dealer for this but we 

have a overstocked of leftovers from promotions. These bags go 

for over $90.00 for a months supply which is 2 bags. So at 11 

bags for $400.00 you are getting a STEAL and can't find it 

anywhere this cheap' the stuff works great as well. OR make me 

an offer on them all! 

(http://chicago.craigslist.org/nwc/hab/4526020739.html, June 18, 2014) 

77. ViSalus has a tremendous churn or turnover rate (sometimes known in 

the network industry as “breakage”), estimated as nearly 200% per year. Each 

“churned” IP is “non-active.” A non-active IP cannot receive commissions, and has 

lost money with the company. 

78. The actual average amount paid in commissions to the vast majority of 

ViSalus IPs is much less than the IP’s cost of getting into the system in the first place. 

In the absence of bonuses paid for recruiting (described earlier) this “average” level 

of sales activity by a distributor generates very little commissions per IP per year (and 

only to “active” IPs at that). Thus, even the average “active” distributor (who 

continues to purchase product from the company to stay “active”) comes out well 

short of the cost of recouping his or her distribution costs unless he or she participates 

in recruiting activities. 

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79. The true average ratio of “customers” to “IPs” (even by the “nonactive” 

definition employed by the company to mask the true small number of customers), is 

no more than 2:1. The majority of the sale activity for each recruited IP occurs during 

and shortly after his or her signup. Defendants know that the vast bulk of the people 

recruited to be distributors lose money.

80. Pyramid schemes suck in participants by appealing to the notion that the 

new participant may get to be as rich as the examples promoted by the scheme’s 

promoters. Although the get rich promises are often accompanied by small print 

disclaimers or words like “earnings potential” appear in the company’s “official” 

written materials, sophisticated promoters, like Defendants here, spread the word in 

other ways that the same, vast riches of people “just like you” are attainable by 

anyone who “works” the system, i.e., recruits other suckers to join the pyramid 

beneath them in their “downlines.” 

81. Although the Defendants know that the overwhelming majority of new 

signups will lose money as a distributor, the overriding message ViSalus promotes is 

that of profitability, earnings, and getting rich by participating in the “business 

opportunity.” These messages appear on the web at ViSalus’ own website, in written 

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promotional materials, and are disseminated through and with the active assistance 

of the Defendants described below. 

82. Virtually every ViSalus promotion, from its own website to YouTube 

videos of its meetings and conventions to its monthly magazine touts the alleged 

monetary “success” of its distributors. These often include or feature depictions of 

the Defendants like Pacetti, Wilson, O’Toole, or Sarnicola. ViSalus does not identify 

these as professionals who have been paid for recruiting others, but portrays them as 

people just like the newest recruit who worked the “lucrative” ViSalus system selling 

weight-loss shakes to a willing public to personal riches. 

83. The allegedly most “successful” company distributors are publicly 

identified as ViSalus “Ambassadors.” Graded as 1-star up to “Global” Ambassadors 

(and recently a new rank called Diamond), these promoters cooperate in success 

stories posted on the ViSalus website or the blog the company runs. The company 

often holds out Promoter Defendants like the Craigs, O’Toole, Pacetti, and the 

Kirklands and others as examples of success. Sarnicola is often shown in promotional 

materials with his wife on glamorous vacations. In these videos, he often claims, 

“even if you fail this by 99% it’s still an extra $24,000.” A selected handful of other 

promoters, often appearing as couples or with their children on stage, are rewarded 

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publicly in presentations throughout the United States, Canada and now the United 

Kingdom. 

84. Videos and downloadable PowerPoint presentations sponsored and 

disseminated by the company on its own and pushed to websites tout the same 

message of “free” luxury cars, “financial freedom” and “exponential” income, as in 

the following: 

85. In addition to the company’s own branded materials, the Defendants 

actively push a web and social media presence. The company and its promoters 

maintain numerous individual accounts on Facebook, YouTube, and Twitter, 

associated with the ViSalus “opportunity.” The Defendants push out their videos, or 

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the videos produced by Promoter Defendants to YouTube and Vimeo, and spread 

content out to a variety of MLM-related websites frequented by people who may be 

attracted to the pyramid scheme. 

86. The Defendants’ Internet presence actively pushes its money-making 

“opportunity” on (undisclosed) paid network marketing “blogs” (in reality paid 

advertisers). These sites typically publish inflated or false or misleading lists of socalled Top Earners of the ViSalus system. They feature bogus “interviews” between 

the Promoter Defendants or “interviews” on paid sites in which the millions of dollars 

that can be “earned” by associating with ViSalus are explicitly or implicitly stated. 

All or virtually all of the Promoter Defendants, in addition to Blair and Sarnicola, 

have cooperated in being “interviewed” about the ViSalus system and have spread 

the word about their incredible money-making success in the system. The purpose of 

all of this activity is twofold: the company can spread its recruiting and moneymaking message apart from its conventions and events, and can maintain a distance 

from sites and feeds that tout the money-making claims on its behalf. 

87. The effect of all of this coordinated Internet activity is to blanket the 

web with visions of being a ViSalus “promoter” and getting rich in the process. A 

search on Vimeo results in nearly 300 ViSalus-related videos, many if not most 

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showing in some fashion or other allegedly how to make lots of money from the 

ViSalus opportunity. A simple Google search for “ViSalus” and “unlimited earning 

potential” yields over 38,000 hits. A search for “ViSalus millionaires” yields 394,000 

hits. A search for ViSalus and “exponential earnings potential” yields over 12,000 

hits. A search on YouTube for ViSalus and “earnings potential” yields over 340 

videos. Thousands of the “interviews” and lists of “Top Earners” with associated 

dollar figures are spread through a variety of anonymously-owned networkmarketing opportunity websites (many concealed by Domains By Proxy owner 

identity). In short, the company and its promoters have succeeded in associating 

throughout the web the promise of getting rich with distributing ViSalus weight-loss 

shakes. 

88. The company produces slick slideshows of its own that spread the 

money-making message. For example, Regional Director, the rank above a Director 

in the ViSalus system, is a status achieved by continuing as an “active” promoter with 

three qualifying “downlines” and a minimum group volume of $12.5K in sales a 

month. ViSalus-produced videos and PowerPoint presentations disseminated by the 

company suggest that the average income of a Regional Director is around $1- $3K 

a month and imply that new IP’s will soon find themselves driving a “shiny black 

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new Bimmer [BMW automobile].” In a downloadable PowerPoint from its website, 

defendants show and widely disseminate illustrations like this: 

89. The company has pushed the so-called “Bimmer Club” as an overt 

inducement to recruit new IPs. ViSalus boasts of the number of BMWs it has given 

away to IPs both directly in a variety of its own marketing materials and through 

third-parties. For example, in 2010 ViSalus lured a well-known promoter named Rick 

Gutman from MonaVie to join ViSalus and build a new promoter “team.” In a 

promotional video put up by the company, Gutman discussed his “decision” to walk 

away from selling $50 vitamin-laced juice for MonaVie to selling $250 soy and 

Splenda shakes for ViSalus. In the video he tells prospective promoters that he 

“knows” his team has gotten 600 BMWs “free.” This statement, and many more like 

it concerning the “Bimmer Club,” are not true. 

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90. In reality, the BMW cars are only conditionally and partially subsidized. 

The IP remains legally responsible for the lease payments. The ViSalus “payments” 

for the BMW continue only for as long as the IP can maintain a certain level of sales 

by himself and his “downline,” thus ensuring continual internal product loading and 

recruiting activity. 

91. The company pushes the slogan, “3 For Free Stars and Cars” on 

numerous web videos of ViSalus events. In a typical video describing the promotion, 

for example, Defendant Sarnicola, shown on stage, encourages the room to repeat his 

slogan and explains how easy it is for an IP to get the product for free and the car too, 

all by supporting other team members in one’s “downline” and urging them to reach 

‘Rising Star’ status by getting additional individuals to join the pyramid. The posted 

video shows a variety of slides including this: 

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92. The ranking system emphasizes the amount of money that an IP can 

make. The company self-publishes its own magazine, sent to IPs as part of the socalled Vi-Net subscription (a $24/month charge), and partners up with “Success” 

magazine, a glossy network marketing vehicle, to show what IPs are being promoted 

and how successful they are. 

93. The company emphasizes how much money moving “up” in rank is 

worth. For example, the next rank up from Regional Director is the National Director. 

The company claims that the average income of a National Director (“ND”) is 

between $3K and $6K a month, and NDs are invited to attend the “ND Experience,” 

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an “inside secret” training for the promoter to learn how to encourage additional 

individuals to join ViSalus. 

94. As is typical with all direct-selling companies, part of the overall scheme 

is to generate excitement for the “opportunity” to make money. In a public filing, 

ViSalus explained how that excitement is spread: 

“We generate excitement around the ViSalus products and brand 

through events held throughout the year. At challenge parties, 

which are held in private homes or public spaces such as hotel 

conference rooms, prospective customers and individual 

promoters gather to learn about the ViSalus opportunity. These 

challenge parties may be attended by as many as a thousand 

people. Regional events, held several times a year, also range in 

size up to several thousand people ... Thousands of people attend 

our national events, which are typically held three times per year 

and also provide training opportunities and recognition on a large 

scale. Our largest national event is Vitality, held once a year. 

Approximately 18,000 individuals registered to attend our July 

2012 Vitality event in Miami, Florida.” 

95. It is well-established in the network marketing business that one hook to 

get new recruits in the door is the check-waving ritual. The ritual is typically 

performed before a large crowd, videotaped and photographed, and images of the 

happy recipient shown to potential recruits in printed materials, on the Internet and 

wherever they can be spread. The defendants all participate in this show. For 

example, Defendant Jackson is shown on stage like this: 

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96. While ViSalus has staged the check ritual countless times it adds a twist 

to the ritual: the checks are not actually paid. The company does not explain that the 

distributors waving the giant check were brought on board through special deals. Nor 

does it explain, except in very small print, that it will pay the check in 10 years and 

only if the recipient continues to be “active” with the company, and if, and only if, it 

chooses to do so. 

97. The dissemination of the check-waving is an integral part of nearly all 

of ViSalus’ printed or Internet materials. The Promoter Defendants are featured in 

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company-sponsored materials, such as a downloadable PowerPoint from the ViSalus 

website. For example, Defendant Pacetti is prominently shown holding a $1 million 

check: 

98. The company’s so-called “founders” Blair, Mallen and Sarnicola also 

distribute professionally-edited videos posted on the web which tout the success of 

the system, the company and themselves. For example, through a series of videos 

posted on the ViSalus.com website, Mallen, the Chief Marketing Officer, 

enthusiastically pitches how easy it is to start earning an income. As he explains, the 

more people an individual can ‘help’ with the serious spread of the obesity epidemic, 

the more money there is to be made. Other videos feature Sarnicola walk prospective 

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enrollees in the IP system through the wealth that Sarnicola has made, implying that 

the new enrollee can too earn $350K per month as Sarnicola has allegedly done. Blair 

has self-published a book and appears in many videos, the object of which is to 

suggest if not explicitly state that his wealth is due to the success that ViSalus weightloss shakes have in the market. 

99. Some of the Promoter Defendants (Pacetti, Wilson, Jackson and 

O’Toole) as well as Sarnicola, appear on the company-created and sponsored reality 

series “The Pyramid Thing.” The series widely disseminates the message of 

achievable success, wealth and earnings allegedly obtained by being a ViSalus IP and 

following the company’s recruiting plan. There have been over 90 “episodes” of the 

show published on the Internet. 

100. There are literally hundreds of “testimonials” disseminated on video 

through the Internet by the scheme’s promoters that say, imply or point to wealth to 

be made by “joining” ViSalus as a promoter. For example, another top ViSalus earner 

(who was later sued by ViSalus after taking her “team” to a competitor network 

company) stated the following facts and figures in an “interview” posted by one of 

the anonymously owned websites that carries ViSalus-related information: 

“How many people did you sponsor? 

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Ted, these are amazing numbers. I have personally sponsored 48 

people. Those 48 people have turned into a team of over 8,000 

active as of July 2012! That’s the kind of duplication you hear 

about and dream about and with ViSalus is a reality. Our success 

is truly about our incredible team. 

Those are impressive numbers—What’s your secret? 

Oh easy, not really a secret, it’s a straightforward formula, 

which provides viral growth when partnered with ViSalus’ 

tools driven system.... 

o We get started TODAY. 

o We get people into Profit Mode TODAY.” 

101. Typically, ViSalus tries to hook potential enrollees to ViSalus with the 

notion that they can lose weight using the ViSalus shakes and obtain a healthy 

lifestyle by drinking the shakes daily. Defendant Sarnicola and his wife Ashley often 

team up to speak at events – Ashley Sarnicola begins with an inspirational speech 

about getting motivated to be healthy and then turns the stage over to her husband 

who encourages the potential enrollees to “help” others to get healthy too. This initial 

pitch is the excuse to then make the real pitch. While the excitement is high, potential 

enrollees are persuaded with the idea that they also can make large amounts of money 

and drive free luxury automobiles funded by the company by selling the ViSalus 

products to friends and family and strangers. 

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102. The coupling of the “business opportunity” with the initial come-on of 

buying a diet shake is constant in every ViSalus promotional material and the events 

and parties it sponsors. ViSalus immediately pushes individuals to become promoters 

with materials that revolve around jingles like “3 for Free” and “ViSalus is going to 

pay someone for the referrals, it might as well be you and not the person that referred 

you.” The structure of the bonus system is, naturally, in the shape of a pyramid: 

103. ViSalus training videos and promotional materials encourage new 

promoters to immediately set up a “Challenge Party” where close friends and family 

are invited and encouraged to join the team. ViSalus provides promoters with an 

aggressive step-by-step scripted approach for the challenge party and suggests 

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marketing tactics such as “if your friends can’t make it to your party, go to their 

house” or “invite them to attend an open challenge party near their location” – there 

is one available every day in a multitude of locations listed on the ViSalus event 

calendar. At the party the promoter is taught to pitch the opportunity along with the 

diet shake. Promoters are also persuaded to attend Regional Success Training events 

and participate in daily or weekly Challenge Overview calls so that they can stay 

motivated and in touch with other successful promoters and receive advice on how 

to get their business profitable as quickly as possible. The substance of the training 

consists of how to recruit others into the pyramid as quickly as possible. For a time, 

the company teamed up with a web-marketing firm to “teach” new recruits how to 

duplicate their recruiting. 

104. The potential distributor is not told that the recruiting opportunity is not 

evenly or fairly applied: the Defendants have not only run an unlawful pyramid 

scheme but managed to run an unlawful and otherwise crooked pyramid scheme. The 

promotional materials give the explicit impression that the compensation system is 

neutral: join, sell, recruit and be paid. For one example among many others, 

distributors like Sarnicola, Craig, Pacetti, the Kirklands and O’Toole are prominently 

quoted by the company in its downloadable PowerPoint, “If we can do it, so can 

you!”: 

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(Exhibit B). 

105. In reality, these Defendants “did it” because the promoters stacked the 

deck and paid them for positions or gave them preferential treatment in the pyramid 

“downline.” The commission and bonus system set out by the Compensation Plan 

and implemented by the Defendants is enormously complicated and opaque to noninsiders. The funneling of commissions and bonuses, together with deductions of 

various fees charged by ViSalus, the monthly ranking of each of the over 500,000 IPs 

and other people labeled as “customers,” and the precise placement of each individual 

within a “downline” or “upline” is handled by a sophisticated database designed and 

maintained by a company named Exigo. The placement of each IP within the system 

determines how much commission that IP will receive. The assignment of new 

recruits to be in a particular IP’s “downline,” or the association of customer sales to 

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a particular IP is not visible to an IP. The entire system can be manually overridden 

by the ViSalus administrators. 

106. For example, Sarnicola has admitted in an interview that the company 

paid a professional marketer named Robert Dean $350K to move to ViSalus. That 

payment was routed through third parties and undisclosed to people being asked to 

enroll in the “business opportunity.” The new professional recruits, like Defendant 

Wilson, O’Toole, Pacetti and Fortner, were given preferential “upline” treatment, 

payments, assigned existing “downlines” and/or assisted in placement ahead of other 

IPs. 

107. The recruitment of professional marketers and their “downlines” 

artificially swelled the numbers of IPs. By contrast, in all of its promotional materials, 

on its website, and in the hotel rallies ViSalus continued to give the impression that 

its “huge” growth, especially from 2010 to 2012, was due to the popularity of its 

weight-loss shakes among the general public and the money its distributors were 

making. 

108. ViSalus manipulated its database and set up certain promoters to their 

advantage. It admitted as much in court filings in this court. In ViSalus v. Bohn, the 

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company sued Lorene Bohn for allegedly breaching her non-competition agreement 

and taking herself and her 264-distributor downline to an alleged network-sales 

competitor, OceanView. In the lawsuit ViSalus admitted: 

ViSalus helped Bohn build her downline network to ensure her 

success in her company by placing distributors and customers in 

her organization even though Bohn did not recruit such 

distributors or customers. (Par. 16). 

109. The FTC in 1979, in a decision involving the Amway Corporation, set 

forth what is commonly known as the “70% rule.” That rule mandates that a seller 

ensure that its distributors do not buy inventory for the purpose of obtaining 

commissions, but actually retail 70% the product they buy to outside customers 

during each purchase cycle. 

110. ViSalus’ Compensation Plan and policies and procedures mention the 

70% rule, but there is no mechanism by which it is enforced. As a result, there are 

widespread purchases made that violate the rule. The auto-ship program is virtually 

mandated, and once in it is virtually impossible to turn off. As a result, IPs are often 

loaded with weight-loss shakes that are impossible to sell on the open market. The 

ViSalus “business opportunity” is now saturated in the United States. The number of 

IP’s enrolling in the “business opportunity” rose from 8,000 in 2010, to 29,000 on 

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June 30, 2011, to 59,000 on December 31, 2011 and to 114,000 on June 30, 2012. 

The company at one point in 2012 had over 140,000 promoters. The numbers 

collapsed soon thereafter, falling to 76,000 on December 31, 2012 and to less than 

half of that, 35,000 as of the end of 2013. The company is now laying off much of its 

corporate staff, and the number of IPs has now dwindled even more. 

111. The company has expanded to Canada and the UK and other European 

nations, and is trying to market itself in other foreign markets without success. The 

US sales of the company have collapsed since the third quarter of 2012. The 

company’s revenues are now a third of those at its peak, and those due almost 

exclusively from sales through and to new recruits and new markets that the company 

is frantically trying to establish. 

112. The Defendants know that the sales of network marketing companies 

like ViSalus in a given market eventually collapse, and new markets must be found 

where the “business opportunity” is not yet tapped out. Virtually all network sales 

companies that survive the initial two or three year (transient) sales rise, move sales 

internationally. RAM, the Goergens, and the ViSalus co-founders Sarnicola, Blair 

and Mallen, attempted an IPO of ViSalus in 2012 which was pulled at the last minute 

due to concerns from the underwriters. During the IPO, these defendants estimated 

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that the North American market will become saturated, but that there was room to 

still grow, hence the viability for an IPO. 

113. Many of the imported distributors from other network companies have 

now left for other networking companies. For example, Defendants Wilson and 

Jackson are now engaged in LifeVantage, another MLM, and have ceased to be IP’s 

for ViSalus. All or virtually all of the IPs who were recruited between 2010 and 2013, 

like Plaintiffs, have lost their money paid to ViSalus for the “business opportunity.” 

And, as detailed elsewhere, shortly after the peak of the recruited sales force peaked, 

various Defendants pulled out over $140 million from the pyramid scheme. The 

company has again gone private, with Defendants Goergens, Sarnicola, Mallen and 

Blair, obtaining ViSalus stock back from Blyth. 

CLASS ACTION ALLEGATIONS 

114. Plaintiffs Kerrigan, Mikovich and Valli bring this suit as a class action 

pursuant to the FED. R. CIV. P. 23(b)(2&3). 

115. Kerrigan, Mikovich and Valli bring this action individually and for a 

class tentatively defined as: 

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All purchasers of the ViSalus "business opportunity" (the 

"Class"). Excluded from the Class are all persons named as a 

defendant (or a spouse of a defendant or a related entity of 

defendant) and any purchaser who has not experienced a 

financial loss as a result of their ViSalus distributor enrollment. 

116. Kerrigan, Mikovich and Valli’s claims are typical of the claims of the 

class in that they paid money to become IPs in the Defendants’ pyramid scheme and 

lost money as IPs. 

117. Kerrigan, Mikovich and Valli will fairly and adequately represent the 

interests of the class because their claims are typical of those of the class and their 

interests are fully aligned with those of the class. Kerrigan, Mikovich and Valli have 

retained attorneys that are experienced and skilled in complex class action litigation, 

including in class action pyramid scheme litigation. 

118. Class action treatment is superior to the alternatives, if any, for the fair 

and efficient adjudication of the controversy alleged herein, because such treatment 

will permit a large number of similarly situated persons to prosecute their common 

claims in a single forum simultaneously, efficiently and without unnecessary 

duplication of evidence, effort and expense that numerous individual actions would 

engender. 

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119. The Defendants have acted on grounds that apply generally to the class, 

i.e., running a pyramid scheme, so that final injunctive relief or corresponding 

declaratory relief is appropriate respecting the class as a whole. (FED. R. CIV. P. 

23(b)(2)). If Kerrigan, Mikovich and Valli prove that the defendants operate a 

pyramid scheme, the Court should enjoin the defendants from operating that pyramid 

scheme in the future. In the alternative, the Court may issue an injunction without a 

class being named. 

120. This case presents questions of law or fact common to class members 

that predominate over any questions affecting only individual members, and a class 

action is superior to other available methods for fairly and efficiently adjudicating the 

controversy. (FED. R. CIV. P. 23(b)(3)). 

121. The questions of law and/or fact common to the class, include but are 

not limited to the following: 

a. Whether the Defendants were operating an unlawful 

pyramid scheme; 

b. Whether the Defendants encouraged or required class 

members pay money to the defendants for the illusory 

“right” to sell ViSalus product; 

c. Whether the Defendants engaged in acts of mail and/or 

wire fraud when operating the unlawful pyramid scheme; 

and 

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d. Whether the Defendants caused injury to the business or 

property of class members. 

122. These and other questions of law and/or fact that are common to the 

class predominate over any questions affecting only individual class members. No 

element of establishing liability requires individualized proof. 

123. Kerrigan, Mikovich and Valli’s claims are typical of the claims of the 

class. 

124. A class action under FED. R. CIV. P. 23(b)(3) is superior because: 

a. No class member has an interest in individually 

controlling the prosecution of his/her/its separate action. 

No class member can be expected to incur the cost of 

attorneys’ fee and cost to recover their $499 ESS or $999 

ESS plus other payments to become an IP and maintain IP 

status. 

b. There is no other pending litigation over these issues. 

c. It is manifestly desirable to concentrate the litigation of the 

class’s claims in Michigan and this district. 

d. The Court will encounter no difficulties in managing this 

case as a class action. 

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COUNTS 

COUNT ONE 

VIOLATION OF 18 U.S.C. §§ 1961(5), 1962(c) AGAINST DEFENDANTS 

VISALUS, RAM ENTITIES, ROBERT GOERGEN, SR., TODD GOERGEN, 

HASHTAG ONE, O’TOOLE, PACETTI, GOODER, PROSPEX, 

SARNICOLA, BLAIR, AND MALLEN 

125. RICO prohibits the following conduct: 

It shall be unlawful for [1] any person [2] employed by or 

associated with [3] any enterprise [4] engaged in, or the activities 

of which affect, interstate or foreign commerce, [5] to conduct or 

participate, directly or indirectly, in the conduct of such 

enterprise’s affairs [6] through a pattern of racketeering activity 

or collection of unlawful debt. 18. U.S.C. § 1961-68 (numbering 

added to text of statute) 

126. Section 1962(c) makes it “unlawful for any person employed by or 

associated with any enterprise engaged in, or the activities of which affect, interstate 

. . . commerce, to conduct or participate, directly or indirectly, in the conduct of such 

enterprise’s affairs through a pattern of racketeering activity.” 

127. RICO requires that a “person” violate its provisions.” 18 U.S.C. § 

1962(c-d). A RICO “person” includes any individual or entity capable of holding a 

legal or beneficial interest in property.” 18 U.S.C. § 1961(3). A RICO person can be 

either an individual or a corporate entity. All Defendants named in this count are 

RICO persons. 

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THE RICO ENTERPRISE 

128. Defendants ViSalus, Robert Goergen, Sr., Todd Goergen, Ropart Asset 

I, Ropart Asset II, Rock Ridge, Ropart Asset Management, HashTag One, Sarnicola, 

Blair, Mallen, O’Toole, Prospex, Gooder, and Pacetti, have acted as an “associationin-fact” for a common purpose, have and maintained relationships between and 

among each other (and nonparties), and the association-in-fact has a longevity 

sufficient to permit those associates to pursue the enterprise’s purpose - - the 

establishment and perpetuation of an unlawful pyramid scheme in which hundreds of 

thousands of people have lost money. The operation and management of the 

association in fact was generally led, at various times, by Defendants Robert 

Goergen, Sr., Todd Goergen, Sarnicola, Blair and Mallen. The individual promoter 

Defendants O’Toole and Pacetti, through wholly-owned Gooder and Prospex, 

generally operated certain field aspects of the enterprise, taking direction from 

ViSalus, Sarnicola, Blair and Mallen. Later, in approximately 2013, O’Toole/Prospex 

and Pacetti/Gooder began to manage the scheme along with Sarnicola, Blair, Mallen 

and the Goergens. RAM provided funds to enable the association to grow and 

management and strategic advice to grow and expand the pyramid scheme. RAM’s 

own operation was directed by Robert Goergen, Sr., and Todd Goergen. Later, 

HashTag One provided financial incentives to certain recruiters. 

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129. The “association-in-fact” began in 2005 and has continued to today. 

Each of the Defendants charged in Count 1 has been a part of the association-in fact 

as follows: ViSalus: 2005-present; Robert Goergen, Sr.: 2005-2013; Todd Goergen: 

2005-present; Sarnicola: 2005-present; Blair: 2005-present; Mallen: 2005-present; 

O’Toole/Prospex: 2009- present; Pacetti/Gooder: 2010-present; RAM: 2005-2012; 

HashTag One: 2014-present. 

A. Roles of ViSalus, Robert Goergen, Sr., Todd Goergen, 

RAM, Blair, Sarnicola, and Mallen In The 

Management of the Enterprise 

130. In 2002, Defendant Blair, a self-proclaimed ex-Los Angeles gang 

member, met Robert Goergen Sr. in an unrelated business. Robert Goergen, Sr. 

invested money in Blair’s unrelated company. Robert Goergen, Sr. at the time and 

for many years thereafter until 2013, was the chief executive and major shareholder 

at Blyth, Inc., a publicly-traded company operating direct-selling subsidiaries such as 

candle and home-décor seller PartyLite, Inc. Three years later in 2005, Blair learned 

of a network marketing company operating in Troy, Michigan, called Free Network. 

Sarnicola and Mallen were involved in the company’s operations, which was selling 

long-distance telephone service through independent promoters. 

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131. Sarnicola, Blair, and Mallen each had years of “network marketing 

experience” prior to ViSalus. Sarnicola said in an interview: 

I was introduced at the age of 18 by a stranger while working at the 

mall making $5.50 per hour. I had NO CLUE what Network Marketing 

was, but I knew I wanted to be “rich one day,” so Networking seemed 

to be a great way to do that.” 

132. Robert Goergen, Sr., and Todd Goergen were sophisticated business 

people. When they first got involved in ViSalus, each knew the difference between a 

pyramid scheme and a direct-selling commissions system. Since the 1970’s, Robert 

Goergen, Sr., operated and owned a 30% stake in Blyth, Inc., (“Blyth”) which had a 

core business of selling candles and other items by home-based parties operated by 

independent sales people. Todd Goergen had been in charge of M&A at Blyth and 

invested in direct selling companies for RAM. 

133. In December, 2005, the Goergen family investment vehicle, Ropart 

Asset I, invested $1.5 million into ViSalus, through its holding company FVA 

Ventures, Inc. Ropart Asset I became an approximately 25% member in the thenLLC (the LLC later re-formed as a corporation in 2012). Blair, Sarnicola and Mallen 

kept approximately 19% each of the remaining ViSalus membership interest. 

Defendant Ropart Asset I was capitalized by Robert Goergen, Sr., Todd Goergen and 

others, primarily Goergen family members. Defendant Ropart Asset Management 

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managed the investments made by Ropart Asset I. Later, Defendant Ropart Asset II, 

managed by Defendant Rock Ridge, made a further investment and loans in and to 

ViSalus. The effect of these investments initially was to capitalize the company and 

enable it to expand. 

134. Upon making the ViSalus investment, Defendant Ropart Asset 

Management (the managing company for Ropart Asset I) and ViSalus’s holding 

company, FVA Ventures, also entered into a broad-ranging management agreement. 

Under that agreement, which was extended for several years between at least 2006 

and 2010, RAM and its executives, Todd Goergen, Jonathan Shapiro, and others, 

provided almost daily advisory and management services to the ViSalus operation. 

Among other people, RAM provided Todd Goergen and other management personnel 

to ViSalus to assist in its operation. ViSalus has identified Todd Goergen’s role both 

during his management of RAM and later as follows: 

Todd A. Goergen joined ViSalus on August 1, 2012 as chief strategy 

officer. He was first appointed to the ViSalus board of directors in 

2005 as a designee of [Ropart Asset Management] pursuant to its 

rights under its investment agreement with ViSalus. Mr. Goergen has 

served as Managing Member of RAM since 2001. RAM makes direct 

investments in small to mid-size companies. In addition, Mr. Goergen 

is a Managing Member of Ropart Investments, LLC, a private 

investment partnership. Between 1999 and 2000, Mr. Goergen was 

the Director of Acquisitions and Corporate Development at Blyth. 

...Mr. Goergen brings deep knowledge of our business, financial 

expertise and broad experience in growing and managing recently 

founded companies to our board. 

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In 2012, Todd Goergen became the Chief Operating Officer of ViSalus at a $500,000 

a year salary. 

135. At the same time, and coinciding with the RAM investment, the ViSalus 

operating agreement, originally formed in November, 2005, was amended to provide 

for RAM (specifically Defendant Ropart Asset Management) or RAM designees to 

have a significant and controlling role in the ViSalus operation. For example, RAM 

could appoint and remove managers of the company and sit on the company’s board. 

Robert Goergen, Sr. and Todd Goergen at various times assumed the designee powers 

given to RAM. Both sat on the board of ViSalus and were privy to every facet of the 

organization, including its financial and field operations. Thus, from the beginning 

of the capitalization of ViSalus, RAM played a key role in creating, supporting and 

growing the pyramid scheme, and the Goergens were intimately knowledgeable 

about the company’s activities through their active RAM activities. 

136. Between 2006 and the present, each of Sarnicola, Blair, Mallen, and 

Todd Goergen, had a co-equal role in the daily decision-making of the enterprise, 

while Robert Goergen, Sr., had a supporting role and provided financial advice. Todd 

Goergen operated through RAM and RAM’s management agreement with ViSalus 

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and his board activities for ViSalus. The remaining Founders were responsible for 

daily operation and development of the promoter field. 

137. Beginning in 2006, and continuing until an eventual recapitalization in 

2014, RAM played a significant role in the management and operation of the 

enterprise. On repeated occasions early on, between 2006 and 2007, RAM, through 

both Ropart Asset I and Ropart Asset II, and under management by Rock Ridge and 

Ropart Asset Management (each led by Todd Goergen), loaned operating capital to 

ViSalus and took additional equity positions in return for operating cash. Ropart 

Asset I invested a total of $1.418 million equity and $688,000 in loans. Ropart Asset 

II invested $600,000 in equity and $2.919 million in loans between 2005 and 2007. 

The loans were backed by promissory notes from ViSalus. 

138. When they and RAM initially invested in ViSalus in 2005, the Goergens 

insisted that the deal not be publicized. Later, the Goergens publicly acknowledged 

their connection to the running and operation of ViSalus. This was in part to give the 

company an air of legitimacy. ViSalus played on its association with Blyth, a 

publicly-traded company in the direct sales business that has never been “tainted” 

with the idea that it is a pyramid scheme, to grow its credibility with new recruits. At 

various times it also played on its association with RAM. 

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139. In the role of experienced businessmen associated with Blyth and RAM, 

both the Goergens were pitched as members of ViSalus’ “Executive Team.” In a 2012 

“interview” in front of a ViSalus screen and on stage at a convention, Robert 

Goergen, Sr., announced that he had a role in ViSalus’ “strategic” decisions since 

2008. In another video on July 24, 2011, “Billionaire” CEO Robert Goergen, Sr., 

spoke at a ViSalus convention about his “beliefs” in the future of the company. 

B. ViSalus Operation 

140. Coinciding with or shortly before the RAM investment in 2005, Free 

Network was renamed ViSalus Sciences and began selling a wholly different line of 

products, vitamins and later skin-care products. Although its website and promotional 

materials played on the “sciences” behind its products, it did not have any kind of 

laboratories, had no connection with any legitimate hospital or university research 

project, and employed no one with credentials to sustain any manner of health-related 

claims for its products. 

141. ViSalus promoted an affiliation with Dr. Michael Seidman, an ear, nose, 

and throat specialist at Henry Ford Hospital, West Bloomfield, Michigan. Once Blair 

joined ViSalus, the three “co-founders” pitched Seidman as a patent-holder, recipient 

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of 20 years of NIH grants, and world-famous vitamin and nutrition researcher behind 

its weight-loss shakes. At all times, however, Seidman had his own practice in an 

unrelated field, ran his own side business vitamin supplements company, and the 

company paid him a license fee. 

142. The company hired Michael Sheffield and listed as a part of its 

management team in the realm of “MLM Consulting.” Sheffield advertised himself 

as an expert witness in the field of compensation plans and listed many notorious 

network marketing companies as clients. The Compensation Plan was created in 2006 

through Sheffield. All of the shareholders of ViSalus were involved in its 

implementation, although Sheffield’s primary contact was Defendant Mallen. The 

company hired Exigo, Inc., a Dallas-area software company to implement the 

Compensation Plan and began actively recruiting promoters to sell the “business 

opportunity” to people across the United States. 

 

143. A significant event occurred in 2008. In August, 2008, Blyth, RAM, 

Sarnicola, Blair, Mallen, Robert Goergen, Sr., and Todd Goergen, entered into a 

Membership Interest Purchase Agreement (“MIPA”) for Blyth to purchase the 

ViSalus equity owned by each defendant over a series of transactions that were to 

begin in 2008 and conclude in 2012. The price of the membership interest that Blyth 

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would pay was pegged to the company’s profitability at the time of each closing, with 

Blyth committing to pay a potentially very high amount per membership interest 

depending on the ViSalus EBIDTA in 2011 and 2012. In 2008, Blyth initially paid a 

relatively small sum for a small interest in ViSalus. The MIPA deal provided a 

significant incentive to the Corporate Defendants to increase ViSalus’ earnings. 

144. On October 21, 2008, Blyth acquired 43.6% equity interest in ViSalus 

for $13.0 million. In April 2011, Blyth completed the second phase of acquisition of 

ViSalus for approximately $2.5 million and an increased ownership to $57.5%. 

145. After the initial 2008 transaction took place, Blair, Sarnicola and Mallen 

continued as the company’s top controlling management. They also remained and 

played the roles of the company’s front men to the public. They appeared at the 

ViSalus meetings and conventions, recorded videos, allowed their presentations to be 

recorded and distributed, oversaw the operation of the Compensation Plan, became 

or continued to be personally involved in the company’s strategic decision-making, 

and otherwise managed the significant affairs of the company. Blair retained the title 

of CEO, and Mallen continued the Chief Marketing Officer. Sarnicola stayed in 

management but in early 2010, he announced that he was leaving ViSalus, and 

assumed the role as the top of the distributor chain of the ostensibly “independent” 

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promoters, which role he continues to hold. Sarnicola continued to manage the affairs 

of the enterprise after his “leaving. 

146. In January 2012, in the third purchase transaction, Blyth paid 

approximately $22.5 million cash (+ 681,324 shares of common stock valued at $14.6 

million) for an increased ownership to 72.7%. In April 2012 Blyth paid an additional 

$6.2 million bringing the third phase total to $43.3 million. In December 2012, Blyth 

purchased an additional 8.2% of ViSalus to increase the ownership to 80.9% for a 

payment of $60.6 million. An additional payment of $25.3 million was made for a 

buyout of an employee equity incentive (“EIP”) plan. Among the recipients of that 

portion of the purchase were defendants Trzcinski/TRZ, Jackson/Red Letters, and 

Reynolds. 

147. Without valuing the exchanged share amounts, or including what each 

of the individual shareholders received in compensation and, in Sarnicola’s case in 

payments for being the “top” field operative in the pyramid scheme (approximately 

$10-11 million) the Blyth MIPA transactions paid at least $30 million each to 

Sarnicola, Blair, and Mallen. It is believed that some or all of that money has been 

transferred or paid directly to the wholly-owned companies of each of these 

Defendants, Power Couple, AB25, OCD, and BAM. Both Goergens also personally 

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benefitted from the MIPA deal. In 2012 Todd Goergen received a $1.7 million payout 

and Robert Goergen, Sr., received $5.1 million payout for their personal share of 

ViSalus. Todd Goergen also received shares with a redemption value of $4.5 million, 

and Robert Goergen, Sr., received shares with a redemption value of $13.2 million in 

ViSalus in 2012. Both of them, and their respective trusts, received significantly more 

through the RAM investment in ViSalus. Defendants Ropart Asset I and Ropart Asset 

II received over $50 million for their investment in ViSalus by 2012. That money 

was paid out in 2012 to the capital owners of Ropart Asset I, and Ropart Asset II, 

Trust, Robert Goergen, Sr., and Todd Goergen. 

C. Growth of the Pyramid Scheme 

148. RAM, the Goergens, Sarnicola, Blair, and Mallen each played a 

significant role in ramping up the pyramid scheme in advance of a hoped-for IPO in 

late 2012. Each of them had a financial incentive in a high market valuation of 

ViSalus due to MIPA and because they each hoped that ViSalus’s apparent success 

would pay off in an IPO. Each of them were aware that the company’s valuation 

depended on sky-high revenues and that these revenues could only come from the 

artificial influx of promoters, by the outright purchase of network marketers, and by 

illegal recruiting activities down the chain fueled by recruiting bonuses. Each of them 

controlled the business operation of ViSalus to accomplish these illegal activities. 

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149. To achieve the high valuation that these five Defendants hoped would 

eventually result in an IPO, and to increase the value of the equity subject to MIPA 

purchase, RAM provided necessary operating capital to the company to enable it to 

offer professional recruiters money and incentives to come work for the expansion. 

150. With the RAM stability, ViSalus began to systematically induce and buy 

professional marketers from other network companies like MonaVie and GeneWize 

to “join” ViSalus. This deliberate influx greatly accelerated the number of IPs that 

recruited others into the system. The flow of new promoters, sometimes singly and 

sometimes in groups, was designed to induce an aura of “success” or “momentum” 

into the ViSalus operation. As in other pyramid schemes, the influx of distributors 

who were able to bring over “downlines” from other companies, which sometimes 

numbered in the thousands of people, would swell the revenue numbers (each new 

distributor would buy certain amount of product and pay the IP fee); would make 

innocent potential buyers of the product, like Plaintiffs, believe that there was 

something “revolutionary” about the ViSalus vitamins and weight-loss shakes and 

vitamins; and would lend credence to the pitch that ViSalus’ marketing department 

would repeat through any channel possible, that tens of thousands of people were 

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flocking to the “business” or “income opportunity” because it paid so well and was 

backing such a popular product. 

151. In fact, as set forth above, the “new” high-ranking distributors, including 

the Independent Promoter Defendants, were paid to work for ViSalus, controlled their 

pre-existing “teams” of people, and allowed themselves to be presented as 

distributors “just like” innocent recruits when in fact they were anything but. Many 

if not all of the Independent Promoter Defendants, and many others, signed contracts 

with ViSalus or with Defendants Power Couple or AB25 or with each other to get 

advance commissions, move or start with certain “volume,” and got other 

concessions. These agreements were orchestrated by Sarnicola, Blair and Mallen, 

with the knowledge and cooperation of the Georgens and RAM. There were dozens 

or hundreds of these agreements, some with individuals and some with large groups 

of recruiters defecting from other MLM companies. Each of them agreed to keep the 

fact of the “purchase” of these professionals from innocent recruits. 

152. During the time that the scheme ramped up, each of the Corporate 

Defendants knew that the Compensation Plan paid more for recruiting than for the 

ostensible third-party customer sales. The plan was designed to do that and was 

continually tweaked by the defendants to promote more recruiting. A Q&A prepared 

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by senior management for a Blyth annual meeting in 2012 acknowledged this exact 

point: 

[Q] What is the incentive for a leader to sign up a new promoter versus 

simply selling product to that person? 

[A] By having more Promoters within your organization “downline” 

you improve your opportunity to increase your commission since you 

therefore have a larger sales force working for you... In addition, 

depending on your enroller’s rank, they may earn more from a Fast 

Start Bonus triggered by the sale of an ESS versus having that same 

person buy a similar amount of product...Finally, any initial product 

orders trigger yet another bonus that is more lucrative to the enroller 

that that which is generated by a personally enrolled customer’s order. 

153. The Corporate Defendants exchanged understandings about a 

“recruiting culture” developed by the Compensation Plan. These defendants met 

regularly through board meetings, strategy sessions, monthly sales reviews, and in 

Blyth board meetings, to discuss the precise numbers of new recruits brought in each 

month, which promoters were recruiting the most, which promoters sold the most 

number of ESS kits, and so on. Special incentive plans were developed in 2011 to be 

secretly given to top promoters, including many or most of the Independent Promoter 

Defendants in this case, that paid a bounty based on the number of new recruits who 

purchased an ESS kit. 

154. At the board level top management, including the Corporate Defendants, 

tracked which of the many weekly and monthly performance bonuses were paid for 

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the act of recruiting versus for retail sales. Corporate Defendants knew that the only 

real bonus paid out for product sales to non-IPs, the “personal customer 

commissions,” amounted to 9%, and the remaining 91% paid, amounting to hundreds 

of millions of dollars (often over 50% of all net sales booked by the company) 

depended on recruiting others. 

155. The Corporate Defendants knew that most of the new IPs were buying 

a $499 ESS kit, ordered a month or two worth of product, and dropped out. They 

acknowledged between themselves that “the majority of Distributors have short 

ViSalus lives.” 

156. The Corporate Defendants knew the company’s retention rates for both 

customers and promoters and shared them among themselves at board and monthly 

meetings. The Defendants thus knew that the average “customer “was “active” for 

less than three months, and the average distributor less than five months, leaving the 

IPs churned out at a rate of over 200% per year. 

157. The Corporate Defendants also knew there were no appreciable numbers 

of legitimate retail customers for the products. Board presentations showed ratios of 

less than one customer per promoter. That ratio never rose above 3:1, and then only 

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briefly and because of special promotions that temporarily made obtaining customer 

orders more valuable to recruiters than recruiting. One reason for that was that the 

company made 11X more profit from a recruit than from a customer. 

158. When ViSalus was not directly doing deals with professional promoters, 

the Corporate Defendants provided the means for Sarnicola to cut special deals with 

the ostensibly independent promoters like Defendants O’Toole, Pacetti and others. 

For example, Defendant Pacetti, through Defendant Gooder, entered into a subcontract with Defendant Power Couple. O’Toole, through Defendant Prospex, 

contracted with ViSalus directly. Many of these, as set out above, entered into 

contracts in 2011, 2012, 2013, and 2014 that provided special bounty payments based 

on the number of ESS kits that were sold. Those agreements were never disclosed to 

the people who were going to get recruited and continue to be withheld from the 

newest rounds of people getting recruited today. 

159. Defendant Pacetti has been given credit by ViSalus for generating much 

of the pyramid scheme in 2011. Prior to joining ViSalus, Pacetti was a top distributor 

with MonaVie, another weight-loss network company selling vitamin-laced juice 

through a network selling system. He joined the enterprise in 2010, recruited by 

Sarnicola. ViSalus promotes him as a “Top Earner” who achieved his “status” in only 

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45 days. He and Gooder were a knowing and willing participant in the promotion of 

the ViSalus pyramid scheme, and later played a role in the management of the 

scheme. 

160. Pacetti’s Lamborghini was featured in an “episode” of “The Pyramid 

Thing.” He often appeared in videos and live before thousands or tens of thousands 

of prospective distributors giving training on how to “get” “free BMW’s” and achieve 

wealth through the ViSalus “business opportunity,” such as, for example, a video 

appearance in 2012 titled “Roadblocks on Your Road To A BMW.” He touts the 

power of the ViSalus system in many videos and live appearances that are taped, for 

example a 2011 appearance explaining the “power of leverage,” Along with a number 

of the other Individual Promoter Defendants, Pacetti is part of a 2011 ViSaluspublished presentation in which he is depicted giving testimonials to the company 

and the opportunity. These statements were also false and/or misleading. 

161. Defendants O’Toole/Prospex have appeared multiple times at ViSalus 

events in Canada and the United States. O’Toole directly reports to Sarnicola, with 

whom he appeared in “The Pyramid Thing.” O’Toole was a knowing and willing 

participant in the promotion of the ViSalus pyramid scheme. As part of the scheme 

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he allowed himself to be quoted as earning over $200K per month by using the 

company’s easy-to-follow formula: 

Jason O'Toole, ViSalus Nr. 2 Top Earner was rewarded with $1 

million bonus in June 2011. Jason went from over $100K in debt 

and never making it in [multi-level-marketing], to earning 

over $200,000 as of April 2012. 

O’Toole has operated a promoter business for ViSalus since at least 2010 through, 

among other means, his website at www.jasonotooleonline.com. In addition to 

offering his services to others as a network marketing “coach” and lead generator 

through Defendant Prospex, O’Toole represents himself to be the top “earner” for 

ViSalus, and appears in ViSalus promotional materials as a “millionaire” or “Crown 

Ambassador.” O’Toole has been featured in numerous videos posted to YouTube by 

ViSalus or others extolling his alleged financial success due to their ViSalus 

distributor relationship. For example, in a 2012 video, O’Toole is seen with a $1 

million check. He spoke in a 2010 video about his “Healthy and Wealthy” success 

for ViSalus. In 2013, O’Toole recorded a “March To Your Bimmer” video as part 

of the enterprise. The statements O’Toole/Prospex have made are false and/or 

misleading. 

162. In later years, as their influence over sizeable downlines under them 

grew, Pacetti/Gooder and O’Toole/Prospex, became more involved with and began 

to co-manage the enterprise. They entered into the special incentive contracts 

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described above. Another secret deal gave promoter Defendant O’Toole a company 

American Express card for his operational expenses. They both participated in 

numerous strategic sessions with Sarnicola, Blair, Mallen and Todd Goergen where 

they executed non-disclosure agreements before being exposed to the company’s 

future strategy. Each led or co-led a series of promoter “development” groups called 

“Leaders In Training” which identified “promising” recruiters and taught them 

recruiting strategies. In 2014, Defendant O’Toole, through Defendant O’Toole Int’l 

Holdings, became a co-owner of defendant HashTag One and gave out equity in that 

company to other promoters as a reward for recruiting people into the scheme. Pacetti 

and O’Toole, as well as the other Independent Promoters Defendants, organized 

systematic meetings and calls to push the message of “recruit, recruit, recruit” to the 

advancing recruiters in the system. Pacetti even taught special “training” events for 

the higher level promoters how to “distort reality” for new recruits who may objected 

to joining. Gooder and Prospex were reimbursed and/or paid for these sessions by the 

Corporate Defendants. 

163. Each of the Independent Promoter Defendants understood that the role 

they were to play was to recruit as many unsuspecting people as possible into the 

ViSalus scheme, to pretend that they were simply people “just like” unwitting 

participants invited to attend the ViSalus presentation, that they were to use scripted 

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materials at the conventions, that they were to appear in ads and to give false 

testimonials. Each of them understood and knew, based on their prior experience, that 

the ViSalus plan promoted recruiting over product sales. Each of them understood 

that they were to use social media to coat the Internet in the message that ViSalus 

was a great income opportunity. Each of them understood that the terms of their 

distributor relationship with ViSalus was materially different than the people they 

were to recruit. 

164. Each of the Independent Promoter Defendants actively participated in 

the promotion of the pyramid scheme and were handsomely rewarded for building 

huge, multi-level “downlines” of recruits. In return, each of these defendants and 

others made false statements intended to be disseminated to unsuspecting recruits 

purporting to be “just like” the new recruit, all with the intent to lure people into the 

system that each defendant knew was highly unlikely to make any money, or could 

only make money by committing illegal recruiting activities, i.e., victimizing 

someone else. 

165. Each of these Independent Promoter Defendants published “interviews” 

in which they claimed to have made incredible amounts of money by “joining” the 

program. With ViSalus’ cooperation and knowledge, support, assistance and the 

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knowledge and cooperation of Sarnicola, Blair and Mallen, they published fawning 

statements of their alleged success through ViSalus, on their own websites, and 

through links to each other’s sites, thus enabling easy search engine optimizedmessages of ViSalus wealth to be found throughout the web. Each of these statements 

and videotaped appearances in which the false messages in furtherance of the 

expansion of the pyramid scheme was a predicate act of racketeering. 

166. Blair, Sarnicola and Mallen continued to personally appear as the front 

men of ViSalus, recording a multitude of videos which purported to explain the 

compensation system for IPs, and advertised the “business opportunity” for 

“entrepreneurs” to “join” ViSalus. The growth campaign was a runaway success in 

2010, accelerated in 2011, and went through the roof in 2012. 

167. The company’s annual sales in 2010 were $32.8 million. Its sales in 

2011 were $230 million. Its sales in 2012 were $623 million, almost 20 times higher 

in two years. At the same time, the company added tens of thousands of new 

distributors, from well under 10,000 to over 114,000 people, increasing each year by 

over 50,000 in 2011 and 65,000 in 2012. 

 

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D. Roles Of Other Promoter Defendants

168. Defendant Fortner joined ViSalus as a promoter in June, 2010. He is 

believed to have ceased the active ViSalus promotion business in approximately 

2013. He maintained a ViSalus promotional website at www.aaronfortner.com. 

Fortner was previously a distributor for GeneWize. 

169. As part of his work to promote the pyramid scheme, Fortner falsely 

claimed to make over $100K a month due to his relationship with ViSalus. He 

claimed in published materials on the Internet that he was paid or promised to be paid 

over $4 million as a result of being a ViSalus distributor. He appeared in videos 

produced by himself promoting ViSalus. One such video shows Fortner appearing 

at the 2012 Miami Vitality Event sponsored by ViSalus. In another, in 2013, Fortner 

at an Atlanta convention claimed that his life was “radically changed” by his being a 

ViSalus distributor. Fortner conducted numerous recruiting seminars or events on 

behalf of the enterprise, touting the income that could be made through a ViSalus 

distributorship. He was featured in 2014 on the ViSalus Vi-Life blog, stating: 

There is nothing more satisfying than sharing professional, financial 

and emotional victories with my team partners. It happens often, and 

I’m hooked on the feeling.” 

That commitment to shared success is what helped Aaron achieve the 

Diamond Ambassador in only a matter of weeks after the rank was 

introduced to the Vi Community. 

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This statement was untrue and/or misleading. 

170. Fortner was a knowing and willing participant in the promotion of the 

ViSalus pyramid scheme. For example, in a 2013 published interview, Fortner 

exhorted that: 

To get to the next Promoter rank, you need to completely trust in 

the promotions that ViSalus offers and then do exactly what the 

plan says. I made a personal commitment to achieve Diamond 

Ambassador, and then I learned how to get there as fast as 

possible. Sometimes the best leader is the best follower–one who 

consistently follows the play. The system is already in place; you 

just need to follow it. 

This statement was untrue and/or misleading. 

171. Defendants Jackson/Red Letters were connected to ViSalus through 

Defendant Fortner. Jackson operates a website promoting ViSalus at and a YouTube 

channel called “Wealth With Rachel,” in which she touted the ViSalus opportunity. 

She posted numerous YouTube videos touting her alleged successful financial 

relationship with ViSalus. She was featured in numerous videos and printed materials 

extolling her alleged financial success due to the ViSalus distributor relationship. She 

was a featured “ViSalus Top Money Earner” in ViSalus promotional materials. She 

conducted numerous recruiting seminars or events. Jackson actively appeared as a 

promoter for ViSalus, and gave testimonials to the ability of the system to generate a 

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high income and appeared in ads and on a ViSalus convention stage with a not-real 

check. She was touted as the youngest 5-star ViSalus Ambassador in 2011. In 2012 

she gave a “testimonial” about the power of ViSalus, again holding a $500,000 check.

The statements she made in these materials were false and misleading. 

172. Jackson/Red Letters was a knowing and willing participant in the 

promotion of the ViSalus pyramid scheme. In an “interview” she gave to tout her 

alleged success with ViSalus Jackson said: 

Our team has expanded greatly, representing every single state 

in the US and every single province in Canada. We now have 

over 6,000 active (*active!* that’s the only number that counts 

guys) promoters on our team and tens of thousands of customers. 

In April 2012, we’re on track to close out over $4,000,000 in 

group revenue. That’s translated to an income for Josh & I [sic] 

that’s topping $100,000 a month [sic] our 14 month in ViSalus 

(emphasis in the original). 

The statements made in the interview were false and/or misleading. 

173. Defendants Craig/M-Power have been featured as a “$4 million” 

ViSalus distributor on the Internet. Craig and his wife are featured as “5-Star ViSalus 

Ambassadors” waving a $1 million check on stage. They operate a website promoting 

ViSalus. The Craigs have conducted numerous recruiting seminars or events 

designed to induce unsuspecting people into the pyramid scheme. Craig has allowed 

himself to be featured in numerous videos and written and mailed brochures, 

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magazines, and DVD’s extolling his alleged financial success. Among others, Craig 

is listed as a Top Earner in an article featuring Defendant Sarnicola, touting the 

distributor success at ViSalus. Craig was a knowing and willing participant in the 

promotion of the ViSalus pyramid scheme. In 2011, in a PR release by ViSalus, Craig 

described himself as, 

In less than two years he has taken a group from zero to over 40,000 

people, grown monthly group revenue to over $9 million and has helped 

over 120 people earn over 6 figures per year. 

The statements attributed to Craig are false and/or misleading. The “downline” he 

has touted as having developed was transferred to him by Sarnicola. 

174. Defendants Petrilli/9248 and Varon/NHCI were long-time professional 

network marketers who began in the late 1990’s with Excel Communications, an 

eventually bankrupt Texas direct sales company selling phone subscriptions. They 

were recruited by Sarnicola in approximately 2008. They agreed to be represented as 

average distributors without disclosing to innocent recruits that they were given 

different financial arrangements. Petrilli and Varon were featured in various ViSalus 

materials, at times pictured holding checks of $250,000 on stage or at conventions 

disseminated by ViSalus. They were knowing and willing participants in the 

promotion of the ViSalus pyramid scheme. They, along with many other promoter 

Defendants (Sarnicola, Craig, Pacetti, O’Toole, and the Kirklands), were keynote 

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speakers in 2011 at the “Regional Success Tour” where the topics included “Learn 

How To Make $100,000+ From Home,” “Watch BMW’s Be Given Away,” and the 

like. They conducted numerous recruiting seminars. 

175. In 2011 Petrilli and Varon gave an “interview” where they said the 

following:

Lori and Frank have earned millions of dollars in Network 

Marketing in the past 12 years and have helped close to 

250,000 people enter into the industry. Since their start on 

February 15th of 2011, in ViSalus they have watched their team 

grow from 14 distributors to almost 10,000 in less than 40 

weeks. They have broken every rank achievement record since 

joining ViSalus including the fastest to Ambassador – 13 days, 

fastest to 4 Star Ambassador – 45 days and fastest to 5 Star 

Ambassadors – 150 days.... Frank says, “ViSalus allows any 

individual, no matter what their background to rise to a new 

pinnacle of achievement.” ‘It’s actually quite amazing.” Lori 

says, “The differences in this team’s backgrounds is startling 

and yet they all share an amazing level of achievement, there are 

thousands working “very” part time and earning a fantastic extra 

income” She continues: “...and hundreds who have won a free 

BMW and are earning up to tens of thousands a month and all 

of this achieved in less than nine months, it’s quite 

extraordinary.’ ” “That level of universal reward is a living 

validation that success can be achieved by all who claim it to be 

theirs” Lori says, “we’ve never seen anything like this before 

simply because there never has been anything like it.... this is 

it!’ ” 

The statements made in the interview were false and/or misleading. 

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176. Defendants Wilson/ABGL were recruited from a competitor network 

marketing company, MonaVie, in 2010. Prior to Wilson’s involvement with 

MonaVie, Wilson was a distributor and pitchwoman for GeneWize, a company 

selling nutritional supplements. ViSalus promoted Wilson as a “Diamond 

Ambassador” on its website and through news releases. Wilson was a knowing and 

willing participant in the promotion of the ViSalus pyramid scheme. Wilson gave an 

“interview” in 2012 in which she touted that she was a “seven figure earner” in just 

17 months. Similar claims about her success were made by her in in 2012. Wilson 

gave an “interview” to be published on YouTube in 2012 in which she touted 

ViSalus. She has published numerous other videos touting the distribution system 

since 2010. Wilson (along with Defendants Pacetti and O’Toole) also appeared on 

“The Pyramid Thing” Internet reality series promoted by ViSalus, Sarnicola, Blair 

and Mallen. Wilson agreed to be portrayed on “The Pyramid Thing” as an average, 

successful distributor. Wilson’s appearances were false and/or misleading. 

177. Defendants Kirkland/Freedom Legacy are identified as a “5-Star 

Ambassador” for ViSalus and was a former top distributor for multi-level network 

company MonaVie. Since 2011 the Kirklands have been featured in videos and 

written promotional materials mailed by ViSalus. They have conducted numerous 

recruiting seminars or events where they promote their alleged financial success as a 

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result of being a ViSalus distributor. Kirkland, along with his wife, filmed and 

published a YouTube video on the HealthPlusWealth channel entitled “Promoter 

Testimonial,” in which they claimed to generate $2 million a month” in sales, their 

“big expense” is a $29 Vi-Net subscription, and stated: “I don’t know of anything 

else where you can have a six-figure income with an overhead of $29/month.” These 

statements were false and/or misleading. Kirkland was a knowing and willing 

participant in the promotion of the ViSalus pyramid scheme. He, along with many 

other promoter Defendants (Sarnicola, Craig, Pacetti, O’Toole, Petrilli and Varon), 

were keynote speakers in 2011 at the “Regional Success Tour” where the topics 

included “Learn How To Make $100,000+ From Home,” “Watch BMW’s Be Given 

Away,” and the like. 

178. Defendant Gary J. Reynolds, also known as Simply “G”, is one of 

ViSalus’ original Ambassadors. Achieving the rank of 5-Star Ambassador, he has 

successfully recruited tens of thousands promoters into ViSalus. Reynolds is a cofounder of the Body by Vi 90-day Challenge and Project 10 Challenge and actively 

participates in ViSalus’ leadership training, the Leadership & Influence Development 

(LID) group. Prior to working in the field, Reynolds worked as the Director of Sales, 

North America for ViSalus. Reynolds continues to promote ViSalus and himself as 

“Network Marketing Expert” through his website simplyg.com. 

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179. Defendant Kevin Merriweather, together with his wife Stephanie, signed 

up with ViSalus in 2010. Merriweather has and continues to participate in numerous 

ViSalus events promoting his ultra-premium lifestyle and status as a 5-Star 

Ambassador. Merriweather is subject of numerous online videos publicizing ViSalus 

and his prosperity. Merriweather also actively participates in ViSalus’ LID group 

and continues to promote ViSalus through his social media webistes and 

http://www.m5.bodybyvi.com/. 

E. RAM, Pacetti, O’Toole and Other Defendants’ Roles In 

Management Of The Enterprise After The Scheme 

Began to Collapse In Late 2012 

180. On September 4, 2014, Blair, Mallen, Sarnicola, Trust, Roberg Goergen, 

Sr., and Todd Goergen, who were ViSalus shareholders, entered into a 

recapitalization agreement with Blyth. Blyth kept 10% of ViSalus stock and returned 

the remaining 90%, minus a fractional share, to these Defendants. 

181. Certain of these Defendants agreed, as part of the September 4, 2014 

recapitalization, to provide ViSalus a $12 million revolving credit facility. The 

commitments were 40% by Robert Goergen, Sr. and 20% each by Blair, Sarnicola, 

and Mallen. This facility has helped ViSalus to continue to operate the scheme. 

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182. At the same time, on September 10, 2014, the defendant members of 

defendant HashTag One, (Ropart Asset Management II, OCD, BAM Ventures, 

AB25, and O’Toole Int’l, on behalf of their respective owners RAM, Blair, Mallen, 

Sarnicola and O’Toole), offered 4% of HashTag One to thirty 5-Star Ambassadors as 

a reward for their recruiting activity for ViSalus. 

183. HashTagOne did give an interest to a number of current promoters, 

including Pacetti, Craig, and others named in this complaint. 

184. Also at the same time, ViSalus itself began to award equity to recruiting 

promoters on the condition that they do not leave and go elsewhere. During this time 

as well, ViSalus began making payments to HashTag One under the Exigo system, 

even though HashTag One is not a promoter. The effect of this series of transaction 

is to funnel money out of ViSalus and into the pockets of the defendants as a result 

of the pyramid scheme, including the owner-defendants involved in the enterprise. 

 

 

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RICO ENTERPRISE

185. A defendant can be both a RICO “person” and part of another RICO 

“enterprise.” Plaintiffs and the class allege the following: 

 Each Defendant is a RICO “person.” 

 Each individual defendant, i.e., each person, combination of 

persons or combination one or more person and an entity as 

defined above, is a RICO “person.” 

 the Defendants named in this Count are an “enterprise,” (e.g., a 

de facto corporation acting as a single legal entity, or, 

alternatively, an association in fact). 

186. There was an identifiable hierarchy and framework within the 

enterprise. It is directed by the Goergens, through RAM, and the three self-identified 

co-founders of ViSalus, to whom the remaining Defendants named in this Count 

report. The hierarchy has operated within the framework of the inter-related operation 

of non-party Blyth, and ViSalus as set forth herein. 

ALL DEFENDANTS ARE “EMPLOYED BY OR ASSOCIATED WITH” 

THE RICO “ENTERPRISE” 

187. Under Section 1962(c), a defendant must be “employed by or associated 

with” the RICO enterprise. Section 1962(c) operates equally to both “insiders” and 

“outsiders” who participate directly or indirectly in the conduct of the enterprise’s 

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affairs through a pattern of racketeering activity. All Defendants named in this Count 

are employed by or associated with the enterprise, as set forth in detail previously. 

188. They conduct and participate in the operation or management of the 

pyramid scheme through a pattern of racketeering activity, by conducting the affairs 

and supporting the acts of the pyramid scheme. The Goergens, RAM, Sarnicola, 

Blair, and Mallen use the assets of ViSalus to direct, in whole or part, the affairs of 

the pyramid scheme, including the operation of the pyramid scheme and the 

distribution of unlawful profits to individuals associated with the scheme. Todd 

Georgen, Sarnicola, Blair and Mallen control and direct the websites, web 

presentations, events, sponsored conventions and speeches of each of them, and the 

dissemination of video of same, and the individual promoter Defendants named in 

this Count. Pacetti/Gooder and O’Toole/Prospex joined this part of the operation in 

approximately 2013 and at least O’Toole operates through HashTag One as part of 

the management of the enterprise. They then have an ascertainable structure separate 

and apart from the pattern of racketeering activity. 

189. The other promoters are also “employed by or associated with” each 

other and the remaining Defendants for purposes of RICO. They conduct and 

participate in the operation or management of the pyramid scheme through a pattern 

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of racketeering activity, by conducting the affairs and supporting the acts of the 

pyramid scheme. They receive payments and benefits for operating at or near the top 

of the “downline” pyramid, engage in wholesale recruiting at the direction of 

Sarnicola, Blair and Mallen, communicate regularly with ViSalus and Sarnicola, 

Blair and Mallen regarding personal appearances at recruiting conventions, operate 

websites that induce innocent people to engage in the illegal pyramid, and cooperate 

with the other Defendants to lend their names to promotional materials, make false 

statements, and in some instances, appear in the Internet reality series. While 

appearing as ostensible “independent” distributors for purposes of convincing 

innocent recruits to join the “business opportunity,” each of them takes direction from 

and is in contact with each other and Sarnicola, Blair and Mallen. 

ALL RICO “PERSONS” ARE DISTINCT 

FROM THE RICO “ENTERPRISE” 

190. RICO requires the involvement of a RICO “enterprise.” 18 U.S.C. § 

1964 (a-d). An “enterprise” “includes any individual, partnership, corporation, 

association, or other legal entity, and any union or group of individuals associated in 

fact although not a legal entity.” 18 U.S.C. § 1961(5). The enterprise itself is not the 

liable entity, rather it is the RICO person who conducts the affairs of the enterprise 

through a pattern of racketeering activity. 

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191. ViSalus and the individual Defendants described in this complaint are 

distinct from each other. The individual Defendants are distinct from the corporate 

defendant. The corporate Defendant is distinct from the RICO enterprise because it 

is functionally separate, performs different roles within the enterprise and uses its 

separate legal incorporation to facilitate racketeering activity. For example, ViSalus 

operates legally in part by selling its products to consumers without operating as a 

pyramid scheme. 

192. In addition, the different functionality of non-party Blyth, by design, 

helped facilitate the pyramid scheme. Blyth operates its own direct selling division, 

marketing candles and other products through PartyLite, a different system of direct 

selling. It had been in existence since 1976, founded by Defendant Goergen, Sr. 

Sarnicola, Blair and Mallen publicly bragged about the Blyth “billion dollar” 

company “standing behind” or “partnering” with the ViSalus sales scheme. Such 

promotion was made with the knowledge of Goergen Sr. and Goergen, each of whom 

held positions in ViSalus or was identified publicly as a member of the ViSalus 

Board. 

193. Blyth was presented as the financially stable, strong and legitimate 

company which would give credence to the outlandish money pitches and offers of 

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BMWs made by the young and “hip” ViSalus. The intent behind the tie-in with Blyth 

was to prop up the legitimacy of the ViSalus scheme. ViSalus and its co-founders 

(Blair, Sarnicola and Mallen), needed the reputation, experience and legitimacy that 

the Goergens brought to their operation. For example, the company released a press 

release that said in part: 

Our partnership with the founders of ViSalus is mutually 

beneficial in that Blyth is entering a third direct selling product 

category marketing consumable wellness goods and ViSalus 

can leverage expertise from Blyth’s direct selling core 

competency, as well as various corporate functions required by 

a growing enterprise. Moreover, longer term, our experience 

entering international markets should be beneficial to ViSalus’ 

expansion. 

THE DEFENDANTS ENGAGED IN ACTIVITIES WHICH 

AFFECT INTERSTATE AND FOREIGN COMMERCE 

194. Each of the Defendants named in this Count engaged in, and/or each 

others’ activities affect, interstate or foreign commerce. The pyramid scheme has 

operated in the United States and Canada and in recent years in the United Kingdom. 

THE DEFENDANTS PARTICIPATED IN THE 

CONDUCT OF THE ENTERPRISE’S AFFAIRS 

195. Each of the Defendants named in this Count conducted, or participated 

directly or indirectly, in the conduct of such enterprise’s affairs as set forth above. 

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THE DEFENDANTS ENGAGED IN A 

“PATTERN OF RACKETEERING ACTIVITY” OVER AN 

EXTENDED PERIOD OF TIME WITH A THREAT OF 

REPETITION INTO THE FUTURE 

196. RICO requires a “pattern of racketeering activity.” A “pattern of 

racketeering activity” is one that is performed by at least two acts of racketeering 

activity, or violations of a “predicate” offense (an act “indictable under any of” 

certain provisions of” 18. U.S.C. § 1961 (1) (D)). See 18 U.S.C. § 1961(5). A “pattern 

of racketeering activity” can be a past conduct that by its nature projects into the 

future with a threat of repetition. It can also be conduct over a closed period through 

a series of related predicates extending over a substantial period. Both of these apply 

here. 

197. The Defendants’ pattern of racketeering activity is well established and 

has continued from 2004 to the present and intends to continue into the future. The 

Defendants have taken every imaginable step to sell the pyramid program to IPs and 

potential IPs. They each also expect to continue to receive income from the pyramid 

scheme. With each new person recruited, the Defendants increase the value of their 

control of the pyramid scheme. The Defendants have stated their intentions to 

continue to grow the pyramid throughout the United States, have expanded to Canada 

and to the UK. They have announced an intention to expand to additional 

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international markets in 2014. They have recently announced a new round of 

“professional marketers” who have “joined” the company, intending to attempt to 

replicate the false boom of 2010-2012, and have flooded the web with “ground floor” 

opportunities in Germany and Austria to perpetuate the scheme there. It is certain that 

their conduct is a continuing threat due to their racketeering activities. 

DEFENDANTS HAVE USED AND CAUSED TO BE USED 

FRAUDULENT MAIL AND WIRE COMMUNICATIONS IN 

INTERSTATE COMMERCE, 

18 U.S.C. § 1341 AND 18 U.S.C. § 1343 

198. Mail and wire fraud are enumerated predicate acts that can constitute 

RICO “racketeering activity” under Section 1961(1)(D). 

199. Mail fraud occurs when an individual devises a plot to defraud and 

subsequently uses the mail in furtherance of it. 18 U.S.C. § 1341. The Defendants 

named in this Count have transmitted, caused to be transmitted or invited others to 

transmit material, by mail or private or commercial carriers, such as UPS, for the 

purpose of executing their scheme or artifice to defraud in violation of RICO. 

Likewise, they have distributed the by UPS (mail) to many individuals literally 

hundreds of thousands or millions of pieces of promotional literature, statements, 

checks, and other mailings all between 2005 and the present. Without limitation, 

each statement sent monthly to an IP distributor is a mailing and an act of mail fraud, 

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and each promotional literature sent by U.S. Mail is a mailing and an act of mail 

fraud. 

200. Wire fraud occurs when an individual devises a plot to defraud and 

subsequently uses wire means in furtherance of it. 18 U.S.C. § 1343. The defendants 

have used the Internet since 2005 to disseminate, publish and spread the pyramid 

scheme throughout the United States and (since 2011) Canada and (since 2013) the 

United Kingdom for the purpose of executing their scheme or artifice to defraud in 

violation of RICO. Thus, the Defendants have transmitted, caused to be transmitted 

and invited others to transmit, by means of wire in interstate commerce, writings, 

signs, signals, pictures, or sounds for the purpose of executing their scheme or artifice 

to defraud in violation of 18 U.S.C. §1343. Without limitation, for example, each 

transmission of a video to be posted on YouTube, Vimeo, Facebook, or through 

Twitter, or establishment of a website to disseminate information about the pyramid 

scheme or transmission of signals, pictures or information to such website is a 

separate act of wire fraud. 

201. Defendants committed at least two predicate acts of mail and/or wire 

fraud relevant to this Count. These, along with factual allegations against other 

Defendants, are described throughout this complaint and are summarized: 

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ViSalus: 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

www.visalus.c

om

ViSalus blog 

2012 Placed “interview” 

emphasizing 

making money 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

http://www.bus

inessforhome.o

rg/2011/12/lori

-petrilli-andfrank-varonvisalus-topearnerinterview/

12/17/11 Placed “interview” 

emphasizing 

making money 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=5qK0tQ

BAdDs 

(HealthPlusWe

althCA’s 

Channel) 

2/18/12 Placed “interview” 

emphasizing 

making money 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

http://www.10

incomes.com/

page/tinahockmuthvisalus-topearnerinterview 

8/17/12 Placed “interview” 

emphasizing 

making money 

from being a 

distributor 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 114 of 228 Pg ID 6709
113 

W Pyramid 

Scheme 

Victims 

http://thepyram

idthing.com

January 30, 

2011- 

current 

(https://web

.archive.org

/web/*/http:

//thepyrami

dthing.com/

) 

 Promotional 

material aimed at 

emphasizing 

financial rewards 

from participating 

in opportunity 

W Pyramid 

Scheme 

Victims 

www.visalus.c

om

www.slideshar

e.com

numerous other 

web sites 

7/3/09- 

current 

 Promotional 

materials including 

money-making 

calculations 

M/W Pyramid 

Scheme 

Victims 

www.visalus.c

om

numerous other 

web sites 

2009- 

current 

 Welcome Booklet, 

describing “Power 

of 3”, emphasizing 

financial rewards 

from participating 

in opportunity 

W Pyramid 

Scheme 

Victims 

www.visalus.c

om

https://web.arc

hive.org/web/2

013051009185

2/http://visalus.

com/rewards/pr

omoterrewards) 

5/21/13 Promotional 

materials showing 

money rewards 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 115 of 228 Pg ID 6710
114 

W Pyramid 

Scheme 

Victims 

www.youtube.

com 

2013- 

current 

 Videos published 

by N. Sarnicola 

and wife about 

opportunity and 

money. 

W Pyramid 

Scheme 

Victims 

Numerous 

websites, 

ViSalus Blog 

Approx. 

2012 

 The Jacksons 

receiving $500,000 

check from 

ViSalus 

W Pyramid 

Scheme 

Victims 

www.visalus.c

om

republished 

numerous 

websites 

Approx. 

2012 

 K. Pacetti 

receiving 

$1,000,000 check 

from ViSalus 

W Pyramid 

Scheme 

Victims 

http://visalus.c

om/pdf/visalus

_rst.pdf 

2010- 

current 

 Promotional 

material aimed at 

emphasizing 

financial rewards 

Promotional 

material 

emphasizing 

financial 

opportunity. 

(“Learn How To 

Makes 

$100,000+/year 

from home”) 

W Pyramid 

Scheme 

Victims 

www.youtube.

com

(Healthy and 

Wealthy 

ViSalus) 

7/3/11 New paid promoter 

discussing “free” 

BMW’s 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 116 of 228 Pg ID 6711
115 

W Pyramid 

Scheme 

Victims 

www.visalus.c

om

republished 

numerous other 

websites 

2014 “Promoter- 3 For 

Free, Stars and 

Cars “brochure 

showing rewards 

for participating in 

opportunity 

W Pyramid 

Scheme 

Victims 

http://www.bu

sinessforhome

.org/2012/04/r

achel-jacksonvisalus-topearnerinterview/

4/21/12 Placed “interview” 

emphasizing 

making money 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

http://www.bu

sinessforhome

.org/2013/09/a

aron-fortnervisalus-hitsdiamondambassador/

9/10/13 Placed “interview” 

emphasizing 

making money 

from being a 

distributor 

M Pyramid 

Scheme 

Victims 

www.youtube.

com

www.slideshar

e.com

republished 

numerous 

websites 

Various, 

beginning 

in 2008 and 

continuing 

 “Exponential 

Income Potential” 

video showing 

financial rewards 

for participating in 

opportunity 

“3 For Free Stars & 

Cars” video 

showing financial 

rewards 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 117 of 228 Pg ID 6712
116 

M/W Pyramid 

Scheme 

Victims 

www.visalus.c

om

(http://visalus.c

om/sites/defaul

t/files/docs/cor

porate/visalus_

overview_pres

entation.pdf) 

available for 

download, 

republished 

numerous 

websites 

10/1/13- 

current 

 Slides showing 

earnings and other 

inducements 

W Pyramid 

Scheme 

Victims 

http://www.bus

inessforhome.o

rg/2012/05/visa

lus-jasonotoole-andjennifercreamer-hit200000-permonth/

5/15/12 Placed “interview” 

emphasizing 

making money 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

http://www.bus

inessforhome.o

rg/2012/04/nic

k-sarnicolavisalus-topearnerinterview/.

4/11/12 Placed “interview” 

emphasizing 

making money 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=qRoZs5

DuNdA#t=459

2005 Predicted 

exponential growth 

for ViSalus 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 118 of 228 Pg ID 6713
117 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=4e2aIwu

Bf58

2013 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=4e2aIwu

Bf58

2/4/14 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=HzkvZsq

RxNg&list=PL

9AE2E471EC2

A8876

2010 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=RgBYG

NtCZhs

5/24/10 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=WBzlItX

bUts

10/18/11 Predicted 

exponential growth 

for ViSalus 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=MyAGo

wf9wuc

3/4/13 Promotional 

material 

emphasizing 

financial 

opportunity. 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 119 of 228 Pg ID 6714
118 

W Pyramid 

Scheme 

Victims 

http://visalusbl

og.com/share/a

aron-fortner/

3/11/14 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=m9lceQ

URJe4

4/28/12 The Jason O’Toole 

receiving 

$1,000,000 check 

from ViSalus 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=BQy_U0

V81io

6/30/10 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=QAx_xD

-

2Ee0&list=PL

R0SMmBOeM

Z8eosPDD1jD

PJFt4ivQRyCk

.

4/4/13 Promotional 

material aimed at 

emphasizing 

financial rewards 

“March to Your 

Bimmer in 30 days 

or Less” 

W Pyramid 

Scheme 

Victims 

http://www.bus

inessforhome.o

rg/2012/07/visa

lus-900-

ambassadors10-million-inmonthlyearnings/.

7/13/12 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

http://www.pr

web.com/releas

es/DirectSellingViSalus/Distrib

11/21/11 

Promotional 

material aimed at 

emphasizing 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 120 of 228 Pg ID 6715
119 

utorChallenge/prw

eb8980946.htm

. 

financial rewards 

from scheme 

W Pyramid 

Scheme 

Victims 

http://www.prn

ewswire.com/n

ewsreleases/visalus

-crownambassadorkyle-pacettideliverspositivegrowth-in2014-

257502701.ht

ml

5/1/14 Predicted 

exponential growth 

for ViSalus 

Promotional 

material 

emphasizing 

financial 

opportunity. 

M/W Pyramid 

Scheme 

Victims 

http://visalus.c

om/sites/defaul

t/files/docs/cor

porate/visalus_

overview_pres

entation.pdf.

2011 Promotional 

material 

emphasizing 

financial 

opportunity. 

M/W Pyramid 

Scheme 

Victims 

http://events.ar

riveby25.com/

wpcontent/upload

s/2011/04/Regi

onal_Success_

Tour_2011a.pd

f.

2011 Promotional 

material aimed at 

emphasizing 

financial rewards 

from scheme 

W Pyramid 

Scheme 

Victims 

http://www.prn

ewswire.com/n

ewsreleases/visalus

-announcestara-wilson-asnew-diamond9/10/13 Promotional 

material aimed at 

emphasizing 

financial rewards 

from scheme 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 121 of 228 Pg ID 6716
120 

ambassador223237351.ht

ml. 

M/W Pyramid 

Scheme 

Victims 

ViSalus 

Compensation 

Plan (Exhibit 

A) 

2008 Compensation Plan

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 122 of 228 Pg ID 6717
121 

N. Sarnicola: 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or Date 

Range of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

http://thepyr

amidthing.co

m

January 30, 

2011- current 

(https://web.ar

chive.org/web/

*/http://thepyr

amidthing.co

m/) 

 Promotional 

material aimed at 

emphasizing 

financial rewards 

from participating 

in opportunity 

(approximately 96 

episodes) 

W Pyramid 

Scheme 

Victims 

www.youtub

e.com 

2013- current Videos published 

by N. Sarnicola 

and wife about 

opportunity and 

money. 

W Pyramid 

Scheme 

Victims 

http://visalus

.com/pdf/vis

alus_rst.pdf 

2010- current Promotional 

material aimed at 

emphasizing 

financial rewards 

Promotional 

material 

emphasizing 

financial 

opportunity. 

(“Learn How To 

Makes 

$100,000+/year 

from home”) 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 123 of 228 Pg ID 6718
122 

W Pyramid 

Scheme 

Victims 

http://www.b

usinessforho

me.org/2012

/04/nicksarnicolavisalus-topearnerinterview/.

4/11/12 Placed “interview” 

emphasizing 

making money 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

https://www.

youtube.com

/watch?v=4e

2aIwuBf58

2013 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www.

youtube.com

/watch?v=4e

2aIwuBf58

2/4/14 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

http://www.b

usinessforho

me.org/2012

/07/visalus900-

ambassadors

-10-millionin-monthlyearnings/.

7/13/12 Promotional 

material 

emphasizing 

financial 

opportunity. 

M/W Pyramid 

Scheme 

Victims 

http://events.

arriveby25.c

om/wpcontent/uplo

ads/2011/04/

Regional_Su

ccess_Tour_

2011a.pdf.

2011 Promotional 

material aimed at 

emphasizing 

financial rewards 

from scheme 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 124 of 228 Pg ID 6719
123 

Robert Goergen, Sr./Living Trust: 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

M/W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus, Ropart 

and Blyth 

Mgmt. 

i.e. Email from 

Rob Goergen to 

Shapiro and 

Todd Goergen, 

with cc to Bob 

Barghaus and 

Bob Goergen 

VS094794-95 

11/10/09 Changes to 

ViSalus Comp Plan

M/W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus and 

Blyth Mgmt. 

i.e. Email from 

Rob Goergen to 

John Purdy and 

Tolmie with cc 

to Bob 

Barghaus, Bob 

Goergen, Tyler 

Schuessler, and 

Todd Goergen 

VS038293-94 

8/16/10 Agendas for 

ViSalus leadership 

training and sales 

meetings; 

BOD meetings 

M/W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus, 

Ropart, and 

Blyth Mgmt. 

i.e. Email from 

Rob Goergen to 

4/23/09 Advance 

agreements and 

recruiting 

professional 

promoters 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 125 of 228 Pg ID 6720
124 

Bob Barghaus, 

Bob Goergen, 

Todd Goergen, 

Ryan Blair, 

Shapiro, 

Mallen, 

Sarnicola, and 

others 

VS037790-91 

M/W Pyramid 

Scheme 

Victims 

Documents and 

communication 

surrounding the 

Joinder 

Agreement 

4/15/12 Joinder Agreement 

M/W Pyramid 

Scheme 

Victims 

Documents and 

communication 

surrounding the 

Recapitalization 

Agreement 

VS009401-97 

9/4/2014 Recapitalization 

Agreement 

between ViSalus, 

Inc., Blyth, and 

Series B Holders 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 126 of 228 Pg ID 6721
125 

Todd Goergen: 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

M/W Pyramid 

Scheme 

Victims 

Emails 

between 

ViSalus Mgmt. 

and Todd 

Goergen 

i.e. Email from 

Ryan Blair to 

Todd Goergen 

VS107771-71 

11/24/10 Agreements 

between ViSalus 

and Nick Sarnicola 

M/W Pyramid 

Scheme 

Victims 

Emails 

between 

ViSalus Mgmt. 

and Todd 

Goergen 

i.e. Email from 

Shapiro to 

Mallen, Blair, 

Todd Goergen, 

and Sarnicola 

VS001706-7 

9/20/11 Funding 

agreements and 

investments from 

Ropart to ViSalus 

M/W Pyramid 

Scheme 

Victims 

Emails 

between 

ViSalus Mgmt. 

and Todd 

Goergen 

i.e. Email from 

Tyler 

Schuessler to 

John Purdy, 

Blair, John 

Tolmie, Mallen 

1/31/11 ViSalus 

operation/ViSalus 

disclosure 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 127 of 228 Pg ID 6722
126 

and Todd 

Goergen 

VS002539 

W/M Pyramid 

Scheme 

Victims 

Emails/Letter 

between 

ViSalus Mgmt. 

to promoters 

i.e. letter from 

Blair to 

promoters 

VS003348 

3/13/2014 Hashtag One units 

being awarded to 

ViSalus promoters 

as bonus 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 128 of 228 Pg ID 6723
127 

R. Blair: 

Mail/ 

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

http://visalu

s.com/pdf/v

isalus_rst.p

df 

2010- 

current 

 Promotional 

material aimed at 

emphasizing 

financial rewards 

Promotional 

material 

emphasizing 

financial 

opportunity. 

(“Learn How To 

Makes 

$100,000+/year 

from home”) 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

XuwEtwotc0,

2011 Predicted 

exponential growth 

for ViSalus 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

LQ964eQH

Fg0

4/11/15 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

1umrCk0JwY

11/7/11 Promotional 

material 

emphasizing 

financial 

opportunity. 

M/W Pyramid 

Scheme 

Victims 

http://events

.arriveby25.

com/wp2011 Promotional 

material aimed at 

emphasizing 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 129 of 228 Pg ID 6724
128 

Mail/ 

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

content/uplo

ads/2011/04

/Regional_S

uccess_Tou

r_2011a.pdf

.

financial rewards 

from scheme 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 130 of 228 Pg ID 6725
129 

B. Mallen: 

Mail/ 

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

http://visalu

s.com/pdf/v

isalus_rst.p

df 

2010- 

current 

 Promotional 

material aimed at 

emphasizing 

financial rewards 

Promotional 

material 

emphasizing 

financial 

opportunity. 

(“Learn How To 

Makes 

$100,000+/year 

from home”) 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

HzkvZsqRx

Ng&list=PL

9AE2E471

EC2A8876

2010 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

RgBYGNtC

Zhs

5/24/10 Promotional 

material 

emphasizing 

financial 

opportunity. 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 131 of 228 Pg ID 6726
130 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

WBzlItXbU

ts

10/18/11 Predicted 

exponential growth 

for ViSalus 

W Pyramid 

Scheme 

Victims 

http://blake

mallen.com/

2011-current Predicted 

exponential growth 

for ViSalus 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

dud7qE2X

DQg 

9/17/11 Predicted 

exponential growth 

for ViSalus 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

MyAGowf9

wuc

3/4/13 Promotional 

material 

emphasizing 

financial 

opportunity. 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 132 of 228 Pg ID 6727
131 

M. Craig: 

Mail/ 

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General 

Content 

M/W Pyramid 

Scheme 

Victims 

www.visalu

s.com

(http://visal

us.com/sites

/default/file

s/docs/corp

orate/visalu

s_overview

_presentatio

n.pdf) 

available 

for 

download, 

republished 

numerous 

websites 

10/1/13- 

current 

 Slides 

showing 

earnings and 

other 

inducements 

W Pyramid 

Scheme 

Victims 

http://visalu

s.com/pdf/v

isalus_rst.p

df 

2010- 

current 

 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards 

Promotional 

material 

emphasizing 

financial 

opportunity. 

(“Learn How 

To Makes 

$100,000+/ye

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 133 of 228 Pg ID 6728
132 

ar from 

home”) 

W Pyramid 

Scheme 

Victims 

http://www.

mikecraigvi

salus.com/

5/14/10-

12/13/13 

(site offline) 

 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

W Pyramid 

Scheme 

Victims 

http://www.

businessfor

home.org/2

012/07/visal

us-900-

ambassador

s-10-

million-inmonthlyearnings/.

7/13/12 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

http://www.

prweb.com/

releases/Dir

ect-SellingViSalus/Dis

tributorChallenge/p

rweb898094

6.htm. 

11/21/11 

Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

M/W Pyramid 

Scheme 

Victims 

http://events

.arriveby25.

com/wpcontent/uplo

ads/2011/04

/Regional_S

uccess_Tou

r_2011a.pdf

.

2011 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 134 of 228 Pg ID 6729
133 

A. Fortner: 

Mail/ 

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General 

Content 

W Pyramid 

Scheme 

Victims 

http://www

.businessfo

rhome.org/

2013/09/aar

on-fortnervisalushitsdiamondambassado

r/

9/10/13 Placed 

“interview” 

emphasizing 

earning money 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

www.aaronf

ortner.com 

(site 

currently 

offline)

6/28/08-

12/16/14, 

particular 

record 

referenced in 

complaint 

published 

9/04/13 

(archive.org 

records) 

 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

participating 

in opportunity 

W Pyramid 

Scheme 

Victims 

http://tvstre

amtimes.co/

stream/aaro

n-fortner

2012 Placed 

“interview” 

emphasizing 

earning money 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

uL6yqfEfl5

0

11/16/13 Placed 

“interview” 

emphasizing 

earning money 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 135 of 228 Pg ID 6730
134 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

http://visalu

sblog.com/s

hare/aaronfortner/

3/11/14 Promotional 

material 

emphasizing 

financial 

opportunity. 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 136 of 228 Pg ID 6731
135 

R. Jackson: 

Mail/ 

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General 

Content 

W Pyramid 

Scheme 

Victims 

http://visalu

s.com/pdf/v

isalus_rst.p

df 

2010- 

current 

 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards 

Promotional 

material 

emphasizing 

financial 

opportunity. 

(“Learn How 

To Makes 

$100,000+/ye

ar from 

home”) 

W Pyramid 

Scheme 

Victims 

Numerous 

websites, 

ViSalus 

Blog 

Approx. 

2012 

 The Jacksons 

receiving 

$500,000 

check from 

ViSalus 

W Pyramid 

Scheme 

Victims 

http://www

.businessfo

rhome.org/

2012/04/rac

heljacksonvisalus-top4/21/12 Placed 

“interview” 

emphasizing 

earning 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 137 of 228 Pg ID 6732
136 

earnerinterview/

W Pyramid 

Scheme 

Victims 

http://boom

ski.bodybyv

i.com/

2012-current Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/user/Wea

lthWithRac

hel

2013 Placed 

“interview” 

emphasizing 

earning money 

from being a 

distributor 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

JWc81CZY

6Ig

2/26/15 Promotional 

material 

emphasizing 

financial 

opportunity 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

UVvrTKSa

E8w&index

=13&list=P

L580D4818

743A4581. 

7/17/12 The Jacksons 

receiving 

$500,000 

check from 

ViSalus 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

bQr4dG3C

Ld8.

10/27/11 Placed 

“interview” 

emphasizing 

earning money 

from being a 

distributor 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 138 of 228 Pg ID 6733
137 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

IQPlDSUD

p7I

8/17/12 The Jacksons 

receiving 

$500,000 

check from 

ViSalus 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 139 of 228 Pg ID 6734
138 

T. Kirkland: 

Mail/ 

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General 

Content 

M/W Pyramid 

Scheme 

Victims 

www.visalu

s.com

(http://visal

us.com/sites

/default/file

s/docs/corp

orate/visalu

s_overview

_presentatio

n.pdf) 

available 

for 

download, 

republished 

numerous 

websites 

10/1/13- 

current 

 Slides 

showing 

earnings and 

other 

inducements 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

5qK0tQBA

dDs 

(HealthPlus

WealthCA’s 

Channel) 

2/18/12 Placed 

“interview” 

emphasizing 

earning 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 140 of 228 Pg ID 6735
139 

W Pyramid 

Scheme 

Victims 

http://timan

dholley.wee

bly.com/

11/9/11- 

current 

(archive.org 

records) 

 Promotional 

material 

showing the 

Kirklands 

holding 

$250,000 

check from 

ViSalus 

M/W Pyramid 

Scheme 

Victims 

http://events

.arriveby25.

com/wpcontent/uplo

ads/2011/04

/Regional_S

uccess_Tou

r_2011a.pdf

.

2011 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

5qK0tQBA

dDs

2/8/12 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 141 of 228 Pg ID 6736
140 

J. O’Toole: 

Mail/ 

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General 

Content 

M/W Pyramid 

Scheme 

Victims 

www.visalu

s.com

(http://visal

us.com/sites

/default/file

s/docs/corp

orate/visalu

s_overview

_presentatio

n.pdf) 

available 

for 

download, 

republished 

numerous 

websites 

10/1/13- 

current 

 Slides 

showing 

earnings and 

other 

inducements 

W Pyramid 

Scheme 

Victims 

http://www.

jasonotoole

online.com 

2010 

(estimated) 

to today 

 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

participating 

in opportunity 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 142 of 228 Pg ID 6737
141 

W Pyramid 

Scheme 

Victims 

http://www.

businessfor

home.org/2

012/05/visal

us-jasonotoole-andjennifercreamer-hit200000-permonth/

5/15/12 Placed 

“interview” 

emphasizing 

earning 

W Pyramid 

Scheme 

Victims 

http://thepyr

amidthing.c

om

January 30, 

2011- 

current 

(https://web.

archive.org/

web/*/http://

thepyramidth

ing.com/) 

 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

participating 

in opportunity 

W Pyramid 

Scheme 

Victims 

http://visalu

s.com/pdf/v

isalus_rst.p

df 

2010- 

current 

 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards 

Promotional 

material 

emphasizing 

financial 

opportunity. 

(“Learn How 

To Makes 

$100,000+/ye

ar from 

home”) 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 143 of 228 Pg ID 6738
142 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

m9lceQURJ

e4

4/28/12 The Jason 

O’Toole 

receiving 

$1,000,000 

check from 

ViSalus 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

BQy_U0V8

1io

6/30/10 Promotional 

material 

emphasizing 

financial 

opportunity. 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

QAx_xD2Ee0&list=

PLR0SMm

BOeMZ8eo

sPDD1jDPJ

Ft4ivQRyC

k.

4/4/13 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards 

“March to 

Your Bimmer 

in 30 days or 

Less” 

M/W Pyramid 

Scheme 

Victims 

http://events

.arriveby25.

com/wpcontent/uplo

ads/2011/04

/Regional_S

uccess_Tou

r_2011a.pdf

.

2011 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 144 of 228 Pg ID 6739
143 

K. Pacetti: 

Mail/ 

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General 

Content 

W Pyramid 

Scheme 

Victims 

www.visalu

s.com

ViSalus 

blog 

2012 Placed 

“interview” 

emphasizing 

earning 

M/W Pyramid 

Scheme 

Victims 

www.visalu

s.com

(http://visal

us.com/sites

/default/file

s/docs/corp

orate/visalu

s_overview

_presentatio

n.pdf) 

available 

for 

download, 

republished 

numerous 

websites 

10/1/13- 

current 

 Slides 

showing 

earnings and 

other 

inducements 

W Pyramid 

Scheme 

Victims 

www.visalu

s.com

republished 

numerous 

websites 

Approx. 

2012 

 K. Pacetti 

receiving 

$1,000,000 

check from 

ViSalus 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 145 of 228 Pg ID 6740
144 

W Pyramid 

Scheme 

Victims 

http://visalu

s.com/pdf/v

isalus_rst.p

df 

2010- 

current 

 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards 

Promotional 

material 

emphasizing 

financial 

opportunity. 

(“Learn How 

To Makes 

$100,000+/ye

ar from 

home”) 

W Pyramid 

Scheme 

Victims 

http://thepyr

amidthing.c

om

January 30, 

2011- 

current 

(https://web.

archive.org/

web/*/http://

thepyramidth

ing.com/) 

 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

participating 

in opportunity 

W Pyramid 

Scheme 

Victims 

http://www.

prnewswire.

com/newsreleases/vis

alus-crownambassador

-kylepacettideliverspositivegrowth-in2014-

5/1/14 Predicted 

exponential 

growth for 

ViSalus 

Promotional 

material 

emphasizing 

financial 

opportunity. 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 146 of 228 Pg ID 6741
145 

257502701.

html

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

41RyxN5yh

MY&list=P

L9uZwAP

MkPObMQ

ExqHa_C9r

T5baC2gdF

v,

11/8/12 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

participating 

in opportunity 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

fMsFiquYJ

Ak.

7/25/11 Promotional 

material 

emphasizing 

financial 

opportunity. 

M/W Pyramid 

Scheme 

Victims 

http://visalu

s.com/sites/

default/files

/docs/corpor

ate/visalus_

overview_p

resentation.

pdf.

2011 Promotional 

material 

emphasizing 

financial 

opportunity. 

M/W Pyramid 

Scheme 

Victims 

http://events

.arriveby25.

com/wpcontent/uplo

ads/2011/04

/Regional_S

uccess_Tou

r_2011a.pdf

.

2011 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 147 of 228 Pg ID 6742
146 

T. Wilson: 

Mail/ 

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General 

Content 

W Pyramid 

Scheme 

Victims 

http://thepyr

amidthing.c

om

January 30, 

2011- 

current 

(https://web.

archive.org/

web/*/http://

thepyramidth

ing.com/) 

 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

participating 

in opportunity 

W Pyramid 

Scheme 

Victims 

http://www.

prnewswire.

com/newsreleases/vis

alusannouncestara-wilsonas-newdiamondambassador

-

223237351.

html. 

9/10/13 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

W Pyramid 

Scheme 

Victims 

http://www.

10incomes.

com/page/ta

ra-wilsonhits-80-000

2012 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 148 of 228 Pg ID 6743
147 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

v37JIC3iA0

5/8/12 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

W Pyramid 

Scheme 

Victims 

https://www

.youtube.co

m/watch?v=

r_BGxmS2

m1c

9/19/11 Promotional 

material aimed 

at 

emphasizing 

financial 

rewards from 

scheme 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 149 of 228 Pg ID 6744
148 

Ropart Asset Management Fund I and II/ 

Ropart Asset Management Company: 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited 

In 

Comp. 

¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails between 

Ropart and 

ViSalus Mgmt. 

i.e. VS094794-95

11/10/09 ViSalus 

Compensation 

Structure and 

Comp Plan 

W Pyramid 

Scheme 

Victims 

Emails between 

Ropart, ViSalus 

and Blyth Mgmt. 

i.e. VS004113-

14; VS024439 

9/13/10; 

9/26/12 

 Membership 

Interest Purchase 

Agreement 

W Pyramid 

Scheme 

Victims 

Emails between 

Ropart and 

ViSalus Mgmt. 

i.e. VS005409-12 

3/10/09 Ropart providing 

management 

services to ViSalus 

W Pyramid 

Scheme 

Victims 

Emails between 

Ropart and 

ViSalus Mgmt. 

i.e. VS001706-7 

9/20/11 Investments from 

Ropart to ViSalus 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

Promissory note 

between founders 

and Ropart Fund 

I 

12/12/08 Loan to FVA 

Ventures/ViSalus 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 150 of 228 Pg ID 6745
149 

i.e. Ropart 

000001-3 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

Promissory note 

between founders 

and Ropart Fund 

I 

i.e. Ropart 

000007-9 

3/23/2009 Loan to FVA 

Ventures/ViSalus 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding the 

Operating 

Agreement of 

Ropart Fund II 

Ropart000085-

115 

1/1/06 Ropart Fund II 

Operating 

Agreement 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding the 

Security 

Agreement 

between 

FVA/ViSalus and 

Ropart Fund II 

2/1/2010 Security 

Agreement for loan

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 151 of 228 Pg ID 6746
150 

Rock Ridge Asset Management: 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails 

between Rock 

Ridge and 

ViSalus Mgmt. 

i.e. Email from 

Tolmie to 

Goergen 

VS 036092 

7/25/13 Expense 

reimbursements 

incurred by Rock 

Ridge on behalf of 

ViSalus 

W Pyramid 

Scheme 

Victims 

Emails 

between 

ViSalus and 

Ropart Mgmt. 

i.e. 

Email from 

Tolmie to 

Shapiro 

VS023794 

3/23/13 Funding through 

Rock Ridge 

W Pyramid 

Scheme 

Victims 

Emails 

between 

ViSalus and 

Ropart Mgmt. 

i.e. Email from 

Shapiro to 

Tolmie 

VS023893 

3/22/13 Ownership 

percentages and 

sharing ViSalus 

profits 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 152 of 228 Pg ID 6747
151 

Power Couple, Inc. (Sarnicola): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

M/W Pyramid 

Scheme 

Victims 

Letters and 

Emails 

between 

ViSalus Mgmt. 

and Nick 

Sarnicola 

i.e. VS106486-

87 

4/1/13 Power Couple 

Agreement with 

ViSalus – Market 

Development 

M/W Pyramid 

Scheme 

Victims 

Emails from 

ViSalus to 

promoters 

i.e. SK061017-

36 

8/22/12 Power Couple 

funding bonus to 

Ambassadors 

M/W Pyramid 

Scheme 

Victims 

Emails and 

Letters from 

Power Couple 

to ViSalus 

promoters 

i.e. VS035880-

81 

11/8/13 Performance B 

onus Agreements 

from Power Couple 

to Promoters 

M/W Pyramid 

Scheme 

Victims 

Emails and 

letters from 

Power Couple 

to ViSalus 

promoters 

i.e. SK011610-

11 

 Commission 

Advance 

Agreements from 

Power Couple to 

Promoters 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 153 of 228 Pg ID 6748
152 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=OKseLl

m9O3g

YouTube 

2013 Power Couple 

Vlog11 – Lifetime 

Challenge Bonus 

Promotion 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 154 of 228 Pg ID 6749
153 

ArriveBy25 (Sarnicola): 

Mail/

Wire 

Directed 

To 

Where 

Published/ 

Subject 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W/M Pyramid 

Scheme 

Victims 

Emails and 

letters between 

ViSalus Mgmt. 

and Ropart 

i.e. VS021132 

4/2/14 Funding HashTag 

One 

W/M Pyramid 

Scheme 

Victims 

Emails, faxes, 

letters from 

ArriveBy25 to 

ViSalus 

promoters 

i.e. VS021221-

22 

6/5/10 Commission 

Advance 

Agreements 

between 

ArriveBy25 to 

Promoters 

W/M Pyramid 

Scheme 

Victims 

Emails and 

letters from 

ArriveBy25 to 

ViSalus 

promoters 

i.e. SK021229-

32 

6/29/11 Performance 

Agreements 

between 

ArriveBy25 to 

Promoters 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 155 of 228 Pg ID 6750
154 

BAM Ventures, Inc. (Mallen): 

Mail/

Wire 

Directed 

To 

Where 

Published/ 

Subject 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails and 

letters between 

ViSalus Mgmt. 

and Ropart 

i.e. VS021132 

4/2/14 Funding HashTag 

One 

W Pyramid 

Scheme 

Victims 

Emails by 

Blake Mallen 

on behalf of 

BAM 

Ventures, Inc. 

i.e. SK019055; 

VS 002757-67 

8/13/09; 

2/12/14 

 Promotional topics;

Recruiting 

promoters; 

Sales team topics; 

W Pyramid 

Scheme 

Victims 

Emails from 

ViSalus Mgmt. 

and Ropart 

i.e. VS001566-

68 

2/26/13 BAM financials 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 156 of 228 Pg ID 6751
155 

OCD Marketing (Blair): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails relating 

to Hashtag 

Agreement 

i.e. VS021132 

4/2/14 Funding HashTag 

One 

W/M Pyramid 

Scheme 

Victims 

Emails and 

letter between 

Blair and 

ViSalus 

promoters 

i.e. VS026529 

 Commission 

advances and 

performance bonus 

W/M Pyramid 

Scheme 

Victims 

Emails and 

letters between 

Blair and Blyth 

Mgmt. 

i.e. VS022294-

323 

3/12/14 Questionnaire from 

Blyth to Blair to 

prepare Blyth 

annual report 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 157 of 228 Pg ID 6752
156 

Prospex Automated Wealth Systems, Inc. (O’Toole): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails from 

O’Toole to 

ViSalus 

promoters 

i.e. SK010529 

5/30/13 ViSalus 

promotional 

materials via Blog 

W Pyramid 

Scheme 

Victims 

Emails 

between 

ViSalus 

promoters 

i.e. SK054718 

7/10/11 Sharing Prospex 

blog link 

W Pyramid 

Scheme 

Victims 

Emails 

between 

O’Toole and 

ViSalus 

promoters 

i.e. SK081178-

80 

5/7/10 O’Toole taking on 

personal students 

to build a business 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 158 of 228 Pg ID 6753
157 

O’Toole International Holdings, Inc. (O’Toole): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Documen

t 

Where 

Cited In 

Comp. ¶ 

General Content 

W/M Pyramid 

Scheme 

Victims 

ViSalus Mgmt. 

and Int. Holdings 

i.e. VS105304 

9/10/14 Consent 

Resolutions in lieu 

of HashTag 

meeting 

W/M Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 159 of 228 Pg ID 6754
158 

Gooder, LLC (Pacetti): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Document

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus and 

Gooder/Pacetti 

i.e. VS93852 

3/11/14 Special Incentive 

Agreement 

between ViSalus 

and Gooder, LLC 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus 

Promoters 

i.e. SK036563 

5/14/14 LID Group 

W/M Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 160 of 228 Pg ID 6755
159 

Red Letters, LLC (Jackson): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Document

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus 

promtoters 

i.e. SK073024 

5/14/14 LID Group 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus and 

Jackson 

i.e. VS125788 

5/2/15 Commission to 

Red Letters 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 161 of 228 Pg ID 6756
160 

M-Power Path, Inc. (Craig): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Document

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails from MPower Path to 

ViSalus 

promoters 

i.e. SK021924-

25 

2/6/12 Promoter business 

advice – gifts and 

taxes 

W Pyramid 

Scheme 

Victims 

Emails from MPower Path to 

ViSalus 

Promoters 

i.e. SK023496 

10/24/12 Mass emails to 

Promoter re 

conference calls, 

events, ViSalus 

trainings 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 162 of 228 Pg ID 6757
161 

A Berry Good Life, Inc. (Wilson): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Documen

t 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus 

promoters 

i.e. SK052050 

5/29/11 Promoting 

Wilson/Berry 

Good Life 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus 

promoters 

i.e. SK057203 

1/3/12 Backdating orders 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus 

Promoters 

i.e. SK073025 

5/14/14 LID Group 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 163 of 228 Pg ID 6758
162 

9248-2587 Quebec, Inc. (Petrilli): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Document

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

YouTube; 

Various websites 

i.e PL0167-178

 Placed “interview” 

emphasizing 

making money 

from being a 

distributor; 

ViSalus events 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus and 

Petrilli 

i.e. VS93852 

3/11/14 Special Incentives 

Agreement 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 164 of 228 Pg ID 6759
163 

Network Dynamics America Corp. (Varon): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

YouTube; 

Various 

websites i.e 

PL0167-178 

12/17/11 Placed “interview” 

emphasizing 

making money 

from being a 

distributor; 

ViSalus events 

W Pyramid 

Scheme 

Victims 

Emails 

between 

promoters 

i.e. SK058772-

80 

5/28/12 ViSalus 

promotions 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 165 of 228 Pg ID 6760
164 

Freedom Legacy, LLC (Kirklands): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails 

between 

promoters 

i.e. SK022447-

53 

2012 Included in 

Contests 

M/W Pyramid 

Scheme 

Victims 

Letter and 

emails from 

ViSalus to 

Kirklands 

i.e. 

HKirkland0000

01 

6/20/13 Confidential 

information and 

non-compete 

W Pyramid 

Scheme 

Victims 

YouTube; 

various 

websites 

i.e. PL0032-35; 

PL417-426 

 Promotional 

videos; 

Placed “interview” 

emphasizing 

making money 

from being a 

distributor; 

ViSalus events 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 166 of 228 Pg ID 6761
165 

Residual Marketing, Inc./Got Heart Global, Inc. (Fortner): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Document

Where 

Cited In 

Comp. ¶ 

General Content 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus 

promoters and 

ViSalus Mgmt. 

i.e. SK000327-

330 

6/16/14 ViSalus strategy 

and planning group 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus Mgmt. 

and Fortner 

i.e. SK073025 

5/14/14 LID Group 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus Mgmt. 

and Fortner 

i.e. SK077172-

74 

11/2/15 Transfers to Got 

Heart Global 

W Pyramid 

Scheme 

Victims 

Emails from 

ViSalus to Got 

Heart Global 

i.e. SK047866 

7/11/16 Payments to Got 

Heart Global from 

ViSalus 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 167 of 228 Pg ID 6762
166 

Wealth Builder International (MacDonald): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Document

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails between 

MacDonald and 

ViSalus 

Promoters 

i.e. SK010260 

12/16/12 Bridge Agreement 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

W Pyramid 

Scheme 

Victims 

Emails between 

promoters 

i.e. SK010055 

8/8/12 ViSalus events 

W Pyramid 

Scheme 

Victims 

YouTube; various 

websites 

i.e. PL0374-395 

 

 Promotional videos 

and screenshots; 

Promotional 

videos; 

Placed “interview” 

emphasizing 

making money 

from being a 

distributor; 

ViSalus events 

 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 168 of 228 Pg ID 6763
167 

JakeTRZ, Inc. (Trzcinski): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails from 

ViSalus to 

JakeTrz 

i.e. SK015272-

79 

1/11/12 Mass emails 

promoting ViSalus 

events 

W Pyramid 

Scheme 

Victims 

Emails from 

ViSalus to 

JakeTrz 

i.e. SK016279-

282 

3/14/12 Mass emails 

promoting ViSalus 

contests 

W Pyramid 

Scheme 

Victims 

Emails from 

ViSalus to 

JakeTRZ 

i.e. SK041529 

5/3/16 Bimmer Club 

Membership 

renewal 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 169 of 228 Pg ID 6764
168 

Mojos Legacy, LLC (Luceros): 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Document

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus and 

Mojos Legacy 

i.e. VS93852 

3/11/14 Special Incentive 

Group Agreement 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

W Pyramid 

Scheme 

Victims 

YouTube; 

various websites 

i.e. PL 0427-463 

2010-2014 

Promotional videos 

and screenshots; 

Promotional 

videos; 

Placed “interview” 

emphasizing 

making money 

from being a 

distributor; 

ViSalus events 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 170 of 228 Pg ID 6765
169 

Gary J. Reynolds/BeachLifestyle Enterprises: 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date Range 

of 

Document 

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

https://www.yo

utube.com/wat

ch?v=svjexbnS

0Vs

YouTube 

Video 

2012 Promotional Video 

W Pyramid 

Scheme 

Victims 

Emails 

between 

ViSalus 

promoters 

i.e. SK000005-

6 

6/17/14 LID Group 

W Pyramid 

Scheme 

Victims 

Emails 

between 

ViSalus 

promoters 

i.e. SK074969-

70 

11/24/14 Enrolling 

promoters 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 171 of 228 Pg ID 6766
170 

Kevin Merriweather: 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Document

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus 

promoters 

i.e. VS013179 

4/14/14 Publishing links to 

“The Pyramid 

Thing” on social 

media 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus 

promoters 

i.e. SK000031-

32 

6/16/14 LID Group 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

W Pyramid 

Scheme 

Victims 

YouTube; 

Various websites

i.e. PL0254-262 

 Promotional videos 

and screenshots; 

Promotional 

videos; 

Placed “interview” 

emphasizing 

making money 

from being a 

distributor; 

ViSalus events 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 172 of 228 Pg ID 6767
171 

HashTag One, LLC: 

Mail/

Wire 

Directed 

To 

Where 

Published 

Date or 

Date 

Range of 

Document

Where 

Cited In 

Comp. ¶ 

General Content 

W Pyramid 

Scheme 

Victims 

Emails between 

ViSalus Mgmt. 

and Ropart 

i.e. VS003951 

3/13/14 Hastag equity as 

incentive to keep 

ViSalus promoters 

M/W Pyramid 

Scheme 

Victims 

Documents and 

Communications 

surrounding 

HashTag Units 

i.e. VS1052634 

9/11/14 Unit recipient 

M/W Pyramid 

Scheme 

Victims 

Emails and 

letters to 

ViSalus 

promoters 

i.e. VS003348 

3/13/14 Awarding Hashtag 

units based on 

ViSalus 

performance 

202. Each of the Defendants named in this Count acted with requisite intent 

to establish, perpetuate and/or carry out the pyramid scheme to defraud. Each 

Defendant named in this Count acted with either specific intent to defraud or with 

such recklessness with respect to the false or misleading information mailed or wired 

in furtherance of the pyramid scheme as to constitute requisite scienter to commit 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 173 of 228 Pg ID 6768
172 

mail and wire fraud. That scienter can be inferred from, among other things at least 

the following: 

 ViSalus has acknowledged that “pyramid schemes” are 

“illegal” and there is a “risk” that a governmental agency 

or court could ... require ViSalus... to alter [its] 

distribution model or cease operations. 

 Defendants Blair, Mallen, Sarnicola, Robert Goergen Sr., 

and Todd Goergen each understood that the operation of 

the business could be deemed illegal. For example, Blair 

in 2011 gave an interview, published on YouTube, in 

which he explained that recruiting-based compensation 

systems are illegal. 

https://www.youtube.com/watch?v=sTlJu2SBTdQ&list=

PL615EC34EC3FC78DF. Each of these individuals made 

all fundamental decisions regarding the scheme’s 

operation and finances and knew that the true facts 

concerning the operation of the scheme fit every criterion 

of an illegal pyramid or were reckless to that possibility. 

Each of these defendants was not a passive investor in 

ViSalus, rather each was an active and knowing 

participant in the operation of the company and the 

commission of the pyramid scheme that formed the core 

of its operation. Each of the individual defendants was 

aware of the Compensation Plan, the company’s essential 

form of doing business, identified himself with the 

company as a management employee, and formulated 

specific decisions relating to the operation of the pyramid 

scheme. 

 Sarnicola, Mallen, Blair, Wilson, Pacetti and O’Toole and 

Sarnicola participated in the reality show “The Pyramid 

Thing” (see www.thatpyramidthing.com ) in part spoofing 

and ridiculing the notion that the ViSalus network sales 

are in fact an illegal pyramid scheme. The title and 

intended thrust of this show demonstrates defendants’ 

acute awareness of ViSalus’ vulnerability to being accused 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 174 of 228 Pg ID 6769
173 

of being an illegal pyramid scheme. Moreover, each of 

these defendants is a veteran of the chain sales industry 

who has bragged in public and/or in interviews with 

his/her familiarity with the idea that pyramid schemes are 

illegal, further demonstrating scienter. 

 Defendants Robert Goergen Sr. and Todd Goergen were 

directly involved in the financing and active management 

of the ViSalus company and individually knew and/or 

recklessly disregarded that that the operation of that entity 

was an illegal pyramid scheme. 

 Fortner, Wilson, O’Toole, Pacetti, Varon, Petrilli, Craig 

and Kirkland were veterans of the network marketing 

industry and were involved in multiple allegations of their 

companies operating as a pyramid scheme. There is a 

network industry awareness that the FTC has closed down 

similar operations for being an illegal pyramid (for 

example BurnLounge, Equinox and others) and an 

awareness on the part of each of these Defendants that 

recruiting others into a particular sales scheme has been 

deemed by the FTC and courts to be an illegal pyramid 

scheme. 

 A number of the Individual Promoter Defendants are also 

in the separate business of “coaching” new recruits on how 

to themselves recruit others. Some of the individual 

promoter Defendants (such as Fortner) are members of an 

alleged industry trade group that issues seminar materials 

and mp3 downloadable files on the difference between a 

“legitimate” network sales company and a pyramid 

scheme. These Defendants therefore have for years had an 

opportunity to understand that their participation in the 

ViSalus scheme is an illegal pyramid and/or recklessly 

disregarded the notion and consciously participated in an 

illegal pyramid scheme. 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 175 of 228 Pg ID 6770
174 

THE DEFENDANTS’ PROMOTION OF THE PYRAMID IS A PER SE

SCHEME TO DEFRAUD UNDER THE MAIL AND 

WIRE FRAUD STATUTES 

203. The Defendants named in this Count have used a false and fraudulent 

scheme, or a scheme to defraud within the meaning of federal law, to harm Plaintiffs 

and the class. In all respects, these Defendants have conducted their affairs 

unlawfully, intentionally, willfully and with intent to defraud, that is, knowingly and 

with such specific intent to deceive as is in violation of the mail and wire fraud 

statutes. They have done so in order to cause financial gain for themselves and for 

others, all to the detriment of Kerrigan, Mikovich and Valli and the class. 

204. First, each Defendant named in this Count has promoted the pyramid 

scheme that, by its very nature, is a per se scheme and artifice to defraud to obtain 

money by false pretenses. As detailed in this complaint, all Defendants named in this 

Count have promoted and successfully expanded the pyramid scheme to victimize 

the named Plaintiffs and the class. Each of the enumerated acts of wire and mail fraud 

in furtherance of the pyramid scheme is an act of racketeering. 

205. Second, as part of the pyramid scheme, the Defendants named in this 

Count made numerous false statements in furtherance of the scheme. Examples of 

the falsity of these statements include: 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 176 of 228 Pg ID 6771
175 

 Creating and disseminating the false impression that 

through the pyramid scheme, IPs like Plaintiffs and the 

class can get “free” BMWs, and/or can get a sizeable 

monthly or “residual” income. 

 Creating and disseminating the false impression that the IP 

program has “enormous” or “unlimited income potential” 

and that the IP Sales Force can make enormous money as 

a result of participating as a promoter for the program. 

 Creating and disseminating the false impression that the IP 

program is a “ground floor” opportunity. The defendants 

have over the years continually spread the suggestion, or 

explicitly stated that the opportunity to become a ViSalus 

promoter is a “ground floor” opportunity even after the 

sales collapse in late 2012. 

 Creating and disseminating the false impression that there 

are many available persons who will want to purchase the 

weight-loss shakes and other merchandise and that the 

purchase of an IP enrollment will enable the purchaser to 

make money from legitimate sales. In reality, the 

defendants know that sales of the weight-loss products are 

made almost exclusively to people who are promoters. 

 Creating and disseminating the false impression that the 

success stories featured by ViSalus are typical or, in some 

cases, even possible when defendants knew that the 

persons portrayed were being paid (unreal) amounts of 

money for committing an illegal activity and/or were 

assisted by the defendants in setting up a sufficiently large 

“downline” that the income generated was in fact large. 

206. Third, as part of the pyramid scheme the Defendants named in this Count 

omitted material facts for the purpose of and with the intention of the fraudulent 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 177 of 228 Pg ID 6772
176 

pyramid scheme by obtaining money from the victims. Examples of these omissions 

include: 

 Failure to reveal that the multilevel marketing program 

and its IP program are illegal pyramid schemes but instead 

propagate the statements and impression that it is a legal 

enterprise. 

 Failure to reveal that under Compensation Plan the 

majority of the IP’s have and likely will lose their money. 

 Failure to disclose that many of the top IP earners paraded 

by the company (at company-sponsored check waving 

spectacles and through other publicly disseminated events, 

videos, documents, and other media) as examples of what 

IPs can hope to attain through following the ViSalus 

Compensation Plan were in fact already well established 

salespeople for other network companies who were 

recruited to bring large, preexisting “downlines” to 

ViSalus by the company and were placed in their 

positions, aided in their attainment of their ViSalus ranks, 

and/or otherwise compensated beyond what is paid to 

ordinary IPs under the Compensation Plan. 

 Failure to reveal that the company knowingly spread 

unreal and misleading accounts and claims of the success 

of its “Director” and “Ambassador” IPs throughout the 

web, all in an effort to attract new IPs but avoid disclosing 

a direct connection between the statements and ViSalus. 

PLAINTIFFS AND THE CLASS HAVE PROXIMATELY SUFFERED 

RICO INJURY TO BUSINESS 

207. A “violation” of RICO is committed if “individuals and entities,” use 

the mails or interstate wire facilities in the execution of “any scheme to defraud.” 18 

U.S.C. §§ 1341, 1343, Sections 1961(1) (B), 1962. Sections 1964 (a), (c) and (d) 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 178 of 228 Pg ID 6773
177 

authorize persons “injured” in their “business or property,” “by reason of” RICO’s 

“violation” to sue for appropriate redress, including equity relief, treble damages and 

attorneys’ fees. 

208. Each of the Plaintiffs (and the class sought to be certified) suffered a loss 

of money composed of the cost they paid to become an IP, together with the website 

fees, administrative fees, and the cost of merchandise purchased as samples and for 

purposes of operating the alleged “business opportunity,” and the amount they 

recovered as commissions or other payments. Kerrigan has lost over $1,000, while 

Mikovich and Valli have each lost in excess of $500. The losses were proximately 

caused by the actions described in this Count, and may be presumed from, among 

other things, the presumption that no one would knowingly join an illegal pyramid 

scheme. 

209. The precise amount lost by the class sought to be certified has not yet 

been determined but is believed to be well over $360 million. It is believed that each 

of the unwitting participants in the pyramid scheme sought to be certified as a class 

has lost $50 to well over $5,000 as a result of purchasing their IP distribution rights. 

Upon information and belief, the precise amounts that each and every participant in 

the pyramid scheme has spent on (1) costs associated with the IP “business 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 179 of 228 Pg ID 6774
178 

opportunity” and (2) has received in commissions or bonuses or other payments from 

ViSalus as a result has been tracked, maintained and accounted for by ViSalus 

through a proprietary software database maintained by Exigo. Thus, the precise loss 

of every class member is easily capable of being ascertained in this litigation, and the 

total business injury capable of being computed for the class. 

210. The predicate acts set forth in this Count each were mailings and/or wire 

transmission of material in furtherance of the promotion of the pyramid scheme. Each 

of these predicate acts was intended to falsely convey the impression to people like 

Plaintiffs that participation as a ViSalus IP was legal; that they had a reasonable 

opportunity to make money; that people just like them were able to make generous 

income; and that the commissions or bonuses they would receive would come from 

the sale of desirable product. The loss suffered by the Plaintiffs and the class was 

foreseeable and a direct result of the establishment, promotion, and expansion of the 

pyramid scheme by the Defendants named in this Count. A pyramid scheme depends 

on continued expansion by continual recruiting of innocent people who do not realize 

that the only way in which they can achieve the benefits represented by the pyramid 

scheme’s promoters is to recruit and victimize other innocent people into joining. In 

reality, like all pyramid schemes, the Compensation Plan and all aspects of the 

promotion of the pyramid scheme were based on recruiting over product sales, and 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 180 of 228 Pg ID 6775
179 

depended on the known existence of money-losers (like the Plaintiffs and the class) 

to pay the small group of “winners” inherent in any pyramid scheme. There is a clear 

causal connection between the promotion and recruiting predicate acts alleged above 

and the injury suffered by the Plaintiffs and the class. 

211. The predicate acts attributed to the Corporate Defendants, RAM, Robert 

Goergen, Sr., Todd Goergen, Sarnicola, Mallen, and Blair, also include the creation 

and dissemination of the Compensation Plan. Under the ViSalus Compensation Plan, 

as set forth above, innocent participants could only make money by recruiting others 

who in turn would recruit others. This was a necessary feature of the Plan, understood 

as such by all of the Defendants named in this Count. It was the goal of each of these 

Defendants that Plaintiffs subscribe, by the payment of money to ViSalus, to the 

Compensation Plan. The payment of bonuses and commissions to promoters who 

were recruiters of participants in the pyramid scheme, like the Plaintiffs and the class, 

was an intended part of the ViSalus Compensation Plan. Each of the named Plaintiffs 

were placed by ViSalus in a pyramid “downline” whose top slot was occupied by 

Sarnicola. Each of the payments made by the Plaintiffs in 2012 and 2013 to purchase 

IP distribution rights and product, as well as payments they made for website usage, 

resulted in payment of a bonus or commission payment that was made, directly or 

indirectly, to RAM, Sarnicola and ViSalus. Defendants Sarnicola, Blair, Mallen, 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 181 of 228 Pg ID 6776
180 

Robert Goergen, Sr., and Todd Goergen, together with ViSalus, directly authored 

and/or approved of the dissemination of the ViSalus Compensation Plan that was 

made a part of the IP distribution rights purchased by the Plaintiffs. The dissemination 

of the ViSalus Compensation Plan, together with predicate acts that purported to 

falsely emphasize the features of the Compensation Plan (for example, without 

revealing that under the plan there would be many more “losers” than “winners”) was 

in furtherance of the scheme. Plaintiffs lost money by participating in the 

Compensation Plan. But for the illegal nature of the bonus and commission payments 

set forth by the Compensation Plan, Plaintiffs and others would not have lost money. 

Plaintiffs’ losses thus were a direct and proximate cause of their intended 

participation in the Compensation Plan authored and/or approved by each of these 

Defendants. 

212. A pyramid scheme depends on recruitment of innocent people. The 

predicate acts attributed to the promoter Defendants are primarily those that concern 

the promotion of the scheme and luring innocent people to join the business 

opportunity. The promoters had an incentive to spread the word. The payment of 

bonuses and commissions to promoters who were recruiters of more participants was 

part of the scheme. In 2012 and 2013 many of the other promoters were named a socalled “Diamond Ambassador” eligible to collect revenue from company-wide sales, 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 182 of 228 Pg ID 6777
181 

including sales made to new recruits like Kerrigan, Mikovich and Valli. It is believed 

that these individuals were also Plaintiffs’ “uplines” (and “downline” from 

Sarnicola), and therefore these individuals also received a commission payment, 

either directly by virtue of being in Plaintiffs’ “upline” or indirectly, as a pool bonus, 

from the money paid by Plaintiffs. But for the illegal nature of the bonus and 

commission payments set forth by the “business opportunity” and the recruiting 

materials, ads or promotions made by these Defendants, directed to Plaintiffs and 

members of the class who were invited to meetings such as those attended by the 

Plaintiffs, Plaintiffs and others would not have lost money. The dissemination of the 

ViSalus “business opportunity,” by these Defendants together with predicate acts that 

purported to spread the impression that joining the ViSalus “business opportunity” or 

that resulted in the recruitment of Plaintiffs, directly or indirectly, proximately caused 

Plaintiffs’ and the class losses. 

213. Certain predicate acts attributed to ViSalus also concern promotion and 

recruitment. Defendant ViSalus as a corporate entity operated the same scheme, with 

the same general participants, to attract the collective payment of several hundred 

million dollars by well over 500,000 participants to become promoters for a 

fraudulent enterprise. ViSalus had the actual intent to attract such participants as 

evidenced by a massive web presence, publication of web-related videos, its own and 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 183 of 228 Pg ID 6778
182 

related websites, and other broadly disseminated offers for people to become 

promoters for ViSalus. ViSalus disseminated quotations from participants indicating 

that they have joined the ViSalus “team” as a result of the invitation. Each of the 

predicate acts alleged above that is directed to promotion and recruitment, is a 

communication made by ViSalus or with its knowledge, intended to further the goal 

of the scheme. But for these false and misleading statements and/or omissions 

Plaintiffs and the class would not have would not have been induced to purchase IP 

distribution rights. Plaintiffs’ losses were a direct and proximate cause of their 

innocent participation in the pyramid scheme. 

214. Participants in the ViSalus scheme were induced to purchase IP 

distribution rights without knowledge that they could only make money by 

victimizing others. Each of the predicate act charged to the Promoter Defendants that 

concerned promotional and recruiting materials authored by, or which knowingly 

featured Defendants was made with the intent that it induce Plaintiffs, or the class of 

unwitting participants like Plaintiffs, into believing that they were participating in a 

legal enterprise and not an illegal pyramid scheme. Each of the predicate act 

promotional and recruiting materials authored by, or which knowingly featured 

Defendants was made with the intent that Plaintiffs join the “downline” organization 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 184 of 228 Pg ID 6779
183 

of each of them (as each were at various times within each other’s organizations as 

well as in Sarnicola’s) and therefore contribute money into the scheme. 

215. In particular, during the conventions or “kick-off events” such as one 

attended by Plaintiff Kerrigan, or the hotel meetings organized by ViSalus at which 

new promoters like Kerrigan were encouraged to invite prospective promoters like 

Mikovich and Valli, new participants were encouraged to look at the promotional 

materials, social media presence of ViSalus and its “Body By Vi” program, or the 

“90 Day Challenge” Program, and were handed promotional brochures that featured 

ads and representations set forth as the predicate acts attributed to these Defendants. 

Each of these conventions, meetings or events, including those attended by Plaintiffs, 

featured videos that depicted promotional material described as the predicate acts in 

this Count. But for the false belief in the legality of the program, or the alleged 

“success” of the program induced by these materials, Plaintiffs would not have been 

induced to contribute money into the scheme. 

 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 185 of 228 Pg ID 6780
184 

COUNT TWO 

ALL DEFENDANTS CONSPIRED TO VIOLATE 18 U.S.C. § 1962(c) 

AND ARE IN VIOLATION OF 18 U.S.C. §§ 1961(5), 1962(d) 

216. Section 1962(d) makes it “unlawful for any person to conspire to violate 

any of the provisions of subsection (a), (b), or (c) of this section.” 

217. Plaintiffs re-state Paragraphs 1-216 as if fully set forth here. 

218. Each of the Defendants named in this Count have participated in a 

conspiracy to violate Count One. 

219. Each of the Defendants named in this Count has participated in the 

pyramid scheme and their participation is necessarily a combination of more than two 

individuals. 

220. The roles of all of the Defendants named in this Count are set forth in 

Count 1. 

2:14-cv-12693-MFL-DRG Doc # 131 Filed 03/08/17 Pg 186 of 228 Pg ID 6781
185 

221. Defendants’ and nonparty entities’ creation, support or maintenance of 

the pyramid scheme is illegal. 

222. The Defendants named in this Count had a meeting of the minds on the 

object or course of action, specifically to create, support and maintain the pyramid 

scheme for their financial benefit as evidenced by each Defendant’s voluntary and 

knowing participation in the pyramid scheme. These agreements and understandings 

are described in Count 1. 

223. Each of the Defendants named in this Count and others have committed 

one or more overt acts to achieve or further the unlawful objects and purposes of the 

pyramid scheme detailed herein. They include the following: 

Robert Goergen, Sr./Trust: (1) silently investing in ViSalus when he knew 

or reasonably should have known that ViSalus was operating as a pyramid 

scheme; (2) assisting ViSalus in operation as a pyramid scheme by (a) being 

actively involved with its expansion after 2008, (b) serving on its Board of 

Directors and making public statements of support and confidence that 

ViSalus was a legitimate seller of weight-loss products, and (c) lending his 

name and his publicly-traded company’s credibility as a legitimate business 

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by causing Blyth to purchase the stock of ViSalus, (d) lending his name and 

credibility as a CEO of a publicly-traded, legitimate business by appearing at 

conventions, and giving “interviews” extolling ViSalus’s future in front of 

potential distributors. Goergen’s actions gave an air of legitimacy to ViSalus 

which was exploited by ViSalus through print and electronic communications. 

Todd Goergen/RAM/HashTag One: (1) silently investing in ViSalus when 

he knew or reasonably should have known that ViSalus was operating as a 

pyramid scheme; (2) assisting ViSalus in operation as a pyramid scheme by 

(a) being actively involved with its expansion after 2008 and causing Blyth to 

provide ViSalus funds and support to give it capital to expand the pyramid 

scheme, (b) serving on its Board of Directors and making public statements 

of support and confidence that ViSalus was a legitimate seller of weight-loss 

products, and (c) lending his name and his publicly-traded company’s 

credibility as a legitimate business by causing Blyth to purchase the stock of 

ViSalus, (d) lending his name and credibility as a CEO of a publicly-traded, 

legitimate business by appearing at conventions, and giving “interviews” 

extolling ViSalus’s future in front of potential distributors. Goergen’s actions 

gave an air of legitimacy to ViSalus which was exploited by ViSalus through 

print and electronic communications. 

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Sarnicola/Power Couple/AB25: (1) serving as one of the co-founders and 

principal creators of the pyramid scheme, (2) creating and/or approving the 

creation of the Compensation Plan which pays primarily for recruiting, (3) 

creating and disseminating countless promotional materials, videos, and 

public appearances designed to further and expand the pyramid scheme in the 

United States and abroad, (4) making contractual arrangements with the 

Goergens and Blyth to provide capital to expand the pyramid scheme and to 

lend the scheme an air of legitimacy, (5) making deals with professional 

network marketers to pay them hidden inducements and/or assign them 

“downlines” as an inducement to further the expansion of the pyramid 

scheme, (6) acting as the “top” distributor and accepting tens of millions of 

dollars as gains from the pyramid scheme. 

Blair/OCD: (1) serving as one of the co-founders and principal creators of 

the pyramid scheme, (2) creating and/or approving the creation of the 

Compensation Plan which pays primarily for recruiting, (3) creating and 

disseminating promotional materials, videos, and public appearances at 

conventions, regional meetings, and television designed to further and expand 

the pyramid scheme in the United States and abroad, (4) making contractual 

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arrangements with the Goergens and Blyth to provide capital to expand the 

pyramid scheme and to lend the scheme an air of legitimacy, and appearing 

as the public face of the enterprise with the Goergens, all to give an air of 

legitimacy to the enterprise, (5) making deals with professional network 

marketers to pay them hidden inducements and/or assign them “downlines” 

as an inducement to further the expansion of the pyramid scheme. 

Mallen/BAM: (1) serving as one of the co-founders and principal creators of 

the pyramid scheme, (2) creating and/or approving the creation of the 

Compensation Plan which pays primarily for recruiting, (3) creating and 

disseminating countless promotional materials, videos, and public 

appearances designed to further and expand the pyramid scheme in the United 

States and abroad, (4) making contractual arrangements with the Goergens 

and Blyth to provide capital to expand the pyramid scheme and to lend the 

scheme an air of legitimacy, (5) making deals with professional network 

marketers to pay them hidden inducements and/or assign them “downlines” 

as an inducement to further the expansion of the pyramid scheme, (6) acting 

as the “top” distributor and accepting tens of millions of dollars as gains from 

the pyramid scheme. 

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O’Toole/Prospex/O’Toole Int’l Holdings: (1) accepting payments and/or 

other inducements, including being given or assigned a “downline” by 

Sarnicola, Blair and Mallen upon becoming a ViSalus distributor; (2) 

performing recruiting acts on behalf of ViSalus and the enterprise when he 

knew or reasonably should have known that he was promoting a pyramid 

scheme, (3) appearing in print and electronic promotions to give legitimacy to 

the idea that anyone could achieve six- and seven- figure success in the 

“business opportunity” when he knew that his own success and financial 

payments were the result of hidden arrangements that would not be made 

available to persons who were being recruited. 

Wilson/ABGL: (1) accepting payments and/or other inducements, including 

being given or assigned a “downline” by Sarnicola, Blair and Mallen upon 

becoming a ViSalus distributor; (2) performing recruiting acts on behalf of 

ViSalus and the enterprise when she knew or reasonably should have known 

that she was promoting a pyramid scheme, (3) appearing in print and 

electronic promotions to give legitimacy to the idea that anyone could achieve 

six- and seven- figure success in the “business opportunity” when she knew 

that his own success and financial payments were the result of hidden 

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arrangements that would not be made available to persons who were being 

recruited. 

Pacetti/Gooder: (1) accepting payments and/or other inducements, including 

being given or assigned a “downline” by Sarnicola, Blair and Mallen upon 

becoming a ViSalus distributor; (2) performing recruiting acts on behalf of 

ViSalus and the enterprise when he knew or reasonably should have known 

that he was promoting a pyramid scheme, (3) appearing in print and electronic 

promotions to give legitimacy to the idea that anyone could achieve six- and 

seven- figure success in the “business opportunity” when he knew that his 

own success and financial payments were the result of hidden arrangements 

that would not be made available to persons who were being recruited. 

Fortner/Residual Marketing/GHGI: (1) accepting payments and/or other 

inducements, including being given or assigned a “downline” by Sarnicola, 

Blair and Mallen upon becoming a ViSalus distributor; (2) performing 

recruiting acts on behalf of ViSalus and the enterprise when he knew or 

reasonably should have known that he was promoting a pyramid scheme, (3) 

appearing in print and electronic promotions to give legitimacy to the idea that 

anyone could achieve six- and seven- figure success in the “business 

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opportunity” when he knew that his own success and financial payments were 

the result of hidden arrangements that would not be made available to persons 

who were being recruited. 

T. Kirkland/Freedom Legacy/H. Kirkland: (1) accepting payments and/or 

other inducements, including being given or assigned a “downline” by 

Sarnicola, Blair and Mallen upon becoming a ViSalus distributor; (2) 

performing recruiting acts on behalf of ViSalus and the enterprise when he/she 

knew or reasonably should have known that he/she were promoting a pyramid 

scheme, (3) appearing in print and electronic promotions to give legitimacy to 

the idea that anyone could achieve six- and seven- figure success in the 

“business opportunity” when he/she knew that their own success and financial 

payments were the result of hidden arrangements that would not be made 

available to persons who were being recruited. 

Petrilli/9248: (1) accepting payments and/or other inducements, including 

being given or assigned a “downline” by Sarnicola, Blair and Mallen upon 

becoming a ViSalus distributor; (2) performing recruiting acts on behalf of 

ViSalus and the enterprise when she knew or reasonably should have known 

that she was promoting a pyramid scheme, (3) appearing in print and 

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electronic promotions to give legitimacy to the idea that anyone could achieve 

six- and seven- figure success in the “business opportunity” when she knew 

that his own success and financial payments were the result of hidden 

arrangements that would not be made available to persons who were being 

recruited. 

Varon/NDAC: (1) accepting payments and/or other inducements, including 

being given or assigned a “downline” by Sarnicola, Blair and Mallen upon 

becoming a ViSalus distributor; (2) performing recruiting acts on behalf of 

ViSalus and the enterprise when he knew or reasonably should have known 

that he was promoting a pyramid scheme, (3) appearing in print and electronic 

promotions to give legitimacy to the idea that anyone could achieve six- and 

seven- figure success in the “business opportunity” when he knew that his 

own success and financial payments were the result of hidden arrangements 

that would not be made available to persons who were being recruited. 

Jackson/Red Letters: (1) accepting payments and/or other inducements, 

including being given or assigned a “downline” by Sarnicola, Blair and 

Mallen upon becoming a ViSalus distributor; (2) performing recruiting acts 

on behalf of ViSalus and the enterprise when he knew or reasonably should 

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have known that he was promoting a pyramid scheme, (3) appearing in print 

and electronic promotions to give legitimacy to the idea that anyone could 

achieve six- and seven- figure success in the “business opportunity” when he 

knew that his own success and financial payments were the result of hidden 

arrangements that would not be made available to persons who were being 

recruited. 

Wealth Builder Management: (1) accepting payments and/or other 

inducements; (2) performing recruiting acts on behalf of ViSalus and the 

enterprise when it knew or reasonably should have known that it was 

promoting a pyramid scheme]. 

Merriweather: (1) accepting payments and/or other inducements, including 

being given or assigned a “downline” by Sarnicola, Blair and Mallen upon 

becoming a ViSalus distributor; (2) performing recruiting acts on behalf of 

ViSalus and the enterprise when he knew or reasonably should have known 

that he was promoting a pyramid scheme, (3) appearing in print and electronic 

promotions to give legitimacy to the idea that anyone could achieve six- and 

seven- figure success in the “business opportunity” when he knew that his 

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own success and financial payments were the result of hidden arrangements 

that would not be made available to persons who were being recruited. 

G. Reynolds/BeachLifestyle: (1) accepting payments and/or other 

inducements, including being given or assigned a “downline” by Sarnicola, 

Blair and Mallen upon becoming a ViSalus distributor; (2) performing 

recruiting acts on behalf of ViSalus and the enterprise when he knew or 

reasonably should have known that he was promoting a pyramid scheme, (3) 

appearing in print and electronic promotions to give legitimacy to the idea that 

anyone could achieve six- and seven- figure success in the “business 

opportunity” when he knew that his own success and financial payments were 

the result of hidden arrangements that would not be made available to persons 

who were being recruited. 

224. The Defendants named in this Count used false and fraudulent means 

and conducted their affairs unlawfully, intentionally, willfully and with the intent to 

defraud, for their own financial gain and benefit and for the financial gain and benefit 

of others, all to the detriment of Kerrigan, Mikovich and Valli and others that 

purchased the IP Program. These acts, intent and losses are set forth in Count 1. 

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225. Each of the Defendants named in this Count has violated Section 

1962(c) and is liable, jointly and severally, for the business injury caused to the 

Plaintiffs and the class by his or her actions. 

COUNT THREE 

VIOLATIONS OF 5 U.S.C. § 78j(b) [SECTION 10B] and 17 C.F.R. § 

240.10b-5 [SECTION 10B-5] 

AGAINST [10b-5(b)] VISALUS, AND [10b-5(a)&((c)] VISALUS, ROBERT 

GOERGEN, SR., TODD GOERGEN, SARNICOLA, BLAIR, MALLEN, 

PACETTI AND O’TOOLE 1

226. Plaintiffs and the class repeat and re-allege every allegation above as if 

set forth herein in full. Plaintiffs’ sworn certificates were attached as Exhibits C, D, 

and E to the SAC. 

227. Plaintiffs allege violations of securities laws in the alternative and 

without prejudice to their position that their RICO claims, set forth in Counts 1 and 

2, are not preempted by the PSLRA. These allegations are not a waiver of their claims 

made in Counts 1 and 2. 

 

1

 In addition to ViSalus, Plaintiffs believe that the “makers” of the 

misrepresentations/omissions also include the Goergens, Sarnicola, Blair, Mallen, 

Pacetti and O’Toole. Plaintiffs reserve the right to seek further amendment to this 

count at the appropriate time. 

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228. All Defendants have admitted and claimed that the sale and offer of sale 

of IP distributorships, such as those purchased by Plaintiffs and the class is in 

connection with and constitutes the sale of a security. 

229. The Defendants named in this Count made material misrepresentations 

and/or omissions in connection with the sale of distributorships to Plaintiffs and the 

class. The Defendants falsely represented that they were conveying a legal business 

opportunity, when, in fact, they and each of them knew or recklessly ignored that 

they were selling and the Plaintiffs were purchasing an interest in an illegal pyramid 

scheme. In the alternative, Defendants’ actions omitted material facts, i.e., that they 

were selling an interest in a pyramid scheme, in connection with the sale of 

distributorships. 

230. There is a necessary connection between the Defendants’ actions, set 

forth in this Complaint, and the Plaintiffs’ purchase of IP distributorships and other 

payments made in connection with that purchase. There was a necessary and 

immediate causal connection between the promotional activities by the Defendants 

described in this complaint and the Plaintiffs’ and the class’s purchase. Indeed, the 

constant goal of all Defendants named in this Count was to expand the scheme and 

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sell as many distributorships as possible to unsuspecting participants in the pyramid. 

The instances of omissions and/or misrepresentations and mail and wire fraud alleged 

throughout this complaint directly supported, and the misstatements therein were the 

only justification for, the price of the enrollment packages and the cost required of 

new recruits to purchase the products. The omissions and/or misrepresentations of 

the value of investing in the ViSalus opportunity is directly reflected in the 

company’s enrollment documents, the only means by which someone may invest in 

the company. 

231. The Plaintiffs necessarily and/or justifiably relied on the 

misrepresentations and/or omissions. Such reliance may be presumed from, among 

other things, the presumption that no one would knowingly join an illegal pyramid 

scheme. In addition, the Plaintiffs reviewed and relied upon the misrepresentations 

and misrepresentations by omission of the Compensation Plan detailed in paragraphs 

8-15 of this Third Amended Complaint. The damages caused by the omissions and/or 

misrepresentations were a necessary consequence of an inherently illegal scheme to 

defraud. 

232. Defendants’ actions were made with such mental state to manipulate, 

deceive or defraud, or with such recklessness, as to constitute scienter. Each of the 

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Defendants named in this Count had a motive to operate and benefit from the 

operation of the pyramid scheme, and opportunity to conceal the fact that they were 

operating a pyramid scheme. Proof of such scienter can be inferred from the 

following: 

 Each of the Defendants benefitted in concrete and substantial way from 

the operation of the pyramid scheme. See averments made in 

connection with Counts 1 (RICO) and 7 (unjust enrichment); 

 Each of the Defendants engaged in plainly illegal behavior. See

averments made in connection with the commission of a pyramid 

scheme, Paragraphs 39-110; Counts 1 and 2; 

 Each of the Defendants had a specific understanding that he was 

engaged in the commission of a pyramid scheme or that it would be 

substantially likely that the operation would be found to be a pyramid 

scheme. See generally Paragraph 186. In addition to the facts alleged in 

Paragraph 186, each of the Defendants named here had personal 

knowledge of the contents of the Prospectus filed in advance of the IPO, 

which specifically warned that elements of the operation, or all of the 

operation, could be found to be a pyramid scheme. 

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233. Plaintiffs and the class suffered damages in that they lost moneys 

through the purchase of their IP distributorships. 

234. Plaintiffs’ and the class damages may be measured either in actual 

damages or may be rescissionary. 

COUNT FOUR 

VIOLATION OF 15 U.S.C. § 77l(a)(2) [Section 12(2)] AGAINST VISALUS2

235. Plaintiffs and the class repeat and re-allege every allegation above as if 

set forth herein in full. 

236. Plaintiffs allege violations of securities laws in the alternative as 

permitted and without prejudice to their position that their RICO claims, set forth in 

Counts 1 and 2, are not preempted by the PSLRA. These allegations are not a waiver 

of their claims made in Counts 1 and 2. 

 

2

 Plaintiffs believe that additional defendants may properly be liable under Section 

12(2) and reserve the right to bring a further amendment at the appropriate time. 

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237. ViSalus was engaged in the offer or sale of a security in connection with 

the sale of IP distributorships. ViSalus omitted a material fact necessary in order to 

make the statement, under the circumstances, not misleading, to wit, that the 

distributorship was a pyramid scheme. See allegations made above relating to the 

operation of a pyramid scheme, which are specifically incorporated herein. 

238. Defendant ViSalus is the seller of the distributorship interest. The 

Compensation Plan incorporated in the distributorship interest is materially false 

and/or misleading, to wit, it omits to disclose that the seller operates a pyramid 

scheme. 

239. ViSalus offered or sold a security within the meaning of Section 12(2). 

240. Plaintiffs and the class suffered damages in that they lost moneys 

through the purchase of their IP distributorships. Causation may be presumed from, 

among other things, the presumption that no one would knowingly join an illegal 

pyramid scheme. 

241. Plaintiffs’ and the class are entitled to actual damages and/or rescission 

of their purchase amounts plus equitable interest. 

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COUNT FIVE 

VISALUS IS IN VIOLATION OF SECTION 3b, M.C.L.A. SEC. 445.903b 

MICHIGAN CONSUMER PROTECTION ACT AGAINST VISALUS 

242. Plaintiffs and the class repeat and re-allege every allegation above as if 

set forth herein in full against Defendant ViSalus. 

243. To the extent that the law provides, Plaintiffs and the class defined by 

the statute at issue in this Count Three bring this claim on their own behalf and on 

behalf of each of the class members. 

244. The Defendant has violated the Michigan Consumer Protection Act, 

MCLS § 445.901 et seq. (“MCPA”) entitling Plaintiffs and the members of the class 

to damages and relief under the MCPA. 

245. Defendant is in violation of the “mini-FTC Act” portion of the MCPA 

at § 445.903b, which requires registration of all business opportunities offered at 

more than $500, in that ViSalus charges $999 for one of the three ViSalus IP 

membership levels that all defendants promote, among other things. 

 

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COUNT SIX 

DEFENDANTS VISALUS, SARNICOLA, BLAIR, AND MALLEN 

ARE IN VIOLATION OF M.C.L.A. SEC. 445.903 

MICHIGAN CONSUMER PROTECTION ACT

246. The Defendants have engaged in “trade or commerce” within the 

meaning of MCLS § 445.902(1)(g), which specifically includes pyramid and chain 

promotions in that definition. 

247. The Michigan Consumer Protection Act prohibits unfair, 

unconscionable, or deceptive methods, acts, or practices in the conduct of trade or 

commerce such as: 

 

 Failing to reveal a material fact, the omission of 

which tends to mislead or deceive the consumer, 

and which fact could not reasonably be known by 

the consumer; 

 Making a representation of fact or statement of fact 

material to the transaction such that a person 

reasonably believes the represented or suggested 

state of affairs to be other than it actually is; and 

 Failing to reveal facts that are material to the 

transaction in light of representations of fact made 

in a positive manner. 

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248. Defendants have violated the MCPA in that they authored or knowingly 

permitted and encouraged the dissemination of the ViSalus Compensation Plan in 

place in 2011 (Exhibit A) to Plaintiffs and others in the class. 

249. Each of the Plaintiffs was shown and given the ViSalus Compensation 

Plan at the meetings they attended described in this Complaint. Each of the Plaintiffs 

reviewed and relied upon the misrepresentations and misrepresentations by omission 

detailed in paragraphs 8-15 of this Third Amended Complaint. 

250. The Compensation Plan omits to reveal that the benefits and 

commissions set forth in the Compensation Plan operate as a pyramid scheme. 

251. Had Plaintiffs been made aware that by becoming IPs of ViSalus they 

were agreeing to participate in the Compensation Plan of a pyramid scheme they 

would not have done so. In the alternative, their reliance may be presumed from, 

among other things, the presumption that no one would knowingly join an illegal 

pyramid scheme. 

252. As a result, Plaintiffs and the class have suffered injury which is 

compensable under the MCPA together with attorneys’ fees. 

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COUNT SEVEN 

ALL DEFENDANTS EXCEPT VISALUS HAVE 

BEEN UNJUSTLY ENRICHED

253. Plaintiffs and the class repeat and re-allege every allegation above as if 

set forth herein in full. 

254. Plaintiffs bring this claim on their own behalf and on behalf of each of 

the class members. 

255. Unjust enrichment occurs when a Plaintiff confers a benefit to the 

defendant, the Defendant accepts and retains the benefit, and Defendant does not pay 

the Plaintiff the value of the benefit. 

256. The Defendants named in this Count have been unjustly enriched at the 

expense of, and to the detriment of, Plaintiffs and the members of the class in that the 

financial benefits obtained by them came as a result of their promotion of the 

unlawful pyramid scheme. The financial benefits they obtained came from the 

Plaintiffs and the members of the class, who unwittingly participated in the pyramid 

scheme and naturally and inevitably lost money in the process. The unjustly-obtained 

benefits are comprised of the following three categories of gains. 

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257. First, certain Defendants named in this Count made contractual 

agreements with each other and with third-party Blyth that depended on the success 

of the pyramid scheme. The 2008 deal between Blyth on one hand and the Goergens, 

the Ropart Asset I and Ropart Asset II investment companies controlled by the 

Goergens, and Sarnicola, Mallen and Blair, on the other hand, provided a set formula 

for the Blyth buyout of the shares held by the Goergens and Sarnicola, Mallen and 

Blair which was directly dependent on high revenues booked by ViSalus. These 

Defendants, as set forth in Counts 1 and 2, took active steps to expand the scope of 

the pyramid scheme, and increased the number of participants—and therefore the 

number of inevitable “losers” in order to maximize the amounts each would get—

paid for by the shareholders of Blyth-- while and as a result of the ongoing, expanded 

pyramid scheme. These Defendants were able to obtain payouts under the Blyth 

contracts on the backs of the Plaintiffs (since 2013 as to the named Plaintiffs, and 

since 2008 for Plaintiffs in the class). Beginning in October, 2008, and continuing 

through transactions in April, 2011, January, 2012, December, 2012, and January, 

2013, Defendants ViSalus, Ropart Asset, Ropart Asset II, Robert Goergen Sr., Todd 

Goergen, Blair, Sarnicola and Mallen individually extracted some of the proceeds of 

the pyramid scheme to their benefit. These Defendants received at least the following 

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payments which would not have been made but for the success of the unlawful 

pyramid scheme: 

 October, 2008- Ropart Asset and Ropart Asset II: $3 

million; Blair: $2.5 million; Sarnicola: $2.5 million; 

Mallen: $2.5 million; ViSalus: $3 million. 

 April, 2011- Ropart Asset and Ropart Asset II: $1 million; 

Blair: $300,000; Sarnicola: $300,000; Mallen: $300,000; 

“others”: $600,000 

 January, 2012- Ropart Asset and Ropart Asset II: $11 

million; Blair: $3.333 million and additional shares of 

ViSalus; Sarnicola: $3.333 million and additional shares 

of ViSalus; Mallen: $3.333 million and additional shares 

of ViSalus; “others”: $7.6 million. 

 December, 2012- Goergen Sr: $5.1 million; Goergen: $1.7 

million; Blair: $13.3 million; Sarnicola: $13.3 million; 

Mallen: $13.3 million; “others”: $13.6 million. In 

addition, Blair, Sarnicola and Mallen received $25.3 

million in a buyout of an equity incentive plan, and they 

together with the Goergens received an option for 

purchase of their remaining shares of ViSalus by 2017 at 

$147 million. Defendants Trzcinski/TRZ, Jackson/Red 

Letters, and Reynolds were also among the recipients of 

the equity incentive plan buyout. 

 Thus, the known total amounts received by these 

defendants are as follows: Ropart Asset I and Ropart Asset 

II: $50+ million; Goergen Sr: $5.1 million; Todd Goergen: 

$1.7 million; Blair: $19.5 million plus stock and portion of 

EIP; Sarnicola: $19.5 million plus stock and portion of 

EIP; Mallen: $19.5 million plus stock and portion of EIP; 

“others”: $20.8 million. 

 In addition, in April and July, 2013, as the sales in ViSalus 

evaporated, the Defendants declared dividends of $33 

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million and paid $6.1 million to “noncontrolling 

shareholders,” believed to be the Goergens and Blair, 

Sarnicola and Mallen. 

258. Second, the individual promoter Defendants, together with their 

controlled entities named as Defendants and Sarnicola in his role as the “top” 

distributor controlling 75% of the “downline” (and Defendants Pacetti/Gooder 

controlling 10% in 2012, Defendants Fortner/Residual Marketing controlling 10% in 

2012, Defendants Kirklands/Freedom Legacy controlling 10%, and Defendants 

O’Toole/Prospex controlling 10% in 2012, together with the unknown shares of the 

remaining promoters named in this Count) have each been enriched in various 

amounts as a result of the performance of their various illegal duties. Regardless of 

in what year, each of the Promoter Defendants were “upline” from the Plaintiffs and 

the class, and thus, as a matter of the Compensation Plan implemented by ViSalus, 

obtained bonuses and commissions as a “Diamond” or other Ambassador distributor, 

which were necessarily funded by a portion of the Plaintiffs’ (and the class’s) 

purchase of a $49, $499, or $999 IP distributorship and purchase of product. These 

payments were thus directly funded by the Plaintiffs by virtue of the compensation 

system paying commissions and bonuses “upline” to promoters at the top of the 

pyramid. The value of these benefits can be computed but is presently unknown. But 

for the illegal Compensation Plan and the commission of the illegal pyramid scheme, 

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the Promoter Defendants could not have obtained the funds that came to them via the 

Compensation Plan. 

259. Third, in addition to the unjust benefits he has obtained as a result of a 

deal with Blyth, and as the top “upline” distributor, since 2010 Sarnicola has been a 

“Global Ambassador” for ViSalus. In that role he has received (or acknowledged 

receiving) $350K per month as a result of being the head of the largest “downline” 

for the company. Upon information and belief, Sarnicola, through Defendants Power 

Couple and AB25, was paid approximately $10.7 million for recruiting tens or 

hundreds of thousands of people into the illegal pyramid scheme, and through 

Defendant Power Couple, another $1 million per year from ViSalus in assistance and 

performance payments. The moneys that he received, in part, as an “upline” 

distributor came from Plaintiffs’ (or the class) payments for the same reasons as set 

forth above. 

260. The revenue that resulted in these payments came directly from the 

payments made by Plaintiffs and the class. It would be unjust to permit these 

Defendants to retain these ill-gotten gains. 

 

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COUNT EIGHT 

VISALUS HAS ENGAGED IN STATUTORY 

AND/OR COMMON LAW CONVERSION 

261. Plaintiffs repeat and re-allege every allegation above as if set forth 

herein in full. 

262. Plaintiffs bring this claim on their own behalf and on behalf of each of 

the class members. 

263. Statutory conversion under MCLS § 600.2919a provides that a person 

damaged by another person’s stealing or embezzling property or converting property 

to the other person’s own use may recover three times the amount of actual damages 

sustained, plus costs and reasonable attorney fees. 

264. ViSalus has wrongfully exerted dominion over plaintiffs’ funds 

inconsistent with plaintiffs’ rights to such funds in violation of the statute. 

265. ViSalus is also liable for common law conversion. Under Michigan law, 

a common law cause of action for conversion also exits for “[A]ny distinct act of 

dominion wrongfully exerted over another's personal property in denial or 

inconsistent with his rights therein.” 

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266. ViSalus is thus also liable for common law conversion because, as 

discussed in the other paragraphs of this Complaint, they have wrongfully taken and 

otherwise exerted dominion over the enrollment and other fees and costs they induced 

Plaintiffs to pay in connection with the ViSalus IP “business opportunity,” denying 

and/or otherwise inconsistent with the Plaintiffs’ rights therein. 

COUNT NINE 

CIVIL CONSPIRACY AGAINST ALL DEFENDANTS

267. Plaintiffs repeat and re-allege every allegation above as if set forth 

herein in full. 

268. Plaintiffs bring this claim on their own behalf and on behalf of each of 

the class members. 

269. The elements of a common law cause of action for civil conspiracy are: 

(1) a concerted action (2) by a combination of two or more persons (3) to accomplish 

an unlawful purpose or a lawful purpose by criminal or unlawful means, (4) causing 

damage to the Plaintiffs. 

270. All Defendants are alleged to have undertaken an “unlawful purpose,” 

that is violation of Section 1962(a) and (d) of RICO; further, these Defendants are 

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alleged to have violated Section 5 of the MFIL which sounds in tort and unjust 

enrichment which sounds in tort, and conversion (ViSalus only). 

271. The concerted action to accomplish an unlawful purpose between and 

among these Defendants is set forth in Paragraphs 44-105 (describing the commission 

of the pyramid scheme), and Paragraphs 122-167 (the concerted action) all of which 

are specifically incorporated herein. The combination between and among these 

Defendants alleged to accomplish the operation and commission of the pyramid 

scheme is described and set forth in Paragraphs 122-167 and 204-211. In addition, 

these Defendants performed the following actions: 

Robert Goergen, Sr./Trust: (1) silently investing in ViSalus when he knew 

or reasonably should have known that ViSalus was operating as a pyramid 

scheme; (2) assisting ViSalus in operation as a pyramid scheme by (a) being 

actively involved with its expansion after 2008, (b) serving on its Board of 

Directors and making public statements of support and confidence that 

ViSalus was a legitimate seller of weight-loss products, and (c) lending his 

name and his publicly-traded company’s credibility as a legitimate business 

by causing Blyth to purchase the stock of ViSalus, (d) lending his name and 

credibility as a CEO of a publicly-traded, legitimate business by appearing at 

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conventions, and giving “interviews” extolling ViSalus’s future in front of 

potential distributors. Goergen’s actions gave an air of legitimacy to ViSalus 

which was exploited by ViSalus through print and electronic communications. 

Todd Goergen/RAM/HashTag One: (1) silently investing in ViSalus when 

he knew or reasonably should have known that ViSalus was operating as a 

pyramid scheme; (2) assisting ViSalus in operation as a pyramid scheme by 

(a) being actively involved with its expansion after 2008 and causing Blyth to 

provide ViSalus funds and support to give it capital to expand the pyramid 

scheme, (b) serving on its Board of Directors and making public statements 

of support and confidence that ViSalus was a legitimate seller of weight-loss 

products, and (c) lending his name and his publicly-traded company’s 

credibility as a legitimate business by causing Blyth to purchase the stock of 

ViSalus, (d) lending his name and credibility as a CEO of a publicly-traded, 

legitimate business by appearing at conventions, and giving “interviews” 

extolling ViSalus’s future in front of potential distributors. Goergen’s actions 

gave an air of legitimacy to ViSalus which was exploited by ViSalus through 

print and electronic communications. 

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Sarnicola/Power Couple/AB25: (1) serving as one of the co-founders and 

principal creators of the pyramid scheme, (2) creating and/or approving the 

creation of the Compensation Plan which pays primarily for recruiting, (3) 

creating and disseminating countless promotional materials, videos, and 

public appearances designed to further and expand the pyramid scheme in the 

United States and abroad, (4) making contractual arrangements with the 

Goergens and Blyth to provide capital to expand the pyramid scheme and to 

lend the scheme an air of legitimacy, (5) making deals with professional 

network marketers to pay them hidden inducements and/or assign them 

“downlines” as an inducement to further the expansion of the pyramid 

scheme, (6) acting as the “top” distributor and accepting tens of millions of 

dollars as gains from the pyramid scheme. 

Blair/OCD: (1) serving as one of the co-founders and principal creators of 

the pyramid scheme, (2) creating and/or approving the creation of the 

Compensation Plan which pays primarily for recruiting, (3) creating and 

disseminating promotional materials, videos, and public appearances at 

conventions, regional meetings, and television designed to further and expand 

the pyramid scheme in the United States and abroad, (4) making contractual 

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arrangements with the Goergens and Blyth to provide capital to expand the 

pyramid scheme and to lend the scheme an air of legitimacy, and appearing 

as the public face of the enterprise with the Goergens, all to give an air of 

legitimacy to the enterprise, (5) making deals with professional network 

marketers to pay them hidden inducements and/or assign them “downlines” 

as an inducement to further the expansion of the pyramid scheme. 

Mallen/BAM: (1) serving as one of the co-founders and principal creators of 

the pyramid scheme, (2) creating and/or approving the creation of the 

Compensation Plan which pays primarily for recruiting, (3) creating and 

disseminating countless promotional materials, videos, and public 

appearances designed to further and expand the pyramid scheme in the United 

States and abroad, (4) making contractual arrangements with the Goergens 

and Blyth to provide capital to expand the pyramid scheme and to lend the 

scheme an air of legitimacy, (5) making deals with professional network 

marketers to pay them hidden inducements and/or assign them “downlines” 

as an inducement to further the expansion of the pyramid scheme, (6) acting 

as the “top” distributor and accepting tens of millions of dollars as gains from 

the pyramid scheme. 

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O’Toole/Prospex/O’Toole Int’l Holdings: (1) accepting payments and/or 

other inducements, including being given or assigned a “downline” by 

Sarnicola, Blair and Mallen upon becoming a ViSalus distributor; (2) 

performing recruiting acts on behalf of ViSalus and the enterprise when he 

knew or reasonably should have known that he was promoting a pyramid 

scheme, (3) appearing in print and electronic promotions to give legitimacy to 

the idea that anyone could achieve six- and seven- figure success in the 

“business opportunity” when he knew that his own success and financial 

payments were the result of hidden arrangements that would not be made 

available to persons who were being recruited. 

Wilson/ABGL: (1) accepting payments and/or other inducements, including 

being given or assigned a “downline” by Sarnicola, Blair and Mallen upon 

becoming a ViSalus distributor; (2) performing recruiting acts on behalf of 

ViSalus and the enterprise when she knew or reasonably should have known 

that she was promoting a pyramid scheme, (3) appearing in print and 

electronic promotions to give legitimacy to the idea that anyone could achieve 

six- and seven- figure success in the “business opportunity” when she knew 

that his own success and financial payments were the result of hidden 

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arrangements that would not be made available to persons who were being 

recruited. 

Pacetti/Gooder: (1) accepting payments and/or other inducements, including 

being given or assigned a “downline” by Sarnicola, Blair and Mallen upon 

becoming a ViSalus distributor; (2) performing recruiting acts on behalf of 

ViSalus and the enterprise when he knew or reasonably should have known 

that he was promoting a pyramid scheme, (3) appearing in print and electronic 

promotions to give legitimacy to the idea that anyone could achieve six- and 

seven- figure success in the “business opportunity” when he knew that his 

own success and financial payments were the result of hidden arrangements 

that would not be made available to persons who were being recruited. 

Fortner/Residual Marketing/GHGI: (1) accepting payments and/or other 

inducements, including being given or assigned a “downline” by Sarnicola, 

Blair and Mallen upon becoming a ViSalus distributor; (2) performing 

recruiting acts on behalf of ViSalus and the enterprise when he knew or 

reasonably should have known that he was promoting a pyramid scheme, (3) 

appearing in print and electronic promotions to give legitimacy to the idea that 

anyone could achieve six- and seven- figure success in the “business 

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opportunity” when he knew that his own success and financial payments were 

the result of hidden arrangements that would not be made available to persons 

who were being recruited. 

T. Kirkland/Freedom Legacy/H. Kirkland: (1) accepting payments and/or 

other inducements, including being given or assigned a “downline” by 

Sarnicola, Blair and Mallen upon becoming a ViSalus distributor; (2) 

performing recruiting acts on behalf of ViSalus and the enterprise when he/she 

knew or reasonably should have known that he/she were promoting a pyramid 

scheme, (3) appearing in print and electronic promotions to give legitimacy to 

the idea that anyone could achieve six- and seven- figure success in the 

“business opportunity” when he/she knew that their own success and financial 

payments were the result of hidden arrangements that would not be made 

available to persons who were being recruited. 

Petrilli/9248: (1) accepting payments and/or other inducements, including 

being given or assigned a “downline” by Sarnicola, Blair and Mallen upon 

becoming a ViSalus distributor; (2) performing recruiting acts on behalf of 

ViSalus and the enterprise when she knew or reasonably should have known 

that she was promoting a pyramid scheme, (3) appearing in print and 

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electronic promotions to give legitimacy to the idea that anyone could achieve 

six- and seven- figure success in the “business opportunity” when she knew 

that his own success and financial payments were the result of hidden 

arrangements that would not be made available to persons who were being 

recruited. 

Varon/NDAC: (1) accepting payments and/or other inducements, including 

being given or assigned a “downline” by Sarnicola, Blair and Mallen upon 

becoming a ViSalus distributor; (2) performing recruiting acts on behalf of 

ViSalus and the enterprise when he knew or reasonably should have known 

that he was promoting a pyramid scheme, (3) appearing in print and electronic 

promotions to give legitimacy to the idea that anyone could achieve six- and 

seven- figure success in the “business opportunity” when he knew that his 

own success and financial payments were the result of hidden arrangements 

that would not be made available to persons who were being recruited. 

Jackson/Red Letters: (1) accepting payments and/or other inducements, 

including being given or assigned a “downline” by Sarnicola, Blair and 

Mallen upon becoming a ViSalus distributor; (2) performing recruiting acts 

on behalf of ViSalus and the enterprise when he knew or reasonably should 

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have known that he was promoting a pyramid scheme, (3) appearing in print 

and electronic promotions to give legitimacy to the idea that anyone could 

achieve six- and seven- figure success in the “business opportunity” when he 

knew that his own success and financial payments were the result of hidden 

arrangements that would not be made available to persons who were being 

recruited. 

Wealth Builder Management: (1) accepting payments and/or other 

inducements; (2) performing recruiting acts on behalf of ViSalus and the 

enterprise when it knew or reasonably should have known that it was 

promoting a pyramid scheme. 

Merriweather: (1) accepting payments and/or other inducements, including 

being given or assigned a “downline” by Sarnicola, Blair and Mallen upon 

becoming a ViSalus distributor; (2) performing recruiting acts on behalf of 

ViSalus and the enterprise when he knew or reasonably should have known 

that he was promoting a pyramid scheme, (3) appearing in print and electronic 

promotions to give legitimacy to the idea that anyone could achieve six- and 

seven- figure success in the “business opportunity” when he knew that his 

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own success and financial payments were the result of hidden arrangements 

that would not be made available to persons who were being recruited. 

G. Reynolds/BeachLifestyle: (1) accepting payments and/or other 

inducements, including being given or assigned a “downline” by Sarnicola, 

Blair and Mallen upon becoming a ViSalus distributor; (2) performing 

recruiting acts on behalf of ViSalus and the enterprise when he knew or 

reasonably should have known that he was promoting a pyramid scheme, (3) 

appearing in print and electronic promotions to give legitimacy to the idea that 

anyone could achieve six- and seven- figure success in the “business 

opportunity” when he knew that his own success and financial payments were 

the result of hidden arrangements that would not be made available to persons 

who were being recruited. 

272. The Defendants named in this count have conspired and combined with 

each other and engaged in practices to obtain a profit by way of a pyramid scheme, 

which has caused damage to Plaintiffs and other class members. The damages 

suffered by the Plaintiffs are naturally foreseeable and proximately caused by the 

conspiracy. 

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COUNT TEN 

VIOLATION OF SECTIONS 13, 25 AND 28 OF THE MICHIGAN 

FRANCHISE INVESTMENT LAW AGAINST VISALUS 

273. Plaintiffs repeat and re-allege every allegation above as if set forth 

herein in full. 

274. M.C.L.A 445.1513 prohibits the sale of a franchise where the following 

applies: “(a) The franchisor's method of business includes or would include activities 

which are illegal where performed.” 

275. M.C.L.A. 445.1525 further prohibits the following: 

A person shall not publish an advertisement concerning the offer 

or sale of a franchise in this state if the advertisement contains a 

statement that is false or misleading or omits to make any 

statement necessary in order to make the statements made, in 

light of the circumstances under which they were made, not 

misleading. 

276. M.C.L.A. 445.1528 provides the following: 

(1) A person may not offer or sell any form of participation in a 

pyramid or chain promotion. A pyramid or chain promotion is 

any plan or scheme or device by which (a) a participant gives a 

valuable consideration for the opportunity to receive 

compensation or things of value in return for inducing other 

persons to become participants in the program or (b) a participant 

is to receive compensation when a person introduced by the 

participant introduces one or more additional persons into 

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participation in the plan, each of whom receives the same or 

similar right, privilege, license, chance, or opportunity. 

(2) A pyramid or chain promotion is declared to be illegal and 

against the public policy of the state. Any contract made in 

violation of this section is voidable at the sole option of the 

purchaser. 

277. ViSalus has violated Sections 13, 25 and 28 by offering and selling to 

Plaintiffs and the class participation in the pyramid scheme in violations of the statute. 

278. Plaintiffs and the class had a contract with ViSalus. 

279. Plaintiffs and the class are entitled to rescission of their contract in the 

full amount of each of their payments to ViSalus. Plaintiffs demand judgment in the 

form of an order requiring the rescission of the contract of each participant in the 

pyramid scheme. 

COUNT ELEVEN 

VIOLATIONS OF SECTION 5 OF MICHIGAN FRANCHISE 

INVESTMENT LAW AGAINST VISALUS

280. Michigan’s Franchise Investment Law, M.C.L.A 445.1501 et seq. at 

Section 1505 prohibits the following conduct: 

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A person shall not, in connection with the filing, offer, sale, or 

purchase of any franchise, directly or indirectly: 

(a) Employ any device, scheme, or artifice to defraud. 

(b) Make any untrue statement of a material fact or omit to state 

a material fact necessary in order to make the statements made, 

in the light of the circumstances under which they are made, not 

misleading. 

(c) Engage in any act, practice, or course of business which 

operates or would operate as a fraud or deceit upon any person. 

 

281. M.C.L.A 445.1531 further provides the following: 

(1) A person who offers or sells a franchise in violation of section 

5 or 8 is liable to the person purchasing the franchise for damages 

or rescission, with interest at 6% per year from the date of 

purchase until June 20, 1984 and 12% per year thereafter and 

reasonable attorney fees and court costs. 

282. Under the Franchise Disclosure Law, ViSalus is liable jointly and 

severally for violations of the law. 

283. ViSalus’ conduct in offering the “Business Opportunity” to be a ViSalus 

IP constitutes an offering of a franchise under this law. Its conduct as set forth in this 

Complaint is a scheme or artifice as defined under this section and establishes 

violations of the sections of the Act set forth above. 

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284. As a result, the Plaintiffs and the class, to the limits of the applicability 

of the Franchise Disclosure Law, Section 1531, have been damaged. Plaintiffs and 

the class are entitled to damages or rescission pursuant to this section. 

PRAYER FOR RELIEF 

Kerrigan, Mikovich and Valli and the plaintiff class request the following 

relief: 

a. Certification of the class; 

b. A judgment against the Defendants; 

c. Damages in the amount of the injury to business incurred by 

Kerrigan, Mikovich and Valli and the class as a result of 

defendants’ conduct and for injury to their business and property, 

all as a result of defendants’ violations of 18 U.S.C. § 1962(c) 

and (d) and that such sum be trebled in accordance with 18 

U.S.C. § 1964(c); 

d. Damages in actual amount or rescission of contracts pursuant to 

violations of securities laws (alternative and conditional) 

e. Temporary and permanent injunctive relief enjoining the 

defendants from further unfair, unlawful, fraudulent and/or 

deceptive acts, including, but not limited to, supporting, 

continuing or operating the pyramid scheme; 

f. Disgorgement of all proceeds of the pyramid scheme by each 

defendant; 

g. Relief under the Michigan Franchise Disclosure Act including 

damages as provided and rescission of any contract made with 

ViSalus, and damages under the Michigan Consumer Protection 

Act as provided; 

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h. The costs of investigation and litigation reasonably incurred, as 

well as attorneys’ fees in accordance with 18 U.S.C. § 1964(c); 

and 

i. For such other damages, relief and pre- and post-judgment 

interest as the Court may deem just and proper. 

DEMAND FOR A JURY TRIAL 

Kerrigan, Mikovich and Valli, on their own behalf, and on behalf of the 

class(es) they represent, demand a jury trial. 

Filed this 8th day of March, 2017. 

 Respectfully submitted, 

SOMMERS SCHWARTZ, P.C. 

s/ Andrew Kochanowski 

Andrew Kochanowski (P55117) 

Sarah L. Rickard (P78767) 

Lance C. Young (P51254) 

Attorneys for Plaintiffs 

One Towne Square, Suite 1700 

Southfield, MI 48076 

(248) 355-0300 

akochanowski@sommerspc.com

srickard@sommerspc.com

lyoung@sommerspc.com

 

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PREBEG, FAUCETT & ABBOTT, PLLC 

Matthew J.M. Prebeg 

(TX Bar No: 00791465) 

Brent T. Caldwell 

(TX Bar No: 24056971) 

Attorneys for Plaintiffs 

8441 Gulf Freeway, Suite 307 

Houston, TX 77017 

(832) 743-9260 

mprebeg@pfalawfirm.com

bcaldwell@pfalawfirm.com

WEXLER WALLACE LLP 

Edward A. Wallace (IL Reg. No. 6230475) 

Attorneys for Plaintiffs 

55 W. Monroe Street, Suite 3300 

Chicago, IL 60603 

(312) 589-6272 

EAW@wexlerwallace.com

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