Tuesday, November 03, 2015
Texas Firm Central to Questions About Carson's Ethics
On the campaign trail, GOP presidential candidate Ben Carson is seeing nothing but good things out of Texas. Four months ahead of the state’s Republican primary, he is polling well and drawing strong praise from Republican activists.
Yet on a Colorado stage last week, Texas was at the center of the toughest question thrown at the retired neurosurgeon.
“This is a company called Mannatech, a maker of nutritional supplements, with which you had a 10-year relationship,” CNBC’s Carl Quintanilla told Carson. “They offered claims that they could cure autism, cancer, they paid $7 million to settle a deceptive marketing lawsuit in Texas, and yet your involvement continued. Why?”
Carson bristled at Quintanilla’s characterization.
“I did a couple of speeches for them,” Carson said. “I do speeches for other people. They were paid speeches. It is absolutely absurd to say that I had any kind of a relationship with them.”
“Do I take the product? Yes,” Carson added. “I think it’s a good product.”
The exchange, which eventually prompted boos from audience members favorable to Carson, brought to the forefront Carson’s ties to a Texas company with a controversial past.
Founded in 1993, Coppell-based Mannatech markets a line of “glyconutrients” that it claims contain complex sugars derived from plants that help support better health. The company’s sales people, most part of its Amway-style multilevel marketing structure rather than company employees, became central to the both the company’s quick success and its scrutiny from state and federal regulators.
Both the U.S. Food and Drug Administration and the Texas Department of State Health Services soon began receiving complaints from Mannatech customers who felt they were lied to, often pointing to claims from marketing materials alleging that the company’s products could cure everything from arthritis to cancer.
One 2002 complainant told the Texas Department of State Health Services that a Mannatech associate told her to stop chemotherapy and purchase $1,000 worth of Mannatech products to address her cancer. Another complained of an email that claimed that Mannatech products could cure Down syndrome. Similar complaints have prompted lawsuits from both customers and investors.
Mannatech’s multilevel marketing system enabled it to develop an arm’s-length relationship with a sales force of thousands hawking the products online and around the world. Whenever associates were caught making exaggerated statements about a product’s impact, company officials would argue it could not control claims made by independent associates.
Carson began speaking favorably about the company’s products around 2004, claiming, among other things, that they helped him recover from prostate cancer. In 2006, a Fort Worth Star-Telegram investigation into Mannatech’s marketing described Carson, then-director of pediatric neurosurgery at John Hopkins, as “a powerful ally” for the company. "I do believe in the products," Carson told the Star-Telegram. "But, as a scientist, I cannot and will not make scientific claims about them until the science has been proven."
In 2007, then-Texas Attorney General Greg Abbott charged Mannatech, its owner, Samuel L. Caster and several related entities with operating an illegal marketing scheme. The petition cited supposed testimonials from satisfied Mannatech customers as part of the company’s fraud.
“The whole purpose of the testimonials is to create a frenzy and motivate associates to sell even more products, in large part through the relaying of deceptive claims set forth in the testimonials,” the petition said.
In 2009, Abbott held a news conference in Dallas to announce Mannatech had agreed to return $4 million to its customers. The company also agreed to pay $2 million in legal fees, and Caster agreed to pay a $1 million penalty.
“Bottom line, this is a warning to the general public: Beware of phony claims of magic cure-all pills or false hope in a bottle,” Abbott said at the time.
Though Mannatech never admitted any wrongdoing in the settlement, company spokesman Mike Crouch said the company has become more vigilant about marketing claims made by sales associates.
“Today’s Mannatech is a far different company than the one which settled the 2009 lawsuit,” Crouch said. “Mannatech works daily to ensure the challenges of the past are well behind it and offer its customers and sales associates science-validated products and industry-standard compliance processes.”
Mannatech, which is publicly traded, posted a profit last year of $6.5 million on $190 million in revenue. Sixty percent of the company's 284 employees are based in Texas.
Carson has given four paid speeches for Mannatech, most recently in 2013, and earned $42,000 for a “Carson-affiliated charity,” according to a recent report by the Wall Street Journal. At least one of the speeches was delivered to Mannatech sales associates. He also appeared on videos on Mannatech’s website until about a month ago.
Despite those transactions, Crouch said that Carson was not lying when he asserted during the CNBC debate that he didn’t have a business relationship with the company.
“Dr. Carson is a long-term customer and has spoken about his personal and professional experiences at Mannatech events,” Croch said. “Dr. Carson has never been a paid endorser or spokesman for Mannatech or its products.”
Last month, Carson and his wife Candy met for about an hour with Abbott at the Governor’s Mansion.
“It's easy to see why Texas is exceptional after meeting with its Governor,” Carson tweeted following the visit. Abbott later called Carson a "really likable man" who has a "genuine concern" for the direction of the country.
Abbott is expected to make an endorsement in the presidential race closer to the March 4 Republican primary. Asked whether his previous investigation into Mannatech would factor into his decision, his office declined to comment.
Patrick Svitek contributed to this report.
This article originally appeared in The Texas Tribune.
Posted by Pundit Press