Michael Burton

Dates of Herbalife Distributorship: 1990s – present
Status in Herbalife: President’s Team
Business Methods: Nutrition Clubs, Training Videos, Calls and Presentations; Online Recruiting Businesses; Recruiting Scripts

All statements in this report are made pursuant to Pershing Square’s disclaimer, available at http://factsaboutherbalife.com/disclaimer/.

Michael Burton is a long-time President’s Team member who aggressively promotes the financial benefits of Herbalife, even after filing for bankruptcy protection last year with more than $7 million in liabilities. Burton has financial ties to numerous companies that have promoted work-from-home opportunities on the Internet. He has advised Herbalife distributors to go into debt and to tap into retirement savings to pursue the business.

Herbalife says it is cracking down on the methods and messages Burton used to climb to the top of the Herbalife marketing plan. Yet Burton remains one of the company’s most visible distributors and is currently promoting the dubious financial benefits of becoming an Herbalife “wellness coach” to college students and other young people seeking career opportunities.

Background on Herbalife-Related Businesses

• Michael Burton and his family are affiliated with several businesses that appear to have ties to Herbalife.
  • Merelle Worldwide, LLC, is registered in Texas (Filing Number:  800859709, registration attached as Exhibit A).  The registration filing uses the address 250 N. Main, Grapevine, TX 76051, and lists Burton’s daughter, Sydney Mercedes Burton,^[1] as Vice President and Director.  According to bankruptcy papers filed by Burton and his wife, Michelle, in the Bankruptcy Court of the Eastern District of Texas on July 29, 2013—specifically a Summary of Schedules, attached as Exhibit B, and a Statement of Financial Affairs, attached as Exhibit C—Michael and Michelle have a 95% limited partnership interest in Merelle Worldwide.  See Ex. B at 6.  Indeed, the name “Merelle” appears to be a combination of the names “Mercedes” and “Michelle.”  The company provides “Marketing and Lead Generation Services.”  See Ex. C at 7.
    • Dan Penick, who is involved with several of Burton’s businesses, is President and Director of Merelle Worldwide.  See Ex. A.
• LineLogix Technologies, LLC, is registered in Texas (Filing Number:  801192070, registration attached as Exhibit D).  The registration filing uses the address 250 N. Main, Grapevine, TX 76051—the same address listed on the registration filing for Merelle Worldwide.  Moreover, the Burton’s Statement of Financial Affairs lists LineLogix as a business in which the Burtons were “an officer, director, partner, or managing executive of a corporation . . . within six years immediately preceding the commencement of this case [July 29, 2013].”  See Ex. C at 6-7.  In addition, Merelle Worldwide registered the trademark for LineLogix.  See http://www.trademarkia.com/linelogix-77464212.html.  LineLogix is a “Web Technology Business.”  See Ex. C at 7.
  • The LineLogix “Disclaimer and User Agreement,” which previously could be found on the website of Nutrition Clubs Worldwide (see infra at 2) and is attached as Exhibit E, congratulates new users “on making the decision to become a multi-level marketing plan distributor” and notes that “Merelle Worldwide has developed a training and marketing system (‘”LineLogix”’) to assist you in furthering your business.”
  • LineLogix “powers” recruiting websites for Herbalife and other multilevel marketing business websites.  For example, the phrase “Powered by LineLogix” is printed at the bottom of webpages for sites including the following:
    • Nutrition Clubs Worldwide (http://web.archive.org/web/20121002052138/http://www.nutritionclubsworldwide.com/)^[2] was an Herbalife lead generation website that encouraged potential users to “[s]end prospects to your lead generating website to view a persuasive presentation” about the Herbalife business opportunity.  See Exhibit F for a compiled screenshot of the website, demonstrating its focus on lead generation business methods.
    • In 2013, the website Nutrition Clubs Worldwide was converted into MyHCMTouch.  See http://workfromhome.myhcmtouch.com/.  MyHCMTouch is a “training and marketing website filled with powerful tools and robust features that will take your Herbalife business to the next level!”  See https://twitter.com/MyHCMTOUCH; see also http://myhcmtouch.com/features/ for additional links between MyHCMTouch and Herbalife business opportunities.

    

https://www.facebook.com/NutritionClubsWorldwide/posts/460991223980876.

• The Phoenix STS  (http://thephoenixsts.com/bioInfo.cfm?idx=84&cls=GuestSpeaker) is a local Herbalife Success Training Seminar (STS) registered to President’s Team member Maurice Smith.  See Exhibit G; see also infra at 15.
• Dallas STS (http://www.dallassts.com/ResourceLibrary.cfm) is a local Herbalife STS registered to Chairman’s Club member Dan Waldron.  See Exhibit H; see also infra at 15.^[3]
• eTeamPro (http://www.cieaura.com/index.html) is a website offering multilevel marketing business methods for independent distributors of CieAura “holographic chips” for sleep and allergy relief.
• The registration for LineLogix lists Penick as President and Director (Ex. D), though according to Penick’s LinkedIn website, attached as Exhibit J, he no longer works at LineLogix.  Instead, Eric Do, the former President and CEO of Merelle Worldwide (see Exhibit K), lists himself as the IT Director of LineLogix on his LinkedIn website, attached as Exhibit L.
• Global Home Business Systems (GHBS) is another business operated by Michael Burton that purported to offer training materials for prospective Herbalife distributors.  See, e.g., https://vimeo.com/user24651359/review/85606570/79c52461b3^[4] for a recruiting video (see also infra at 8).  According to public consumer complaints, GHBS recruits would receive a DVD for $9.95 that came with a return shipping label addressed to “Merelle Worldwide LLC.”  See http://www.ripoffreport.com/r/Global-Home-Business-Systems-Merelle-Worldwide-LLC-E-Home-Business/Grapevine-Texas-76051/Global-Home-Business-Systems-Merelle-Worldwide-LLC-E-Home-Business-I-paid-995-for-a-354630.
• Worldwide Nutrition Group, Inc., is registered in Texas (Filing Number:  801555682, registration attached as Exhibit M).  The registration filing uses the address 250 N. Main, Grapevine, TX 76051—the same address listed on the registration filings for Merelle Worldwide and LineLogix—and lists Michael, Michelle, and Sydney Mercedes Burton, as well as Penick, as Directors.  On the Burtons’ Statement of Financial Affairs, the “nature of business” is listed as “Herbalife Distributor.”  See Ex. C at 7.  Their Summary of Schedules notes that Michael owns 80 shares and Michelle owns 10 shares of common stock in Worldwide Nutrition.  See Ex. B at 6.  There is a LinkedIn website for Michael Burton which lists the acronym for Worldwide Nutrition Group—WWNG— under current employment.  See Exhibit N.
• Burton Marketing International, LLC, is registered in Florida (Filing Number:  L04000068847, registration attached as Exhibit O).  The registration is “inactive.”  The registration filing uses the “principal” address 2200 N.E. 36th Avenue, Bldg. 400, Ocala, FL 34470, but also lists as the mailing address P.O. Box 2569, Grapevine, TX 76099—the same city listed on the registration filings for Merelle Worldwide, LineLogix, and Worldwide Nutrition Group.  The registration filing lists Michael and Michelle Burton, as well as Cynthia Sapp, as Managers.  On her LinkedIn website, attached as Exhibit P, Sapp titles herself as “Controller at Burton Marketing International LLC.”  The Burtons’ Statement of Financial Affairs notes that the business provides “Marketing Services.”  See Ex. C at 7.
• Work at Home Institute, LLC, is registered in Florida (Filing Number:  G05245900058, registration attached as Exhibit_Q).  The registration is “expired.”  The registration filing uses the address 3111 W. Martin Luther King Blvd., Suite 100, Tampa, FL 33607, and lists Michael Burton as the owner.  The address listed for Burton on the registration filing is 2200 N.E. 36th Avenue, Bldg. 400, Ocala, FL 34470—the same address listed for Burton Marketing International.  The Burtons’ Statement of Financial Affairs notes that the business provides “Sales Lead Generation Services.”  See Ex. C at 7.
• Jackson Bo Group is registered in Texas (Filing Number:  801122494, registration attached as Exhibit R).  The registration filing uses the address 250 N. Main, Grapevine, TX 76051—the same address listed on the registration filings for Merelle Worldwide, LineLogix, and Worldwide Nutrition Group—and lists Michael Burton as the company’s President and sole Director.  The Summary of Schedules filed by the Burtons as part of their bankruptcy proceeding notes that the couple owns 100% of Jackson Bo Group.  See Ex. B at 5.  The Burtons’ Statement of Financial Affairs refers to Jackson Bo Group as a “Nutrition marketing services” company.  See Ex. C at 6.
• Michael Burton and his family operate a number of Herbalife nutrition clubs that offer free nutrition products, “wellness evaluations,” and fitness programs, which we believe are a means of luring prospective recruits for the Herbalife business opportunity into Burton’s clubs.
  • Nutrition Addiction (http://www.nutritionaddiction.com/) is an Herbalife nutrition club owned and operated by Burton.  See Exhibit S for a Michael Burton LinkedIn website listing “Owner at Nutrition Addiction” under current employment.  The club’s website states that its location is Grapevine, TX.  The club’s former website, available at http://web.archive.org/web/20110929221352/http://nutrition-addiction.com/app/websites/ntclub20/index.cfm, lists the address 250 N. Main, Grapevine, TX 76051—the same address listed on the registration filings for Merelle Worldwide, LineLogix, and Worldwide Nutrition Group.
    • The current website presents a photograph of an Herbalife Formula 1 shake on its “Menu” page.

http://www.nutritionaddiction.com/WEB/websites/MXCL/club/menu.cfm.

• The club also has an active Facebook page (https://www.facebook.com/nutritionaddiction#!/nutritionaddiction) with nearly 1,500 followers that is replete with references to Herbalife.

https://www.facebook.com/photo.php?fbid=10150857432322132&set=a.438380157131.243441.169953937131&type=3&theater.

• Burton’s club also lures potential recruits into the Herbalife business opportunity by offering low-paying jobs as “Weight Loss Challenge Coaches” that seem designed to appeal to college students and other young unemployed individuals.  For example, an archived version of the Nutrition Addiction website advertises positions as “Weight Loss Challenge Coaches,” asking potential recruits if they would “like to make an extra $500 – $1500/month working 1 or 2 evenings per week” and promising to provide “all necessary training.”  See http://web.archive.org/web/20110929221352/http://nutrition-addiction.com/app/websites/ntclub20/index.cfm.
• Atomic Nutrition is an Herbalife nutrition club owned and operated by Sydney Mercedes Burton.^[5]  Atomic Nutrition is the assumed name of Guerilla Group, LLC, a company registered in Texas (Filing Number:  801425368, registration attached as Exhibit T; see also id. at 2-4 for assumption of Atomic Nutrition name) that lists Sydney M. Burton as the sole Manager.  The Guerilla Group registration filing uses the address 601 Cross Timbers Rd., Suite 126, Flower Mound, TX 75028-1397, which is the same address listed on the Burtons’ Statement of Financial Affairs for Merelle Worldwide, LineLogix, Worldwide Nutrition, Jackson Bo Group, Global Card Systems, and Matrix Marketing.  See Ex. C at 6-7.
  • The Atomic Nutrition Facebook page, available at https://www.facebook.com/ATOMICnutrition, shows numerous photographs linking Sydney Mercedes Burton’s club to Herbalife.

https://www.facebook.com/photo.php?fbid=616593595054856.

• Moreover, Sydney Mercedes Burton’s Facebook profile explicitly links Atomic Nutrition to Herbalife, and also links Sydney Mercedes to her father’s nutrition club, Nutrition Addiction.

 

https://www.facebook.com/Sydneymercedes943/about#!/Sydneymercedes943/about.

• In the past, Burton registered a number of domain names to market lead generation services and other business tools to Herbalife distributors.  Notable examples include:
  • LeadWheel is a domain registered to Burton (see Exhibit U) that offered training tools and consulting services for work-from-home business opportunities.  The site is no longer active, but is still available at http://web.archive.org/web/20030919010052/http:/www.leadwheel.com/.
  • The Income Point is another domain registered to Burton (see Exhibit_V) that offered business methods for Herbalife distributors.  The site is no longer active, but is still available at http://web.archive.org/web/*/http://incomepoint.net/.
  • The iOffice is a domain registered to Merelle Worldwide and lists Michael Burton as the administrative and technical contact (see Exhibit W).  The site offered recruiting materials to Herbalife distributors.  The site is no longer active, but is still available at http://web.archive.org/web/*/www.theioffice.com.
  • Prospect Performance is another domain registered to Merelle Worldwide, also listing Burton as the administrative and technical contact (see Exhibit X).  The site offered leads to its members.  The website is no longer active.
  • Burton hosted a yacht cruise on October 17, 2012, called “Sail to Success, for members of his “organization” (downline or upline) who were attending the Herbalife Extravaganza two days later in Long Beach, CA.

Primary Source Data on Business Practices

 

http://burtonorg.com/.

Videos^[6]

• Michael Burton appears in videos promoting the Herbalife business opportunity and Burton’s Herbalife-related businesses.
  • In a recruiting video for Global Home Business Systems (GHBS), Burton’s training business for Herbalife distributors, available at https://vimeo.com/user24651359/review/85606570/79c52461b3, Burton explains that anyone can be an Herbalife success.  Burton tells prospective recruits that “[t]he reason we all share our stories of success, and talk about the incredible lifestyles and incomes, is not to brag or to boast—it’s to let you know two very important things.  Number one—what is possible, because we’re real people and we’ll be training you to do exactly what we do, so if it’s possible for us, then it’s certainly possible for you. . . .”  Burton goes on to note that the second reason for sharing such stories is that the GHBS trainers are “already successful.”  (0:42 – 1:14.)
  • Later in the video, Burton tells recruits they can achieve “financial freedom.”  Through GHBS and the Herbalife business opportunity, Burton says, “Whether you currently have a little or a lot of money to start a business, we’ve got a place for you regardless of where your finances are today, and we’re confident that, with our online system, we can show you how to make some part-time money or truly have your dreams come true and have the financial freedom that we believe people not only want but they deserve.”  (3:36 – 3:54.)
  • Burton also explains that the key to success with Herbalife is recruiting new distributors into the scheme and earning “residual income” when they order products from Herbalife.  Discussing the “magic” of residual income, Burton says, “Now let’s talk about my favorite type of income, and that’s residual.  Residual income, you do the work one time, or you do the action one time, or the service one time, and you get paid for a lifetime.  And, you know, there’s many examples of that in the marketplace. . . .  And, really, Herbalife’s marketing plan has both types of income [residual and what Burton calls linear income] . . . .  The magic of residual income is that at some point in the future, when your income gets to where you want it to be, you can travel, you can do all the incredible things you want, and the income still keeps coming.  That is the magic of Herbalife’s marketing plan.”  (1:08:31 – 1:09:23.)
  • Burton also pressures recruits to order large volumes of Herbalife products in order to qualify as a Supervisor immediately, telling recruits that there are “unlimited” income possibilities if they qualify as a Supervisor.  “Supervisor—this is important, put a star by it, put some circles around it, whatever you want to do—Supervisor is a very key position in the marketing plan.  We really say it’s the gateway to the Herbalife marketing plan.  It opens the door to unlimited types of income.”  (1:13:08 – 1:13:23.)
  • Burton also tells prospective recruits that they can earn recruiting rewards on distributors even 50 levels below them in their downlines.  “I really want to make sure you understand what I’m saying—if your team went 50 levels deep, you could earn two percent on all 50 levels.”  (1:17:45 – 1:17:53.)
  • Toward the conclusion of the video, Burton encourages prospective recruits to go into debt in order to pursue the Herbalife business opportunity.  “How am I going to get the money to qualify for supervisor this month?,” Burton asks, rhetorically.  “Probably like most of you, I didn’t have two or three thousand dollars stuffed underneath my mattress, so I asked my coach how he qualified and he said he leveraged himself.  So write this down:  he said he used other people’s money.  I said, wow I like the opportunity to use someone else’s money, can you explain what that means?  And he said he used the bank’s money.  He put it on a credit card.”  (1:26:37 – 1:27:03.)  Burton, referring to his wife and himself, then notes that “[i]n that moment we decided to leverage ourselves and put our 4000 volume point supervisor order on the one and only credit card that we had left and now as I look back, that is the smartest business decision I ever made in my life.”  A few minutes later, Burton continues, “If you’re thinking like Michelle and I were, ‘I need to get to supervisor this month but I can’t afford to,’ you need to know there are many ways to finance a new business.  I know of people who have borrowed the money from friends or relatives, people who’ve sold luxury items or unnecessary items like motorcycles or boats because they were clear, once they reached success in this business, they could replace those items ten times over.  I know others who have cashed in or leveraged a retirement account, because if you ask me, an Herbalife distributorship is the ultimate retirement account.  It’s not important how you get to supervisor, as long as you get there as soon as you possibly can.”  (1:30:30 – 1:31:06.)

• Another recruiting video for GHBS, available at https://vimeo.com/user24651359/review/91648899/1bc12a9da7, opens with a montage of expensive cars and a mansion.  Burton then recounts his difficult financial circumstances before he found the Herbalife business opportunity.  “At that time of our lives, it was a very tough time.”  He describes the struggles he and his wife faced in their car business.  He notes that he had to file for bankruptcy and was left $1 million in debt.  “We were pretty much lost as a family,” he says.  (1:06 – 1:40.)
• Burton continues, describing the “unbelievable” change to his family’s lifestyle that resulted from his discovery of the Herbalife business opportunity, and providing his audience of potential distributors with a series of misleading income claims.  Referring to the training program he offers through GHBS, Burton says, “And then someone shared this type of information with us, and it changed everything.  It made sense to us.  We understood that, you know, there was a system, and it was duplicatable, and we had a coach, and we had a mentor.  And we got really excited, and we got started.  And I tell you, it’s been unbelievable for us over the last nine years.  Just after six months in the business, our income was over $6,000 a month.  And by the eleventh month in the business, we were over $12,000 a month. . . .  After sixteen months in the business, we were over $25,000 a month.  And that number’s staggering—the type of lifestyle you can have with that income.  And since then, the income’s doubled, tripled, and quadrupled.  It’s just been absolutely exciting.  And over the last nine years, we have made millions, we have been paid millions of dollars for doing this business.  And what I know, you could have the same opportunity as we had.” (1:40 – 2:46.)  It is highly misleading to suggest that new recruits are likely to make this kind of money.  According to Herbalife’s Statement of Average Gross Compensation of U.S. Distributors in 2012, attached as Exhibit Y and available at http://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/StatementAverageCompensation2011EN.pdf, only four-hundredths of one percent of Herbalife distributors in the U.S. earn even $250,000 per year in payments from Herbalife, while 88% of those distributors earn $0 per year in payments from Herbalife.
• As the video concludes, Burton reaffirms the ease with which one supposedly can earn substantial income and financial freedom through Herbalife.  “[A]s long as you’re serious, teachable, and willing to work for what you want, you can build a business that can change your life and the lives of the ones you love.  My wife and I built our business right around our family and our daughter’s schedule, and from the convenience of our own home.  And if we can do it, so can you.”  (30:18 – 30:33.)

• In an audio clip promoting the July 2010 Herbalife Leadership Development Weekend in Vancouver, WA, available at https://soundcloud.com/hlfaudio/saved-call-in-line-recording, Burton expresses his excitement about the Herbalife opportunity, saying, “we have such incredible momentum going on in America . . . and the growth that we’re having in the general market is just incredible.  And so right now is an incredible time to jump on the bandwagon here, jump on the wave . . . .”
• In another video, available at https://vimeo.com/user24651359/review/85606450/64ba711ff5, an advertisement for www.6earn.com, a website registered to Burton’s Prospect Performance business, see Exhibit Z, is “[a]pproved by” Burton’s Work at Home Institute.  The video describes the supposed ease of earning income from home, telling viewers “all you need is a computer and a little belief in yourself.”  The video continues, presenting a number of deceptive income claims, with participants in the advertisement making claims such as, “with all the money I made working from home, I bought a new home,” “I make over $7,000 a month working part-time,” “I’m making $5,000 a month—never thought I’d make this much right out of school,” and “my goal for next month is $20,000.”

+

 

• While Burton holds himself out as an Herbalife success story, the reality is that Michael and Michelle Burton are currently in a state of substantial financial delinquency, and have been for quite some time, ultimately declaring bankruptcy in 2013.  See Exhibit AA.
  • In December 2005, a federal tax lien of $528,320.00 was assessed against Michael Burton in Florida.  See Exhibit BB.
  • In June 2006, a $311,791.65 federal tax lien was assessed against the Burtons in Florida.  See Exhibit CC.
  • In April 2009, a foreclosure judgment was issued against the Burtons on a residence with a listed address of 6192 N.E. 72^nd Place, Silver Springs, FL 34488, in the amount of $949,693.23.  See Exhibit DD.
  • In April 2013, federal tax liens of $288,768.00 and $554,518.00 were assessed against the Burtons in Texas.  See Exhibit EE.
  • In April 2013, a $16,138.38 federal tax lien was assessed against Merelle Worldwide in Texas.  See Exhibit FF.
  • In July 2013, the Burtons filed for bankruptcy with $7,147,893.55 in debt and only $74,135.92 in assets.  See Ex. B at 1; see also Ex. AA and Ex. C.
  • Merelle Worldwide, as mentioned above, is described in the Burtons’ Statement of Financial Affairs as providing “Marketing and Lead Generation Services.”  See Ex. C at 7.
  • Work at Home Institute is also described in the Burtons’ Statement of Financial Affairs, as providing “Sales Lead Generation Services.”  See Ex. C at 7.
  • Burton registered a number of domains to market his lead generation businesses.
    • LeadWheel, while no longer active, advertised the chance to “earn an extra . . . $1000 Next Month . . . working from home!,” telling site visitors, “SATISFACTION GUARANTEED!”  See http://web.archive.org/web/20030919010052/http:/www.leadwheel.com/members/iLeaddemo/index.htm.  In addition, the user agreement for LineLogix provided that “[c]ancelling or downgrading my iOffice/LineLogix account will NOT stop my leads from being delivered if I am participating in a leadwheel campaign.  Leads will continue to be delivered to me if I fail to notify the admin. staff through the helpdesk.  Those leads delivered cannot be refunded nor may I receive a refund for any shares that have been partially filled.”  See Ex. E at ¶ 15.
    • Prospect Performance is also no longer active, but the Terms of Service Agreement makes clear that this was a lead generation business.  The “Definitions” section focuses on the different types of leads a user will acquire, the “User Eligibility” provision notes that “Prospect Performance, in our sole discretion, reserves the right to determine the eligibility of Client to receive Leads,” and the “User Conduct” provision discusses the protocol to be followed if a “Lead” makes a request “to be removed from any further contact.”  See Exhibit GG.
    • Several of Burton’s businesses offered scripts for distributors to use when attempting to recruit new distributors into the scheme.
      • The Income Point offered a variety of recruiting scripts and other tools to distributors:
        • One set of scripts provided guidance to members engaged in recruiting calls with prospective distributors.  See Exhibit HH, available at http://web.archive.org/web/20020515152621/http://incomepoint.net/PDF/Sponsoring/1packscript.PDF and http://web.archive.org/web/20011215120532/http://incomepoint.net/PDF/Sponsoring/2packscript.PDF.
        • Another script helped members “package [their] income story.  See Exhibit II, available at http://web.archive.org/web/20020811144428/http://incomepoint.net/Pdf/Recruiting/packincomestory.PDF.
        • The site also provided template “lead sheets” for members to keep track of leads.  See Exhibit JJ, available at http://web.archive.org/web/20020515152651/http://incomepoint.net/PDF/Sponsoring/qualldsheet.PDF.
• The iOffice offered both scripts and training materials to distributors:
  • One script advised members on how to conduct a recruiting call.  See Exhibit KK, available at http://web.archive.org/web/20090306152120/http:/theioffice.com/web/system/ext/theIOffice/inc/mediaupload/New1stPk_v.prelaunch.pdf.
  • Another script provided members with the “testimonials” of people who have taken Herbalife products for ailments like alcoholism, autism, and cancer.  See Exhibit LL, available at http://web.archive.org/web/20040210042454/http:/www.theioffice.com/library/RetailLibrary/Retail/4.3%20Testimonial%20Packet.pdf.
  • The site hosted audio tutorials from senior Herbalife Distributors like President’s Team member Glenn Wells.  See Exhibit MM, available at http://web.archive.org/web/20040205052507/http:/www.theioffice.com/library/Recruiting_SponsoringLibrary/Recruiting_Sponsoring/Email%203%20-%20Most%20Frequently%20Asked%20Questions!.pdf.
  • The site provided guidance on how to contact and cultivate leads.  See Exhibit NN, available at http://web.archive.org/web/20090206035727/http:/theioffice.com/web/system/ext/theIOffice/inc/mediaupload/OnlineTP_DailyLeadProcess.pdf.
  • The site also featured information on “The Power of Duplication!”  See Exhibit OO, available at http://web.archive.org/web/20040215053633/http:/www.theioffice.com/library/Recruiting_SponsoringLibrary/Recruiting_Sponsoring/1.1%20The%20Power%20of%20Duplication.pdf.
  • The Burton family also hosts Herbalife Opportunity Meetings (HOMs) at their nutrition clubs.  See supra at 4-7 for more on Burton nutrition clubs.
    • According to Herbalife, HOMs are presentations to which potential distributors are invited to learn more about the business opportunity.  See Exhibit PP for an explanation of HOMs by Herbalife in a company presentation on “How to grow a STRONG royalty check.”
    • Atomic Nutrition hosts HOMs.  Indeed, Sydney Mercedes Burton, the owner of Atomic Nutrition, posted a video on her Facebook profile with the following caption:  “Over 65 people in the house tonight at ATOMIC NUTRITION for the HOM! Where else can you go to a business meeting and sit next to a guy on a unicycle? Lol!”  See https://www.facebook.com/Sydneymercedes943#!/photo.php?v=4240113171708&set=vb.1551909161&type=3&theater.
    • MyHCMTouch (http://www.myhcmtouch.com/), as mentioned supra at 2, is a Burton-operated website offering training and marketing tools with which Herbalife distributors can recruit a downline.  Specifically, the site offers resources geared toward “sponsoring,” i.e. recruiting, new members, “daily methods of operation” to build Herbalife businesses, and opening nutrition clubs—yet another Herbalife recruitment mechanism.

Lead Generation Materials

Recruiting Materials

 

• The Burtons’ businesses do considerable damage to consumers.  Consumer complaints regarding Global Home Business Systems, for example, are particularly revealing:
  • One complaint, from an individual who purchased the GHBS “starter pack” in order to “become part of the Herbalife Company,” cites the extreme difficulty of connecting with a GHBS employee who was supposed to assist in setting up that individual’s Herbalife business.  The complaint notes that it had been one month of “phone tag” and cancellations without any contact from the GHBS employee, despite the fact that “[GHBS] claim[s] that the whole program is up and running within 2 weeks.”  See http://www.ripoffreport.com/r/Global-Home-Business-Systems-HerbalifeElaine-Depinto/internet/Global-Home-Business-Systems-Herbalife-Elaine-Depinto-company-rip-off-complete-waste-of-453259.
  • Another complaint  from a GHBS customer notes that “they told me that to weed out the peoiple [sic] that really wanted to work they were charging $9.95 shipping for the video.  [A]nd when you get the DVD I viewed the DVD and there was noting [sic] there to help me start a buisness [sic] [in] Los Angles California.”  See http://www.ripoffreport.com/r/global-home-business-systems/los-angles-california-/global-home-business-systems-they-told-me-that-to-weed-out-the-peoiple-that-really-wanted-462221.
  • Burton is a distributor in Chairman’s Club member Dan Waldron’s downline.
  • Michael Burton runs several Herbalife-related businesses linked to other senior Herbalife distributors.
    • Burton is linked to senior Herbalife distributors through LineLogix, which powers local STS websites like Dallas STS and The Phoenix STS.  Dallas STS is registered to Dan Waldron.  See Ex. H; see also Waldron Report at 2, 10, 17 for additional details on Dallas STS.  The Phoenix STS is registered to President’s Team member Maurice Smith.  See Ex. G; see also Waldron report at 12 for additional details on Smith.

Links to Other Senior Distributors

Burton with Dan Waldron (left), Eric Do (second from left), and Dan Penick (second from right).

• Burton has collaborated with Chairman’s Club member Doran Andry through Burton’s website The iOffice.  In 2007 and 2009, The iOffice hosted training materials, guides, and recruiting scripts that were copyrighted to Financial Success System (FSS), Andry’s Herbalife lead generation and recruiting business.  See Exhibit QQ; Ex. NN; see also Andry Report for additional details on FSS.
  • The iOffice has also collaborated with President’s Team member Glenn Wells.  See supra at 13.
  • Burton also frequently appears at Herbalife-sponsored events with other Herbalife senior distributors.

Burton at the 2009 Herbalife Extravaganza in Atlanta with Chairman’s Club member Leslie Stanford (center) and President’s Team member Donte Andry (left), available at https://www.facebook.com/photo.php?fbid=154242957293.

Michael and Sydney Mercedes Burton with Chairman’s Club members Dan and Vicki Waldron (center) as the Waldrons receive their 2012 Mark Hughes Bonus Award.

Burton meeting with Herbalife’s Senior Vice President of World Wide Sales Robert Levy (second from right), Founder’s Circle member Geri Cvitanovich (fourth from right), President’s Team member Dennis Dowdell (fifth from right), and President’s Team members Craig and Caroline Tsutakawa (first and second from left).

Burton and President’s Team member David Hayes (right), available at https://www.facebook.com/photo.php?fbid=157326157727647.

Links to Herbalife Corporate Leadership

• Over the past few years, Burton was a member of the Herbalife Sports Council—part of Herbalife’s Herbalife24 brand, which markets itself as a “performance nutrition line empowering athletes 24-hours a day” (see http://performancenutrition.herbalife.com/en/).  See, e.g., https://www.facebook.com/events/147159738704774/ (mentioning Burton’s membership in the Herbalife Sports Council); Michelle Celarier, Debt-Ridden Herbalife Follower Shaken, Not Stirred, N.Y. Post, Oct. 1, 2013, available at http://nypost.com/2013/10/01/debt-ridden-herbalife-follower-shaken-not-stirred/ (same).
• In 2012, Herbalife publicly congratulated the Burtons on their “Lifetime Achievement” of reaching one million volume points.

http://www.herbalifemail.com/RCG/2012_05_DistributorsOnTheRise_usen.pdf.

• In 2000, the Burtons were featured in Herbalife Today, a magazine published by Herbalife, for their qualification to President’s Team.  The article notes that the Burtons’ income has reached $25,000 per month, and quotes Michael Burton as saying, “We’ve moved into a new home and have taken several vacations recently in Mexico, Southern California, the Bahamas and Florida.”  See  Exhibit RR at 9.
  • Two separate issues of Herbalife Today give inconsistent stories of how the Burtons got started with Herbalife.  In 2000 U.S. Edition No. 068, Michael Burton said, “My wife’s parents, James and Carole Wood, introduced us to Herbalife, and James encouraged me to sign up with him. I was totally against the idea and didn’t want to have anything to do with it . . . but he and Carole invited me to a Success Training Seminar anyway. After I got back home, I told Michelle that I’d just found what we were going to be doing for the rest of our lives!”  See Ex. RR at 9.  However, just three issues later, Herbalife Today quoted James Wood as saying that it was Michael Burton who introduced Wood to Herbalife.  See Exhibit SS at 15 (“[T]here was a Success Training Seminar in the area, and my son-in-law, Michael Burton—now a President’s Team member along with my daughter, Michelle—took me there”).
  • Burton has headlined Herbalife Leadership Development Weekends in Vancouver, WA (2010) and Jacksonville, FL (2012).

http://herbalifemail.com/flyers/2010_LDW_July_Vancouver_usen.pdf.

http://www.herbalifemail.com/Flyers/2012_LDW_Jacksonville_usen.pdf.

• Burton was a guest speaker at Herbalife’s 2009 Sacramento Spectacular and 2013 Orange County Spectacular.

http://herbalifemail.com/Flyers/2009_NYS_Sacramento.pdf.

http://www.herbalifemail.com/Flyers/2013_Jan_Spectaculars_OrangeCounty.pdf.

• Burton was a guest speaker on Herbalife’s 2012 African American Recruiting Tour, billed as an event where “[Herbalife’s] experts will show how you can make a significant impact in the African-American community, in both health and financial success.”

http://www.herbalifemail.com/flyers/2012_AATour_Flyer_Raleigh_USEN.pdf.

• Burton has promoted his recruiting-focused Herbalife business methods overseas, speaking at Herbalife events in Europe and the Caribbean.

http://www.herbalifemail.com/flyers/2012_JA_BusinessMethodsTour_QualFlyer.pdf.

Burton speaking at the 2012 Herbalife Extravaganza in Barcelona, Spain in September 2012, available at https://www.facebook.com/photo.php?fbid=10151169451297230.

• Burton was a guest speaker at a 2004 Herbalife STS in Montreal.

Other Businesses

These businesses may present additional avenues for investigation.

• Matryx Marketing, LLC, is registered in Texas (Filing Number:  801122512, registration attached as Exhibit TT).  The registration filing uses the address 250 N. Main, Grapevine, TX 76051—the same address listed on the registration filings for Merelle Worldwide, LineLogix, and Worldwide Nutrition Group—and lists Dan Penick as President and Director.  The Burtons’ 2013 Statement of Financial Affairs lists Matryx Marketing as a “Product/Service Marketing Company.”  See Ex. C at 7.
• Invent Data Solutions, LLC, is registered in Texas (Filing Number:  800613009, registration attached as Exhibit UU).  The registration filing uses the address 9126 Jasmine Lane, Irving, TX 75063, and lists Cynthia Sapp and Tam Do as Members.  As mentioned supra at 3, Sapp is the controller at Burton Marketing International.  See Ex. P.  It is unclear whether Tam Do is related to Eric Do, the former CEO of Merelle Worldwide and current IT Director of LineLogix.  The Burtons’ Statement of Financial Affairs lists Invent Data Solutions as a “Technology Systems and Solutions” company.  See Ex. C at 7.
• MediaCor, LLC, is registered in Florida (Filing Number:  L06000077775, registration attached as Exhibit VV).  The registration is “inactive.”  The registration filing uses the address 2200 N.E. 36th Avenue, Bldg. 400, Ocala, FL 34470—the same address listed for Burton Marketing International.  The registration filing lists Chester Trow as the registered agent and Michael Burton and Cynthia Sapp as the company’s Managers.  The Burtons’ Statement of Financial Affairs lists MediaCor as a “Media and marketing services” company.  See Ex. C at 7.
• Global Card Systems, LLC, is registered in Texas (Filing Number:  800751566, registration attached as Exhibit WW).  The company has forfeited its existence.  The registration filing uses the address 250 N. Main, Grapevine, TX 76051—the same address listed on the registration filings for Merelle Worldwide, LineLogix, and Worldwide Nutrition Group—and lists Penick, as President and Director.  The Burtons’ Summary of Schedules notes that Michael Burton owns 95% of Global Card Systems.  See Ex. B at 6.  The Burtons’ Statement of Financial Affairs lists Global Card Systems as a “Technology Systems” company.  See Ex. C at 6.
• Factor Media Group, LLC, is registered in Texas (Filing Number:  800860307, registration attached as Exhibit XX).  The company has forfeited its existence.  The registration filing uses the address 11496 E. Pine Valley Rd., Scottsdale, AZ, 85255-1890, and lists Matthew Clarke, Jean-Luc Martin, and Cynthia Sapp (the controller at Burton Marketing International) as Managers.  The Burtons’ Summary of Schedules notes that Michael Burton owns 34% of Factor Media.  See Ex. B at 6.
• Bombers Management Group, LLC, is registered in Texas (Filing Number:  801028939, registration attached as Exhibit YY).  The company has forfeited its existence.  The registration filing uses the address 250 N. Main, Grapevine, TX 76051—the same address listed on the registration filings for Merelle Worldwide, LineLogix, and Worldwide Nutrition Group—and lists Penick as President and Director and Sydney Mercedes Burton, as Vice President and Director.  The Burtons’ Summary of Schedules notes that Michael Burton owns 95% of Bombers Management Group.  See Ex. B at 6.  The Burtons’ Statement of Financial Affairs lists Bombers Management Group as a “Management company.”  See Ex. C at 7.
• Tix Tat Properties, LLC, is registered in Texas (Filing Number:  801646771, registration attached as Exhibit ZZ).  The registration filing uses the address 601 Cross Timbers Rd., Suite 126, Flower Mound, TX 75028-1397, which is the same address listed on the Burtons’ Statement of Financial Affairs for Merelle Worldwide, LineLogix, Worldwide Nutrition, Jackson Bo Group, Global Card Systems, and Matrix Marketing.  See Ex. C at 6-7.  The registration filing lists Penick as the Manager of the company.  The Burtons’ Summary of Schedules notes that the couple owns 40% of Tix Tat.  See Ex. B at 6.
• Global Vision Entertainment, LLC, is listed on Burtons’ Statement of Financial Affairs as an “Entertainment Marketing Services” business in which the Burtons were “an officer, director, partner, or managing executive of a corporation . . . within six years immediately preceding the commencement of this case [July 29, 2013].”  See Ex. C at 6-7.
• MB3 Motorsports, LLC, is registered in Florida (Filing Number:  G04063900251, registration attached as Exhibit AAA).  The registration is “expired.”  The registration filing uses the address 2200 N.E. 36th Avenue, Bldg. 400, Ocala, FL 34470—the same address listed for Burton Marketing International—and lists Michael Burton as the owner.  The Burtons’ Statement of Financial Affairs lists Bombers Management Group as a “Motor Sports and Marketing Services” company.  See Ex. C at 7.
• Fighters Management Group, LLC, is registered in Florida (Filing Number:  L06000098282, registration attached as Exhibit BBB).  The registration is “inactive.”  Like Burton Marketing International, supra at 3, the registration filing uses the “principal” address 2200 N.E. 36th Avenue, Bldg. 400, Ocala, FL 34470, but also lists as the mailing address P.O. Box 2569, Grapevine, TX 76099—the same city listed on the registration filings for Merelle Worldwide, LineLogix, and Worldwide Nutrition Group.  The Burtons’ Statement of Financial Affairs lists Fighters Management Group as a “Mixed Martial Arts Events and Fighter Management” company.  See Ex. C at 7.