Long-time Utah MLM Firm, Modere, Shutters its Business, Surprising Employees, Vendors, "Social Marketers," and Customers Alike

Modere abruptly closed its business on Friday, dismissing all employees in advance of what is expected to be a Chapter 7 bankruptcy filing.

As of last evening, the now one-page website of the Provo, Utah-based multi-level marketing company has a brief, six-language statement that reads:

"Thank You for the Journey

"After 23 wonderful years of serving our cherished community, we’ve made the difficult decision to close our doors.

"We’re incredibly grateful for your support, trust, and loyalty over the years. Whether you’ve been with us from the beginning or just discovered us recently, thank you for being a part of our story.

"From all of us at Modere — thank you. It’s been an honor."

For readers not familiar with Modere, its still "live" LinkedIn profile states:

"Modere ... is an omnichannel, consumer products company that develops and markets clean, health & wellness products through ecommerce and direct-to-consumer channels. The company’s branded, award-winning portfolio of clean lifestyle products includes beauty and personal care, nutrition and household essentials that are formulated without the use of thousands of controversial chemicals and compounds. This holistic live clean philosophy drives every aspect of the brand, going beyond its ingredient paradigm to encompass business operations, company culture, community activism and environmental advocacy."

According to various MLM reports and industry rankings, Modere's annual revenue was pegged at between $100 million and as high as $400 million, although unsubstantiated online statements suggested that the company was struggling financially of late.

Regardless, beyond the fairly cryptic statement now published on its website, no other information has officially been released by Modere.

However, several MLM-focused media outlets have reported that numerous independent distributors (described as "Social Marketers" by Modere) have shared online that they have been notified via email's sent by the company that previously placed orders will be fulfilled by Modere.

That said, several now former Modere employees have posted online about the Friday shuttering of the company and the concurrent layoff of what one former executive described as "hundreds of corporate roles" at the firm.

Interestingly, it appears that neither the company nor its majority owners, Z Capital Partners or S.A.C. Capital Advisors (more on them below), followed federal law that requires employers planning a layoff of 50 or more employees to provide a 60-day, publicly available notice as per the WARN Act (aka, the "Worker Adjustment and Retraining Notification Act of 1988").

Then again, although the statement on the Modere website points to "23 wonderful years of serving our cherished community, ..." the truth is that Modere's history actually traces back more than 35 years ago.

Perhaps that's because the real story of Modere as it includes a trail of serendipitous formation, international growth, tax evasion, prison time, near financial collapse, and an apparent fire sale eventually leading to its now formal closing.

The Hidden Modere History

The truth of the matter is that before Modere was Modere it was known as Neways International.

And the backstory of Neways stretches back to the 1970s, even though the firm was not legally formed until 1992.

That said, I found this Encyclopedia.com report about Neways to be very insightful.

Among other things the Encyclopedia.com writeup explains that Thomas Mower, a chemist, and his wife, Leslie DeeAnn, started a commercial chemical company called Nubrite in the 1970s, a firm that

"... used harsh chemicals in more than 400 different industrial products, including engine degreasers, which they sold to airports, garages and convalescent centers."

After over a decade of running Nubrite and discovering that many of the caustic chemicals it sold were contained in cosmetics being used by Leslie, the couple decided to create their own line of personal care products free from harsh chemicals, products they took to market through independent distributors using an MLM business model.

By 1992 their efforts had progressed to the point that they incorporated their business under the name Neways International, with Thomas and Leslie splitting ownership 50-50.

Sales soon grew beyond the borders of the United States into Canada, followed shortly thereafter with inroads into Australia, followed by New Zealand and Malaysia.

Next came the United Kingdom and Russia, which in turn opened-up opportunities in Eastern Europe and beyond.

By 1998, Encyclopedia.com reports that sales success had turned Neways into a "hot" international MLM phenomenon, with over $300 million in top-line revenue.

By extension, the Mowers were now multimillionaires many times over.

Unfortunately, Neways successes did not come without difficulties, including such legal challenges as

• A product recall forced by the U.S. Food and Drug Administration for marketing/selling a product containing dangerous levels of a powerful diuretic;
• Unsubstantiated health claims that medical research supported certain Neways' products as being devoid of harmful side effects common with competing products; and
• Pleading guilty to charges brought by the FDA to selling a product that illegally contained human growth hormone (HGH), activities that led to paying a $500,000 criminal fine and forfeiting $1.25 million in profits from the sale of said product.

And then things got ugly.

Although they divorced in 2000, Tom and Leslie still ran Neways side-by-side after the new millennium began.

In late 2001, however, the Mowers were both charged with one count of conspiracy and six counts of tax evasion.

Why? For allegedly attempting to defraud the U.S. Internal Revenue Service out of over $1 million in taxes and failing to report to the IRS an estimated $3.2 million in overseas commission checks.

Prior to being found guilty in March 2005 (on all charges), the Mowers resigned their posts with the company.

Then in November 2006, a few months before the Mowers were slated to enter prison, San Francisco, California-based Golden Gate Capital acquired Neways from the Mowers for an amount not officially disclosed, even though Wikipedia reports that the sale price was $500 million.

The Golden Gate Capital purchase of Neways notwithstanding, some five years later (with Neways then facing serious financial difficulties), the company announced that it had "... completed a comprehensive out-of-court restructuring, allowing the company to significantly reduce its debt."

Through the restructuring, Golden Gate Capital retained a minority stake in Neways, with "... private equity firm Z Capital Partners ... and funds affiliated with S.A.C. Capital Advisors ... own(ing in aggregate the) majority ..." of Neways after-the-fact.

That was in January 2012.

One year later, Z Capital acquired controlling interest of Neways by purchasing the stake previously held by S.A.C. Capital.

Then in February 2014, Neways formally relaunched as Modere.

Bringing us now, 11 years later, to the unexpected closure of Modere.

Should additional new/information become available, we'll update our report here.

Otherwise, good luck to the former Modere employees in finding new opportunities.

Publisher's Note

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