UNITED STATES DISTRICT COURT EASTERN ... -...

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TEXAS

SHERMAN DIVISION

PRUVIT VENTURES, INC.,

Plaintiff,

vs.

AXCESS GLOBAL SCIENCES, LLC, and

FOREVERGREEN INTERNATIONAL, LLC,

Defendants.

Civil Action No. 4:15-cv-00571-ALM-CAN

DECLARATION OF RON WILLIAMS

IN SUPPORT OF AXCESS GLOBAL

SCIENCES, LLC AND

FOREVERGREEN INTERNATIONAL,

LLC’S JOINT MOTION FOR

TEMPORARY RESTRAINING

ORDER, EXPEDITED DISCOVERY,

AND PRELIMINARY INJUNCTION

Honorable Judge Amos L. Mazzant

FOREVERGREEN INTERNATIONAL, LLC

Counterclaimant,

vs.

PRUVIT VENTURES, INC., LACORE

LABS, LLC, TERRY LACORE, BRIAN

UNDERWOOD, CHRISTOPHER N. HARDING,

BILLY FUNK, RAY DIETRICH, ROBERT

DEBOER, and MICHAEL RUTHERFORD,

Counterclaim and Third Party

Defendants.

AND RELATED COUNTERCLAIMS AND

THIRD-PARTY CLAIMS

Case 4:15-cv-00571-ALM-CAN Document 30-13 Filed 10/26/15 of 17 PageID #: 518

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I, Ron Williams, hereby declare as follows:

1. I am the Founder, Chief Executive Officer of ForeverGreen International, LLC

(“ForeverGreen”), a defendant and counter-plaintiff in the above-captioned lawsuit.

ForeverGreen is a wholly owned subsidiary of the publically traded entity ForeverGreen

Worldwide Corporation, of which I am the Chairman of the Board. I have personal knowledge of

the matters set forth herein and if called upon to testify, I could and would testify competently to

them.

2. I submit this declaration in support Axcess Global Sciences, LLC (“AGS”) and

ForeverGreen’s Motion for Temporary Restraining Order, Preliminary Injunction, and Expedited

Discovery in the above-captioned action (“Action”).

I. BACKGROUND

3. I have over twenty-five (25) years of business leadership experience, and I have

served in executive management positions in the network marketing industry over a career that

spans two decades. I have helped develop and open customer and member sales in more than 200

countries and assisted in the success of millions of distributors worldwide. I also served a full

one (1) year term as the president of the Multi-Level Marketing International Association.

4. Based on my years of experience in the network marketing industry, my

leadership of several direct selling companies and associations, I have developed an intimate

understand and knowledge of the business fundamentals, principles, and economics that lead to

success in the network marketing industry.


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II. FOREVERGREEN’S PRODUCTS

5. I founded ForeverGreen in 2004, for the purpose of empowering others to better

themselves. As part of this overarching purpose ForeverGreen developed a family of health

related products including: Organic Whole Foods, 24-Karat Chocolate, Marine Phytoplankton,

FrequenSea, Essential Oils, Azul, Fixx, Pulse-8, POWERstrips, SOLARstrips, BEAUTYstrips,

Retrome, and Thunder and FIXX meal replacement protein shakes.

III. FOREVERGREEN CREATED A NEW MARKET WITH ITS KETOSIS

PRODUCT

6. It is generally recognized in the medical professions that the rate of obesity

among the adult population in the United States has been steadily increasing in the last several

decades. (Millet Decl., Ex. A at 1:14-18.). Such obesity has been linked to marked increased in

the occurrence of heart disease, hypertension, diabetes, osteoarthritis of the knees and hips, and

increased morbidity resulting from these and other medical conditions. (Id. at 1:18-22.)

7. Many exercise routines and dietary plans have been developed in an effort to

combat this obesity epidemic and to help people achieve their weight-management goals. One

weight management technique focuses on helping people reach a state of nutritional ketosis

through diet and exercise. (See gen. Millet Decl, Ex. B.) A state of nutritional ketosis is typically

achieved by undertaking long periods of fasting or extended exercise. (Id. at 4:34-42.) Once

nutritional ketosis is achieved, a person’s body begins burning fat and using ketone bodies as an

alternative source of energy, rather than glucose. (Id. at 2:37-42.) (Id. at 2:37-42.) When in

ketosis, the body essentially burns fat for fuel rather than carbohydrates resulting in increased fat

burn and weight loss. (Id.) However, due to the physical difficulties associated with long periods


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of fasting and extended exercise, achieving a state of nutritional ketosis is very difficult, if not

impossible, for most people.

8. Beginning in 2013, as part of its overarching purpose to help people improve their

lives, ForeverGreen has worked with AGS to develop a dietary supplement called KetonX that

helps users achieve a state of nutritional ketosis without the necessity of long periods of fasting

or vigorous exercise.

9. ForeverGreen’s KetonX supplement is based on patented technology described in

United States Patent Nos. 6,613,356 (“Vlahakos Patent”) and 9,138,420 (“USF Patent”)

(collectively, the “Asserted Patents”). AGS granted ForeverGreen an exclusive license to the

Vlahakos Patent in the multi-level marketing channel on May 25, 2015. (Attached hereto as

Exhibit K is a true and correct copy of the May 25, 2015 Sublicense Agreement.) Subsequently,

on July 7, 2015, AGS granted ForeverGreen an exclusive license to the USF Patent. (Attached

hereto as Exhibit A is a true and correct copy of the July 7, 2015 Sublicense Agreement.)

10. I interact with ForeverGreen’s independent distributors to receive feedback on

customer satisfaction and the quality of our products. I also interact with ForeverGreen’s

customer care personnel who interact regularly with our customers and distributors. I am aware

that customers and distributors of KetonX have high praise for this product, and they find that

using KetonX helps them to achieve improved health and weight-management goals.

11. ForeverGreen markets its KetonX supplement throughout the world through its

independent distributors in its direct selling network. ForeverGreen relies on high customer

satisfaction for its products as a critically important marketing point. The success of any product


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sold in the network marketing channel depends on word-of-mouth satisfaction to create a

network of happy distributors and satisfied customers.

12. Based on wide-spread distributor and consumer satisfaction with its products,

ForeverGreen has patiently grown its business tremendously since its founding. Also based on

the widespread satisfaction and quality of its KetonX supplement, ForeverGreen’s independent

distributor base has grown by over 6,400 customer and distributors since the release of KetonX

on July 10, 2015.

IV. EARLY MEETINGS WITH AXCESS GLOBAL AND FOREVERGREEN

13. In early 2013, while working with a consultant, Axcess Global was given a list of

roughly 20 network marketing companies, including ForeverGreen, to consider licensing the

technology contained in the Asserted Patents.

14. Near the end of 2013 Axcess Global decided that it would partner with

ForeverGreen to bring a Ketosis Supplement to the network marketing industry and the parties

signed a Letter of Intent on February 6, 2014. (Attached hereto as Exhibit B is a true and correct

copy of the Letter of Intent.) Shortly thereafter, ForeverGreen purchased over $270,000 worth of

raw materials for production of a Ketosis Supplement. (Attached hereto as Exhibit C are true and

correct copies of Wells Fargo Wire Transfer Activity Details evidencing payments for raw

materials.)

15. Over the next several months, despite extensive research, development, and

testing, Axcess Global struggled to produce a supplement that was ready for marketing.


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V. FOREVERGREEN’S INTRODUCTION TO TERRY LACORE (PRUVIT)

16. In early 2014, I was introduced to Terry LaCore (“LaCore”) who presented

himself as a friend and colleague. LaCore had an established network marketing company, bHIP

Global (“bHIP”).

17. During this time, LaCore proposed a potential merger of our respective

companies; his company being bHIP and mine being ForeverGreen. It was at that time that I

indulged Mr. LaCore by introducing him to the ketosis technology. This was done solely for the

potential of LaCore marketing a Ketosis Supplement in China, where bHIP was prevalent.

(Attached hereto as Exhibit D is a true and correct copy of an email chain dated July 7, 2014

from Gary Millett to Ron Williams; attached hereto as Exhibit E is a true and correct copy of an

email dated July 17, 2014 from Ron Williams to Ed Porter.) ForeverGreen was not prevalent in

China and this approach was intended as a creative funding mechanism to bring our companies

together. ForeverGreen would maintain its exclusive distribution rights in the remainder of the

network marketing channel world-wide.

18. During this time, Axcess Global and ForeverGreen began testing their initial

formulations of a ketosis supplement. Eventually, I asked LaCore if he would be willing to test

an early version of ForeverGreen’s ketosis supplement in China. LaCore agreed to do so and we

both began testing the product. Unfortunately, as evidenced in both ForeverGreen and LaCore’s

initial tests, this early formulation was not ready for market.

VI. PRUVIT HASTILY RELEASED KETO//OS IN AN ATTEMPT TO GAIN AN

ADVANTAGE BY BEING FIRST TO MARKET

19. In late January 2015, I received a phone call from LaCore who indicated that he

was no longer interested in working with ForeverGreen, that he did not believe the University of


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South Florida’s patent application1 would ever result in an issued United States Patent, and that

he intended to move forward and develop a ketosis supplement on his own under the Pruvit

name. I asked LaCore not to pursue a ketosis supplement on his own and indicated that this was

not my intent when I introduced him to the proprietary ketosis technology.

20. In February 2015, I further contacted LaCore to discuss his moving forward with

a Ketosis Supplement without ForeverGreen and outside of AGS. (Attached hereto as Exhibit F

is a true and correct copy of an email dated February 26, 2015 from Ron Williams to Terry

LaCore.) Reasserting, what was seemingly forgotten by LaCore, that ForeverGreen did not

introduce LaCore to the ketosis supplement for LaCore to pursue it on his own. (See Exhibit F.)

21. Shortly after I contacted LaCore, he responded by offering me, individually,

fifteen percent ownership in Pruvit. (Attached hereto as Exhibit G is a true and correct copy of an

email dated March 2, 2015 from Terry LaCore to Ron Williams, and Exhibit L is a true and

correct copy of an email dated March 2, 2015 from Terry LaCore to Ron Williams.) I rejected

this offer on principle. (See Exhibit G.) I could not take an opportunity for myself that rightfully

belonged to ForeverGreen. At a minimum, my duty as CEO and Chairman of the Board required

my refusal.

22. In late March 2015, two of Pruvit’s executives, LaCore and Brian Underwood

(“Underwood”), met with me and one of ForeverGreen’s investors, John Clayton. The meeting

took place in Texas. The purpose of the meeting was to evaluate whether there was any

possibility of saving the relationship between LaCore and ForeverGreen by working together on

1 The referenced application eventually issued and became United States Patent No. 9,138,420.


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the distribution of the ketosis supplement. This meeting was somewhat successful in that

ForeverGreen and LaCore, now representing Pruvit, believed working together may still be a

possibility if the two could agree to terms.

23. In early April 2015, Underwood, the CEO of Pruvit, flew to Utah to discuss the

terms of working with ForeverGreen to bring a ketosis supplement to market. The meeting, and a

few subsequent telephone discussions with Underwood, did not build ForeverGreen’s confidence

in Underwood as someone to lead such an important collaboration. In its due diligence,

ForeverGreen validated these impressions as it found a history of poor business dealings by

Underwood. Additionally, the discussions with Underwood also indicated that Pruvit and

ForeverGreen were likely far away from an agreement on terms as Pruvit’s expectations had

drastically increased since the time that ForeverGreen introduced LaCore to the concept in 2014.

24. In late April 2015, after the meeting and subsequent telephone discussions,

Underwood requested that ForeverGreen wait until November to try to make this work.

Underwood expressed that ForeverGreen and Pruvit needed more time to refine the terms. In

retrospect, it appears that these communications were nothing more than tactics to delay

ForeverGreen’s release of KetonX and aide Pruvit’s efforts to hastily be first to market with its

ketosis supplement because shortly thereafter, on May 11, 2015, LaCore told me that Pruvit was

launching its KETO//OS supplement the next day. When I asked LaCore why Pruvit was moving

forward with its own product now, rather than proceeding with the November timeframe that I

was given by Underwood, LaCore told me that Pruvit had to be first to market.

25. On May 12, without permission from AGS or ForeverGreen, and without license

to the USF Patent or the Vlahakos Patent, Pruvit launched a Ketosis Supplement, dubbed


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“KETO//OS,”2 misappropriating AGS’s trade secrets and infringing upon ForeverGreen and

AGS’s rights under the Asserted Patents in the process.

26. After spending additional time to further develop, test, and perfect its formulation,

ForeverGreen launched its KetonX supplement on July 10, 2015.

VII. PRUVIT IS CAUSING HARM TO FOREVERGREEN

27. Pruvit’s KETO//OS supplement competes directly with ForeverGreen’s KetonX

supplement in the marketplace. The marketplace views the products as alternatives to each other,

with each product being used as a ketosis weight management supplement. In fact, Pruvit claims

that KETO//OS utilizes the patented technology found in the USF Patent, to which ForeverGreen

has an exclusive sublicense in the multi-level marketing channel. (See Exhibit A.) While the two

products may initially appear to be quite similar, there are significant differences in quality,

which as discussed below, is tarnishing ForeverGreen’s legitimate KetonX product.

A. Pruvit’s business advantages over ForeverGreen

28. By being first to market, without approval and with an infringing product, Pruvit

inappropriately usurped a significant business advantage from ForeverGreen. As mentioned

previously, Pruvit did everything within its power, including inappropriately leading me to

believe that it was still interested in working together, to make sure that it was first to market

with its ketosis supplement, KETO//OS. Pruvit launched KETO//OS on May 12, 2015, with one

day of advance notice to me, and a full two months before ForeverGreen launched KetonX.

2 A companion product, called “KETO//COS,” which includes caffeine, was also launched. Both

products are referenced herein as merely “KETO//OS.”


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29. ForeverGreen is the only company with rights to the Asserted Patents and should

have enjoyed the benefit of being first to market, as well as ongoing exclusivity in the ketosis

supplement market. (See Exhibit A; Exhibit K.)

There is a significant advantage in being first to market in the network marketing

industry, especially like here, where the product is revolutionary. The network marketing

industry is a close-knit industry and distributors are constantly watching for exciting new

products. When a revolutionary product is launched, it creates a buzz in the industry and attracts

distributors who are excited to take the new product to their previously established downlines.

As such, the initial launch of a new product allows the first company to market to establish a

large base of independent distributors and the distributors are incentivized to join and stay with a

company because doing so allows them to collect a percentage of the sales from the distributors

and customers that they have introduced to the company. Therefore, even if a better competing

product comes along, the distributors are not likely to leave the original company, because doing

so would require them to walk away from the ongoing earnings generated by their established

downline.

30. When a product in a new product category like this is released, the first company

to release the product gains specific advantages, one of which is brand recognition by the

public. Because it is the first product, the public will associate that product with the company

that introduces it. Most new products get introduced by a company that has invested the time

and economic resources to create a new technology and product. It then enjoys a first-to-market

advantage to capitalize on that investment. In this case, however, Pruvit did not invest in the

technology or spend nearly the resources that AGS and ForeverGreen did to create this new


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product, yet it is reaping the rewards as if it did. The longer Pruvit is allowed to sell its product,

the more AGS will be damaged by losing the association in the mind of the consuming public

that AGS and ForeverGreen should enjoy.

31. Thus, by being first to market with its KETO//OS supplement, Pruvit

inappropriately gained a significant business advantage over ForeverGreen. In the face of

ForeverGreen’s efforts to bring a Ketosis Supplement to market legally and correctly.

B. ForeverGreen has lost existing business to Pruvit

32. Pruvit’s release of KETO//OS has already caused ForeverGreen to lose

distributors. ForeverGreen sells its KetonX supplement through independent distributors in its

direct selling network. ForeverGreen’s success as a business derives from its ability to retain

existing distributors and their ability to introduce additional distributors and customers. To date,

ForeverGreen is aware that it has lost at least two full-time, market-leader level, distributors to

Pruvit. Specifically, ForeverGreen has lost at least the following distributors: Billy Funk and Ray

Dietrich. These distributors were previously ForeverGreen distributors, but recently terminated

their relationship with ForeverGreen to switch to Pruvit. (Attached hereto as Exhibit H is a true

and correct copy of the Career Placement Agreement.; see also

https://www.youtube.com/watch?v=ZHMgnNciYho.) There are likely many more distributors lost

to Pruvit, which we are unable to identify at this time.

C. ForeverGreen has lost prospective distributors to Pruvit

33. As mentioned previously, the initial launch of a revolutionary product, like

ketosis supplements, in the network marketing industry is essential to establishing a base of

distributors. By being the first to market with its KETO//OS product, Pruvit benefited from this


https://www.youtube.com/watch?v=ZHMgnNciYho

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heightened initial interest and secured a large portion of the independent distributors who were

waiting for this type of revolutionary product to be released in the network marketing industry.

Additionally, it appears Pruvit initiated its lawsuit against AGS and ForeverGreen as a frivolous

action designed as a stall tactic and, even worse, a marketing and sales tool to sway distributors

from joining with ForeverGreen.

34. Because of the momentum Pruvit gained during this initial launch, it is likely that

Pruvit will gain additional distributors, who undoubtedly would have joined ForeverGreen had

ForeverGreen rightly been first to market and the sole source of ketosis supplements in the

industry.

D. ForeverGreen is confronting market devaluation because of Pruvit

35. Pruvit is currently selling the patent infringing KETO//OS to distributors for as

low as $4.09 per serving, depending on the volume of product purchased. ForeverGreen sells its

product to distributors for $5.99 per serving. (Attached hereto as Exhibit I is a true and correct

copy of a spreadsheet comparison of Pruvit’s pricing compared to that of ForeverGreen.) So, in

many instances, Pruvit is selling its unauthorized and patent infringing product to distributors at

a 32% discount from ForeverGreen’s legitimate product price. (Id.)

36. Customer relationships are very important in this industry, and ForeverGreen

invests heavily in recruiting and forging strong and personal relationships with its distributors

and customers. Like most products, the pricing for dietary weight management supplements like

KetonX tend to be a key factor for customers, in that customers do not want, or expect, the price

of the product to go up over time. If ForeverGreen is forced to reduce the price of its KetonX

product now to match the price of Pruvit’s inferior KETO//OS product, ForeverGreen will likely


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not be able to increase its price back to its original price in the future without destroying the good

will and customer relationships that ForeverGreen has worked hard to foster.

E. Future losses as a result of Pruvit’s sales of KETO//OS are foreseeable

37. Former ForeverGreen, and current Pruvit distributor Billy Funk (“Funk”) recently

touted that Pruvit was selling $100,000 of KETO//OS each day within 32 minutes. See

https://www.youtube.com/watch?v=ZHMgnNciYho . Funk claims that a cap was previously set

on sales so that no more than $100,000 worth of product was sold each day to make sure that

Pruvit could keep up with production. (Id.) Funk also indicated that as early as September 26,

2015, the daily cap had been lifted allowing for sales of more than $100,000 each day. (Id.)

Because of the snowball effect as a network marketing industry gains momentum, and its sales

force of distributors grows, this number is sure to increase rapidly. However, even if this number

remained steady, because ForeverGreen should be entitled to market exclusivity by virtue of the

patent rights it holds, ForeverGreen would be losing out on at least $36.5MM annually.

F. Tarnishment to the industry

38. It is my experience that independent distributors and customers in the network

marketing industry are regularly offered dietary supplements as a means for achieving their

weight management goals. It is further my experience that distributors and customers conclude

that many of these products are unhelpful, too expensive, or cause undesired side effects.

Accordingly, ForeverGreen will be irreparably harmed whenever Pruvit’s KETO//OS results in

customer dissatisfaction with the product. If dissatisfied Pruvit customers conclude that ketosis

dietary supplements are ineffective, not worth the cost, or that they cause undesired side effects,


https://www.youtube.com/watch?v=ZHMgnNciYho

13

this poor experience may make them unwilling to ever consider ForeverGreen’s KetonX

supplement.

39. I am particularly concerned about this because Pruvit’s early versions of

KETO//OS are known to cause diarrhea, headaches, and nervous system attacks. (Attached

hereto as Exhibit M is a true and correct copy of a customer complaint relating to health

problems associated with use of KETO//OS.)

40. Furthermore, I am aware that many Pruvit customers have complained that

KETO//OS is ineffective in helping them to achieve their desired weight-management goals. It is

very possible that the new version of KETO//OS is still not truly ready, and Pruvit is tarnishing

the market for ForeverGreen’s patented KetonX supplement by releasing an inferior,

underdeveloped, ineffective, and potentially harmful product.

41. The concern that Pruvit’s KETO//OS supplement is tarnishing the industry has

increased over the past several months as I learned in August 2015 that LaCore’s product

manufacturing company was sued by one of its clients for allegedly shorting ingredients in a

different product that they manufacture. (Attached hereto as Exhibit J is a true and correct copy

of relevant portions of the First Amended Complaint for Injunctive Relief and for an Equitable

Accounting filed in Optogenix Inc. v. BHIP Global, Inc., Civil Action No. 14-cv-6558 (S.D.N.Y.

Dec. 9, 2014.) The negative reputation of LaCore’s manufacturing company being associated

with the Ketosis Supplement market has further potential to tarnish the industry as a whole and

to devalue the Ketosis Supplement technology that ForeverGreen has been working to bring to

market for over two (2) years. Irreparable Harm to ForeverGreen’s Business Model


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42. Up to the present, ForeverGreen has been a rapidly growing business, and it has

been steadily developing a strong base of distributors. ForeverGreen’s business model depends

on the continued growth and ForeverGreen expects to continue recruiting a solid network of

distributors. However, if Pruvit is not enjoined, ForeverGreen is likely to continue losing

distributors to Pruvit, continue to cause price erosion, and tarnish to the ketosis industry, thereby

significantly diminishing the value of ForeverGreen to its shareholders.

43. Because ForeverGreen’s business model is dependent upon a strong and growing

sales force of distributors, the migration of even a small number of distributors to Pruvit could

greatly harm ForeverGreen. Loss of individual distributors can be devastating in the network

marketing industry because often times a single distributor will convince its entire downline to

move over to a new company. Therefore, allowing Pruvit to continue selling its KETO//OS

supplement will undermine the foundational base of ForeverGreen’s business model for KetonX.

G. Irreparable Harm to Shareholder Value

44. The actions detailed above, which have been instigated by LaCore and his

company Pruvit, have caused irreparable harm to the share value of ForeverGreen. As CEO of

ForeverGreen, and Chairman of the Board of its publically traded parent entity ForeverGreen

Worldwide Corporation, I have an obligation to bring products to market lawfully, rightfully, and

with integrity. My duty to protect public shareholder value requires it. Pruvit is irreparably

harming ForeverGreen’s value through its actions and its unauthorized and patent infringing

KETO//OS supplement. The reputational harms described above not only taint the Ketosis

Supplement market as a whole, but they also have a direct negative impact on ForeverGreen’s


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CERTIFICATE OF SERVICE

I hereby certify that on October 26, 2015, I caused a true and correct copy of the

foregoing document to be filed with the Clerk of Court and served on all counsel of record via

CM/ECF pursuant to Local Rule CV-5(a).

/s/ Larry R. LaycockLarry R. Laycock


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