Theft case embroils Nu Skin
The attorney for a man accused of theft for receiving excess Nu Skin Enterprises products for his charity and then selling some of it on eBay said Wednesday the Provo company destroyed evidence after it was turned over to it by police and also is withholding other documents.
The attorney for Scott Lazerson, a former Nu Skin employee who operated a charity called the Interface Foundation, has asked a judge to dismiss the case, citing the destruction of the products. Marcus Mumford also asked 4th District Judge Darold McDade to order Nu Skin to turn over additional evidence.
Lazerson was charged in February 2010 with three felonies of theft by deception, receiving stolen property and money laundering.
According to court documents, Lazerson received Nu Skin products that had not been not sold to Nu Skin's network of distributors, were expired, damaged or for other reasons had ended up in a warehouse that disposed of unwanted items. Lazerson said he was providing the products to impoverished people in developing countries through his charity.
But some of the products ended up for sale on eBay. Nu Skin prohibits the sale of its products on eBay or other online sites in order to maintain the integrity of its sales system in which its high-priced products are sold to independent distributors.
Prosecutors also charged Elizabeth Craig and Brady Harper, who run a company called Nu Lite Sales LLC through which Lazerson sold some of the donated items. Craig and Harper were dismissed from the case by McDade, who said there was no evidence they had participated in any theft.
Craig, a former Miss Utah, and Harper are suing the Provo Police Department for false arrest and Nu Skin for malicious prosecution and defamation, among other things.
Their civil suit says Nu Lite sold products for Lazerson that were high-end and expensive and unsuitable for use by an impoverished person in a developing country and that monies went to pay expenses for the charity.
Lazerson was arrested after Nu Skin conducted an internal probe and then went to the Provo police. Officers armed with a search warrant and directions from Nu Skin employees opened four storage units rented by Lazerson that contained about 400 boxes of products.
But Detective Ron Gibson testified that he turned over the boxes to Nu Skin after taking an inventory and photos.
Sometime after that, Nu Skin destroyed the unwanted products it said were valued at $1.5 million. But Mumford contends the value of the materials can't be determined without having the actual products in hand.
Mumford introduced a partial recording of an interview between Nu Skin officials and the supervisor of the E-Store, the warehouse where unwanted products end up. The store can give those products to employees or take them to the landfill.
In the tape, the supervisor said Lazerson was given "dump products" with no value that were destined to the landfill. The recording calls into question the company's valuation of the products given to Lazerson, Mumford contends.
He also asked the judge to order Nu Skin to turn over more evidence of how it values excess inventory and how it takes a write down for them on its taxes.
McDade ordered Nu Skin to turn over its personnel file from when Lazerson was an employee. But the company's attorneys said Nu Skin did not have additional relevant material other than parts of its internal investigation that should be kept confidential because they involved communications with the company's in-house lawyers.
The judge said he would rule on whether to dismiss the case and another motion after receiving further arguments in the couple of weeks.