A former Miss Utah is suing Nu Skin Enterprises, alleging it prompted the Provo Police Department to falsely accuse her and her business partner of selling stolen expired or damaged Nu Skin products headed for the dump.
The criminal charges, which were subsequently dismissed by a judge, caused Elizabeth Craig and Brady Harper "extreme damage of their reputations, humiliation, embarrassment and severe emotional distress," according to the complaint filed in U.S. District Court for Utah.
Nu Skin’s legal woes
Nu Skin Enterprises is now facing at least four proposed class action lawsuits alleging it misled investors about its operations in China.
Company shares plunged last month after a Chinese agency reported it would investigate allegations in an important newspaper that the Utah company was operating like a pyramid scheme and suggested it was brain washing members of its independent sales force.
Four lawsuits have been filed in U.S. District Court for Utah by attorneys on behalf of shareholders who claimed they have been damaged by the company’s actions in China and its alleged failure to disclose it was operating in violation of Chinese laws.
Nu Skin has denied it was violating Chinese law and said it would cooperate in the investigations.
Nu Skin did not return an email seeking comment on the lawsuit, which says Craig is entitled to more than $60 million in damages as a result of the actions by the company and police.
Provo attorney Mark Stubbs, who represents Craig, declined to answer questions about the lawsuit.
The two were arrested in February of 2010 by Provo police acting on information from Nu Skin and after executing a search warrant on a storage unit that held Nu Skin products. Charges claimed Craig and Harper were selling some of more than $1 million that was allegedly stolen from Nu Skin, which is based in Provo.
Charges against Harper and Craig — Miss Utah in 1991-92 — were dismissed in December of 2010 by a judge who found prosecutors had not met the burden of proof of the allegations required to bind them over for trial.
Charges against another man, Scott Lazerson, were reduced, but he still faces trial in August on a single charge of theft by deception, a second degree felony.
Lazerson, a former Nu Skin employee, began collecting company products from an employee store that gets rid of items that are expired, overstocked, returned, mislabeled, damaged or unwanted for a charity he operated, according to the Craig and Harper lawsuit.
Lazerson was given the products by the store supervisor, Cherilyn Nielson, who believed she had the authority to donate them to the charity Lazerson had founded, Interface Foundation, which then provided items to people in impoverished circumstances, the suit says.
Lazerson turned to Craig and Harper to sell high-end Nu Skin articles such as facials and cosmetics that were not suitable for distribution to the poor, the lawsuit said. Through their company, Nu Lite Sales LLC, the two sold the products online, with a portion of their earnings going to Interface.
But the sales attracted the attention of Nu Skin which, according to the lawsuit, goes to great lengths to reduce sales of its products outside of its chain of independent distributors.
Nu Skin officials contacted the Provo Police Department and alleged Craig, Harper and Lazerson were trafficking in stolen company products. They were arrested when the company failed to tell police that the merchandise was "dump product" and not stolen but were a give-away authorized by the store manager, the lawsuit says.
Publicity after the arrest short-circuited Craig’s career at a motivational speaker. Brigham Young University cancelled all her pending appearances and Deseret Book pulled products associated with her, causing loss of income and reputation, the suit says. Harper also suffered income and reputational loss, it says.
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