Xyience having legal problems? [Archive] - Bodybuilding by Freakzonline

abs

02-04-2007, 11:47 PM

anybody could have produced this letter.. did you do a search of federal case # by any chance?

http://blog.myspace.com/index.cfm?fuseaction=blog.view&friendID=135747506&blogID=203983522&MyToken=5e220918-451c-4610-853c-b5e914a67911

We have been notified by several investors of the Xyience Company, some who have pending lawsuits, that Xyience is currently being investigated by senior counsel for the Securities and Exchange Commission for illegal money raising and that investor funds are possibly being diverted into shell corporations set up by Xyience's CEO Russell Pike. Pike has been imprisoned for these type of actions in the past. We are in contact with the SEC, and have verified the investigation.

Attached are several articles sent to us by these investors, displaying Russell Pike's previous criminal history.

We have also been in contact with Phoenix Labs, a manufacturer of Nutritional Supplements for the industry. Xyience owes Phoenix Labs over $500.000.00 for manufacturing fees they will not pay. A lawsuit in currently pending against Xyience. Russell Pike and Paul Grady were deposed on October 12, 2006, regarding this Federal Case #CV06-1859.

Dymatize Nutrition is also filing suit against Xyience. Xyience owes this supplement manufacturing company over 2 million for unpaid manufacturing fees.

Recently, our office has also been contacted by Basic Media Group, who is the publisher of Real Fighter Magazine. Xyience refuses to pay for their share of the production of this publication and the exclusive advertising rights for the Real Fighter Magazine given to Xyience.

Also, we have been contacted by the Nevada State Athletic Commission. They have been advised that Xyience's Russell Pike and the president of the Ultimate Fighting Championship, Dana White, have possibly been collaborating with each other to lockout all other supplement sponsors from advertising with the UFC. White is apparently also directing which fighters Xyience sponsors and locking out other supplement sponsors from advertizing on Spike TV during the Reality Show. We are investigating further, the business relationship between Xyience and Dana White and the impropriety of this exclusive arraingement.

A class action law suit is currently being drafted on behalf of several investors and former employees who have claims against the Xyience Company and it's convicted felon Pike, as well as other officers of the Xyience company.

Lastly, sources have just notified our office, that some GNC executives might possibly have a financial interest in the Xyience Supplement company. GNC is Xyience's biggest account and they seem to be taking on all of the Xyience products they produce regardless of the quality.

We will be in touch as things progress.

Regards,

John Miller
Director
Criminal Complaint Division

abs

02-04-2007, 11:48 PM

Tuesday, January 09, 2007

XYIENCE IN TROUBLE PART II
Current mood: contemplative
Category: Sports

XYIENCE LEGAL TROUBLES

By: Rich Bergeron

Fight News Unlimited posted an email we intercepted last month that described some intriguing allegations being leveled at Xyience, Inc. ranging from the company engaging in locking other potential sponsors out of the UFC to setting up shell companies to illegally divert funds to. While we have recently discovered that the email may not be genuine, we have confirmed some of the allegations against Xyience that the email disclosed. We have recently uncovered some startling evidence of civil litigation filed against Xyience and the fallout that followed. One company involved in a lawsuit against Xyience, Inc. (Phoenix Laboratories) settled the case against Xyience shortly after depositions were scheduled last October for officers of the corporation. Several employees resigned before the settlement. So did the chief counsel for Xyience in that case.

Phoenix Laboratories (http://www.phoenixlaboratories.com/index.html), which is involved in producing products for neuroscience research and also manufactures vitamins, supplements, and pharmaceutical products, filed suit against Xyience, Inc. in April of 2006, seeking compensatory damages in excess of $500,000. Just a week after that case settled out of court, another company filed suit against Xyience. Valint Consulting, LLC is currently involved in litigation to recover more than $97,000 it claims it is owed for professional consulting services. A summons was issued to Xyience in that case on November 28, 2006. It is the last transaction registered in the case.

In an initial complaint dated April 20, 2006, Phoenix Laboratories contended that an agreement had been made in October of 2005 between the company and Xyience, Inc. for the manufacture and delivery of goods. The complaint, drafted by Stephen R. Stern and Mark W. Geisler of the Platiff's law firm, contained allegations including, "Defendant has failed and refused to pay plaintiff for the goods it ordered, received, and accepted from plaintiff, in the amount of $498,065.35." The complaint goes on to list packaging costs incurred by Phoenix Laboratories, which they paid to a third party and expected to also receive in additional payment from Xyience, Inc. The packaging figure they added to the claim for damages was $5,935.80. The company also sought interest and legal fees in the case.

The invoices included in the case files as evidence include the following products and prices: Xytamins (19,341 30 Packs) at a total cost of $109,083.24; Xtreme Fat Burner 90's (20,445 units) at a total cost of $119,398.80; Xtreme Nitric Oxide 90's (9,727 units) at a total cost of $60,988.29; Xtreme Natural Growth 90s (8,819 units) at a total cost of $38,450.84; Xtreme Carb/Fat Blocker 90s (4,923 units) at a total cost of $19.495.08; Xtreme Testosterone 90s (9,730 units) at a total cost of 62,953.10; and Xelerate 90's (15,120 units) at a total cost of $87,696.

The contention of the lawyers representing Xyience was that Phoenix Laboratories did not deliver the goods to the proper specifications that Xyience provided for them. They lodged their own counterclaims in the suit seeking "compensatory, incidental, consequential, and punitive damages" in addition to any and all attorney fees incurred by Xyience as well as a complete dismissal of the case. The counterclaim documents filed by the lawyers for Xyience argued:

"Phoenix knew or should have known that Xyience would engage in considerable quality control analyses regarding the nutritional supplements that Phoenix manufactured and packaged on behalf of Xyience. Said quality control analyses revealed significant defects and deficiencies. The nutritional supplements manufactured and packaged by Phoenix for Xyience pursuant to the above-mentioned purchase orders, including, without limitation, the established and specific formulas and specifications provided by Xyience, failed in material respects to conform to the representations and warranties made by Phoenix."

Xyience reportedly hired a third-party lab to test the products produced by Phoenix Laboratories, and the tests allegedly revealed an "extensive and systematic failure by Phoenix" to properly create and label the products according to Xyience's instructions and demands. The lawyers for Xyience went on to claim that due to Phoenix Laboratories' "breaches of contract, breaches of

representations and warranties, deficiencies and defects and failures of consideration, Xyience

has sustained substantial and extensive losses and damages."

The counterclaims essentially argued that the company lost profits because Phoenix Laboratories made a product that Xyience could not possibly sell. The Xyience defense team contended that the delivered goods "were not fit for the ordinary purposes for which such nutritional supplements were to be used."

The defendant also charged, "Phoenix's actions in misrepresenting the contents of nutritional supplements intended for consumption by the general public involves high moral culpability such that Xyience is entitled to an award of punitive damages." The counterclaims and answer to the amended complaint in the case was dated June 30, 2006. It was filed by two cooperating law firms with two lawyers named as representatives for each: COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, P.A. (Attorneys Steven A. Klepper and Nolan E. Shanahan) and SANTORO, DRIGGS, WALCH, KEARNEY, JOHNSON & THOMPSON (Attorneys James D. Boyle and Ben West). Klepper and Shanahan were based in New York, where Phoenix Laboratories is located. Boyle and West operated out of Las Vegas, where Xyience, Inc. is based.

Phoenix Laboratories denied being responsible for any offenses alleged by Xyience, and Phoenix Attorneys Stern and Geisler completed a reply to the Xyience counterclaims on July 17, 2006. "Each and every claim for relief alleged in Xyience's Counterclaims fails to state a claim upon which relief may be granted," they wrote. The same document later argued, "All injuries and damages, if any, allegedly suffered by Xyience are a result of Xyience's own acts and omissions." The attorneys asked for all counterclaims to be dismissed and that all relief sought by Xyience be denied by the court.

The next development in the case came due to a dispute over where the depositions should take place. The Plaintiffs wanted to perform the depositions (scheduled for three dates in October) of the Xyience-associated parties in New York, while the defendants insisted on having the depositions held in Nevada. The plaintiffs legal team ended up having to perform the depositions in Las Vegas with the defendants footing the bill for their plane tickets and hotel lodging.

A document filed on September 27 of 2006 totally transformed the entire case and revealed some serious concerns for Xyience. Plaintiff's Attorney Mark Geisler wrote a letter to the judge in the case regarding his inability to get through to his opponent's attorneys. Geisler and his team had drafted two letters regarding discovery issues that were never answered by the defendant's counsel.

"In this nonpayment case based on broken promises to pay, we have been advised Defendant's general counsel abruptly left employment a few weeks ago, its Chief Financial Officer (whom we had noticed for deposition) left employment earlier this year, and another critical employee (also whom we had noticed for deposition) resigned effective August 25, 2006," wrote Geisler in the September 27 letter to Presiding Judge Michael L. Orenstein. "The continued lack of response from Defendant's counsel, coupled with the exodus of employees from defendant, is troubling. If Defendant is not going to defend the case, we should be apprised of that fact now."

Geisler goes on to mention that although depositions have been noticed and scheduled for three dates in October, some discovery is needed before those dates, and the dates may have to be postponed as a result. Geisler finishes his correspondence after requesting that the judge "break the discovery logjam" and "persuade Defendant's counsel to address, rather than ignore, Defendant's discovery obligations."

The Judge subsequently ordered Xyience to comply with the discovery requirements in regard to interrogations under oath and documents requested by plaintiff attorneys. He also refused to delay the deposition dates despite the difficulties surrounding the resignation of the Xyience employees and legal counsel. He signed that order on October 4, 2006.

The next document on the docket reveals that sometime between the date of October 11, 2006 and October 19th, 2006 (when Geisler informed the judge of a settlement) something must have occurred to inspire Xyience to end the matter. The case was terminated on November 21, 2006. Although the settlement details were not disclosed in the files I was able to access, it seems clear that Xyience's legal defense team was unprepared for this fight to go on any longer, and the employee resignations are also mighty peculiar.

Next in line to sue Xyience, Inc. was Valint Consulting, and that corporation's lawyers submitted their initial complaint in the case on November 28, 2006. The Illinois based consulting firm alleges that Xyience failed to pay for "professional consulting services in the amount of 91,473.83" rendered between May 8, 2006 and July 16, 2006. The complaint reports a $10,000 payment made by Xyience, but the final award Valint seeks in the case works out to $97,155.42. They also hope to recover added "interest in the per diem amount of $45.10 up to and including the date of judgment" plus costs and attorneys fees as well as "any further relief this Court deems just."

The claim against Xyience charges, "Xyience retained Valint's invoices and has not objected to the amounts set forth in those invoices. Valint has contacted Xyience on several occasions for payment and Xyience has never asserted any defense or claim that Valint's services were not performed timely or in full compliance with Valint's obligations under the agreement. By retaining Valint's invoices without objection, Xyience has indicated its mutual assent and acquiescence to the amount due and owing."

Valint's Managing Director Don Sharp signed the document in addition to Attorney Mark E. Abraham of the law firm Gould and Ratner, based in Chicago, Illinois. Also listed on the claim is Gould and Ratner Attorney Christopher J. Horvay. The claim itself is just four pages long with a one-page verification signed by Sharp and 28 pages of supporting documents for evidence. These documents feature various invoices, a letter from Gould and Ratner demanding payment, and agreements, with one signed by Xyience President Russell Pike.

The letter from Gould and Ratner is signed by Fredric D. Tannenbaum and addressed to Jeff Dash of Xyience. The correspondence threatens legal action if the debt is not tendered to Valint by October 20, 2006.

Xyience apparently never paid, and there has been no action in the case since November of 2006. Although there has not been anything available online to either corroborate or refute the other charges leveled against Xyience in the email we published in December, I did come across the following quote on a few threads:

"In what could end up being a huge story, the word in Las Vegas the last few days is that there may be major problems with Xyience, once of UFC's biggest sponsors. Allegedly, people are being laid off left and right."

The site where that quote appeared is: http://www.f4wonline.com/index.php?option=com_content&task=view&id=2093&Itemid=1

It's obviously not very specific or definitive, but it seems to at least hint that there is an ongoing pattern to Xyience's troubles. This whole conundrum for the one and only UFC sponsor is starting to really unfold. For my next piece I will bring you the official response, or lack thereof, from Xyience regarding these matters.

Here is another few interesting tidbits I found in Cyberspace about this story: UFC ANDBASIC MEDIA GROUP LOCKING OUT MMA PRESS

MESSAGE BOARD DISCUSSING THE PROSPECT OF UFC BEING PUBLICLY TRADED

If anyone out there in my readership has anything to add or share, let us know. We'll be making some calls to get to the bottom of this and see where it takes us. Stay tuned!!

9:12 AM - 2 Comments - 0 Kudos - Add Comment
www.FightersNutrition.com

I was told personally by a "Major Stockholder" at Xyience that they are going public and seeking distibution in Wal-mart stores within the next six months.

If true, this is a poor decision on Xyience's part as there is no way they will have long term success in the Mass Market.....I have been in the Nutrition Industry for 16 years and watched several companies attempt Mass Market Integration - but they all failed....Met-Rx, EAS, Twinlab, to name a few!

The reason......NO EDUCATION ON PRODUCT USE. No person at Wal-mart can be staffed at each location to educate you the consumer on proper use of each supplement. So the initial buy-in from Wal-mart will be huge for Xyience, but the returns to Xyience when the product does NOT CONTINUE to sell will be such a heavy hit on Xyience, they will fold.

That is my forecast.......I do not see a big future for Xyience.....and Phoenix Labs will be around for a long time.....they produce products for several National Brands. Xyience will be gone in a few years.....or at least a has been........

I will continue to sell their products because you the consumers demand it.....at least some of you do. When the demand stops, I will stop too, and move on to the next great revelation in supplements (not that Xyience revolutionized anything.....lol).

Posted by www.FightersNutrition.com on Tuesday, January 09, 2007 at 3:00 AM
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Maybe I should send this story to Wal-Mart headquarters