Company says former CEO is to blame for its failure
Wake Up Now, a Utah-based multi-level marketing company (MLM) which in May issued a press release that it had 100,000 “customers”
and was expanding, has folded all its network marketing operations in the U.S. and has blamed its entire failure on its former CEO Kirby Cochran, filing suit for more than $10 million in damages against him and family members he hired to work at the business.
alleges that Cochran — who has a history of leading companies into bankruptcy and has faced racketeering charges — milked Wake Up Now out of its cash with “rampant and reckless spending,” arranged for cushy jobs for family members including his wife, son and brother, and sucked 100 percent of the profits out of the business through a consulting agreement with a company secretly set up with the help of one of his business students while he was an instructor at the University of Utah that he later assigned to his brother.
(See TINA.org’s initial warning about the company here.)
Kirby Cochran profited, the lawsuit asserts, without actually investing any real money of his own into the company. And if that isn’t enough, it also alleges he made creepy comments to attractive women and bullied employees, even berating one about the preparation of his daily smoothie.
But perhaps the most notable detail that comes out of the lawsuit against Cochran is a small footnote on page 16 that notes “Most IBOs are Wake Up Now customers as well.” And that, a red flag for a possible pyramid scheme, may say it all about why this MLM was troubled
from the start. But more on that later in this post. Now back to why it halted operations.
“Lavish expenditures” and “side-deals”
The lawsuit alleges that Cochran, who was fired in October, not only sucked money from the company in a variety of ways, but also mismanaged it by launching an inadequate software platform that couldn’t confirm whether a product had been paid for or delivered or allow affiliates (known at Wake Up Now as Independent Business Owners) to view their commissions.
All this led to affiliates and customers having to wait for hours for help from customer service representative. Fed up, many charged back their purchases and filed complaints with the FTC and BBB, according to the lawsuit. (See the breakdown of consumer complaints
against WUN, many of which said that the company repeatedly charged their credit cards and that the company was a pyramid scheme that made false earnings and product claims.)
In short, the lawsuit alleges Cochran essentially led to the downfall of Wake Up Now:
Kirby Cochran’s gross mismanagement, side-deals with family members to pay out all of WUN’s profits, lavish expenditures, failed business initiatives, and the botched HUB launch placed WUN in a position where it needed millions of dollars to survive.
After Cochran was fired, the suit alleges that he then tried to recruit WUN employees along with family members who had worked at WUN, including his wife who was legal counsel, to help him start a new company, Global Connection Network, that would compete with WUN, and engaged in disparaging and defamatory comments, poisoning people against WUN.
Business cannot recover
In a Facebook note
posted Monday, Phil Polich, Cochran’s replacement as CEO of WUN, wrote:
“…we continued to discover that Kirby Cochran’s deceptive actions had put the company in a position from which it could not recover. In the end, his decisions for a privileged few outweighed the incredible heart and dedication of the many. With that said, effective immediately, WakeUpNow will cease all network marketing operations in the United States.”
Who really was ever going to profit?
But we at TINA.org are left wondering why the company hired a CEO that was entangled in lawsuits and had a well-known history of questionable business failings and bankruptcies in the first place. And how prosperous a company could be that sold a bunch of stuff you could get for free on the Internet and which admits that the majority of its customers were its own affiliates — about 99 percent of which never made much money
from their WUN efforts.
TINA.org reached out to Cochran, and Wake Up Now, which is still selling products, for comment but has not heard back. We have also asked the University of Utah if Cochran is still a business instructor in its finance department but we have not heard back.
For more about multi-level marketing and pyramid schemes, click here