Sandy Greenberg has traded in selling stocks for pushing Bazi.
Sandy Greenberg has traded in selling stocks for pushing Bazi.

Is Bazi a miracle drink that can make people both healthy and wealthy -- or is it just the latest scheme from Denver's penny-stock prince?

Battle of the super drinks! Read a comparison of miracle juice supplements on the Latest Word blog.

Sandy Greenberg likes to call his sales force a "volunteer army." He steps to the podium and looks out over the hundred enlistees who have crammed into this hotel meeting room for the May 2 regional conference of XELR8, the Denver-based nutritional supplement company. Among the troops are nurses, real-estate agents, retail workers, construction supervisors, homemakers, teachers, shop owners and the recently unemployed; some have driven here from New Mexico and Arizona. Even seated and silent, they radiate enthusiasm as if it were a commodity. And they are just a fraction of the more than 6,400 independent XELR8 distributors across the U.S. and Canada, a number that Greenberg hopes will soon explode, bringing in far more than the $7.4 million in revenues his company reported last year.

Colorful banners line the room, all devoted to the company's primary product, Bazi. Named after the Chinese word for "eight elements," the liquid supplement boasts a "synergistic blend" of twelve vitamins, 68 minerals and various fruits and berries. Fervent followers insist that drinking a shot a day of the "drink of life" will do everything from improve athletic performance and mental clarity to fight off headaches, allergies, arthritis and even cancer. Bazi's ardent endorsers include such sports celebrities as former Broncos quarterback Brian Griese and ousted coach Mike Shanahan; even John Elway, while not an official spokesman, told TV cameras last year that sucking down the stuff gave him greater energy. And XELR8 marketing materials offer this proclamation from New England Patriots quarterback Tom Brady: "I don't look at it like I'm buying Bazi, but as investing in myself."



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So are the people here tonight. Billboards across the metro area feature Bazi's distinctive red bottle and white cap alongside this exhortation: "Increase your health and your wealth!" Call the number on the billboard and you get a call back from a Bazi distributor inviting you to a tasting and "opportunity presentation," where you learn that you, too, can be a Bazi distributor.

A sixteen-ounce bottle of Bazi sells for $25 — but you can't buy it in stores. Instead, hundreds of thousands of units are sold each year through a multi-level marketing network. Distributors earn commissions by selling Bazi directly to friends and family — and they're also rewarded when they enlist others in the cause.

In the late '80s and early '90s, when Greenberg was considered a prince of the penny-stock trade, he managed a huge force of brokers trained in the art of the hard sell. These days, though, the tanned 51-year-old knows that an unsalaried sales force needs a different kind of motivational speaker, and so Bazi's top distributors give the pep talks. "Everybody, let's give it up for Mark Jackson," Greenberg says, announcing the former Broncos wide receiver who, as one of the legendary Three Amigos in the late '80s, made the storied touchdown catch from Elway in the 1987 AFC Championship.

"My rookie year, I had a chance to quit a couple times," Jackson tells the crowd. "What I learned in the Broncos is sometimes you need help to be successful." After retiring from the NFL, Jackson worked in the mortgage industry for several years — and then some friends helped him find his way into the Bazi business, where the money now chases after him. "Some of you guys might be thinking about quitting," he says. "Sometimes you need a little help. You have to be able to sacrifice if you want to go from good to great."

Becoming great at XELR8 means reaching the Diamond ranks of distributorship — with commissions in the realm of six figures a year, as well as the chance to win tropical vacations and luxury cars — by pushing greater volumes of Bazi through your "downline" network of recruits, an army of Bazi-pushers who then find their own recruits to preach the path of making your "dreams of health, success and overall well-being a reality," as Bazi's marketing materials promise.

"There's magic inside each and every one of us," Jackson insists, "and it comes out in different ways with Bazi."

Bazi has a brick-red hue and a light, carbonated froth. For anyone who has choked down a wheatgrass shot, the taste isn't bad; it's slightly sweet and mineral-y, like crushed Flintstones vitamins sprinkled into a cocktail of various juice concentrates. And, in fact, that's not far off from the actual contents of Bazi, according to the label on the bottle. It contains vitamins A, B, C, D and E; minerals such as zinc, calcium, potassium and some unpronounceables like dysprosium and praseodymium; and 72 other nutritional ingredients. The "8 superfruits" include old staples like raspberry, blueberry and pomegranate, along with more exotic produce that's become a hot trend in liquid supplements: the Himalayan goji berry, the Indonesian mangosteen, the seabuckthorn berry from Russia and the Brazilian açai berry. But it's the jujube (pronounced joo-joob) from China that gets top billing.

"Deep in the cool mist of China's prized Shandong Province grows an ancient, superior fruit of almost magical power," begins the voiceover on the Bazi website. "Carefully cultivated for over 4,000 years, this amazing fruit is rich in life-giving nutrients and steeped in legend." Ancient healers and high priests would use the "mystical" jujube fruit to cleanse vital organs, revitalize the kidneys, detoxify the blood, slow the aging process and provide a "sense of immortality" to those who drank it. With Bazi, the voice concludes, XELR8 has used the "jujube in its most potent form so it may provide you with all its astonishing health benefits."

XELR8 won't disclose how much of the magical jujube is in Bazi, citing its "proprietary blend," and most of the evidence offered to its efficacy are citations from Chinese studies of the individual fruit; no studies have been conducted on Bazi itself. But there's no denying the head rush and energy many report after a first gulp of Bazi — whose ingredients also include caffeine.

That's a "natural caffeine," explains Sanjeev Javia, XELR8's vice president of product development, and it's added to the mix to further activate the powerful antioxidants and B vitamins in the formula already working at toxins and radicals in the body. "I like to describe the body system as a tree, where the roots and trunk are the base, and all the individual branches are certain issues that one may have," Javia says. "When you feed your body powerful nutrients, you are feeding the roots of this system. The indicators of how well these roots are being fed are how strong, lively and vital the branches become."

Javia, a lively, affable 34-year-old with the looks of a Bollywood star, is the "mad scientist" credited with formulating Bazi. He also manages the relationships with the company's athletic endorsers and oversees their nutritional programs. While Javia is neither a scientist nor a nutritionist, he did study biology and biopsychology during his undergrad years at the University of Michigan, which is where he became friends with several athletes, including Griese. After working for a few years in California as a sales trainer for an Internet company, Javia moved to Colorado in 2004 to help Griese set up his non-profit charity. It was through Griese that Javia met Greenberg, who was operating a company then known as VitaCube Systems (V3S), marketing nutritional supplements to athletes.

Nutritional supplements were big at the turn of the new century — too big. VitaCube's line included more than forty different products. One package, Elite Cube, consisted of a tackle box filled with various pills and powders that was marketed to athletes at a cost of $300 a month.

"It's not easy to swallow down six or seven pills at a time," Javia says. "They didn't know what to take, how much to take, when to take it. So now all of a sudden people stopped taking their supplements and they stopped being healthy." Intrigued by the possibilities, Javia took a job with Greenberg and began researching ways to fit all of the supplements into a single dose that people might actually take. "So that was the original concept: Okay, why don't we put these vitamins into a system, give them the solution," he remembers.

To test possible solutions, Javia worked as a liaison between VitaCube and a research and development laboratory that he declines to name. "We went through about fifty iterations," he says, "just sampling and making adjustments, sampling and making adjustments, for about a year."

While they were working on the formula, Greenberg was working on his company, changing the name to XELR8 to reflect its streamlined mission. "What we learned is that if we were going to be successful as a company, what the American public really wanted was something really convenient they could take that had all the stuff in it and tasted good enough," Greenberg says.

That something was Bazi. And by early 2007, XELR8 was ready to launch its all-in-one wonder drink.

Tell me why you love Bazi!" says Tom Chenault.

Right now, Buzz Coffee looks more like a strip-mall church during a revival than a Longmont coffee shop. That's because in addition to owning Buzz, Chenault is XELR8's "master distributor." Colleagues call him a "pied piper" for the Bazi cause.

"I love how Bazi gives me energy all day," says Vikki from Boulder. Kristy from Lafayette "hasn't had a cold in the past two years" while using Bazi. Alex, a part-time DJ, loves Bazi because "it helps my mom with the Parkinson's; she's 88." Bazi allowed Darlene, a mortgage broker, to finally get rid of gnats breeding in her nasal passage: "I started drinking Bazi, and it cleaned up the entire infection in, like, three days," she says.

So it works wonders for increasing your health. But these people also love Bazi for the promise of wealth.

"Do you have dreams of being rich some day?" asks Chenault.

"Oh, yeah," replies twenty-year-old Austin, the youngest recruit, who works at a 7-Eleven.

Chenault, who fizzes with fellowship, pauses and looks at Austin like he's the only person in the room. "I can see it in your eyes," he says, then turns back to the crowd. "Bazi can give him that. That's the magic of this business. That's why I am so committed to each and every one of you having the kind of life that we're talking about. The business is about people.

"If you teach four people to do exactly the same thing and your four people come in at five cases and they teach their four people? That means you get paid ten dollars apiece on those people," Chenault continues. As he explains the Bazi distribution system, an assistant writes numbers representing potential income on the whiteboard, starting at the top and moving down. "And your biggest goal is to drive this thing five levels deep, because [XELR8] doubles your commission to 10 percent and you let geometric progression take over. And you've got 1,024 people in your business, times a two-case auto-ship, times 10 percent, you made $20,480 on that level — and you just made yourself that $800 a day. That's incredible money. And that goes on forever, and it's happening right now."

But money isn't the end in itself, Chenault says. It simply buys us the freedom to be with the ones we love. That's the way it was for him twenty years ago when he left his high-flying life as a stockbroker, quit drinking and began looking for a way to work from his Littleton home. He and his wife, Denise, wound up becoming one of the top distributors for a health-products multi-level marketing company called Youngevity, where they built an organization of over 93,000 distributors; Chenault also hosted a radio program focusing on home-based businesses.

Chenault knew Greenberg from his days as a stockbroker, and when he heard that his friend was getting ready to introduce Bazi, he got so excited about the product and its potential for growth that he came on board as the very first distributor. And he brought many in his network along.

For Chenault, the beauty of the XELR8 model is that it allows individuals to use the equity of their own effort and their relationships to build a business. "You want to make darn sure that you have got the ability to leverage yourself," he says. "Denise and I get paid a little tiny bit off of every person in this room. And you go out and multiply and we get paid a little tiny bit on those people, and those people and those people. You are leveraging other people's money, other people's time, other people's efforts."

Andrea Vahl, a stay-at-home mom, recently signed up as a distributor; she's working hard at building a downline by using XELR8's "invite, taste, follow-up" recruitment method. After Chenault's presentation, she turns to the potential recruit she brought to Buzz. "There are people who have a real negative attitude toward network marketing and they don't really understand it," she says. "I think the tide is turning where people are realizing it's not a scam. It's just a different way to make money."

In his XELR8 office, Sandy Greenberg points to a wall filled with framed photos of Bazi endorsers. "Cadillac Williams at one of our events," he says. "He was rookie of the year and the top running back for Tampa Bay. That's Mike Alstott; he's a fullback for Tampa. Darick Holmes. Becky Quinn, she's an amazing cyclist." Some of the celebrities in the photos — Arnold Schwarzenegger chilling with Greenberg, for example — haven't endorsed Bazi. Not yet, at least.

The supplement also has found fans among prominent Denverites. Auto pitchman "Dealin' Doug" Moreland was among the early investors in XELR8, as was Denver developer/restaurateur Jim Sullivan. Steve Rosdal, founder of Hyde Park Jewelers, is a top distributor; he recruited former CBS4 sportscaster Les Shapiro.

Greenberg's pictures aren't limited to athletes and other celebrities. He also displays tigers. "This I bought in Hawaii," he says, pointing to the large, brightly colored painting of a tiger's face in front of a full moon. "I saw this back in the day, and my thing was 'Eye of the Tiger.' So I just fell in love with this picture and had to have it. I think I bought this fifteen years ago. Now everyone tells me it's dated, get it out of the office. But I like it."

XELR8 headquarters is located in a stucco building on South Holly Street that's actually owned by Greenberg's father, former stockbroker Arnold Greenberg. "It's a pretty efficient little building," says the younger Greenberg, who went to George Washington High School, just down the street. "We've been in there since we started. And the rent's right — for right now." Bazi is actually produced in Phoenix by Arizona Production & Packaging, which ships the bottles directly to a Bazi warehouse near Denver International Airport. The Denver offices are used solely for administration and presentations for potential distributors. And there are plenty of those, recruited by friends and those billboards promising health and wealth.

Greenberg was not a good student in high school. When it came time to get a job, he first sold cars, but he soon decided to follow in his father's footsteps and go into the financial industry. And in the '80s in Denver, then the penny-stock capital of the country, there was one clear choice for an ambitious young broker: Blinder Robinson, which was headed by Meyer Blinder, the flamboyant "Penny Stock King." Typically costing less than five dollars a share, penny stocks were seen by smaller companies with little history as a good way to raise capital — but they were also considered risky investments.

"The only source of information about the company was the company itself," recalls former Colorado Securities Commissioner Phil Feigin. "There were no analysts following it; it was just what the company would tell you. All the salesmen out there were building up a lot of hype about how this is going to be the great new this or that, the new gold mine, the new oil processing, the new better tire, the new better anything. And when they would build that up through their telephone sales techniques and when it finally becomes public, you'd have to beat off the investors with a stick if you were lucky enough to get in on the initial offering."

The companies often failed to live up to the hype, and the investors lost out — but in the meantime, the broker walked away with the commissions. "There are only two ways to make money in a corporation: You get dividends or you sell it to somebody for more than you paid for it," Feigin explains. "These companies were never going to pay dividends, so the only thing you had to do was find the greater fool. And as long as the penny-stock firms were out there pumping the stock, you could find that greater fool."

In 1989, when the Securities Exchange Commission finally came down hard on Blinder Robinson for pushing penny stocks on naive investors and overcharging them for the service, Sandy Greenberg was the firm's top trader.

After a dramatic raid on his Englewood headquarters by federal law enforcement and a seizure of his assets by the SEC, Blinder declared bankruptcy. He was eventually convicted of several counts of securities fraud, racketeering and money laundering and sentenced to 46 months in federal prison ("The Harder they Fall," August 4, 1992, and "Blinder Rage," December 2, 1992). Greenberg moved on and founded his own firm in Englewood called Chatfield Dean & Co, which began snatching up offices across the country. It quickly collected complaints, too. Florida tried to bar Chatfield Dean for disciplinary problems in other states, including Idaho, Illinois, Maine, Maryland and Missouri, where it had sold unlicensed securities through unlicensed brokers. In 1992, the National Association of Securities Dealers fined Chatfield Dean, then the largest penny-stock brokerage in the United States, for failing to supervise brokers, guaranteeing returns on investments and unauthorized trading. Forbes ran a scathing piece on Greenberg, noting that his training manual for new brokers "highlights the familiar three-call approach to selling stock: introduction, teaser, hard sell. The manual gives sample pitches and recommends that brokers make 200 to 300 cold calls a day. Chatfield Dean offices are literally sweatshops of cold-calling."

The Forbes article noted that some of the investments Chatfield Dean was pushing were recycled Blinder stocks, like one for an exotic car company, Vector, that had actually ceased production. Still, Greenberg's brokers were able to raise $4.5 million for Vector.

Such activities resulted in the SEC's hitting Chatfield Dean with over $3 million in fines in 1993, and Greenberg and a partner were suspended from trading for six months. Greenberg vowed to clean up his act by hiring employees who would change the Chatfield Dean culture, but his wrangling with the SEC persisted through the mid-'90s, prompting some major mutual-funds firms to sever their relationship with the company. Greenberg insists that the SEC scrutiny was largely the unfair result of his former connections with Blinder. "Their activities were not atypical of a lot of stuff that arose in other securities firms," Feigin says. "Everybody had issues with the SEC in those days."

And Greenberg forged ahead in Denver, where his ebullient personality made him a go-to quote for business journalists regarding the bull market. But that bull got gored when SunAmerica backed out of a deal to buy Chatfield Dean for $16 million, and Greenberg finally sold his brokerage to JW Financial for the bargain-basement price of $2.2 million.

Greenberg was down, but he wasn't out. He soon had a new project going with his next-door neighbor, John Elway. In 1999 they announced plans to team up with Michael Jordan and Wayne Gretzky to launch, an online sporting goods retailer that would also offer fitness and financial advice. Investors rushed to get in, pouring $150 million into the project. But tanked within a year, the result of "coming in on the tail end of the dotcom bust," says Greenberg. "It was very difficult for MVP or any company to raise additional funds to continue."

By then, Greenberg had yet another company in the works. He'd teamed with Warren Cohen, a local banker and real-estate developer, to form a health-supplement company called V35 Systems. "I was forty years old, I was out of shape, I had stomach problems," says Greenberg. "I really thought something was seriously wrong. Then I learned about nutrition and learned that most of my problems were nutritionally based from doing the wrong things."

In 2004, V35 introduced its direct-selling model, bringing in multi-level marketing veterans to tout the product line in the time-honored manner of Amway and Mary Kay. In 2005, Greenberg took the company, now named XELR8, public and raised $9.2 million, the highest-ever IPO for a multi-level marketing company. But revenues didn't meet expectations, and the company's stock soon slipped. In 2006, XELR8 incurred a net loss of $4.6 million.

By January 2007, the American Stock Exchange was threatening to delist XELR8 because its value had fallen below $2 million. A month later, though, the company launched Bazi and was able to raise an additional $2 million in a private placement of its common stock. XELR8 was allowed to remain on the stock exchange.

All other product lines were discontinued so that XELR8's sales efforts could focus on Bazi. Within weeks of the launch, the company had added 111 new distributors to the more than 2,700 already signed on, and the number just kept growing. At Bazi's national convention in Las Vegas in February 2008, Greenberg presented a Lexus to the company's top distributors: Denise and Tom Chenault, who estimates that he now has 10,000 distributors beneath him.

Bazi got another boost this February, when XELR8 announced "an affiliation" with the renowned Steadman Hawkins Clinic, a specialist in sports medicine with facilities in Vail and Greenville, North Carolina. "We did due diligence on its quality, and now our dieticians can offer Bazi throughout our facilities," said Dr. Jim Silliman, CEO of Steadman Hawkins. But the connection between XELR8 and Steadman Hawkins is not as significant as the company's marketing materials suggest.

"Steadman Hawkins does not have a relationship with Bazi," explains Dr. Richard Hawkins, who's based at the North Carolina clinic. "Bazi and XELR8 has signed a contract with the Greenville Hospital System, and Steadman Hawkins doctors are employed by GHS. That's a big hospital system." Although Hawkins says he drinks Bazi himself and has appeared in XELR8 videos shown at events promoting Bazi, his clinic has not started recommending it to patients.

The Steadman Hawkins deal — whatever it may be — wasn't enough to stem XELR8's losses. Earlier this year, stock prices fell to a low of two cents per share. In March, XELR8 was officially delisted from the New York Stock Exchange (formerly the American Stock Exchange) for failing to meet the requirements for shareholder equity. XELR8 stock now trades on the Over the Counter boards, known also as "the pink sheets," which is considered much riskier investment territory.

David Elias, head of investor relations for XELR8, admits that any time a delisting occurs, it "will generally not look good for the stock." But he notes that many good companies choose to be listed in the pink sheets, since there are significant expenses involved with being listed on a national exchange. "XELR8 had a very good year, a very good quarter," he says. "Many companies know that there are many expenses to get to the point where you can become profitable."

The vast majority of XELR8's expenses are in sales and marketing, which increased from $3 million in 2007 to $5 million in 2008. "It's commissions, it's producing marketing materials, promotional materials, events," says Elias.

Events like the May 2 conference — and the annual convention in Las Vegas in February, which attracted 400 Bazi distributors from across the country for two days of seminars, presentations, ceremonies and general cheerleading for the cause. And many of those athletic endorsements come with a price. The XELR8 website proudly showcases more than 350 professional and Olympic athletes, all adamant Bazi drinkers: pitchers Curt Schilling and Randy Johnson, NHL goalie Marty Turco, golfer Tom Pernice Jr., Super Bowl champs Marco Rivera and Mike Alstott.

While a frequent exhortation of distributors is that "none of the athletes are getting paid to endorse XELR8," the company's president, Doug Ridley, does acknowledge that some of the athletes receive cash, stock options and free product for appearing in marketing videos and at promotional events. But he says that such compensation is minuscule compared to the endorsement fees handed out by larger companies. "I think the distinction is that most of the athletes we have are not endorsers," he explains. "They're customers, and they pay for the product because they love it."

XELR8 is not the only multi-level marketing company built around fruit-based supplement drinks with exotic names like Noni, Xango and Zrii. All promise increased wellness and energy, and all follow similar strategies of rapid recruitment. While XELR8 has signed up roughly 10,000 distributors — with 6,483 considered "active," according to the company's most recent filing — the Bazi army is still tiny compared to the force behind MonaVie, a purple superjuice that's a blend of Brazilian açai berries and other fruits. Sold in a 25-ounce bottle for around 35 bucks, MonaVie is slightly cheaper than the $1.56 per ounce Bazi. Last year, the Utah-based company behind MonaVie signed up its millionth distributor and had sales that topped $1 billion.

The line between a legitimate multi-level marketing program and a pyramid scheme can get fuzzy. According to Bill Reese, an attorney who represents many multi-level-marketing companies, no specific federal statute prohibits pyramid schemes; the job of regulating them falls to the FTC. And when the FTC does look to see if a company is operating a shady pyramid scheme, it considers several factors, Reese says: "Is the company incentivizing very large or undue product purchases? Are most of the products being sold to distributors rather than end users? Is there deception involved in the promises of income?"

The FTC calls such offerings "Lotions and Potions" on its website and warns consumers "to apply a healthy dose of caution before buying products advertised as having 'miracle' ingredients or techniques and guaranteed results. Many of these 'quick cures' are unproven, fraudulently marketed and useless or even dangerous." Consumers should watch out for companies with overpriced or unviable products, compensation plans that pay commission for recruiting new distributors, and extreme claims about the product's performance, the FTC cautions.

To stay on the good side of the Federal Trade Commission, MonaVie, which is not traded publicly, issues an official income statement each year, detailing where the money went within the network. According to its 2008 statement, the majority of the roughly $1 billion that MonaVie paid in compensation went to fewer than 1 percent of its distributors. Ninety-two percent of its sales team earned less than $1,000 a week, mostly in discounts as "wholesale customers." About half of MonaVie's distributors worked an average of 32 hours per month for an annual check of $1,536.

XELR8 provides no such disclosure statement — but it has to make other filings with the SEC. One such filing from April reveals that in the prior twelve months of purchases, 6,483 came from independent distributors and 4,530 from customers. But president Ridley, a veteran of such multi-level marketing companies as Amway and Quixtar, says the majority of those customers were actually onetime distributors who had been bumped from the rolls for inactivity. "There's often a distinction between the people that may be registered in the network and the number that we report in our filings," he says. "The way we do it in our filings is that we drop off people on a monthly basis we deem are not active distributors because they haven't placed an order in a certain period of time."

And in those filings, XELR8 acknowledges to potential investors that the company's survival depends on its ability to "duplicate distributors."

"This isn't a sustainable business," says Robert Fitzpatrick, a critic of multi-level marketing companies who runs the North Carolina-based website Pyramid Scheme Alert. "You recruit four who recruit four who recruit four. We could only go about seventeen more levels and we would run out of human beings. Basic mathematics. It's all about deceiving that crowd that everybody can build a downline and everybody can win when the exact opposite is true."

To Fitzpatrick, the XELR8 athletes are just part of the illusion necessary to keep new distributors signing up. "The pyramid plan is a lie, but it is a very potent lie," he says. "It plays tricks with math. It plays upon people's greatest hopes. And it talks about wealth. Well, we're in a recession. Most of us struggling for salary, scared we might not make our house payments and could lose our homes — and here's a guy claiming to have a system that offers unlimited wealth to huge numbers of people. He looks like a magician!"

It may be touting a magic potion, but there's no hocus pocus to XELR8's business plan, its officers insist. "We offer a sixty-day, money-back guarantee on all purchases," Ridley says, noting that the company is very careful not to make specific income promises to distributors. "If you go online and look at our business opportunity section, we don't create any type of income representation," he says. "All we do is display our compensation structure. If all you're doing is displaying your compensation structure, there's no income representation."

In fact, the only income representation you can find in the company's materials is a disclaimer made three years ago that stated the average annual earnings for all active Bazi distributors in 2005 — not including those who just consumed the supplement themselves and recruits who never received a commission — was $692.02.

Leigh Sullivan began selling Bazi as a distributor in 2007 after jeweler Rosdal, a longtime friend of her father's, convinced her to try it. She sold it for a few months and then dropped out. "Honestly, it didn't feel right to me. Almost dirty," she says. "Like I really want you to try this product, but not because it's going to be good for you, but because I'm going to make $20 if you buy two cases every month." Nevertheless, she continues to buy Bazi as a customer every month because "I really, really like the product," she says. "It is really stupidly expensive, but I am one of those people who will go pay money to go buy supplements. So I guess you pick your poison."

But not only does XELR8's business plan come in for criticism; so does its product. Steven Barrett, a retired psychologist who monitors claims made by companies that sell health products for the site, doesn't find anything special in Bazi's special blend. "What they're selling is a multi-vitamin, multi-mineral drink with some fruit extract, that's all," he says. "For about a dollar a month, you can supplement adequately with generic Centrum."

XELR8 won't say what it costs to produce Bazi, but SEC filings indicate it's somewhere between $5 and $6 a bottle.

Kim Gorman, a registered dietician with the University of Colorado Denver's Center for Human Nutrition, puzzles over the ingredients label on the Bazi bottle. "Obviously this is about making money," she says. "They're using bits of information that are science-based. If you extract a piece of a sentence out of scientific literature, you can pull pieces out and say, 'Well, look, in this paper, Vitamin C did yadda, yadda, yadda. Therefore since this product — which is proprietary — has vitamin C in it, we can also make this claim.' That's hogwash; you can't. It won't do any harm, as long as you can afford it. But it certainly won't replace a healthy diet."

I believe I am a changed person," says Les Shapiro. "Multi-level marketing doesn't just teach us how to be better salespeople, it applies to life in general — being a better father, mother, husband, whatever. It does make you a better person." Shapiro, who was laid off by Channel 4 in 1999, says he never imagined getting involved in this type of business until his friend Rosdal, who'd recently retired, gave him a bottle of Bazi.

"I didn't like the taste at first," Shapiro admits. But after about a week, he started noticing that his health was better. "I was no longer wanting to take a nap in the late afternoon; my workouts were longer and harder," he says. "I play a lot of baseball, and I had a lot of junk going on in my shoulder. It totally went away. My allergy symptoms subsided. I had started using reading glasses in the morning for small print, and I didn't need them in the morning."

Today Shapiro has 200 distributors under him and says he makes a good residual income with Bazi.

The magic is strong. Both the FTC and the Colorado Attorney General's Office report that they've received no complaints about the company. Greenberg says that's because he and his executive team have worked hard to build XELR8's credibility, launching it as a publicly held security and making regular financial disclosures to federal regulators, even when those disclosures are disappointing. But the work has paid off with Bazi's army.

"I think we've paid our dues and certainly invested a lot of money and time," says Greenberg. "We're right at the tipping point." XELR8 collected $7.4 million in revenue last year, an increase of 53% over 2007, and Greenberg says it's only going up from here.

"I've seen what corporate America looks like," says Greenberg. "They're laying people off. The old structure is going down."


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