LAS VEGAS (KTNV) — Over the past six years, Las Vegas locals have reported falling victim to the promises and claims made by multi-level marketing company Monat, which sells hair and skincare products online.
In 2018, 13 Investigates first broke the story of allegations of balding and scalp sores by some Monat users.
And our coverage continued with class action lawsuits and an Attorney General crackdown in Florida where the company is headquartered.
Now, the company's troubled waters are getting deeper.
Former Monat President Stuart MacMillan has gone from the company's biggest cheerleader to its harshest critic. He's got the inside knowledge and financial incentive to do that. As he turns against his former employers in court, he paints a stark picture of alleged fraud affecting customers, employees and the government.
"Don't let the haters dictate to you what you can and cannot say..." That's how MacMillan described Monat's critics when he was at the helm of the company in 2020. But, in newly filed court records, MacMillan himself seems to be one of those so-called "haters."
MacMillan resigned from Monat last June. Just a few weeks ago, amid a profit-sharing dispute with Monat co-founders Rayner and Luis Urdaneta, MacMillan sued them and the company, alleging breach of contract, defamation, and fraud after spending years in lock step with them.
After our investigation aired in 2018, MacMillan and the Urdanetas posted a series of social media videos defending Monat against critics they claimed targeted the company because they were "jealous" of its success.
Now, MacMillan is claiming in court records that the Urdanetas operate Monat "more like a cult than a legitimate business," likening it to a "mafia family" running an "unprincipled syndicate" designed to "unjustly enrich themselves."
He says the Urdanetas "created a hostile work environment" where "any complaints from employees or independent contractor market partners were met with skepticism, criticism, and retaliation."
On May 23, Monat filed an answer in court to MacMillan's claims, denying his allegations but admitting the Urdanetas fired MacMillan's daughter "because she attended a Zoom holiday toast that reflected poorly on Monat."
Las Vegas stylist Toni Miller has also experienced retaliation by Monat.
"The only hair transformation that I am seeing with my clients is hair loss," Miller told 13 Investigates in 2018, after which Monat sued her for defamation. Just last month, she rejected the terms of a settlement offer from them, so the case remains unresolved.
13 Investigates also spoke to former market partner Erin Ostby in 2018 when she said, "You never wanted to say you were having a bad reaction to Monat because of what would happen. People jump on you!"
Ostby personally experienced the online backlash where women reporting problems were blamed and shamed. The young Las Vegas mother stopped selling Monat after her own hair began falling out.
"I was crying to my husband, not just over my hair, but what had I done?"
Multiple class action lawsuits document problems with Monat products and accuse the company of running a pyramid scheme. In court records, in Facebook groups with thousands of members, and in on-camera interviews, consumers report balding, scalp sores and substantial hair loss after using Monat.
The FDA has received hundreds of adverse event reports, and 13 Investigates exposed Monat market partners who were posting false claims of FDA approval.
MacMillan's lawsuit claims he "regularly advised (the Urdanetas) that they were potentially violating regulations governing beauty products and related advertisements."
He never came forward about that during our investigation--denying every request we made for on-camera interviews and deferring instead to a publicist to deflect and discredit concerns expressed by consumers across the country.
"I literally had almost a baseball size of hair in my hand. It's devastating," reported San Diego resident Dana Sohovich in 2018.
Heather Fox of Las Vegas added, "It was supposed to strengthen your hair. It was an expensive product and I thought it would help my hair, but instead, I'm devastated."
"There's nothing in the products that would cause this kind of reaction on a large population. There just isn't," said then Monat spokesperson Gene Grabowski. "You can rub it in your skin. You can drink it if you like--within reason. It's not going to cause this kind of reaction."
But MacMillan's lawsuit accuses the Urdanetas of "making proclamations about Monat and its products on social media that were not supported by the facts as they existed at the time."
And he says the co-founders "insisted on improperly changing the formulas for Monat's beauty products in order to increase profitability," ignoring "warnings from Monat's chief science officer."
As for MacMillan's claim that "the Urdanetas’ (decided) to water down Monat’s products and substitute quality ingredients for cheaper ones," they say in their Answer and Counterclaim that the allegation is "patently false," adding, "The active ingredients of Monat’s products have not changed since its founding. Certain trace ingredients have occasionally been substituted for better ingredients."
MacMillan also claims financial malfeasance in his lawsuit, citing multiple alleged violations of state and federal law. He says, "Monat employed Urdaneta insiders, family members and friends to no-show, nonexistent jobs... sometimes paying them under the table."
He claims they "maxed out Monat's credit cards on their personal luxury lifestyles, including private airplanes, expensive dinners, and luxurious travel... for example, a $50,000 room service bill in Dubai."
In the lawsuit, MacMillan claims he objected to—but could not change—Monat's practices when he worked there, because he was only one of three directors.
Monat says in court records that MacMillan blamed the Urdanetas for everything he did not want to take responsibility for.
Neither MacMillan nor his lawyers responded to our requests for comment.
Monat wouldn't comment either but laid out additional allegations in its Answer and Counterclaim.
In suing MacMillan for damages he allegedly inflicted on the company, Monat claims MacMillan did not resign but was terminated "as a result of his gross mismanagement and lack of professional judgment."
They accuse him of sabotaging and trying to sell the company behind the co-founders' backs and say he was "directly responsible for millions of dollars in business losses... over a three-year period."
They blame him for "inventory control problems, wide-spread attrition, a botched roll-out of Monat’s EU market," and a "costly IT project" that "imploded" under his supervision.
They accuse him of "being under the influence at work events and disclosing Monat's confidential and proprietary information while inebriated."
And, they claim that "before and after his termination, MacMillan had been sowing seeds of discontent among Monat's market partners, customers and employees behind the Urdanetas' backs for many years while pretending to protect and advance Monat's business interests."
As this and other court actions play out, Monat remains under scrutiny through 2025 by the Florida attorney general--where the company is headquartered. That's the result of a compliance agreement concerning customer service, products and marketing that Monat signed several years ago with state authorities.
