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Posted October 24, 2003
Court Closes the Doors on Company That Sold Weight Loss Supplement
On December 5, 2002, the FTC filed a complaint in federal district court alleging that the defendants made false and unsubstantiated advertising claims that Evening Formula causes substantial and permanent weight loss without diet or exercise. The complaint named as defendants Mark Nutritionals, Inc., based in San Antonio, Texas, and its officers, Harry Siskind and Edward D’Alessandro, Jr. Thereafter, a federal judge entered stipulated orders for preliminary injunction against all three defendants and froze the individual assets of Siskind and D’Alessandro.
Since 1999, the defendants’ sales of Evening Formula have totaled more than $155 million. The FTC’s complaint alleged that defendants made sales primarily through the use of deceptive radio advertisements. The 30 to 60- second “radio spots” aired daily in English and Spanish on radio stations across the United States. Typically, local radio personalities who purportedly used the product read the ads and presented their personal experience with the product, the FTC alleged.
In September 2002, Mark Nutritionals filed for Chapter 11 reorganization in bankruptcy court. In April 2003, the bankruptcy court, at the recommendation of the FTC and others, converted Mark Nutritionals’ case to a Chapter 7 liquidation. Since the conversion from Chapter 11 to Chapter 7, Mark Nutritionals has ceased all operations including all manufacturing, advertising, marketing, and sales. Under the terms of the stipulated final order announced today, Mark Nutritionals is barred from engaging in any future business activity.
D’Alessandro The stipulated final order with D’Alessandro prohibits the defendant from making false or misleading weight-loss representations, including false or misleading representations that:
a product will cause substantial weight loss without reducing caloric intake or increasing exercise;
a product will cause substantial weight loss even if users eat substantial amounts of high calorie foods; and
a product will cause substantial long-term or permanent weight loss.
The order further requires that D’Alessandro possess competent and reliable scientific evidence to substantiate any future representations about the safety or efficacy of any food, drug, dietary supplement, or other health-related product or service. It also prohibits the use of the term “weight loss” in the name of Evening Formula or the use of any other term that communicates the same or similar meaning, unless at the time the term is used, there is competent and reliable scientific evidence that substantiates that such product will cause clinically significant weight loss. In addition, the settlement prohibits D’Alessandro from misrepresenting any test, study, or research concerning any food, drug, dietary supplement, or other health-related product or service.
The D’Alessandro settlement also requires him to pay $140,000 to the federal government, and contains a suspended judgment of $155 million with an avalanche clause that requires him to pay the amount in full if it is found that he lied on his financial disclosure statements.
The settlements with both defendants contain various recordkeeping requirements to assist the FTC in monitoring defendants’ compliance.
The FTC coordinated its case against Mark Nutritionals and D’Alessandro with attorney generals from the States of Texas, Illinois, and Pennsylvania. Those States filed separate law suits against the defendants in state court. These States have reached separate agreements with D’Alessandro enjoining certain activities and requiring the payment of monetary relief. The State of Texas continues to pursue Mark Nutritionals in bankruptcy court and has filed a motion to provide restitution to consumers who purchased products after September 17, 2002.
The Commission vote to authorize staff to file the two stipulated final orders was 4-0-1, with Commissioner Pamela Jones Harbour recused. They were filed in the U.S. District Court for the Western District of Texas, San Antonio Division, on October 21, 2003, and require the court’s approval.