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Posted January 18, 2005

Supplement Maker to Pay over $3.5 Million to Settle Deceptive Advertising Charges for Immune Dietary Supplement

On January 18, 2005, the Federal Trade Commission (FTC), the Orange County (California) District Attorney, and the California State Attorney General announced that they had reached settlements with Body Wise International, Inc., an Orange County business, resolving allegations that Body Wise deceptively advertised the “AG-Immune” dietary supplement. The FTC alleges that Body Wise made unsubstantiated claims that AG-Immune prevents, treats, or cures numerous diseases, including cancer, HIV/AIDS and asthma, in violation of a 1995 FTC order. The FTC’s proposed settlement with Body Wise, if approved by the court, requires Body Wise to pay a $2 million civil penalty to the FTC. California’s proposed settlement would require Body Wise to pay the State of California an additional $1.58 million in penalties and costs for allegedly violating the State’s Business and Professions and Health and Safety Codes. The FTC also reached a settlement with Jesse A. Stoff, M.D., an expert endorser of AG-Immune, to resolve allegations that he made deceptive claims for the product.

“There is no immunity for violators of FTC Orders – especially those making false and unsubstantiated claims that their products cure or treat serious diseases,” said Lydia B. Parnes, Acting Director of the FTC’s Bureau of Consumer Protection.

The FTC complaint names Body Wise International, located in Tustin, California, and Jesse A. Stoff, M.D, a resident of Tucson, Arizona. According to the complaint, in April 2000, Body Wise began marketing AG-Immune, a dietary supplement containing “antigen infused dialyzable bovine colostrum/whey extract” or “AI/E-10.” BodyWise marketed this and other AI/E-10 products directly to consumers and through a network of “consultants” who market and sell Body Wise products to consumers. Body Wise sold AG-Immune for approximately $50 for a one-month supply, and had over $14 million in sales.

According to the complaint, Body Wise contracted with Dr. Stoff to explain the purported medical benefits of AI/E-10 and endorse Body Wise products containing AI/E-10. In promotional materials and at seminars, Body Wise and Dr. Stoff allegedly claimed that AG-Immune could prevent or treat numerous diseases or conditions, including cancer, HIV/AIDS, heart disease, chronic fatigue syndrome, and asthma, and that scientific research suggested these claims. The defendants also allegedly claimed that AG-Immune improves immune system function to prevent or treat these and many other diseases and conditions. Dr. Stoff was paid royalties for every bottle of AG-Immune sold.

In 1995, Body Wise settled FTC allegations that the company made unsubstantiated claims for weight loss and cholesterol products. The resulting order bars Body Wise from making certain false or unsubstantiated claims for dietary supplements, misrepresenting any test or study, and failing to disclose any material connection between Body Wise and any person endorsing a Body Wise product. The FTC alleges that Body Wise violated this FTC order by making unsubstantiated disease prevention, treatment, and other health claims for AG-Immune, misrepresenting that scientific research demonstrated the alleged benefits, and failing to disclose the material connection between AG-Immune and its expert endorser, Dr. Stoff. The complaint also alleges that Dr. Stoff made similar unsubstantiated claims, misrepresented that scientific research demonstrated the claimed benefits of the product, and made these claims without exercising his purported expertise in the prevention and treatment of disease.

The FTC has obtained two stipulated orders. One order requires Body Wise to abide by the terms of the FTC’s 1995 order and to pay the FTC a $2 million civil penalty. The order also prohibits the company from making unsubstantiated disease treatment and prevention and other health benefit claims for any product or service for the immune system or weight control, or any health-related service or therapy, dietary supplement, food, drug, or device.

The FTC’s other stipulated order prohibits Dr. Stoff from making false or unsubstantiated claims that any food, drug, or dietary supplement prevents, treats, or cures any disease; activates the immune system to prevent or treat diseases; or provides any other health benefit. The order prohibits Dr. Stoff from misrepresenting the existence or results of tests or studies. In addition, the order requires Dr. Stoff, when acting as an expert endorser, to support his expert conclusions with both competent and reliable scientific evidence and an actual exercise of his purported expertise. The settlement contains a monetary judgment of $358,000 against Dr. Stoff, which is suspended because of his inability to pay. This amount will become due immediately if the court finds that he misrepresented his financial condition to the FTC.

The Commission vote to refer the complaint and settlements to the Department of Justice for filing was 5-0. The complaint and proposed orders were filed on January 13, 2005, in the U.S. District Court for the Central District of California by the Department of Justice at the FTC’s request. The state action was filed in Orange County Superior Court in Santa Ana. The proposed orders require the court’s approval.