Sean Moloughney08.28.08
Steve Warshak isn’t smiling. The founder of Cincinnati, OH-based Berkeley Premium Nutraceuticals—makers of the male sexual enhancement product Enzyte—was sentenced to 25 years in prison by a U.S. District Court judge on Aug. 27.
The company and other defendants were ordered to forfeit more than $500 million. Convicted in February on 93 counts of conspiracy, fraud and money laundering, Mr. Warshak was ordered to pay $93,000 in fines.
The makers of Enzyte, famous for its “Smilin’ Bob” advertisements have now become infamous for what federal prosecutors considered to be a criminal enterprise. They claim the company deceived consumers through false advertising, hid profits, made unauthorized charges to customer credit cards and failed to accept returns. Prosecutors claim these actions cheated consumers out of $100 million.
The federal investigation into Berkeley Premium Nutraceuticals lasted four years and has yielded criminal charges against about a dozen employees and associates, the Associated Press reports.
Warshak's mother, Harriet Warshak, was also reportedly sentenced to two years in prison, having been convicted of conspiracy and other charges. The judge allowed the 75-year-old woman to remain free pending appeal.
Daniel Fabricant, PhD, vice president, Scientific Regulatory Affairs, with the Washington, D.C.-based Natural Products Association said that while the case against Berkeley Premium Nutraceuticals was atypical given the company’s previous offenses, the harsh verdict sends a clear message: “This industry is regulated. You have to be a responsible citizen and if you don’t you’re going to have to pay the consequences.”
“The dietary supplement industry has to be truthful and not misleading,” he added. “If you don’t follow that you shouldn’t be in the industry. We all have to play by the rules.”
Steve Mister, president and CEO, Council for Responsible Nutrition (CRN), Washington, D.C., noted the case involving Enzyte was isolated.
“It is unfortunate that so many consumers were deceived by the false advertising of this product and further manipulated through their credit card transactions,” he said. “However, it’s important to remember that this is just one isolated incident. The majority of dietary supplement manufacturers are walking the straight and narrow when it comes to their advertising. Under the law, dietary supplements must be able to substantiate their advertising claims—if they cannot backup their claims, there are severe penalties, as evidenced by this case.”
Mr. Mister noted that CRN’s initiative with the National Advertising Division (NAD) of the Better Business Bureaus has increased the review of dietary supplement advertising, ensuring that product claims are truthful.
“CRN will continue to support initiatives such as these, so that consumers can be confident in the claims of dietary supplements—after all, without consumers’ confidence in our products, we would not have an industry,” he said.
Todd Harrison, partner with Venable, Washington, D.C., said the case simply had more to do with credit fraud than anything else, and the issue of unsubstantiated or misleading health claims was a “a side issue, at best.”
“This case was more about the company's marketing practices than about the claims being made for the product,” he said. “The unfortunate part is that this case tends to reinforce the public perception that supplements are hocus pocus.”
Despite the hefty 25-year jail term and fines imposed, Mr. Harrison said he doubts the verdict will have any impact on the marketing of other dietary supplements that claim sexual health benefits. “It is just more negative press for the industry,” he said.
The company and other defendants were ordered to forfeit more than $500 million. Convicted in February on 93 counts of conspiracy, fraud and money laundering, Mr. Warshak was ordered to pay $93,000 in fines.
The makers of Enzyte, famous for its “Smilin’ Bob” advertisements have now become infamous for what federal prosecutors considered to be a criminal enterprise. They claim the company deceived consumers through false advertising, hid profits, made unauthorized charges to customer credit cards and failed to accept returns. Prosecutors claim these actions cheated consumers out of $100 million.
The federal investigation into Berkeley Premium Nutraceuticals lasted four years and has yielded criminal charges against about a dozen employees and associates, the Associated Press reports.
Warshak's mother, Harriet Warshak, was also reportedly sentenced to two years in prison, having been convicted of conspiracy and other charges. The judge allowed the 75-year-old woman to remain free pending appeal.
Daniel Fabricant, PhD, vice president, Scientific Regulatory Affairs, with the Washington, D.C.-based Natural Products Association said that while the case against Berkeley Premium Nutraceuticals was atypical given the company’s previous offenses, the harsh verdict sends a clear message: “This industry is regulated. You have to be a responsible citizen and if you don’t you’re going to have to pay the consequences.”
“The dietary supplement industry has to be truthful and not misleading,” he added. “If you don’t follow that you shouldn’t be in the industry. We all have to play by the rules.”
Steve Mister, president and CEO, Council for Responsible Nutrition (CRN), Washington, D.C., noted the case involving Enzyte was isolated.
“It is unfortunate that so many consumers were deceived by the false advertising of this product and further manipulated through their credit card transactions,” he said. “However, it’s important to remember that this is just one isolated incident. The majority of dietary supplement manufacturers are walking the straight and narrow when it comes to their advertising. Under the law, dietary supplements must be able to substantiate their advertising claims—if they cannot backup their claims, there are severe penalties, as evidenced by this case.”
Mr. Mister noted that CRN’s initiative with the National Advertising Division (NAD) of the Better Business Bureaus has increased the review of dietary supplement advertising, ensuring that product claims are truthful.
“CRN will continue to support initiatives such as these, so that consumers can be confident in the claims of dietary supplements—after all, without consumers’ confidence in our products, we would not have an industry,” he said.
Todd Harrison, partner with Venable, Washington, D.C., said the case simply had more to do with credit fraud than anything else, and the issue of unsubstantiated or misleading health claims was a “a side issue, at best.”
“This case was more about the company's marketing practices than about the claims being made for the product,” he said. “The unfortunate part is that this case tends to reinforce the public perception that supplements are hocus pocus.”
Despite the hefty 25-year jail term and fines imposed, Mr. Harrison said he doubts the verdict will have any impact on the marketing of other dietary supplements that claim sexual health benefits. “It is just more negative press for the industry,” he said.
