Supplement Marketers Settle FTC Charges

Gero Vita International and six related defendants have settled Federal Trade Commission charges that they violated federal law by claiming that their products could cure or treat numerous illnesses and conditions, including asthma, diabetes, Alzheimer’s disease, overweight, and sexual dysfunction. The defendants are barred from making misleading claims about their products and are required to pay monetary judgments totaling $605,000.

In May 2003, the FTC filed a complaint against A. Glenn Braswell; his companies, JOL Management, G.B. Data Systems, Gero Vita International, and Theraceuticals, Inc.; and Ron Tepper, a corporate officer and director, alleging that they deceptively marketed five dietary supplements: “Lung Support Formula,” a dietary supplement that purportedly cured nearly all breathing and respiratory problems, including asthma, emphysema, and smoking-related damage; “Antibetic Pancreas Tonic,” an herbal supplement that purportedly treated or cured both Type I and Type II diabetes; “G.H.3,” also known as “Theraceuticals GH3 Romanian Youth Formula,” marketed as an anti-aging product that could reverse and prevent Alzheimer’s disease and other forms of dementia; “Chitoplex,” a chitosan-based weight-loss product that purportedly enabled users to lose weight without diet or exercise; and “Testerex,” a yohimbe product touted as effective in treating 62-95 percent of cases of impotence and erectle dysfunction.

The FTC’s complaint was later amended to name six additional defendants: Health Quest Publications, Inc., G.B. Data Systems, Inc. (Canada), Halsey Holdings LLC, Ronald Lawrence, M.D., Ph.D., Hans Kugler, Ph.D., and Chase Revel. Lawrence and Kugler appeared in the defendants’ ads as expert endorsers, and Revel helped write some of the ads. The settlements announced today concern JOL Management, G.B. Data Systems, Gero Vita International, Health Quest Publications, Halsey Holdings, Tepper, and Lawrence. The case against Braswell, Kugler, and Revel is still pending.

The orders prohibit the settling defendants from making deceptive claims for the products that were the subject of the 2003 complaint and require them to include a safety warning on any product containing yohimbe, an herb that can raise blood pressure in some individuals. The orders prohibit the defendants from making unsubstantiated disease treatment claims for any food, drug, or dietary supplement, and require that any endorser used by the defendants must actually have the represented expertise and a reasonable basis for the endorsement.

The corporate orders contain a $30 million judgment, suspended upon payment of $540,000 in installments over 18 months, based on the corporate defendants’ inability to pay. The corporate defendants will be held liable for the entire $30 million if it is found that they misrepresented their financial condition or if it is found that defendant Braswell has acquired any ownership interest in, or control over, any corporate defendant, or becomes involved in any business relationship with, or receives any payment from, any corporate defendant. The orders against individual defendants Tepper and Lawrence contain monetary judgments of $40,000 and $25,000 respectively, and avalanche clauses of $500,000 that will become due if it is found that they misrepresented their financial status. Finally, the orders require the settling defendants to cooperate in the ongoing litigation against the remaining defendants.

The Commission vote authorizing staff to file the proposed stipulated final orders was 5-0. The proposed stipulated final orders were filed in the U.S. District Court, Central District of California, Western Division and signed by the trial judge on March 30, 2005.

NOTE: These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final orders have the force of law when signed by the judge.

Copies of the stipulated final orders are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC Matter No. X030059)
(Civil Action No. CV 03-3700-DT (PJWx)