Alternative Cigarettes, Inc.

9923022

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

ALTERNATIVE CIGARETTES, INC., a corporation, and JOSEPH PANDOLFINO, individually and as an officer of the corporation.

DOCKET NO. C-3956

COMPLAINT

The Federal Trade Commission, having reason to believe that Alternative Cigarettes, Inc., a corporation, and Joseph Pandolfino, individually and as an officer of the corporation ("respondents"), have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondent Alternative Cigarettes, Inc., is a New York corporation with its principal office or place of business at 125 Virgil Avenue, Buffalo, New York 14216.

2. Respondent Joseph Pandolfino is an officer of the corporate respondent. Individually or in concert with others, he formulates, directs, or controls the policies, acts, or practices of the corporation, including the acts or practices alleged in this complaint. His principal office or place of business is the same as that of Alternative Cigarettes, Inc.

3. Respondents have advertised, promoted, offered for sale, sold and distributed tobacco cigarettes, including Pure cigarettes and Glory cigarettes, and non-tobacco herbal cigarettes, including Herbal Gold cigarettes and Magic cigarettes.

4. The acts and practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act.

5. Respondents have disseminated or have caused to be disseminated advertisements for cigarettes, including but not necessarily limited to the attached Exhibits A through I. These advertisements contain the following statements:

A. "The major tobacco companies literally put hundreds of chemicals and additives in their cigarette brands. After years of pressure by American consumers and by Congress, this list was recently disclosed by the giant tobacco companies themselves. This exact list is enclosed for your review.

A number of these additives should give smokers cause for concern. Some of these are known carcinogens. Notice that ammonia is on this list. A recent finding shows that when ammonia is added to cigarettes it actually increases the amount of nicotine that the body absorbs. Other studies show that the most popular brands have up to 12 percent sugar. They also use a high percentage of reconstituted (recycled) tobacco.

Native Americans smoked all natural tobacco without the ills that are associated with smoking today. Could it be that the chemicals and additives cause more health problems than the natural tobacco itself? Much research needs to be done on this subject."

(Exhibit A: Alternative Cigarettes, Inc.'s World Wide Web site)

B. "PURE

100% Natural Tobacco Cigarettes...ADDITIVE FREE!

PREMIUM BRAND

Most popular cigarette brands contain many added chemicals, flavorings, and preservatives. They also contain recycled (reconstituted) tobacco. PURE is made from 100% natural tobacco. No additives are in our cigarettes. Smokers enjoy the natural taste of our premium tobacco without all the additives. PURE is filtered and comes in full flavor, lights, and menthol. PURE is how smoking was originally meant to be."

(Exhibit B: Alternative Cigarettes, Inc.'s World Wide Web site)

C. "GLORY

100% Natural Tobacco Cigarettes...ADDITIVE FREE!

GLORY cigarettes are price competitive with any generic cigarette anywhere. However, unlike generic and premium brands manufactured by the major tobacco companies, GLORY tobacco is natural and additive free. It has no added chemicals, flavorings, preservatives, or recycled tobacco. GLORY is filtered and comes in regular and menthol."

(Exhibit C: Alternative Cigarettes, Inc.'s World Wide Web site)

D. "HERBAL GOLD

100% Nicotine Free Herbal Cigarettes!

NO NICOTINE

HERBAL GOLD does not contain any nicotine or tobacco. It is made from a special blend of smoking herbs: Marshmallow, Yerba Santa, Damiana, Passion Flower, Jasmine and Ginseng. HERBAL GOLD looks and smokes just like tobacco cigarettes. HERBAL GOLD is taking the country by storm since smokers can now enjoy a great tasting cigarette without any nicotine. Each carton has 10 king size packs of 20. Regular, menthol, vanilla and cherry are available.

What are HERBAL GOLD cigarettes?

Herbal Gold is a revolutionary product that is nicotine and tobacco free. Herbal Gold offers a special blend of smoking herbs: Marshmallow, Yerba Santa, Damiana, Passion Flower, Jasmine and Ginseng. These herbs have very good reputations with the health food industry and herbalists. Their histories and other information can be found in numerous herbal and health books.

Our cigarettes are the highest quality non-tobacco smokes in the world. They are filtered and look and smoke just like tobacco cigarettes. Herbal Gold comes in regular, menthol, vanilla and cherry.

Most brands of tobacco cigarettes manufactured by the major tobacco companies have numerous unnatural components, including reconstituted tobacco. Reconstituted tobacco is recycled tobacco that the tobacco companies refuse to waste. The major tobacco companies also put hundreds of chemicals, additives, and preservatives in their brands.

What About HERBAL GOLD'S Taste and Aroma?

Herbal Gold offers a pleasant light taste. Its aroma is sweeter than that of tobacco. One can't expect Herbal Gold's aroma to be identical to tobacco cigarettes since Herbal Gold is tobacco free. The herbs in our cigarettes are natural and are not cured or processed like tobacco.

The vast majority of smokers and non-smokers alike say that the smoke from Herbal Gold is a lot less irritating to the eyes, nose, and throat than tobacco smoke.

Everybody, except the folks from the major tobacco companies, agrees that the arrival of Herbal Gold has been long over due. Our cigarettes are considered by many to be a great alternative to tobacco. In fact, many Herbal Gold smokers believe our product is superior to tobacco."

(Exhibit D: Alternative Cigarettes, Inc.'s World Wide Web site)

E. "MAGIC

100% Nicotine Free Herbal Cigarettes!

NO NICOTINE

MAGIC does not contain any nicotine or tobacco. It is made from a special blend of smoking herbs: Marshmallow, Yerba Santa, Damiana, Passion Flower, Jasmine and Ginseng. MAGIC looks and smokes just like tobacco cigarettes. MAGIC is taking the country by storm since smokers can now enjoy a great tasting cigarette without any nicotine. Each carton has 10 king size packs of 20. Regular and menthol are available.

What are MAGIC cigarettes?

Magic is a revolutionary product that is nicotine and tobacco free. Magic contains the herbs Marshmallow, Yerba Santa, Damiana, Passion Flower, Jasmine and Ginseng. These herbs have very good reputations with the health food industry and herbalists. Their histories and other information can be found in numerous herbal and health books.

Our cigarettes are the highest quality non-tobacco smokes in the world. They are filtered and look and smoke just like tobacco cigarettes. Magic comes in regular and menthol.

What About MAGIC'S Taste and Aroma?

Magic offers a pleasant light taste. Its aroma is sweeter than that of tobacco. One can't expect Magic's aroma to be identical to tobacco cigarettes since Magic is tobacco free. The herbs in our cigarettes are natural and are not cured or processed like tobacco.

The vast majority of smokers and non-smokers alike say that the smoke from Magic is a lot less irritating to the eyes, nose, and throat than tobacco smoke.

Everybody, except the folks from the major tobacco companies, agrees that the arrival of Magic has been long over due. Our cigarettes are considered by many to be a great alternative to tobacco. In fact, many Magic smokers believe our product is superior to tobacco."

(Exhibit E: Alternative Cigarettes, Inc.'s World Wide Web site)

F. "Water is the Only Ingredient Added to Tobacco in the Manufacturing of PURE and GLORY.

Do You Want to Smoke This?

The 599 Ingredients Added to Tobacco in the Manufacture of Cigarettes by the Five Major American Cigarette Companies:

[List of Ingredients]"

(Exhibit F: Alternative Cigarettes, Inc.'s World Wide Web site)

G. "The secret is finally out...on all the chemicals, flavorings, preservatives, and fillers that are added to the tobacco in most of the major cigarette brands.

Therefore, a countless number of smokers across the country are requesting our brands.

For Questions Call:

Alternative Cigarettes, Inc.

. . .

See us on the world wide web at: http://www.altcigs.com"

(Exhibit G: brochure)

H. "PURE

100% NATURAL TOBACCO

ADDITIVE-FREE CIGARETTES

GLORY

100% NATURAL TOBACCO

ADDITIVE-FREE CIGARETTES"

(Exhibit H: Point-of-sale display)

I. "NICOTINE FREE HERBAL CIGARETTES"

(Exhibit I: Point-of-sale display)

CLAIMS REGARDING TOBACCO PRODUCTS

6. Through the means described in Paragraph 5, respondents have represented, expressly or by implication, that smoking Pure and Glory cigarettes, because they contain no additives, chemicals, flavorings or preservatives, is less hazardous to a smoker's health than smoking otherwise comparable cigarettes that contain additives, chemicals, flavorings or preservatives.

7. Through the means described in Paragraph 5, respondents have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representation set forth in Paragraph 6, at the time the representation was made.

8. In truth and in fact, respondents did not possess and rely upon a reasonable basis that substantiated the representation set forth in Paragraph 6, at the time the representation was made. Among other reasons, the smoke from Pure and Glory cigarettes, like the smoke from all cigarettes, contains numerous carcinogens and toxins, including tar and carbon monoxide. Therefore, the representation set forth in Paragraph 7 was, and is, false or misleading.

CLAIMS REGARDING NON-TOBACCO PRODUCTS

9. Through the means described in Paragraph 5, respondents have represented, expressly or by implication, that smoking Herbal Gold and Magic herbal cigarettes does not pose the health risks associated with smoking tobacco cigarettes.

10. In truth and in fact, smoking Herbal Gold and Magic herbal cigarettes does pose many of the health risks associated with smoking tobacco cigarettes. Although Herbal Gold and Magic herbal cigarettes do not contain nicotine, their smoke, like the smoke from tobacco cigarettes, contains numerous carcinogens and toxins, including tar and carbon monoxide. Therefore, the representation set forth in Paragraph 9 was, and is, false or misleading.

11. Through the means described in Paragraph 5, respondents have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representation set forth in Paragraph 9, at the time the representation was made.

12. In truth and in fact, respondents did not possess and rely upon a reasonable basis that substantiated the representation set forth in Paragraph 9, at the time the representation was made. Therefore, the representation set forth in Paragraph 11 was, and is, false or misleading.

13. The acts and practices of respondents as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

THEREFORE, the Federal Trade Commission this fourteenth day of June, 2000, has issued this complaint against respondents.

By the Commission.

Donald S. Clark
Secretary

SEAL: