The FTC can claim another victory against infomercial pitchman Donald W. Barrett and his affiliates over the dietary supplements, "Coral Calcium" and “Supreme Greens” ― products that were found to be falsely marketed as treatments or cures for a host of serious diseases, including cancer, diabetes and heart disease. (FTC press release found here)
This saga began when the FTC initiated an action on June 2, 2004 against the defendants charging them with making false claims regarding the Coral Calcium and Supreme Greens products (complaint found here). A preliminary injunction issued on July 3, 2004 enjoining defendants from making false or misleading claims concerning any dietary supplement during the pendency of the action. Thereafter, and following discovery, the FTC filed a motion for summary judgment against the defendants arguing that they were liable for falsely claiming that the Coral Calcium and Supreme Greens products would treat, cure or prevent any number of health related problems.
In July 2008, District Judge George A. O’Toole, Jr. of the United States District Court for the District of Massachusetts granted the FTC’s motion for summary judgment, finding that the defendants were liable for deceptively touting the cure-all affects of the Coral Calcium and Supreme Greens products. (Summary judgment decision found here) Following this decision, discovery was conducted and a bench trial had to determine the appropriate terms of injunctive relief and the amount of monetary relief to be ordered.
Judge O’Toole has now spoke . . . and he has hit hard. (August 27 decision and order found here) Acknowledging the willful nature of defendants conduct, Judge O’Toole permanently enjoined the defendants from making any representation about the health benefits, performance, or efficacy, of any product (including the Coral Calcium and Supreme Greens products) unless the representation is true, non-misleading, and, at the time the representation is made, the defendants possess and rely upon competent and reliable scientific evidence that substantiates the representation. As for the assessment of disgorgement, Judge O’Toole determined that defendants’ record keeping with respect to profits of the products was not reliable. The Court was troubled that there were multiple different versions of Defendant’s financial statements with different amounts listed for sales and net income, stating “The degree of difference was not so great that a reasonable estimate could not be made on the basis of the differing figures, but the very fact of the variations, together with other evidence about the casual and deceptive way financial information was maintained and reported . . . undermines any confidence that even the ranges reported are close to accurate. The defendants were fiction writers in their infomercial and there is reason to be concerned they were fiction writers in their financial statements.” Thus, the Court accepted the sales numbers advanced by the FTC ― net revenue numbers rather than net profits during the time the ads at issue were run, totaling approximately $70 million. The disgorged sum will be used for consumer redress.
