California infomercial producer Modern Interactive Technology, Inc. (MIT), and its two principals, Mark Levine and David Richmond, have agreed to settle Federal Trade Commission charges that they had an active role in developing the deceptive claims made to sell “The Enforma System” weight-loss products. The settlement requires, among other things, that the defendants have competent and reliable scientific evidence to substantiate future claims for any dietary supplement, food, drug, or device.
This is the last case growing out of the sales of the Enforma System, a weight-loss product consisting of two dietary supplements – “Fat Trapper” and “Exercise In A Bottle.” In April 2000, the FTC announced that it had settled charges against Enforma Natural Products, Inc., the vendor of the Enforma System. The order in that case required Enforma Natural Products and its principal Andrew Grey to pay $10 million in consumer redress. Thereafter, in August 2000, the FTC filed a complaint in federal district court against MIT and its officers, alleging that they played an active role in writing, editing, and producing the infomercials for the Enforma System. In September 2001, however, the district court issued an order ruling that the Commission’s settlement order with Enforma Natural Products was “res judicata” as to MIT, Levine, and Richmond, meaning that the Commission had no right to bring a separate action against them. The Commission appealed this ruling to the Ninth Circuit Court, and in September 2004, the Ninth Circuit reversed the district court’s res judicata decision. It held that Enforma Natural Products was not sufficiently connected to MIT, Levine, and Richmond to justify barring the FTC’s claims against them, and remanded the matter to the district court for litigation. The settlement announced today resolves the charges against MIT, Levine, and Richmond without the need for further court proceedings.
The settlement order:
The order does not require the defendants to pay consumer redress but contains an avalanche clause for $2 million, the amount the defendants were paid for producing the Enforma infomercials, which will be triggered if they have misrepresented their current financial condition.
The stipulated final order for permanent injunction was entered by the U.S. District Court, Central District of California, on February 17, 2005.
NOTE: This stipulated final order for permanent injunction is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order for permanent injunction has the force of law when signed by the judge.
Copies of the stipulated final order for permanent injunction 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.
Office of Public Affairs
(FTC Matter No. X000095)
(Civil Action No. CV-00-09358 GAF (Cwx)