DEBRA VALENTINE
General Counsel

CHARLES A. HARWOOD
Regional Director

ELEANOR DURHAM
Federal Trade Commission
915 Second Avenue, Suite 2896
Seattle, WA 98174
(206) 220-4476 (voice)
(206) 220-6366 (fax)

LISA B. KOPCHIK
JEAN SULLIVAN
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
(202) 326-3139 (voice)
(202) 326-3259 (fax)
ATTORNEYS FOR PLAINTIFF

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
AT SPOKANE

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

ROSE CREEK HEALTH PRODUCTS, INC., THE STAFF OF LIFE, INC., and DONALD L. SMYTH,

Defendants.

Civil Number

COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("FTC" or "Commission") for its Complaint alleges:

1. The Commission brings this action pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 53(b), to obtain preliminary and permanent injunctive relief, an accounting, restitution, rescission, disgorgement and other equitable relief for defendants' deceptive acts or practices in connection with the advertising, marketing and sale of an alleged nutritional supplement, "Vitamin O," in violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C.  45(a) and 52.

JURISDICTION AND VENUE

2. This Court has jurisdiction of this matter pursuant to 28 U.S.C. 1331, 1337(a), and 1345, and 15 U.S.C. 53(b).

3. Venue in the Eastern District of Washington is proper under 28 U.S.C.  1391 and 15 U.S.C.  53(b).

PLAINTIFF

4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C.  41 et seq. The Commission is charged, inter alia, with enforcement of Sections 5(a) and 12 of the FTC Act, 15 U.S.C.  45(a) and 52, which respectively prohibit unfair or deceptive acts or practices in or affecting commerce, and false advertisements for food, drugs, devices, or cosmetics in or affecting commerce. The Commission is authorized to initiate federal district court proceedings to enjoin violations of the FTC Act and to secure such equitable relief, including consumer redress, as may be appropriate in each case. 15 U.S.C.  53(b).

DEFENDANTS

5. Rose Creek Health Products, Inc. ("Rose Creek"), is a Washington corporation with its principal place of business at 3881 Enzyme Lane, Kettle Falls, Washington 98141. Since 1998, Rose Creek has been engaged in the wholesale and retail sale of nutritional products via mail order. Rose Creek transacts business in the Eastern District of Washington.

6. The Staff of Life, Inc. ("SOL"), is a Washington corporation with its principal place of business at 3881 Enzyme Lane, Kettle Falls, Washington 98141. Since 1990, SOL has been engaged in the wholesale and retail sale of nutritional products via mail order. SOL does business as R-Garden or R-Garden Internationale. SOL transacts business in the Eastern District of Washington.

7. Defendant Donald L. Smyth owns 100% of the capital stock of the corporate defendants Rose Creek and SOL. At all times relevant to this complaint, acting alone or in concert with others, he has formulated, directed, controlled, or participated in the acts and practices of defendants Rose Creek and SOL, including the acts and practices set forth in this complaint. He resides and transacts business in this District.

COMMERCE

8. At all times relevant to this complaint, defendants' course of business, including the acts and practices alleged herein, is and has been in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C.  44.

DEFENDANTS' BUSINESS PRACTICES

9. Defendants have advertised, promoted, offered for sale, and sold a purported nutritional supplement called "Vitamin O" to consumers via Internet and newspaper advertising. Consumers can order the product by calling a toll free telephone number or by mail. According to defendants' advertisements, "Vitamin O" consists of "intact oxygen molecules in a liquid solution of distilled water, sodium chloride and trace minerals." The product label claims that "Vitamin O" contains 3% dissolved, stabilized oxygen; close to 30,000 parts per million ("ppm") total oxygen concentration. The "Vitamin O" product label is attached as Exhibit A. In contrast, defendants assert that tap water in most cities contains only 5 to 7 ppm of dissolved oxygen.

10. Defendants claim that many people suffer diminished health and disease as a result of oxygen deprivation caused by pollution, deforestation, stress or other causes, and that "Vitamin O" will provide the oxygen needed for optimum health. Further, defendants claim that consumers can effectively treat life-threatening diseases including cancer, cardiovascular disease, and pulmonary disease with "Vitamin O."

11. Exhibit B is an advertisement placed by defendants in USA Today. Exhibit B makes the following statements:

"Vitamin O" Is Helping Literally Thousands Of People Enjoy Healthier Lives. (headline)

"Vitamin O". . . . may be just the health-building, disease-preventing, life-giving substance your body needs.

Get The Pure Oxygen You Need. Now you can supplement your body's oxygen with "Vitamin O," the newest generation of super oxygenation technology first developed for our space research program.

"Vitamin O" delivers pure oxygen straight to your cells and tissues. There, it purifies your bloodstream, maximizes nutrients, eliminates poisons and toxins. Just 15 to 20 drops two to three times a day is all it takes to experience the many health benefits experienced by countless others.

Can It Help You? For a growing number of people . . . ."Vitamin O" has helped eliminate everything from breathing problems and lack of energy to life-threatening diseases. Below is just a partial list of the many benefits "Vitamin O" can provide. Check those that fit your needs:

  • Boosts energy
  • Improves breathing
  • Promotes sound sleep
  • Sharpens concentration and memory
  • Speeds recovery from illness or injury
  • Stops infections
  • Regulates metabolism
  • Aids digestion
  • Relaxes nervous system
  • Builds resistance to colds and flu

"Vitamin O" Is Simple, Quick, Effective -- Guaranteed. (headline).

12. Exhibit C is an advertisement placed by defendants in USA Today. Exhibit C makes the following statement:

"Vitamin O", available exclusively from Rose Creek Health Products, is the newest generation of super oxygenation technology developed by William F. Koch, M.D., Ph.D., and later used for our space research program. It was designed for use by the astronauts to ensure they received enough oxygen to maintain their health.

13. Exhibit D is an Internet advertisement placed by defendants on their website at www.rgarden.com. This advertisement contains the following statements:

I have been fighting high blood pressure for years. The doctors call it malignant hypertension. I have tried all kinds of supplements. . .but nothing seemed to help. Now since taking "Vitamin O" my blood pressure is much lower. . .and I have no more heart angina.

They say my knees have degenerated and I am supposed to have surgery. Since I started taking "Vitamin O" I have had no more pain.

My father had. . .open heart surgery. . . . One of the common side effects is absolutely excruciating leg pains. . . . He took just 30 drops of "Vitamin O" orally twice a day, and in two days the pain disappeared!. . .It has also provided very significant relief for his emphysema.

Ken has suffered with Cluster Headaches for over twenty years. The last ten years have brought sessions of these disabling attacks lasting for months at a time. The day he began taking "Vitamin O" his headaches disappeared.

I gave a bottle of "Vitamin O" to my mechanic who has been a smoker for decades. Smokers, as you may be aware, have a hacking cough, phlegm, and shortness of breath when they first get up in the morning. He took a dose in the evening (I think it was 30 drops). The next morning, he was amazed! No hacking cough; no phlegm; and he could take a deep breath right away!

In January of 1968, when I was 41 years old, I suffered a massive embolism of the lungs. After weeks in the hospital I went home, but have never been able to do much of anything since then. After 10 minutes or so I have always had to stop and rest. . . . Now with taking a few drops of "Vitamin O" about three times a day, I am a different person.

In March of 1997 I had a diagnosis of cancer in both lungs. I was told that surgery was the only solution because neither chemotherapy nor radiation were an acceptable option, because of my poor condition. I had some emphysema and a plugged artery in my heart, and they weren't sure I'd make it through surgery. If I did nothing, I wouldn't live more than six months to a year. . . . While sitting and talking one evening all of a sudden I suddenly pitched forward and was not breathing and had no heartbeat. . . . After leaving the hospital I was very weak and staggering all over. . . . Three days after starting the "Vitamin O" I threw my cane away. In November we went to Arizona and I bought myself a bicycle. . . . In December the X-rays showed both tumors were getting smaller. This is a long way from the doctor telling me to get into the Hospice program in August.

I was diagnosed with chronic obstructive pulmonary disease in 1992 and with chronic heart failure in 1994. I have been on inhalers and medicines of all kinds. . . I ordered ["Vitamin O"] and started taking it - 20 drops 3 times a day in September. I had been using three inhalers every day for years, but since the "Vitamin O" I am down to using just one of them twice a day. . . . I had started going outside and was even cooking, which I hadn't done in such a long time. Being on oxygen 24 hours a day I had difficulty getting outside. . . . I quit the "Vitamin O" for a week and was right back to where I was before the "O." Two days after resuming the "Vitamin O" I was feeling better again.

14. Defendants have placed a publication on their Internet website that they claim is "a report from Bio/Tech News, a newsletter that focuses on inside information on important innovations in Bioscience and Technology." This publication, as it appears on defendants' website, is attached as Exhibit E. This "report" contains quotes from numerous doctors and researchers advising consumers that decreasing levels of oxygen in the air are in large part responsible for cancer, arthritis, heart disease, Alzheimer's disease, chronic fatigue, premature aging and many other serious ill-health conditions. According to the experts cited in the "report," scientific and medical research has resulted in one of the most important new health-giving, disease-preventing, and life-extending breakthroughs of the 20th century. This breakthrough is "Vitamin O." "Vitamin O" is described as a "dramatic and beneficial new breakthrough in orthomolecular medicine," a "breakthrough regarding oxygenation of the human body [that] has effectively solved some of the most perplexing problems that have been faced by modern medicine in its attempts to energize and vitalize the human body and its immune system, and give the body the power it needs to overcome illness and chronic degenerative disease." This "report" also contains the following statement:

Stabilized oxygen is a new generation of super oxygenation technology developed by Dr. Williams F. Koch M.D., Ph.D. and then later utilized by NASA for the space research program. According to Dr. David Holden, Dip. Bio. Chem., 'Stabilized oxygen was designed to destroy any known and unknown microorganisms with a minimum dose, yet maintain its safety to the host. The obvious use -- to help the astronauts avoid bringing back any germs or foreign organisms in their body fluids.'

15. Defendants charge $40 plus $5 for shipping for two 2-oz. bottles of "Vitamin O;" $70 plus $5 for shipping for four 2-oz. bottles of "Vitamin O;" and $100 plus $5 for shipping for six 2-oz. bottles of "Vitamin O."

DEFENDANTS' VIOLATIONS OF THE FTC ACT

16. Section 5(a) of the FTC Act, 15 U.S.C. 45(a), prohibits unfair or deceptive acts or practices in or affecting commerce. Section 12(a) of the FTC Act, 15 U.S.C. 52(a), prohibits the dissemination of any false advertisement in or affecting commerce for the purpose of inducing, or which is likely to induce, the purchase of food, drugs, devices, or cosmetics. As set forth below, the defendants have engaged and are continuing to engage in such unlawful practices in connection with the marketing and sale of "Vitamin O."

17. For the purposes of Section 12 of the FTC Act, 15 U.S.C. 52, "Vitamin O" is either a "food" or a "drug" pursuant to Section 15(b) and (c) of the FTC Act, 15 U.S.C. 55(b) and (c).

COUNT ONE

18. Through the use of representations, testimonials, and statements contained in the advertisements, attached as Exhibits A through E, defendants have represented, expressly or by implication, that:

a. "Vitamin O" administered orally allows oxygen molecules to be absorbed through the gastrointestinal system;

b. "Vitamin O" prevents and is an effective treatment for life-threatening diseases including cancer, cardiovascular disease, and pulmonary disease, and an effective treatment or prevention for many other physical ailments including breathing problems, chronic headache, lack of energy, joint degeneration, infections, colds and flu, and hypertension;

c. "Vitamin O" has a beneficial effect on human health;

d. Medical and scientific research establishes the efficacy of "Vitamin O"; and

e. "Vitamin O" was developed by a Dr. William F. Koch and was used by National Aeronautics and Space Administration ("NASA") astronauts during NASA space missions.

19. In truth and in fact:

a. "Vitamin O" administered orally does not allow oxygen molecules to be absorbed through the gastrointestinal system;

b. "Vitamin O" does not prevent and is not an effective treatment for any life-threatening disease or other physical ailment;

c. "Vitamin O" does not have a beneficial effect on human health;

d. The efficacy of "Vitamin O" has not been established by medical and scientific research; and

e. "Vitamin O" was not developed by a Dr. William F. Koch and was not used by National Aeronautics and Space Administration ("NASA") astronauts during NASA space missions.

20. Therefore, the representations set forth in Paragraph 18 are false and misleading and constitute deceptive acts or practices and false advertisements of a food, drug, device or cosmetic in or affecting commerce, in violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. 45(a) and 52.

COUNT TWO

21. Defendants did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 18, at the time the representations were made.

22. Therefore, the making of the representations set forth in Paragraph 18 was, and is, a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a).

CONSUMER INJURY

23. Consumers have suffered or are likely to suffer substantial monetary loss as a result of defendants' unlawful acts or practices. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers and harm the public interest.

THIS COURT'S POWER TO GRANT RELIEF

24. Section 13(b) of the FTC Act, 15 U.S.C.   53(b), empowers this Court to issue preliminary and permanent injunctions against defendants' violations of the FTC Act and, in the exercise of its equitable jurisdiction, to order such ancillary relief as preliminary monetary relief, rescission, restitution, and disgorgement of profits resulting from defendants' unlawful acts or practices, and other remedial measures.

PRAYER FOR RELIEF

WHEREFORE, plaintiff requests that this Court, as authorized by Section 13(b) of the FTC Act, 15 U.S.C.  53(b), and pursuant to its own equitable powers:

(a) Award plaintiff such preliminary injunctive and ancillary monetary relief as may be necessary to avert the likelihood of consumer injury during the pendency of this action and to preserve the possibility of effective final relief;

(b) Permanently enjoin defendants from violating the FTC Act, as alleged herein, in connection with the advertising or sale of food, drugs, devices or cosmetics;

(c) Award such relief as the Court finds necessary to redress injury to consumers resulting from defendants' violations of the FTC Act, including, but not limited to, rescission of contracts, the refund of monies paid, and the disgorgement of ill-gotten monies; and

(d) Award plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper.

Dated:_____________, 1999 Respectfully Submitted,

DEBRA A. VALENTINE
General Counsel

_______________________________
ELEANOR DURHAM
Federal Trade Commission
915 Second Avenue, Suite 2896
Seattle, WA 98174
(206) 220-4476 (voice)
(206) 220-6366 (fax)

LISA B. KOPCHIK
JEAN SULLIVAN
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
(202) 326-3139 (voice)
(202) 326-3259 (fax)