U.S. District Court Rules in FTC’s Favor, Imposes $40 Million Judgment Against Weight-Loss Supplement Marketers for Order Violations

Sanction is one of the largest the Commission has received in a dietary supplement case

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 A federal district judge in Atlanta has issued an order finding several defendants, including repeat offender Jared Wheat, in contempt for violating previous court orders related to the sale of weight-loss dietary supplements. The order imposes a more than $40 million judgment against the defendants, part or all of which the Federal Trade Commission may use to provide refunds to deceived consumers who bought the products.

In imposing the monetary sanctions, the court noted that, “The defendants very clearly exhibited a pattern of contemptuous conduct since these proceedings began. [They] dispensed deception to those with the greatest need to believe it, and – not surprisingly – generated a handsome profit for their efforts.”

According to the court, the defendants, who ran an operation known as Hi-Tech Pharmaceuticals, Inc., continued to deceptively market dietary supplements with unsubstantiated claims such as “rapid fat loss,” “fat burner,” “EXTREME WEIGHT LOSS GUARANTEED,” and “curbs the appetite,” in violation of a 2008 order.

The FTC’s case against the defendants began in November 2004, when it filed a complaint charging them with making deceptive claims about the efficacy and safety of “Thermalean” and “Lipodrene,” purported weight-loss products containing ephedra, and “Spontane-ES,” a supposed erectile dysfunction (ED) treatment containing yohimbine. The complaint named National Urological Group, Inc.; National Institute for Weight Loss, Inc.; Hi-Tech Pharmaceuticals, Inc.; Wheat; Thomas Holda; Stephen Smith, Michael Howell; and Dr. Terrill Mark Wright.

In December 2008, a federal district court found in favor of the FTC and ordered the defendants to pay $15.8 million, which the FTC has used to provide redress to injured consumers. The court’s final order also permanently barred the defendants from claiming that their products cause rapid or substantial weight- or fat loss, or affect body fat, appetite, or metabolism unless the claims are true and supported by scientific evidence.

In November 2011, the FTC sought sanctions against Hi-Tech, Wheat, and Smith for violating the 2008 final order. The FTC alleged that, beginning in 2009, these defendants made prohibited weight-loss claims for four dietary supplements – Fastin, Lipodrene, Benzedrine, and Stimerex-ES -- despite lacking competent and reliable scientific evidence to substantiate those claims. After the defendants appealed a previous ruling by the district court, the case proceeded to trial in the spring of 2017, resulting in the order in favor of the FTC announced today.

The court order finding contempt and imposing the sanctions against Hi-Tech Pharmaceuticals, Inc.; Jared Wheat, Stephen Smith, and Dr. Terrill Mark Wright was issued by the U.S. District Court for the Northern District of Georgia, Atlanta Division, on October 10, 2017. The court has requested that the FTC submit a final order memorializing the sanctions ruling within 20 days of its issuance.

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