A Glendale., Calif., company shut down 10 months ago will pay about $10 million to settle claims by the Federal Trade Commission that it wildly exaggerated the results of its diet supplements, used fake endorsements from people like Oprah Winfrey and hired marketers to send millions of spam emails.
FTC Midwest Region attorney Matthew H. Wernz said the $43 million settlement allows $33 million to be suspended if the defendants comply with conditions of the settlement. If they fail to comply, the full amount will be reinstated.
A court-appointed attorney liquidated the company, called Sale Slash and Purists Choice, Wernz said. There was no listing for Sale Slash. A call to Purists Choice went to a recording; a message was not returned. The attorney said two of the corporate defendants fought the settlement in court, but three did not show up so default judgments will be sought against them.
The FTC sought to recover money to repay those who bought supplements with names like Premium Green Coffee and Pure Garcinia Cambogia.
The FTC alleges the defendants used affiliate marketers to send illegal spam emails and post banner ads so it looked like a news sites where celebrities, including Winfrey and members of syndicated television program "The Doctors," were interviewed by a consumer reporter instead of a paid advertiser. In all cases, the celebrities were interviewed about their dramatic weight loss.
The defendants have been selling the supplements since 2012.
The original claim was filed and a temporary restraining order issued in federal district court on April 27 of last year. The receiver took possession of the defendants' property two days later.
Wernz said most of the $10 million will come from real estate and assets frozen in bank accounts.
The court spelled out for the corporate defendants what practices they could engage in, prohibited them from making weight-loss claims unless they had competent and reliable evidence, prohibited them from using celebrity endorsements unless they actually had those endorsements, and instructed them on how they could use email.