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2 1 - 1 1 - 2 0 0 4 Faux pharmaceuticals enhance Ohio man's bank account
Supplements have different rules than drugs have
By MATT CRENSON
Three years since an Ohio salesman started selling penis enlargement pills out of his house, his company is raking in more than $200 million a year on unproven palliatives.
His products claim help for almost every malady of the middle-age middle class.
There's Enzyte, [ErGs] his original product for “natural male enhancement,” and Avlimil, its female equivalent. Dromias is for insomnia, Altovis for fatigue. Numovil fights memory loss. Rogisen is for deteriorating vision. Rovicid is supposed to lower your cholesterol.
In the early days, Steven Warshak pitched his pills in advertisements in the back of men's magazines. Now, despite being the defendant in a class-action lawsuit and the target of more than 3,000 complaints to the Better Business Bureau, the company he created has become a thriving phone-order business with an ambitious national advertising and marketing campaign similar to the ones prescription drug manufacturers use to sell their remedies.
“Our ultimate goal is to be the nutraceutical Pfizer, to provide the best dietary supplements and vitamins and minerals and all the naturals that consumers want,” Warshak said.
The history of Warshak's company, Cincinnati-based Berkeley Premium Nutraceuticals, demonstrates how easy it has become to peddle faux pharmaceuticals in today's marketplace. Unlike drugs, which must be proved safe and effective before they can be sold, nutritional supplements are regulated pretty much like any other consumer product. They are legal as long as they don't do any harm, the pills actually contain whatever ingredients are listed on the bottle, and the manufacturer doesn't make claims about them that aren't backed up by scientific evidence.
“They can't claim to cure disease, but they can use words that suggest it,” said Arthur P. Grollman, a professor of pharmacological sciences at the State University of New York in Stony Brook. He has testified to Congress about dietary supplements. That is why supplement ads often tout products with vague promises to “boost the immune system” or “power up your brain.” It is why the TV advertising campaign for Enzyte promises only “natural male enhancement.”
Millions of people have seen the television commercials for Berkeley's products. The Enzyte ad features “Smiling Bob,” a goofy, grinning everyman who sails through a charmed life with a spring in his step, sinking holes in one on the golf course, and returning to “a very happy missus at home” — presumably thanks to what Enzyte has done for his virility.
In the days before Bob, when Warshak was just getting started in the dietary supplement business, his claims for Enzyte were more explicit. He bought ads in the back of GQ and Esquire magazines promising that “over the eight-month program … your erectile chambers, as well as your penis, will enlarge up to 41 percent.” Today, most of the company's claims are less specific — but some still raise legal issues.
Last month, the Food and Drug Administration sent Warshak a letter demanding that he stop claiming that Rovicid can lower cholesterol and prevent heart disease. The letter also objected to the marketing of Rogisen for macular degeneration, an eye disease that leads to blindness.
In March, the law firm Hagens Berman filed a class-action suit against Berkeley Premium Nutraceuticals demanding that it refund the money of people who bought Enzyte, and pay compensatory and punitive damages.
Warshak acknowledges that he has made a few mistakes, attributing them to growing pains rather than lapses of business ethics. According to an August announcement, Berkeley has reached a deal to sell its products through GNC stores. With more than 5,000 outlets worldwide, GNC prides itself on having “set the standard in the health and nutrition industry.”
GNC officials said they did not have information about the deal, and the August news release announcing the deal has been removed from Berkeley's Internet site.
2 1 - 1 1 - 2 0 0 4 'Natural Male Enhancement' Company Owner Indicted on Fraud, Other Charges
AP
CINCINNATI — The maker of dietary supplements that claim to improve everything from sexuality to memory defrauded thousands of customers and banks of at least $100 million, federal authorities say.
A federal indictment names Berkeley Premium Nutraceuticals, its owner and president, Steven Warshak, and five other individuals, including Warshak's mother, on charges that include conspiracy, money laundering, and mail, wire and bank fraud. They are accused by federal authorities of luring customers with free-trial offers and money-back guarantees, then billing their credit cards without authorization.
Warshak, who has 107 counts against him, denies the accusations and will continue to operate the company, his attorney said Thursday.
The company, which recently said it has 5 million customers worldwide, is known for its "Smiling Bob" ads that depict a man whose life gets better after he uses the company's Enzyte for "natural male enhancement." The company markets nationally a variety of other products claiming to help everything from night vision to memory to female libido.
The company, based in suburban Forest Park, also used false advertising, the indictment charges. In one example, Wednesday's indictment cited ads placed in Penthouse and other male-oriented magazines that claimed Enzyte was developed after years of study by two doctors, one at Harvard and the other at Stanford.
"The company president and others made up information in their advertisements, such as endorsements by doctors that did not exist, and results of customer satisfaction surveys that had never been conducted," U.S. Attorney Greg Lockhart said.
Customers with complaints were told to write to a director of customer care who did not exist, the indictment alleges.
The Food and Drug Administration, Internal Revenue Service, postal inspectors and other agencies participated in the investigation.
The indictment says at one point, Berkeley marketed a supplement called Rovicid as a prostate health product for men, but later relabeled old stocks of Rovicid as a cardiac health supplement for men and women.
A court appearance for the defendants was scheduled for Sept. 28. Martin Weinberg, Warshak's attorney, said he will plead not guilty and "vigorously assert his innocence to all charges."
Several charges, including conspiracy to commit mail, wire and bank fraud, that Warshak faces each carry sentences of up to 30 years in prison with conviction.
"We believe the government converted what in its essence is a civil and regulatory issue into this broad criminal indictment," said Weinberg, who is based in Boston.
In March, Berkeley agreed to pay $2.5 million to settle allegations brought by the attorneys general in Ohio and other states that the company engaged in deceptive practices in the sale of its herbal products. As part of the settlement, Berkeley and Warshak did not admit any wrongdoing.
Five of the company's former executives have pleaded guilty in U.S. District Court to defrauding customers through a product giveaway program that led to unauthorized billing of their credit cards.
Federal authorities have frozen $25 million in assets held by Warshak and members of his family, and Lockhart said authorities will continue to try to recover money to give victims.
Berkeley generated about $250 million in sales in 2004, mostly from telephone orders spurred by TV ads.
In a recent advertisement in The Cincinnati Enquirer, Berekley said: "We have invested heavily in major improvements designed to overcome our early growing pains. The net result of these investments is that today we have more than 5 million customers worldwide, and our customer service is better than most of the Fortune 500 companies."
The ad included a coupon for a free 60-day sample of any Berkeley product.
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[Definitie:] "An ergogenic aid is any substance or phenomenon that enhances performance."
(Wilmore and Costill) 
