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[Definitie:] "An ergogenic aid is any substance or phenomenon that enhances performance."
(Wilmore and Costill) 
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1 8 - 0 2 - 2 0 0 5 Creditors accuse Nutraquest of squirreling away assets
By Penni Crabtree
California consumers won a landmark victory in 2003 when a San Diego judge ordered a leading diet pill company to pay $12.5 million in restitution because it falsely marketed its ephedra product as safe and effective.
Yet, almost two years later, no one has seen a dime. Now attorneys representing California consumers and scores of others who have filed personal-injury lawsuits against New Jersey-based Nutraquest are turning again to the courts to lay claim to millions of dollars they allege were siphoned from the company as part of a fraudulent bankruptcy scheme.
A group of Nutraquest creditors is seeking a jury trial over allegations that the company formerly known as Cytodyne Technologies tried to shield itself from its legal liabilities, according to a complaint filed earlier this month in New Jersey bankruptcy court.
The creditors' complaint alleges that Nutraquest founder Robert Chinery, his wife, Tracy, and others orchestrated a scheme to transfer key company assets to companies controlled by the Chinerys or Chinery business associates before Nutraquest filed for bankruptcy.
That Chapter 11 bankruptcy, filed a few months after Nutraquest lost the false-advertising case in May 2003, effectively froze payment of the California judgment.
David Langfitt, an attorney representing the creditors committee, said the "complaint and exhibits speak for themselves" and declined to discuss the case.
Brian McMahon, an attorney representing the Chinerys and two companies they control, did not return telephone calls. The Chinerys could not be reached for comment.
The Chinerys made a fortune selling the once-popular diet pill Xenadrine RFA-1, which rang up sales of about $442 million between 1997 and 2002. Xenadrine RFA-1, like similar products that contained the herbal stimulant ephedra, was popular with dieters and bodybuilders who used it to lose weight and increase stamina.
The products also were linked to serious injuries and deaths, including the February 2003 death of Baltimore Orioles pitcher Steve Bechler. Bechler died from complications of heatstroke that were blamed in part on his use of Xenadrine RFA-1.
In April, the federal government banned dietary supplement products containing ephedra.
Well before the ban, Nutraquest and other ephedra companies were under siege, the subjects of increased government scrutiny and a growing number of class-action and personal injury lawsuits. One such lawsuit, filed by La Jolla commercial pilot Jason Park in 2001, alleged that Nutraquest falsely advertised Xenadrine RFA-1 as safe and effective. The class-action lawsuit, which ultimately resulted in the $12.5 million judgment, sought to force the company to reimburse California consumers who purchased the diet aid. In the same year, Robert Chinery began developing an ephedra-free product called Xenadrine EFX. It was introduced to the market in 2002 and, with the eventual demise of Xenadrine RFA-1, became the company's key asset. The product generated sales of between $100 million and $200 million from February 2002 through May 2003, according to the complaint.
It was in May 2003, just days before the San Diego judge was expected to rule in the Park case, that Chinery and others transferred the rights to Xenadrine EFX and other Nutraquest assets to other entities they controlled, according to the complaint. Ownership of Xenadrine EFX went to RTC Research & Development, a company owned by Chinery's wife and two Chinery children's trusts. Once the Park ruling came with the judge finding that the company had manipulated and misstated scientific data to put its ephedra product in the best light Nutraquest had been emptied of its most valuable asset, according to the creditors in the company's bankruptcy case.
In addition, Chinery is accused in the complaint of taking $88.3 million in "dividends" and "distributions" from Nutraquest in 2002 and 2003. In 2003, before the bankruptcy, Chinery took "distributions" of $17.5 million, leaving only about $2 million as a reserve for expected loss contingencies, according to the complaint.
Meanwhile, RTC Research & Development licensed rights to Xenadrine EFX to other companies in which Robert Chinery had an ownership interest, according to court documents. RTC also received a large royalty stream from sales of the product.
In October 2003, with almost all its assets transferred elsewhere, Nutraquest filed for bankruptcy. Court documents also allege that Chinery and at least one attorney fraudulently concealed from the San Diego court the nature of the Xenadrine EFX transaction. For instance, according to the complaint, the San Diego judge in the Park case was falsely told by one attorney that Chinery had no interest in the companies that later had the right to sell Xenadrine EFX.
It's not the first time that Chinery and Nutraquest have been accused of shuffling assets to avoid debts. In July 2003, attorneys who represented Nutraquest in the Park case filed a lawsuit against their former client for failure to pay legal fees.
The San Diego law firm of Mazzarella, Dunwoody & Caldarella alleged in the suit that Chinery created shell companies and fraudulently transferred assets as a device to "evade debts." The case was later settled and sealed by the court. 2 6 - 0 2 - 2 0 0 6 Maker of ephedra pills OKs $34M deal
BY GREG SAITZ Nutraquest, a New Jersey supplement maker that filed for bankruptcy protection two years ago, and various other companies have agreed to pay more than $34 million to consumers or their survivors to settle injury claims stemming from the use of ephedra in its diet pills.
The $34.19 million to settle 138 cases will be paid jointly by the Manasquan-based company and various other parties, including retailers such as Wal-Mart and CVS, according to court papers. Nutraquest will contribute not more than $4.35 million, while dozens of other firms will pay the rest. Attorneys for Nutraquest, who have been negotiating with plaintiff's lawyers for the past 10 months, filed a bankruptcy reorganization plan Friday. They still are negotiating a resolution to several other lawsuits against Nutraquest, mostly regarding false advertising. Creditors, including those who sued the company formerly known as Cytodyne Technologies, must vote on the plan and a judge must approve it before the business can emerge from Chapter 11 bankruptcy protection. "We're pleased it's gotten to this point," said David Miceli, an attorney who filed one of the first personal-injury cases against Nutraquest in 2001 and who coordinated mediation sessions for other injury claims. Nutraquest filed for bankruptcy protection in October 2003. At the time, the company already was facing a slew of lawsuits regarding its best-selling diet pill, Xenadrine RFA-1, which contained the now-banned herbal stimulant ephedra. Perhaps the most well-known complaint came from the family of Baltimore Orioles pitcher Steve Bechler, who died in February 2003 of heat stroke. His death was partly blamed on his use of Xenadrine. Court documents show that lawsuit is part of the global settlement; however, specific amounts for each case are confidential. A handful of other personal-injury cases, in which consumers claimed at least $2 million in damages, also were settled, with Nutraquest's insurer paying undisclosed amounts. But two class actions and a civil complaint by the Federal Trade Commission against Nutraquest and owner Robert Chinery involving deceptive advertising claims remain unresolved. Simon Kimmelman, an attorney representing Nutraquest in the bankruptcy case, said those and another outstanding complaint are being mediated. "The debtor believes very substantial progress has been made with regard to negotiations," Kimmelman said yesterday. William Pinilis, an attorney representing the plaintiffs in one of the unresolved class actions, declined to comment on his case. Natalie Ramsey, attorney for the creditors committee, also declined to comment on the proposed reorganization plan, saying the group has not yet discussed it. Nutraquest is one of several supplement makers, including Sussex County-based NVE Pharmaceuticals, maker of Stacker 2 pills, filed for bankruptcy protection while battling lawsuits. All of the manufacturers used ephedra in their supplements at various points before 2004, when federal officials banned the ingredient blamed for contributing to dozens of deaths. Last year, bankrupt Twin Lab and retail defendants established a $19.7 million settlement fund to resolve 62 lawsuits. David Molton, an attorney who represented claimholders in that case and is also involved in other supplement maker bankruptcies, said the challenge is satisfying everyone. "You're looking to create a settlement pot that you're going to get substantial, if not full, approval from" those who have sued, Molton said. 2 9 - 0 5 - 2 0 0 6 Nutraquest to pay California $1M to settle ad claims case
BY DAVID P. WILLIS TRENTON The owner of a Wall-based diet supplement maker agreed Tuesday to pay California authorities $1 million to settle claims of deceptive advertising.
The settlement followed negotiations overseen by a federal court
judge handling the bankruptcy case of Nutraquest Inc., which is
owned by Robert Chinery Jr.,
In 2003, eight district attorneys in California, as well as San
Diego's city attorney, sued Chinery and Cytodyne Technologies,
The company's marketing included claims that Xenadrine was "one of
the most advanced weight-loss products ever created." The company
also said that "clinical studies and real-world results continue to
confirm the unprecedented fat-burning power of this revolutionary
thermogenic Last July, Nutraquest, its founder and three other companies agreed to pay New Jersey nearly $1 million to settle a lawsuit that charged them with misleading advertising.
Nutraquest filed for protection under Chapter 11 Nutraquest no longer sells products containing ephedra.
A proposed reorganization includes a $34.19 million payout |
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