As I expected and predicted, the FTC finally went after the makers of
Cortislim for their ridiculous and totally unfounded claims regarding
the efficacy of this product. One down, a 1000 left to go...
Three Cortislim Defendants to Give up $4.5 Million in Cash and Other
Assets
2005-09-22 - Federal Trade Commission (FTC)
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FTC¹s Litigation Continues Against Four Remaining Defendants
Three defendants will give up $4.5 million in cash and other assets to
settle Federal Trade Commission charges stemming from their roles in the
marketing of CortiSlim and CortiStress, dietary supplements promoted for
weight loss and disease prevention, respectively. The surrendered assets
will include an investment partnership and related charitable
foundation, a speedboat, a truck, and a variety of real estate
interests. As part of the settlement, the defendants cannot seek a cash
refund of state or federal taxes for 2003, 2004, or 2005 that were paid
prior to the settlement. In its complaint, the FTC alleged that the
defendants made false or unsubstantiated product claims and used
deceptively formatted infomercials in pitching the dietary supplements.
The defendants in the settlement announced today, California-based
Pinnacle Marketing Concepts, Inc. (³Pinnacle²) and its president, Thomas
F. Cheng, and Utah-based Shawn M. Talbott, cannot make benefit or
efficacy claims for any dietary supplement, food, drug, cosmetic, or
device unless the claims are truthful and substantiated. Litigation
continues against the four defendants who have not settled.
In September 2004, the Commission filed a complaint against Window Rock
Enterprises, Inc.; Stephen F. Cheng; Infinity Advertising, Inc.; Gregory
S. Cynaumon; and Shawn M. Talbott. The Commission later amended its
complaint to add Pinnacle and Thomas F. Cheng as additional defendants.
The FTC alleges that advertising claims about CortiSlim¹s ability to,
among other things, cause rapid, substantial, and permanent weight loss
in all users were false or unsubstantiated, as were claims about
CortiStress¹s ability to reduce the risk of, or prevent, osteoporosis,
obesity, diabetes, Alzheimer¹s disease, cancer, and cardiovascular
disease. The FTC also alleges that CortiSlim and CortiStress
infomercials were deceptively formatted to appear as talk shows rather
than advertisements. The advertising campaign for CortiSlim ran
nationwide, including ads on broadcast and cable television, radio,
print media, and the Internet.
The FTC announced two separate stipulated final agreements and orders
for permanent injunction today, one with Pinnacle and its president,
Thomas Cheng, who the FTC alleges participated in the marketing of
Cortislim and CortiStress; and one with Talbott, who the FTC alleges
formulated the two products and participated in the advertising. Both
orders prohibit the making of certain claims about CortiSlim and
CortiStress and require competent and reliable scientific evidence to
support any other claims made about the products. The orders also bar
misrepresentations of any tests or studies and prohibit claims about the
performance, effects on weight, or other health benefits of any dietary
supplement, food, drug, cosmetic, or device unless the claims are true,
not misleading, and substantiated by competent and reliable scientific
evidence. Finally, both orders prohibit the use of deceptively formatted
television and radio advertisements and require the use of ³paid
advertisement² disclosures for television ads longer than 15 minutes and
for radio ads longer than five minutes.
The settlement with Pinnacle and Thomas Cheng requires them to give up
$3.4 million in assets: $700,000 cash; the net proceeds from an
investment partnership and related charitable foundation; a $215,000
boat; a $40,000 truck; and a $450,000 property lien. If they are later
found to have misrepresented their financial status, the two defendants
would be liable for a $23.8 million judgment.
The settlement with Talbott requires him to give up $1.12 million in
assets: $225,000 cash; $350,000 from equity in property in Centerville,
Massachusetts, or title to the property; $38,700 from the sale of a
timeshare in Hawaii or title to the timeshare; and cash equal to 80
percent of the current market value of a property in Lisbon, Ohio, or
title to the property. If Talbott is later found to have misrepresented
his financial status, he would be liable for a $3.5 million judgment.
Under the agreements, the defendants also assign to the FTC all claims
they might have against the other defendants in this case, and they will
not use their settlement with the Commission as a basis for seeking a
cash refund of income taxes that they reported as paid. In addition, the
agreements include standard record-keeping provisions and require the
defendants to distribute copies of the orders to certain entities and
individuals.
The Commission vote to authorize staff to file the stipulated final
orders was 4-0. The stipulated final orders for permanent injunction
were filed in the U.S. District Court for the Central District of
California on September 20, 2005.
NOTE: These stipulated final orders are for settlement purposes only and
do not constitute an admission of liability by the defendants. A
stipulated final order acquires the force of law when signed by the
judge.
Copies of the stipulated final orders are available from the FTC¹s Web
site at http://www.ftc.gov and also from the FTC¹s Consumer Response
Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
The FTC works for the consumer to prevent fraudulent, deceptive, and
unfair business practices in the marketplace and to provide information
to help consumers spot, stop, and avoid them. To file a complaint in
English or Spanish (bilingual counselors are available to take
complaints), or to get free information on any of 150 consumer topics,
call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint
form at http://www.ftc.gov. The FTC enters Internet, telemarketing,
identity theft, and other fraud-related complaints into Consumer
Sentinel, a secure, online database available to hundreds of civil and
criminal law enforcement agencies in the U.S. and abroad.
--
Will Brink @ http://www.brinkzone.com/