Owner of “Male Enhancement” Pill Gets 25 Years
I’m sure you all have seen those moronic commercials with “Bob” and his happy wife. The wheels of justice grind slowly, but grind they do. Will this stop all the other manufacturers of “male enhancement” supplements which don’t work? Don’t count on it. Bob won’t be smilin’ from jail:
Enzyte Manufacturer Sentenced To 25 Years in Prison
Don’t expect to see much of Smilin’ Bob in the near future.
By: Mark Kernes
CINCINNATI – Don’t expect to see much of Smilin’ Bob anytime in the near future.
You know Bob: He’s the guy at the suburban pool party who loses his trunks, and when he climbs out, all the women point and stare at his (unseen) cock, while other men look vaguely fearful – or who looks supremely confident watering his lawn with a large hose, and all the neighbors whisper about how much he’s changed recently … since he started taking Enzyte, “the once-daily tablet for natural male enhancement.”
Of course, the stuff doesn’t work – none of these non-prescription “supplements” actually increase the length or girth of a penis beyond its normal erect state – and Steve Warshak, owner of Berkeley Premium Nutraceuticals, which manufactures Enzyte, found out yesterday just how much his fraudulent advertising of the product is going to cost him. Based on Warshak’s conviction last February on 93 counts of mail fraud, bank fraud, conspiracy and money laundering, U.S. District Judge S. Arthur Spiegel sentenced him to 25 years in prison, fined him $93 million, and forfeited $459 million – that’s nearly half a billion dollars – of his and his company’s assets to the government. By comparison, as the Wall Street Journal’s Dan Slater notes, WorldCom’s Bernie Ebbers got 25 years, while Enron’s Jeff Skilling got 24 years and four months. Somehow, the guy who makes phony sex drugs just doesn’t seem quite that culpable.
“The amount surprised me as well,” admitted Martin Pinales, attorney for Harriet Warshak, Steve Warshak’s mother and an officer of the company, who received a two-year sentence, “because what the court is holding is that the company was permeated with fraud, and therefore everything is taken rather than a defined amount of what was fraud.”
In all, 10 Berkeley employees and associates face imprisonment on charges similar to the ones upon which Warshak was tried, though if the sentences handed down on Thursday to Warshak’s sister and brother-in-law, as well as the company’s former chief operating officer and former sales director – one year each – are any indication, the brunt of the guilt rests with Warshak himself.
“This case is about greed,” Judge Spiegel said. “Steven Warshak preyed on perceived sexual inadequacies of customers. Not only was Steven Warshak corrupt, but he corrupted his family… He was the mastermind of the debacle. But for his arrogance, he could have helped them all by taking responsibility. But he was blinded by his arrogance and greed.”
The Food and Drug Administration’s (FDA) investigation of Berkeley had been ongoing for several years before postal inspectors raided the company’s facilities in Forest Park, West Chester and Clifton Heights, Ohio. The Better Business Bureau had received thousands of complaints about the company’s business practices, particularly its requirement that customers affirmatively opt out from receiving regular shipments of the product – not unlike the way early adult Website subscribers had to affirmatively cancel subscriptions to some adult sites or they would continue to be billed monthly for access.
Worse, former Berkeley Chief Operating Officer Jim Teegarden testified that Warshak required customers to provide notarized documents from a doctor proving that they had small genitals in order to get a refund, according to an article on the Consumerist.com Website. If customers complained, he said, employees were instructed to “make it as difficult as possible” for them to get their money back. In some cases, Teegarden said, Warshak required customers to produce a notarized statement from a doctor certifying Enzyte did not work.
“He said it was extremely unlikely someone would get anything notarized saying they had a small penis,” Teegarden said.
But while the most recent Enzyte commercials have avoided making direct claims regarding the product’s effects on the user’s penis, the mere fact that the ads implied increased size and/or stamina is enough to trigger legal action.
“Under advertising law, you are responsible, not only for your direct message, but you are also responsible for implied statements,” said Anthony T. Pavel, Jr., a Washington, D.C. attorney who advises several adult novelty companies. “So that advertising, maybe a five-year-old wouldn’t get it, but when you and I see it, it doesn’t matter that they’re not talking about the girth; from what’s actually in the ads, there’s enough recognition in the public of what they’re implying, so while they’re not using the exact words, the message of that advertisement is very clear, and that is a violation of Federal Trade Commission law.”
“Normal process is, if the agency catches wind of something that they are not happy with, you will get a warning letter,” said one attorney familiar with product liability cases. “Most companies following the receipt of a warning letter will change their labeling sufficiently so that they are not running afoul of the FDA’s rules. What makes this case particularly interesting is that there are lots of dietary supplement companies out on the market making claims that they shouldn’t be, and it’s very rare that something like this happens. Usually, the worst thing that you’ll see is the FTC will go after you for false advertising and disgorge some of your profits.”
“Generally speaking, there would not be a criminal prosecution,” he continued, “and if there was a taking of their profits, sometimes if it was a small operation that takes in a couple of million, depending on the facts of the case, they might get that couple of million. Getting $500 million, if that’s what they made, that’s a really significant verdict.”
While Pinales agreed that “customer care” formed the basis of the indictment, he took issue with the idea that Warshak was guilty of money laundering, even with the concept’s expanded definition under the USA PATRIOT Act to include any monies derived from a criminal enterprise that were deposited in a bank or financial institution.
“There have been some recent cases which require more than just that,” Pinales explained. “You need to have stealth, you need to have issues of camouflage for money laundering, which my client didn’t do. You don’t hide money in your own name. I think there are issues on the principles of money laundering, there’s issues of bank fraud when no bank suffered any losses, so there are major issues for appeal.”
Pinales confirmed that the Warshaks will be appealing, and that the court will set a briefing schedule after it receives the notice of appeal sometime next week. Among the issues that will be raised will be some of the inflammatory language the Judge Spiegel used during sentencing to describe Steven Warshak’s actions, as well as the severity of the sentence.
“Proportionality is always an issue to be raised on appeal; proportionality with other case and proportionality within the same case,” Pinales said. “The judge even stated on the record that no one lost their homes or life savings; that was part of his remarks. So the prison time and the forfeiture definitely seem out of proportion.”
“Whether this case is going to survive appeal is another question,” Pavel agreed. “The convictions will certainly stand. Whether the 25 year sentence and the $500 million will hold, I can’t predict without a closer inspection of the transcript.”
The Brink Bottom Line: Good riddance to “Bob” and Enzyte, but don’t count on these products disappearing from the market anytime soon. There’s too much $$$ involved!