The complaint, which was filed together with the proposed orders on 13 January at the US District Court for the Central District of California, states that Body Wise began marketing AG-Immune, a dietary supplement containing "antigen infused dialyzable bovine colostrum/whey extract" directly to consumers and through consultants in April 2000.
It contracted Dr Jesse Stoff to appear in promotional materials and at seminars, where he endorsed the product's claims for disease prevention or treatment and said that these claims were suggested by scientific research.
Stoff received a royalty for each bottle of AG-Immune sold. One month's supply cost approximately $50 and the company had over $14 million in sales.
A 1995 settlement between Body Wise and the FTC over unsubstantiated claims for weight loss and cholesterol products resulted in an order barring Body Wise from making certain false or unsubstantiated claims for dietary supplements and misrepresenting any test or study. It was also ordered to disclose any material connection between Body Wise and any person endorsing a Body Wise product.
FTC alleges that Body Wise has violated this order and obtained two stipulated orders. One order requires Body Wise to abide by the terms of the 1995 order and to pay $2 million to the FTC by way of a civic penalty.
The State of California also proposes that Body Wise pay an additional $1.58 million in penalties and costs for allegedly violation of its business and professions and health and safety codes.
The second order prohibits Stoff from making false or unsubstantiated claims that any food, drug or dietary supplement prevents, treats or cures any disease; activates the immune system to prevent or treat diseases; or provides any other health benefit.
When acting as an expert endorser, Stoff is ordered to support his conclusions with competent and reliable scientific evidence and an actual exercise of his purported expertise. A monetary judgment against Stoff of $358,000 is suspended due to his inability to pay.
"There is no immunity for violators of FTC Orders - especially those making false and unsubstantiated claims that their products cure or treat serious diseases," said Lydia Parnes, acting director of the FTC's Bureau of Consumer Protection.