‘Historic’ verdict slaps ‘Smiling Bob’ with 25-year jail sentence

By Shane Starling

- Last updated on GMT

The founder of Berkeley Premium Nutraceuticals, Steve Warshak, has this morning been handed a 25-year jail sentence and his company ordered to forfeit $500 million by a federal court that found him guilty on 93 counts of conspiracy, fraud and money laundering.

The federal jury in Cincinnati, Ohio convicted Warshak, his 75-year-old mother and a number of associates for participating in a “scheme”​ that deceived thousands of consumers that had bought the company’s male sexual enhancement products under false pretenses.

The product in question, Enzyte, promised sexual enhancement, and featured TV advertisements featuring ‘Smiling Bob’, a happy man with an exaggerated smile because his problems ‘down below’ had supposedly been remedied.

Untypical

Veteran Colorado-based food-industry lawyer, James R Prochnow, of the firm Greenberg Traurig, said the verdict did not mean further prosecutions would follow, but sent a clear message to the dietary supplements industry that misleading claims could result in harsh penalties.

“This is the most significant decision in the history of the dietary supplements industry,”​ he told NutraIngredients-USA.com. “It is a substantial departure from previous sentencing and sends a clear message to industry that transgressions of this nature will be harshly dealt with.”

The case demonstrated the importance of solid scientific backing for claims, Prochnow said, backing that was not in place for the kind of male sexual enhancement products in question here.

“There is nothing typical about this prosecution or the sentence imposed by the federal judge,”​ he added.

“First of all, criminal prosecutions of those associated with dietary supplement companies are rare. Secondly, it is even more rare for a criminal prosecution to occur based in whole or in part, on allegations by the FDA that an illegal structure-function claim, in the nature of actual fraud, was made.”

In addition to his prison sentence, which must begin in 30 days, Warshak was ordered to pay $93,000 from his personal savings.

His mother’s two-year sentence was suspended due to her age pending an appeal, which could take years.

Good corporate citizens

Daniel Fabricant, PhD, vice president of scientific and regulatory affairs at the Washington DC-based trade group Natural Products Association, agreed the decision was significant and sent a warning shot out to companies that employed spurious or unbacked claims.

“If you’re turning over $100m and you get slapped with a $10m fine it is not the end of the world but the court has ended Warshak’s world along with Berkely’s with this ruling and that is how it should be,”​ Fabricant told NutraIngredients-USA.com.

“If companies are not going to act as good citizens then they deserve to be punished and the court has done that today in no uncertain terms.”

He added: “This is not a first time speeding ticket for Berkeley and that goes a long way to explaining the severity of the punishment. Multiple offenders who think they can continue sustaining slaps on the wrist via small fines, warning letters and product recalls may be about to be hit with a rude awakening.”

He said the decision validated the 1994 Dietary Supplements and Health Education Act (DSHEA).

US district judge, S Arthur Spiegel, said Warshak’s actions victimized thousands of customers and led to criminal charges against many of his friends and relatives.“This case is about greed,”​ Spiegel said. "His family and the people who work for him are also victims of his greed."

Berkeley’s range includes supplements that claim to boost energy and memory, manage weight and assist sleep.

Berkeley initially claimed Enzyte could increase the size and circumference of the penis, but altered this marketing strategy in 2004 after a disgruntled user took the company to an Ohio county court.

It includes Korean red ginseng, ginkgo biloba, zinc, and octacosanol.

Related topics: Regulation, Vitamins & premixes, Energy

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