In it complaint, lodged in 2009, the FTC alleged that Delaware-based Nutraceuticals International LLC and New Jersey-based Stella Labs LLC misled consumers on two counts – firstly by falsely claiming that their ingredients were derived from the South African succulent Hoodia gordonii and secondly by making false and deceptive claims about hoodia’s effectiveness.
Two years later, the FTC has settled charges against both firms and three of their directors for deceptive advertising.
Hoodia: Over-hyped, and over here?
Details of the settlement were released shortly after the publication of research in the American Journal of Clinical Nutrition which found hoodia was no better than placebo for affecting energy intakes or body weight in a 15 day trial among healthy, overweight women.
A succulent plant eaten by the San people of the Kalahari desert to stave off hunger pangs, hoodia gordonii was the focus of an ill-fated tie-up between Unilever and life sciences firm Phytopharm that was abruptly terminated in 2008.
Unilever blamed “safety and efficacy issues” for its decision to pull the plug on the deal, although Phytopharm insisted tests had merely highlighted that solid products were more suitable carriers for it than the SlimFast-style drinks Unilever was allegedly focusing on.
However, the break-up dented market confidence, while an influx of generic Hoodia from China that does not even contain P57 –the active ingredient in hoodia gordonii at the center of the Phytopharm/Unilever tie up - has also hit the ingredient’s credibility in recent years.
Phytopharm gained a global license to market the ingredient in 1997 but late last year returned patents for extracts from the plant to the South African government.
Multi-million dollar judgment
Under the FTC settlement announce yesterday, David J. Romeo, and two companies he controlled (Nutraceuticals International LLC and Stella Labs LLC) have been banned from making any weight-loss claims about foods, drugs, and dietary supplements.
The settlement also imposes a $22.5m judgment against Romeo and the two companies, which will be suspended when Romeo forfeits his vacation home in Vermont, and assigns to the FTC the right to collect on $635,000 in business loans owed to him.
Meanwhile, Nutraceuticals International principal Craig Payton is banned from marketing any foods, drugs, or dietary supplements. However, the order against him does not require him to forfeit any assets, as they were already seized in an unrelated federal drug case.
Finally Nutraceuticals International marketing executive Deborah B. Vickery is required to pay a $4m judgment, which has been suspended due to her inability to pay.
Charges against a fourth individual, Zoltan Klivinyi, who was an officer at Nutraceuticals International, but no longer lives in the US, have been dropped.
The FTC’s 2009 complaint
In its 2009 complaint, the FTC charged that the defendants made multiple false and deceptive claims about their product, including:
- that it was scientifically proven to suppress appetite, resulting in weight loss
- that it was clinically proven to reduce caloric intake by up to 2,000 calories per day
- that it was derived from South African Hoodia gordonii
- that it was an effective treatment for obesity.
These claims were “false or were not substantiated at the time the representations were made”, said the FTC.
“In truth and in fact, clinical studies do not prove that hoodia enables its users to reduce caloric intake by 1,000 to 2,000 calories a day.”
Full details of the case can be found here.