A federal court in Georgia has imposed more than $40 million in sanctions against a weight-loss supplement company, its owner, a sales executive, and a medical professional for their failure to comply with orders obtained by the U.S. Federal Trade Commission (FTC) requiring that they cease making unsubstantiated claims about their products and include a health-risk warning on products containing yohimbe. FTC v. Nat’l Urological Group, Inc., No. 04-3294 (U.S. Dist. Ct., N.D. Ga., Atlanta Div., order entered May 14, 2014). The court ordered that the funds be paid into a court registry for FTC to access with court permission to disburse to affected consumers. The court has also ordered a product recall.
Finding that the defendants (i) continued to make unsubstantiated claims about the products and did not remove violative advertising from the company Website until months after the court found them in contempt of 2008 injunction orders, (ii) provided inaccurate and incomplete information in compliance reports submitted to FTC, (iii) purchased other dietary supplement companies without informing FTC as required, (iv) paid a mere fraction of the judgment entered against them, (v) shopped around for legal opinions to support their conduct, and (vi) did not recall products with packaging and labels that included violative claims, the court ruled that their conduct was contumacious and justified a sanction order equal to gross receipts from the sale of violative products.
The medical professional was required to pay a compensatory sanction of $120,000, the amount he was paid to endorse one of the products.