A Georgia federal judge has ordered Hi-Tech Pharmaceuticals Inc. and three of its directors to pay more than $40 million in sanctions to consumers and to recall four of its products with labels that falsely advertise that its dietary supplements cause substantial weight loss. U.S. District Judge Charles A. Pannell, Jr., issued the ruling in the Federal Trade Commission’s (FTC) 2004 suit against Hi-Tech, National Urological Group Inc., Jared Wheat, Sean Smith and Terrell Mark Wright. It was alleged in the suit that the defendants made unsubstantiated claims about weight loss drugs Fastin, Lipodrene, Benzedrine and Stimerex-ES.
After finding the defendants were in violation of a 2008 permanent injunction, Judge Pannell ordered them to pay damages and to recall all of the products with packages that violate a 2008 injunction. The court’s order said:
The court finds that $40,120,950 in compensatory sanctions is owed to consumers. The court finds that Hi-Tech, Wheat, and Smith must pay compensatory sanctions, jointly and severally, in the amount of $40,000,950. The court also finds that Wright must pay compensatory sanctions in the amount of $120,000.
In 2008, the court enjoined the defendants from advertising the weight-loss products without substantiated, competent and reliable scientific evidence, according to the order. It also ordered that all of the packaging and labels must contain a specific warning about the drug yohimbine. In November 2011, the FTC filed a motion arguing that Hi-Tech, Wheat and Smith should be held in contempt of the permanent injunction for making statements about the four Hi-Tech products that are not substantiated by competent or reliable scientific evidence. A similar motion against Wright followed in March 2012.
According to the court’s order, Hi-Tech, Wheat and Smith disseminated print advertisements for Fastin, Lipodrene, Benzedrine and Stimerex-ES through national magazines and through its website with claims that violated the injunction. The FTC also said it purchased a bottle of the drugs that did not contain the required yohimbine warning on the product packaging, according to the order. The order stated:
The Hi-Tech defendants did not remove violative advertising from the company website until January 2014, approximately 5 months after the court had found the defendants in contempt.
The court also found that Hi-Tech and its directors provided inaccurate and incomplete information in compliance reports to the FTC and failed to report to the FTC that it had acquired two other companies that engage in activities covered by the injunction order. According to the order, Hi-Tech and the directors still owe almost $4 million of the original $15.9 million judgment entered by the court. They also have not recalled any of the products with the packaging containing claims that violate the injunction. Jack Wenik, counsel for Hi-Tech, said the company is still reviewing the decisions and its options.
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.