Consumer Health Digest #05-37
Your Weekly Update of News and Reviews
September 13, 2005
Consumer Health Digest is a free weekly e-mail newsletter edited by Stephen Barrett, M.D., and cosponsored by NCAHF and Quackwatch. It summarizes scientific reports; legislative developments; enforcement actions; news reports; Web site evaluations; recommended and nonrecommended books; and other information relevant to consumer protection and consumer decision-making.
Mannatech investors file class-action suits. Several lawsuits have been filed to seek class-action status on behalf of Mannatech investors who are charging that the company caused Mannatech's shares to trade at artificially inflated levels by misrepresenting the Company's prospects and permitting its "independent distributors" to make improper claims for products. The first such suit, which was filed in August 2005, alleges:
- The defendants had issued false statements about the effectiveness of Mannatech products that inflated the price of its stock.
- The defendants failed to adequately control the conduct of distributors who exaggerated what the products could do.
- On May 9, 2005, Barron’s published a story that detailed Mannatech CEO Samuel L. Caster’s history of legal difficulties and questioned the company’s sales associates’ methods and their “seemingly irrepressible inclination . . . to make extraordinary therapeutic claims for the supplements.” The story also discussed a civil suit by the mother of a deceased child who had charged that the company and certain distributors had used nude pictures of the child to support false claims that Mannatech products had helped him.
- On this news, Mannatech’s stock fell sharply over a 2-day period.
The plaintiffs seek to recover damages on behalf of all persons or entities who acquired Mannatech securities between August 10, 2004 and May 8, 2005. The full text of the first suit is published on Casewatch. Yahoo Business News maintains links to news articles about the other suits.
Metabolife files for bankruptcy. Metabolife International Inc. has filed for Chapter 11 bankruptcy protection. Although its listed assets ($18.3 million) exceed its listed liabilities ($12 million), the company is facing huge additional legal costs and possible adverse verdicts in hundreds of lawsuits which allege that its ephedra-based flagship product, Metabolife 356, caused serious injury or death. The bankruptcy-related documents are posted on the Metabolife Web site.
TrimSpa marketers settle with New Jersey Attorney General. Alex Szynalski (a/k/a Alex Goen), Goen Technologies (d/b/a TrimSpa Corporation), Nutramerica Corporation, and Albert Fleisher, Ph.D., have settled a complaint by agreeing to revise their marketing practices and pay $750,000 to New Jersey to pay for the State's investigative costs and future consumer initiatives. In 2003, the State charged that the defendants had promised that their hypnosis seminars would provide drug-free help for weight loss, but failed disclose that the purpose of the seminars was to sell dietary supplements (TrimSpa and Lipo Spa). Under the settlement, future promotions must (a) disclose the true cost, (b) disclose the costs of any supplements recommended as an integral part of the program, and (c) make no unsubstantiated claims for any weight-control product. ["TrimSpa" maker and State settle lawsuit: Goen agrees to pay $750,000 and revise marketing practices. New Jersey Attorney General press release, Aug 16, 2005]
Folic acid fortification drops birth-defect rate. Researchers who reviewed birth-defect data from 21 states before and after the FDA mandated the fortification of grain products with folic acid have found that spina bifida and anencephaly decreased by about 1/3 among Hispanic and non-Hispanic white infants. However, since current fortification levels do not ensure that pregnant women will consume the recommended amount (400 micrograms/day), recommendations for dietary supplementation are still appropriate for women likely to get pregnant. [Williams LJ. Decline in the prevalence of spina bifida and anencephaly by race/ethnicity: 1995-2002. 116:580-586, 2005]
This page was posted on September 14, 2005.