Anatomy of a Weight Loss Fraud

Posted By elissa on Jun 4, 2008 | 1 comment

This article was published last October, but it’s still quite relevant…these guys are awaiting trial, but you can be sure there are others out there who haven’t been busted yet.

Florida Supplement Maker Indicted on Fraud Charges

MIAMI—R. Alexander Acosta, U.S. Attorney for the District of Southern Florida, in conjunction with FDA, IRS and U.S. Postal Inspection Service, reported the arraignment and pre-trial detainment of Frank Sarcona (aka Frank Sarcone, aka Dave Johnson), who was earlier indicted by a West Palm Beach, Fla., grand jury on 55 separate counts related to charges of fraudulent sale of dietary supplements. Among the charges were: 10 counts of introduction of a misbranded food, 12 counts of money laundering, 25 counts of mail fraud, three counts of wire fraud, three counts of criminal contempt of court, one count of conspiracy to commit mail fraud, wire fraud and criminal contempt, and one count of conspiracy to commit money laundering. 

The superseding indictment alleges that beginning in January 2000 and continuing to October 2004, Sarcona conspired with George Forgione and others to defraud tens of thousands of consumers of millions of dollars through the sale of a misbranded dietary supplement marketed as Lipoban. Federal officials charged Sarcona and Forgione claimed Lipoban, a chitosan-based product, could eat away excess weight without “torturous” dieting or exercising. It was offered in capsules containing 11,500 mg of Lipoban Ultra chitosan and mineral extract, with a recommended dose of two capsules daily. The product was sold through direct mail, the Internet and national newspaper advertisements. 

The U.S. Attorney’s office (www.USdoj.gov/usao/fls) explained the Lipoban duo masqueraded as a health care clinic engaged in clinical studies and the treatment of obesity. They placed a medical insignia on their mailings and forms; represented that Dr. Joseph Maya was the medical director; gave customers a business card listing Dr. Maya with a Boca Raton address; stated they were engaged in a test study and were staffed by a team of researchers, as well as weight loss and nutrition professionals; and they assigned each customer what appeared to be a unique number, such “test participant number 731”. 

According to the indictment, this so-called clinic was, at various times, a mail drop box, the residence of a defendant and an office in an industrial park. Further, Dr. Jose (not Joseph) Maya is not licensed to practice medicine in the United States, but in Mexico. In addition, there were no test studies, no researchers, and the “nutrition professionals” were really telephone customer service operators hired to process orders and perform clerical work. None were trained weight loss and nutrition professionals, nor medical personnel. Most customers received the same “test participant number”, which the feds said was merely a way for Sarcona and Forgione to track the mailing list or advertisement generating the response. Also, the defendants falsely claimed two doctors endorsed their product, yet they failed to state those doctors, who merely recommended generic chitosan, recommended usage in conjunction with diet and exercise…

The obvious take-home lesson from all this is “don’t believe everything you read – do some research before you buy.”  That’s not the sole point of this post though.  Just for laughs, I dug up the Federal indictment, which is available on the Dept. of Justice website.  It’s a fascinating look at the deception from the inside, broken down item-by-item…for example:

22. The defendants represented in the Maya letter and other promotional materials that LipoBan was “now” available without a prescription. The defendants omitted the fact that a prescription had never been required, nor would it ever be required, to obtain the LipoBan product or its ingredients.

And:

25. Consumers who sought a promised refund of the purchase price faced numerous hurdles that were designed by the defendants to delay and discourage refunds. For example, consumers were regularly told that they had not returned the bottles and were required to provide proof that they had been returned. Also, consumers who paid by credit card were denied a refund until they provided credit card statements as proof of payment. Consumers were falsely told this was necessary because their credit card information was not maintained. In reality, the credit card information was maintained in the Lipoban Clinic computer system.

They even purchased mailing lists of from providers like “Psychic Predictions Silver Chart” and “Canyon Astrology” – in order to target female customers they likely felt would be more credulous.

These guys pulled out all the stops…it’s really worth a read.  Knowing that frauds happen is one thing…but understanding HOW they happen is another.  It’s a lot harder to be fooled, when people know what the tricks look like.