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AbledConsumer post banner shows composite screen grab of the product Jack 3D from the USPlabs LLC website. The headline reads: Supplements: Crackdown on products linked to liver toxicity.

U.S. Federal Agencies Crack Down On Supplement Fraud

 

Sources: Bloomberg Business News (David McLaughlin | Tom Schoenberg | Andrew Harris) | WebMD (Brenda Goodman, MA) November 18, 2015

Seven federal agencies, including the Department of Justice and the FDA, held an extraordinary joint press conference Tuesday to announce the civil and criminal indictments of more than 100 makers and marketers of dietary supplements.

At the center of the action, called the Dietary Supplement Sweep, was an 11-count criminal indictment against Dallas-based USPlabs. The company made weight loss and bodybuilding supplements blamed for dozens of liver injuries — some which required transplants — and several fatal heart attacks in young, apparently healthy adults, authorities say.

“The USPlabs case and others brought as part of this sweep illustrate alarming practices the department found — practices that must be brought to the public’s attention so consumers know the serious health risks of untested products,” says the DOJ’s Principal Deputy Assistant Attorney General Benjamin Mizer in a press release.

The allegations are the latest of a half dozen criminal and civil cases announced in the past week by the U.S. Justice Department, the Food and Drug Administration and other federal agencies — part of a campaign officials say has led to actions against more than 100 makers and marketers in the lightly regulated dietary supplements market.

USPlabs and a California company, SK Laboratories Inc., fraudulently sold products containing a stimulant called DMAA, documenting it as geranium powder, the U.S. said in its 11-count indictment against the companies and several individuals.

‘100% Synthetic’

“Lol stuff is completely 100% synthetic,” an SK Laboratories executive wrote to USPlab’s co-founders in a May 2009 e-mail cited in the complaint.

Spokesmen for USPlabs and SK Laboratories didn’t respond to messages seeking comment on the charges.

A statement by the Justice Department, early in the day, that it would announce a criminal action involving dietary supplements sent retailers’ shares plummeting. GNC Holdings Inc. fell as much as 27 percent and Vitamin Shoppe Inc. slid as much as 10 percent.

When the indictment was made public later in the day, neither company was charged or accused of wrongdoing.

The indictment notes that workout and weight-loss supplements are generally sold online and in big-box stores across the U.S., as well as through national retail chains. The names of those chains are blacked out in the indictment that was made public.

‘Redacted Version’

Other court documents, however, refer to GNC as one of the national retailers: GNC’s name inadvertently appeared in a version of the indictment that was filed earlier, prosecutors said in a sealed motion last week that sought permission to submit a newer and “minimally redacted version” of the indictment.

“Although the indictment does not directly accuse GNC of misconduct, this court should protect third parties from harm due to being named but not charged in indictments,” the government wrote in the sealed motion reviewed by Bloomberg News.

GNC shares recovered somewhat, closing down 6.4 percent at $29.07 in New York. Vitamin Shoppe closed at $28.19, a 4.9 percent decline.

A spokeswoman for GNC had no immediate comment. A spokeswoman for Vitamin Shoppe didn’t respond to a request for comment.

The Justice Department’s action is part of a broader crackdown on supplements that contain ingredients other than those listed on the label or that make claims unsupported by adequate scientific evidence, it said in a statement.

‘Wakeup Call’

The indictments “should serve as a wakeup call to the supplement industry,” Deputy Assistant U.S. Attorney General Benjamin Mizer said at a Justice Department news conference announcing the charges. “This is just one step.”

The Justice Department also filed five civil suits in the past week against companies it said had misled consumers about their products’ ingredients or health benefits. These were investigated by the FDA and U.S. Postal Inspection Service, it said.

USPlabs was part of a conspiracy to import ingredients from China, under false certificates of analysis and false labeling, the Justice Department said.

USPlabs told some of its retailers and wholesalers that it used natural plant extracts in its Jack3d and OxyElite Pro products, according to the indictment, when it was using a synthetic stimulant made in a Chinese chemical factory.

 

READ MORE ON THIS STORY AT BLOOMBERG BUSINESS NEWS

READ MORE ON THIS STORY AT WEBMD

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