Sunday, August 31, 2008

Fraudulent Male Enhancement Drug Gets Company Founder 25 Yrs.

In Cincinnati, the marketing of a male sexual enhancement product called Enzyte, which reportedly used ads featuring “Smiling Bob,” a happy man with an exaggerated smile (pictured), has led to a whopping jail sentence for the founder of Berkeley Premium Nutraceuticals.

Today, U.S. District Judge S. Arthur Spiegel sentenced Steve Warshak to 25 years in prison after he was convicted in February on 93 counts of conspiracy, fraud and money laundering. (WorldCom’s Bernie Ebbers got 25 years, while Enron’s Jeff Skilling got 24 years and four months.) Here’s the AP story.

Federal prosecutors accused the company of bilking customers out of $100 million through a series of deceptive ads, manipulated credit card transactions and refusal to accept returns or cancel orders. Judge Spiegel ordered the company, along with other defendants, to forfeit more than $500 million — a figure based on how much Warshak and the company took in.

“This is a case about greed,” Spiegel reportedly said as he reviewed the case. “Steven Warshak preyed on perceived sexual inadequacies of customers.” Spiegel said one aspect of the fraud relied on the reluctance of customers to come forward, which would mean admitting they ordered the sexual enhancement pills.

“I do feel deep remorse and would like to apologize to any customer who ever had a bad experience with my company,” Warshak said. “I apologize to all the great people, the employees of Berkeley — they’ve given their heart and soul. I let them down.”

Spiegel said the company, which will likely be hit with the majority of the forfeiture, will be allowed to remain in business. Spiegel denied Warshak’s request to remain free on bond pending appeal, but gave him 30 days to wrap up personal business and report to prison.

As for Warshak’s mother, Harriet Warshak, Spiegel sentenced her to two years in prison for conspiracy and other charges. The judge is allowing her to remain free pending appeal, acknowledging that she’s 75, has cancer and likely will never be incarcerated because of the time it takes appeals to work through the courts.


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