When the FBI Comes Calling…®
March 17, 2005
Feds raid maker of Enzyte
Accounts frozen at 'male-enhancement' pill company
By James McNair
Enquirer staff writer
Customers, employees and consumer watchdogs have wondered for years if Berkeley Premium Nutraceuticals ran a legitimate business. Now they have even more reason to believe their hunches were on the mark.
Shortly at 9 a.m. Wednesday, about 50 agents from eight state and local law enforcement organizations converged on three Berkeley locations in Greater Cincinnati, sent hundreds of employees home and began rummaging through file cabinets, computers and voicemail systems in search of proof that the herbal supplements maker had defrauded its customers.
No charges were filed and no arrests were made, but Berkeley will resume operating under a federal criminal investigation of indefinite length. The lead agency, the U.S. Postal Inspection Service, will examine the confiscated records to decide if Berkeley violated mail-fraud laws in the course of billing consumers for products they didn't want after a 30-day free trial period.
"We are just going to get the items, and investigators are going to review them to see what we have," said Postal Inspection Service agent Lisa Fitzpatrick.
In a statement, Berkeley said it wouldn't comment on the raid until the FBI explains the nature of the investigation to the company.
"We do believe, however, that the FBI's actions today are unwarranted and counterproductive and do not take into account Berkeley's efforts to strengthen our customer satisfaction, compliance, staff training and many other systems and processes," the company said. "Berkeley's policy is to cooperate with any government agency that has questions concerning its business and to voluntarily resolve any concerns raised by the agency promptly."
With more than 5,000 complaints filed against Berkeley at the Cincinnati Better Business Bureau and the Ohio Attorney General's office since 2001, Berkeley has long been accused of unscrupulous business practices. Its ads run frequently on cable TV channels, and its large, 24-hour sales force is pressured to sell erection-enlargement and female libido-enhancement pills to people responding to the TV spots. Many ex-employees say they felt deceitful in talking callers into $70 purchases.
"One day it was OK to say that Enzyte increased your length by six inches, but the next day you couldn't say that at all," said Michael Smith of Fairfield, who said he managed Berkeley's midnight sales shift for four months before being laid off in 2004. "The rules changed so much that you didn't know if you were doing something wrong. They kept you in a constant state of chaos."
Robbie Bluestein, who joined Berkeley in 2003 for a 3 and a half week stint as sales director, said it was difficult to have a conversation with Berkeley owner Steve Warshak because Warshak was routinely interrupted by calls from lawyers. He said he wasn't surprised by Wednesday's raid.
"They tried to be legitimate by going retail through CVS, GMC and Walgreen's, but there was too much smoke," said Bluestein, of Pleasant Plain.
Tara Mapes lasted only a day and a half at Berkeley. The Colerain Township resident said she began sales training Feb. 28. Peppering her trainer with questions about the products' research, clinical trials and claims, she said she was told she was "overthinking." The next day her hourly pay was cut from $8 to $7.50, so she quit.
"You give a company like that enough rope, and they'll hang themselves," Mapes said. "They were very misleading from the very beginning, and if they were misleading with the employees, you know they were misleading with their customers."
The search of Berkeley's headquarters in Forest Park and two other buildings in Blue Ash and Clifton was authorized by a federal judge on the basis of a sealed affidavit by one of the investigating agents. Federal spokespersons would not discuss the contents of the affidavit, but Douglas McNabb, a Houston lawyer specializing in federal white-collar crime defense, said the records seized Wednesday puts the government one big step closer to filing charges.
"They've already convinced a federal magistrate that there was evidence of criminal activity," he said. "Then they'll present the new evidence to a federal grand jury, and if the jurors think company officials committed a crime, the foreman will sign an indictment."
Patrick Hanley, a former federal prosecutor now in private practice in Covington, said investigators will settle into a long review of the materials seized from Berkeley.
"The government probably won't come to any conclusions for quite some time," he said.
Between the seizure of records and equipment, the freezing of bank accounts and the negative publicity, McNabb said Berkeley is "effectively out of business." Berkeley spokesman Chris Martin, however, said the company will resume operations Thursday morning.
In January, Warshak told the Enquirer that he expects Berkeley to spend $60 million on advertising and launch 40 new products, including a pill for attention management, an eye lubricant and a bath gel for aching joints. He said he set a goal of $320 million in sales for 2005.
But Enzyte, the erection enlarger promoted on TV by a robotic character named Smiling Bob, remains the company's best-known product.
Because the products never underwent clinical trials, it falls to customers to say whether the pills work or not. Several men filed class-action lawsuits against Berkeley because its early ads promised to increase the length of their penis by 41 percent. Last September, the Center for Science in the Public Interest asked the Federal Trade Commission to suspend the Enzyte TV ads, saying they are misleading.
"Enzyte is more successful subtracting from the male wallet than it is adding to the male organ," said David Schardt, senior nutritionist at the center. The FTC took no action.
A month later, on Oct. 14, the U.S. Food and Drug Administration sent a warning letter to Warshak about two of Berkeley's products, Rovicid and Rogisen. The FDA said the two products were improperly marketed as drugs, the former for heart disease and high cholesterol, the latter for age-related decline in vision. The agency also put Enzyte on a scale and found that it weighed an average of 1,263.4 milligrams per tablet, compared with the 1,558 milligrams indicated on the product label.
But the biggest complaint by far against Berkeley pertains not to product claims, but to the company's billing practices.
In more than 5,000 complaints filed with the Cincinnati Better Business Bureau and the Ohio Attorney General's office, Berkeley customers say they were roped into a buying program that docked their credit card without their approval. Typically, those customers were nearing the end of a 30-day free trial period for Enzyte or Avlimil. But by the time they called to cancel, the company had already shipped a second batch of product and billed their credit card $70.
Customers complained that their efforts to receive a refund were futile. The complaints subsided after Berkeley eliminated the auto-renewal program last August and made good on many refund demands. Still, customers soured on the company.
"Anytime I see their commercials on TV, I just cringe," said Lisa Center of Joplin, Mo., an Avlimil user who received a $70 refund {ndash} late {ndash} last May. "I would never order anything from that company again."