The US Federal Trade Commission (FTC) has received a settlement of $30,000 from Robert Waitkus, a businessman running an illegal pyramid operation selling unlicenced dietary supplements.
Waitkus was charged by the FTC in June 2001 for making false claims about the health products and the company. Waitkus claimed that anyone opting to participate in the pyramid scheme - selling the dietary supplements to other individuals under licence - would earn money quickly and easily, but the FTC said that the vast majority of participants in the programme achieved little or no financial success.
The FTC said that the company, Streamline, had been using the Internet, radio, direct mail and print advertisements to promote its health care products for the past five years. The company required participants to make minimum monthly purchases in order to earn recruitment-related commissions, and claimed that they could make between $500 and $2,000 a month.
The FTC decided to focus on these unfair claims rather than a number of other issues relating to the health claims and safety assurances made by Streamline, even though many of these were false and potential dangerous.
"A number of dietary supplements sold by the defendants contain the herbal ingredient comfrey, which is not included on the Food and Drug Administration's list of products generally recognized as safe. In fact, comfrey is known to pose a significant risk to humans, including liver damage, when used internally or externally on open wounds," the FTC said in a statement.
The settlement bars Waitkus from operating other schemes in the future, or from making unsubstantiated health claims about herbal products.