Feds Seek $450 Million from Berkeley

CINCINNATI—Federal authorities are not through with Berkeley Nutraceuticals, the Ohio-based company charged with civil and criminal penalties over the past few years stemming from fraudulent business practices. In the recent past, Berkeley reached settlements with various state attorneys general, and several Berkeley executives have been indicted. Recently, the feds asked U.S. District Judge S. Arthur Spiegel to order forfeiture of Berkeley assets, including cash and real estate, to the sum of around $450 million. Authorities cite money laundering, false advertising and fraud as the charges.

"This wasn't a series of little frauds here and there," Mark Josephs, a U.S. Department of Justice lawyer, told the Cincinnati Enquirer. "This was a big scheme."

However, Berkeley's lawyers countered it is unreasonable and unfair to seize a large portion of the company's profits, some of which were earned legally.

Similarly, Berkeley Founder Steve Warshak's attorney, Martin Weinberg, refuted the charge that Berkeley's revenue was dirtied by its practice of automatically charging for and sending herbal supplements—including the male enhancement product Enzyte—to customers every month, even if they signed up for just one delivery. Weinberg argued most of the company's earnings were outside of this continuity program of automatic charging.

"The jury never found a dollar figure of loss," he said. "We proved that Berkeley, at its core, is a legitimate company that is selling quality products."

Despite these arguments, Judge Speigel reported that under federal law, the government is authorized to seize an entire account or asset even if just some of the value is tied to criminal activity. He further noted the false advertising claims may render a large portion of the company's profits as tainted. He vowed to determine how much the company and Warshak must forfeit when Warshak is sentenced later this year.