California Settles with Xenadrine for $1M

SACRAMENTO, Calif.—The state of California, along with 10 local prosecutors, reached a $1 million settlement in its case against Nutraquest Inc., which was accused of using deceptive techniques in marketing its ephedra-based Xenadrine weight loss product. Under terms of the settlement, Robert Chinery, president of Nutraquest, is required to pay $600,000 in civil penalties and $400,000 in lawsuit-related costs.

Attorneys General from eight districts and the city of San Diego filed the suit in 2003, accusing Nutraquest, formerly known as Cytodyne, of using deceptive claims to market Xenadrine RFA-1. Among the claims cited in the case were statements that Xenadrine was “clinically proven to increase fat loss by an unprecedented 1,700 percent,” and is “the only diet supplement in the world clinically proven to increase fat loss by an extraordinary 38.6 times more than diet and exercise alone.” The settlement involved a joint effort from the state Attorney General’s office, the San Diego City Attorney’s Office and prosecutors from the counties of Monterey, Alameda, Kern, Marin, Napa, San Benito, San Francisco, Solana and Sonoma.

“We think it’s fair,” said Robert E. Nichols, a deputy district attorney for Marin County in California. “We think it’s appropriate.”

Last July, Nutraquest, its founder and three other companies agreed to pay New Jersey nearly $1 million to settle a lawsuit that charged them with misleading advertising. And in 2003, Nutraquest filed bankruptcy under the weight of numerous lawsuits over its ephedra-based product, which was accused of causing medical problems, including at least one death. According to court records, a proposed reorganization includes a $34.19 million payout to settle 138 cases. However, Nutraquest will pay no more than $4.35 million, with the remainder to be paid by more than 60 other parties, including retailers that sold the diet supplement.