Metabolife, Founder Indicted by Grand Jury

SAN DIEGO--A grand jury returned an eight-count indictment against Metabolife International Inc. and its founder, Michael Ellis, on July 22. The indictment charges the defendants with six counts of making false, fictitious and fraudulent representations to the Food and Drug Administration (FDA) and two counts of corruptly endeavoring to influence, obstruct and impede proceedings concerning the regulation of dietary supplements containing ephedra.

According to prosecutors, Metabolife and Ellis are charged with falsely representing material facts to the FDA in letters from April 1998 and February 1999. The prosecutors allege the letters included false statements that "Metabolife ha[d] never received one notice from a consumer that any serious adverse health event has occurred because of the ingestion of Metabolife 356" and that the company had a "claims-free history."

"It is never acceptable for corporations to lie to regulatory agencies, but it is particularly egregious when those lies threaten the public health," said U.S. Attorney Carol Lam.

The case is being investigated by the FDA Office of Criminal Investigations and the Internal Revenue Service Criminal Investigation Division. Each of the eight charges holds a maximum penalty of five years in prison and a fine up to $250,000. The defendants are scheduled to be arraigned on July 27.

Metabolife (www.metabolife.com) issued a response from its attorney, Steve Mansfield from Akin Gump. "The allegations in this indictment are utterly baseless," he said. "The prosecuter handling this case appears to be doing the bidding of a disgruntled agency that has been seeking for the past 10 years to put the dietary supplement industry out of business. ... After two years of investigation, during which no stone was left unturned, millions of dollars of investigation resources, deployment of over 100 federal agents, and over a dozen search warrants, the government has concocted a hypertechnical violation by taking statements to a regulatory agency out of context. We will vigorously contest each and every allegation and look forward to our day in court."