W5 - PhytoPharma - Our Comments
On Sunday January 6th,
2002 the award winning documentary show W5 exposed the 2 year old diet scam,
known as PhytoPharma. Our sincere thanks to Wei Chen, producer Robert Osborne,
associate producer Marnie Sugarman, and the rest of the W5 gang. You did a great
service for many North Americans affected by this!
For those of you who missed
it, and for our U.S. friends - here's the story. As we have described on many
occasions, PhytoPharma was a series of bogus weight loss promotions marketed
by mail order out of Toronto mailboxes.
along with help from Dr. Terry Polevoy of www.dietfraud.com,
began to take notice of the situation back in February 2000. The first ads were
Apple Cider Vinegar capsules by Naturalab.
By March of 2001, it was
to us that this operation was not only not being curtailed, it was growing rapidly.
Many U.S. citizens were upset about it. Rainbow Investigations, along with help
from Dr. Polevoy began to more aggressively put together the pieces of this
By mid summer we made considerable
progress, but were limited by our time and financial resources (we don't get
paid for this work!). W5 contacted us in August 2001, and offered to continue
on with this investigation.
The promotions were run
out of mailboxes which were rented by employees of a Toronto direct mail firm.
Mail was couriered from the mailboxes to the direct marketer. The ads contained
various 800's leading to a Saint John New Brunswick call centre. The extensive
ad campaign was run out of an ad agency in New Jersey.
The products were manufactured
by a contract manufacturer in Florida, and sold to an athletic supplements distributor
in Miami. Orders were shipped out of Toronto for Canadian orders, and Inwood,
New York for U.S. orders. The were delivered by a well known international courier.
The money, and it must
be in the millions, went to Ireland. PhytoPharma doesn't exist anywhere in Canada
as a registered company, and W5 found it registered in Panama.
Who's behind all this?
A small two man operation based in Montreal, called Infogest. Infogest had a
maildrop pickup location in a prestigious Montreal office building, but the
proprietors actually worked out of a small office in an older building in "Old
The proprietors are suspected
to be Daniel Souss and Patrice Runner. Both were previously involved in United
Research Center, a Montreal company convicted in 1997 by the U.S. Federal Trade
Commission for a similar weight loss scam known as the Svelt Patch. See www.ftc.gov/us/1997/9706/urcic.
While Rainbow Investigations
generally limits its role with these stories to reporting the news, on this
one occasion, we feel obligated to a few of our own editorial comments.
As W5 accurately portrayed
in the story, and both Dr. Polevoy and the undersigned have reported, Canada
is clearly seen now as the "Land of Opportunity" with respect to diet
scams. Between the three of us we are aware of at least a half a dozen similar
advertised weight loss promotions out there - all claiming to be based in Ontario,
all marketed out of mailboxes, all with hired answering services, many with
webpages. Millions of dollars weekly, most of it in U.S. dollars, are coming
into the hands of fraud artists right here in Canada.
The U.S. Federal Trade
Commission considers Canada such a problem, that they are considering recommending
a ban on ANY mail order product from Canada to the U.S.
Health Canada has a serious
challenge on their hands. In September 2001 Rainbow Investigations wrote a letter
to Minister Rock recommending the following changes to the HC field compliance
body, known as the Inspectorate:
Canada must employ a team of professional investigators specifically hired
to crack planned frauds. It is imperative these investigators be trained
in the most up to date investigative techniques including and not limited
to surveillance, investigative photography, intelligence gathering, paper
trail searching, computer intelligence
The Inspectorate staffing
levels must be brought to a level where employees can do the job. In Western
Canada, where we have the most familiarity, there are only approximately
15 designated inspectors west of Toronto.
Health Canada must
include in urgent investigative priorities, planned frauds. Traditionally,
Health Canada has almost always prioritized its investigations almost solely
on health risk. While of course, situations with a health risk are important,
but when planned frauds are not investigated, it provides an incentive for
new players to enter into the game. This is clearly happening now.
Health Canada should
provide consumers with up to date investigative and enforcement news on
its webpage such as is done in the U.S. with the Federal Trade Commission,
the FDA, and First Government for consumers.
The situation in Canada
now can only be described as a complete disgrace. Canadians deserve better.
U.S. citizens are sick and tired of having our scams being thrown at them (we
know - we've talked on e-mail with over 300 upset U.S. citizens).
Something has to be done - and done now!!!!!
Date of Story: Wednesday, January 09, 2002
Story Posted By: Ron Reinhold
Source: Ron Reinhold
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