Fraud
In October 1986, USA was the subject of an expose produced by the NBC network, which revealed the company’s use of fraudulent scientific claims and deceptive advertising. In November, the company failed to mail some of its commissions, and by December, the company's checks to distributors were bouncing.
The FDA subsequently investigated USA for pyramid-scheming, the use of false and misleading promotional materials, and for making prohibited disease treatment claims. On January 28, 1987 Attorneys General in California, New York and Texas simultaneously filed lawsuits ordering USA to change its marketing plan and sales claims. Several of the board's advisory members immediately resigned, including Leaf and DeBakey. A few others said that they were "misquoted or improperly used in USA's sales materials." Leaf told Money magazine, "They used my name with false statements to advertise the products." In February 1987, company executives told the FDA that they were going to make labeling changes and bring everything into compliance, but in April USA filed for Chapter 7 bankruptcy liquidation and ceased operation. USA’s deceptive sales and marketing tactics were reviewed in several articles published in 1986-1987.
Read more about this topic: United Sciences Of America
Famous quotes containing the word fraud:
“Things gained through unjust fraud are never secure.”
—Sophocles (497–406/5 B.C.)
“The disfranchisement of a single legal elector by fraud or intimidation is a crime too grave to be regarded lightly.”
—Benjamin Harrison (1833–1901)
“There exists in a great part of the Northern people a gloomy diffidence in the moral character of the government. On the broaching of this question, as general expression of despondency, of disbelief that any good will accrue from a remonstrance on an act of fraud and robbery, appeared in those men to whom we naturally turn for aid and counsel. Will the American government steal? Will it lie? Will it kill?—We ask triumphantly.”
—Ralph Waldo Emerson (1803–1882)