United Sciences of America - Fraud

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.