A Florida promoter of human growth hormone will get to keep most of his $2.4 million home while paying $485,000 to settle Federal Trade Commission charges that he used millions of illegal spam messages to tout the bogus anti-aging properties of HGH herbal supplements
Under the settlement, Creaghan A. Harry, doing business as Hitech Marketing, Scientific Life Nutrition, and Rejuvenation Health Corporation, will be barred from making claims about any products sold over the Internet, including health and weight-loss claims, without scientific evidence.
The settlement leaves Harry with significant equity in his $2.4 million Florida estate. Florida is one of the states with the "homestead exemption" provision, which allows debtors to keep their homes when filing for bankruptcy.
Originally filed in July 2004, the FTCs complaint charged that the defendant violated the FTC Act by making false claims, and violated the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act) by sending e-mail that disguised its source, did not provide a way for recipients to opt-out of receiving future messages, and did not give a valid physical postal address.
In fact, according to the FTC, 40,000 spam messages claiming Harrys products would stop or reverse the aging process, cause weight loss, increase muscle, or regrow hair and remove wrinkles, ended up in the FTCs spam database at spam@uce.gov.
In addition, to paying consumer redress, the settlement bars Harry from violating the CAN-SPAM Act. Based on financial statements provided by the defendant, the settlement contains a suspended judgment of $5.9 million, the total amount of estimated consumer injury. If it is found that the financial statements were inaccurate, the entire $5.9 million will immediately become due.
Finally, the settlement contains various recordkeeping requirements to assist the FTC in monitoring the defendants compliance.
In a Commission statement, the agency noted that recent changes to the bankruptcy law suggest a potential mechanism by which the Commission could obtain more assets for consumer relief. Unfortunately, in this case the timing made it difficult for the Commission to apply the new bankruptcy law provisions.
Despite the timing issues in this case, the Commission statement noted, the Commission is committed to exploring ways to employ the new limitations on homestead exemptions in future cases.
According to the statement, Homestead exemptions have too often frustrated the Commissions ability to redress consumer injury suffered at the hands of malefactors and the Commission will act aggressively to ensure that these people will no longer live high at the expense of their victims.
