Fraud Discovery Institute Asks Waxman To Address Lead In Herbalife Products

FDA should issue a public health alert to warn consumers about potential health risks that may result from use of Herbalife dietary supplements and should remove the company's products from the market, pending further investigation of lead contamination, according to Christopher Grell, an attorney whose firm specializes in ephedra and dietary supplement litigation.

"At a minimum, the state of California should, pursuant to Proposition 65, order Herbalife to place clear and reasonable warnings on these products" to warn consumers about the chemicals they contain, writes Grell in a recent letter to the Fraud Discovery Institute.

Grell and FDI are working to bring to light recent findings that show six Herbalife products contain amounts of lead that exceed maximum levels allowed by California's Prop 65.

FDI selected the six Herbalife products in April for testing by an independent lab.

In a May 17 letter to Rep. Henry Waxman, D-Calif., FDI includes a copy of Grell's recommendations and a summary of test results for the six Herbalife products selected by the group for analysis.

FDI says it communicated the information to Waxman specifically because he has expressed concern about contaminated products. In April 2007, a ConsumerLab report on lead levels in certain vitamin products prompted Waxman to ask FDA whether it needed additional authority, resources, or both, to address contamination issues (¹ (Also see "Waxman Seeks FDA Action Following ConsumerLab Vitamin Lead Testing" - Pink Sheet, 9 Apr, 2007.), p. 6).

FDI's History

In the letter, FDI co-founder Barry Minkow also explains that his organization helped expose the fact that former Herbalife President Gregory Probert lied in corporate filings to the SEC about having an MBA, which ultimately led to Probert's resignation.

Minkow, who himself served more than seven years in jail for fraud related to the activities of his former company, established FDI to investigate other companies committing fraud-related crimes.

In 2005, the company received a letter of commendation from the FBI for uncovering "millions" of dollars in fraudulent activity and preventing further economic harm to consumers. The FBI said it had undertaken 13 different investigations as a result of matters brought to its attention by Minkow's organization.

In the dietary supplement industry, FDI has been particularly focused on multilevel marketing schemes, which raise the prices of dietary supplements and can financially harm those who sign up to market the products, Minkow says.

FDI produced a documentary about Herbalife's multilevel marketing program in China, and has also voiced its opposition to USANA's marketing structure (² 'The Tan Sheet' March 19, 2007, In Brief).

Minkow also owns $21,000 in Herbalife "put" options, which he explains are a way to finance the investigations and lab fees that are a cost of business for FDI. The company does not charge fraud victims for the cost of investigating their complaints.

Holders of "put" options buy the right to sell shares of a company at a certain fixed price for a certain number of days. If the stock price falls within that time period, the holder may sell at the higher price and earn a profit.

According to Minkow, a Wall Street Journal article publicizing Probert's MBA fabrication caused an "unusual" number of former Herbalife employees to contact FDI and suggest that the company's products be tested for contamination.

In the information provided to Waxman, Grell names the six Herbalife products in which lead was found: Shapeworks Protein Drink Mix, Healthy Meals Nutritional Shake Mix, Thermojetics tablet, Shapeworks Cell Activator capsules, Multivitamin Complex and the Tang Kuei Plus tablet.

The products range in lead content from twice to 12 times the maximum level allowed under California law.

Because the products are part of a weight-management program, some consumers might take all of them at once and possibly expose themselves to 45 times the maximum lead exposure allowed, Grell adds.

Product selection by FDI was based in part on two studies published in the Journal of Hepatology in 2007. In the first study, a questionnaire distributed at Swiss hospitals identified 10 cases of hepatotoxicity between 1998 and 2004 that were linked to use of Herbalife products. None of the patients died, but one required a liver transplant.

In the second study, authors investigated 30 cases of unexplained acute hepatitis that had taken place during 2004 in an Israeli hospital. Of the 30 cases, 10 patients were identified as having used Herbalife products shortly before symptoms occurred.

Researchers in the second study concluded that following the association between the products and acute hepatitis, a prospective evaluation of Herbalife products for possible hepatotoxicity should be conducted.

"Until then, caution should be exercised by consumers, especially among individuals suffering from underlying liver disease," they write.

Suspicious cases of hepatic toxicity were also recently cited by the Spanish Ministry of Health when it issued a public health advisory warning consumers about Herbalife products (³ 'The Tan Sheet' April 28, 2008, In Brief).

In response to FDI's announcement, Herbalife issued a statement maintaining that its products "include natural ingredients, and trace levels of naturally occurring lead is present in virtually all natural ingredients. This is not a question of contamination resulting from the manufacturing process or as a result of unsafe handling."

"Our products fall within FDA suggested guidelines for the amount of lead that consumers can safely ingest through their diet," the Los Angeles -based company says.

- Bridget Behling