Manufacturer of Ephedra-Based Dietary Supplements Settles Lawsuit with State

Bankruptcy Judge Approves Settlement Against Company
and its President for $260,000

NEWARK - N.V.E., Inc., a.k.a. N.V.E. Pharmaceuticals, and Robert Occhifinto, the president of N.V.E., have settled a lawsuit that alleged the Sussex County manufacturer of dietary supplements misled consumers by making false and misleading claims about the safety and efficacy of its products, Consumer Affairs Acting Director Stephen B. Nolan announced today.

“This case makes clear that there are no quick fixes when it comes to weight loss and if it sounds too good to be true, it probably is,” said Acting Director Nolan. “This company exploited human nature to make money.”

The state’s complaint, filed in August, 2004, alleged that Newton-based N.V.E. violated New Jersey’s Consumer Fraud Act (CFA) through advertisements that exaggerated the benefits and minimized the risks of its “Stacker-2" and other ephedra-based dietary supplements.

Ephedra is a stimulant derived from the Chinese herb ma huang that has been proven to cause headaches, irritability and heart palpitations, and has been associated with strokes, seizures, high blood pressure and heart attacks. The dangers of using ephedra and other ephedrine alkaloids as a diet supplement for weight loss are, especially when used with caffeine, widely documented in medical literature. N.V.E. represented that its products were safe when taken in the recommended dosages and that most people who used them lost two to three pounds per week, despite hundreds of complaints that refuted these statements.

The settlement requires N.V.E. and Occhifinto to pay the State $260,000 as follows: a $60,000 payment from Occhifinto and four $50,000 payments from N.V.E. N.V.E. filed for Chapter 11 Bankruptcy protection on August 10, 2005. On August 9, 2006 and as a pre-condition of the settlement, the Bankruptcy Court approved the State’s settlement with N.V.E., thereby protecting the $200,000 N.V.E. payment from bankruptcy proceedings. N.V.E. and Occhifinto entered into the settlement without any admission of liability or any violation of the CFA.

Under the terms of the settlement, N.V.E. and Occhifinto are prohibited from engaging in acts and practices in violation of the CFA, which include:

misrepresenting that a weight-loss product causes rapid and substantial weight loss without the need to diet or exercise;
representing that a weight-loss product, when used by itself or with diet and exercise, causes the loss of weight or fat within a specific period, if not based upon competent and reliable scientific evidence;
using an endorsement for a weight-loss product that identifies atypical results, yet fails to clearly and conspicuously disclose that the results are not typical; and
representing that a weight-loss product is “clinically proven” to be safe or effective, unless the representation is based upon competent and reliable scientific evidence.
As part of this settlement, N.V.E. has also agreed to make the following documents available to the state for the next four years:

all advertisements and promotional materials for each weight-loss product it sells in New Jersey;
all materials it relies upon to confirm the accuracy of the advertisements and promotional materials; and
all tests, reports, studies, surveys, demonstrations or other evidence that contradict the representations made in its advertisements or promotional materials, including complaints or other communications with consumers, governmental entities or consumer protection agencies.

This is the State’s third settlement of a lawsuit against a New Jersey company that manufactured or distributed ephedra-based dietary supplements for alleged violations of the CFA. The State previously settled with Cytodyne Technologies (a.k.a. Nutraquest) in April 2005, and with Goen Technologies in August 2005.

Deputy Attorney General Joshua T. Rabinowitz represented the State in each lawsuit.

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