“Dietary Supplements Under Federal Investigation”
The Justice Department indicted USP Labs and says it is a “wake up call” for the industry. Indictments have been for mislabeling and making false claims about products. U.S. consumers spend an estimated $40 billion per year on dietary supplements, noted Acting Deputy Director J. Reilly Dolan of the Federal Trade Commission. “Many deliver what they have promised, but some are nothing more than 21st century snake oil,” Dolan said. Up to 50% of Americans are believed to take herbal/dietary supplements. The DOJ announced indictments against Dallas-based workout and dietary supplement maker USP Labs and four of its executives for criminal conspiracy to mislabel and market potentially dangerous products. Subsequently, shares of nutritional-supplement companies tanked. Hardest hit were shares of GNC Holdings Inc., which traded down 27% early and closed down 6.4%, followed by Herbalife LTD, Vitamin Shoppe Inc and Nu Skin Enterprises Inc. The head of the Justice Department alleged that certain USP Labs products had been labeled as being derived from natural plant extracts when they were 100% synthetic. Dolan said the FTC also took action against Sunrise Nutraceuticals for selling a $75-a-bottle herbal remedy falsely claiming to alleviate the pain of withdrawal for opiate addicts.