Radio Fraudcasting

Radio listeners tuning into Dallas DJ Jeff K on KKMR (now KDBN, “The Boneâ€) in late 2000 could hear him extolling a magical weight-loss remedy. “It helped me lose 36 pounds,†said the DJ, whose real name is Jeff Kovarsky. “I ate so much over Thanksgiving, I still have turkey burps. But thanks to Body Solutions, I keep the weight off and now I’m ready for Christmas. So, bring it on, Grandma. The honey-baked ham, the apple pie, the Christmas cookies. I’m not afraid because I’ve got Body Solutions Evening Weight Loss Formula.â€

Few listeners then could have known that Kovarsky was hyping a scam by a politically connected Texas company that preyed on people who wanted to believe a radio personality’s claim that it’s possible to “lose weight while you sleep.†Last October, the Feds shut down San Antonio-based Mark Nutritionals, long after it began paying radio personalities at 755 radio stations across the country to sell this snake oil by saying that they had shed pounds just by taking a spoonful of this herbal potion before bed.

Mark Nutritionals also paid millions of dollars to the radio stations for these endorsements. While the stations have not advertised the fact that they rented out their airwaves to promote this fraud, 370 of them—including 58 in Texas—fingered themselves by registering in court to recover money from the company after it declared bankruptcy last year. Ex-tabloid celebrity photographer Harry Siskind started Mark Nutritionals in 1999, after the bankruptcy of an earlier venture that sold weight-loss cookies called Texas D’Lites. Although the slang term “mark†is all too applicable to Mark Nutritionals’ customers, Siskind named this company and Mark’s, a San Antonio nightclub, after his late brother-in-law. Siskind told the San Antonio Chamber of Commerce in 2001 that his initial doubts about this marketing scheme vanished—like cellulite—overnight after his first paid radio announcer generated $3,400 in sales.

To be sure, commercial radio embraced quack claims in its infancy. Carr Collins, the insurance magnate who headed Texas’ first workers’ compensation agency, used radio to sell $3 million of “Crazy Crystals†during the Great Depression. The Federal Trade Commission (FTC) shuttered that operation in 1940, after the serendipitously named Dr. Arthur J. Cramp debunked the crystals’ laxative claims.

Mark Nutritionals cleverly put radio personalities on a commission to endorse its product in what were not clearly delineated ads. Paying promoters proportional to the volume of sales that they generated created incentives for strong endorsements and discouraged announcers from addressing complications. Few listeners, for example, ever heard that Evening Formula was just part of a full Body Solutions regimen that also was supposed to include doses of the stimulant ephedra—one of the nation’s most dangerous herbal remedies.

Devoid of pictures or fine print, radio was the ideal medium to broadcast this former paparazzo’s message to an obese nation. Millions of faithful listeners heard personal pitches from familiar voices, yet they could not see if the announcer plugging the product really had lost weight. In four years, Mark Nutritionals rang up $155 million in sales to more than one million customers.

The company’s imitators testify to its success. Richard Cleland, the assistant director of the FTC’s advertising division, says that false weight-loss claims are flooding the market. Michigan-based marketing firm BTW Associates, which advertises its “Reality Radio†services as “America’s most effective model for live endorsement radio,†worked for at least 50 radio stations that promoted Evening Formula.

“When taken every night on an empty stomach right before you go to bed,†Emmy-award-winning CBS commentator Charles Osgood said of the product on 400 Infinity Broadcasting stations, it “will help you to lose weight while you sleep. It’s that easy.â€

While the FTC, which settled its 2002 fraud lawsuit against the company in October, would not identify all the stations that promoted this fraud, half of them registered in federal court to collect money that Mark Nutritionals owes them. An FTC attorney involved in the case said it’s reasonable to assume that these 370 creditor stations are pursuing revenue from Evening Formula ads that they aired. Other stations may not have pursued such debts out of the shame that dogs some of the people who either promoted or bought into this scam. After joining a 2002 class-action lawsuit against Mark Nutritionals, Florida homemaker Janet Makinen cited embarrassment as “the reason most people have never taken on the company.†(At press time the lawsuit was still pending.)

Yet the payola lure of all the advertising money that Mark Nutritionals owed to major radio chains prompted them to swallow their pride. Even before Mark Nutritionals filed for bankruptcy, Viacom’s Infinity Broadcasting sued the company to recover more than $9 million in advertising revenue and Cox Enterprises sued to recover $452,000. The nation’s three largest radio powers account for 41 of the 58 Texas stations that are seeking payment for promoting this fraud. San Antonio behemoth Clear Channel Communications owns 21 Mark Nutritionals creditor stations in Texas, more than Infinity and Cox combined. Walt Disney’s ABC, Christian broadcaster Salem Communications, and the African-American Radio One chain are the only other companies that own multiple creditor stations in Texas.

Dallas-area FTC officials launched the Evening Formula probe after they personally heard “outrageous†radio claims about the product. One challenge for these attorneys was determining what Mark Nutritionals knew about the claims that radio personalities made on its behalf. FTC attorney Tom Carter says the government cleared this hurdle when it discovered that these announcers recorded their endorsements for the company, which awarded prizes for the best spots—including Jeff K’s “turkey burp.†These exchanges demonstrated that the company knew about and encouraged claims for which it lacked credible scientific evidence.

Mark Nutritionals settled its FTC charges in October by agreeing to cease to exist. Apart from this corporate death penalty, Siskind’s partner, Edward D’Alessandro, Jr., agreed to pay a $140,000 fine and pledged to refrain from false weight-loss claims in the future. Charges are still pending against the dogged Siskind, who reportedly once won an endurance contest with Superman, after spending weeks in the bushes of a rehabilitation clinic to snap the first tabloid shot of Christopher Reeves in a wheelchair.

Tom Carter says that the FTC has reached a tentative settlement with Siskind, which he expects to be revealed soon, once commissioners vote on it. Given Siskind’s political connections, it will be interesting to see if the settlement is punitive enough to dissuade others from copying a business that made Siskind $7 million a year and paid his wife, Patti, a $500,000 annual salary.

Siskind is a frequent business partner of attorney Stanley Rosenberg of Loeffler Jonas & Tuggey, which is defending Siskind from the FTC lawsuit. The firm was started in 2001 by one of President Bush’s elite “Ranger†fundraisers, Tom Loeffler, from remnants of predecessor Arter & Hadden. The firms made a bundle helping Metabolife International, the nation’s number one marketer of ephedra diet remedies, sabotage Texas Department of Health (TDH) efforts to restrict ephedra sales. The firm paid Texas Senator Jeff Wentworth (R-San Antonio) and then-Representative Rick Green (R-Dripping Springs) to lobby TDH on Metabolife’s behalf. The Travis County prosecutor reportedly has a deal in the works with Green and Wentworth to settle charges that they broke a state ethics law that prohibits lawmakers from being paid to privately lobby state agencies.

Meanwhile, the FTC has been working for more than a year on voluntary guidelines to help media screen out bogus weight-loss claims. Many experts and common sense suggest that red flags shoot up whenever hucksters sell the idea that pounds can be shed without a change of diet or exercise habits. Media lobbyists are trying to prevent the FTC from adopting such common sense—even in voluntary guidelines. “Creating a list of presumptively false claims based solely on today’s science will choke the flow of new products and information to consumers and impede the introduction of new and efficacious products,†Electronic Retailing Association President Elissa Matulis Myers warned the FTC last year. Such guidelines also could choke the flow of the hundreds of millions of dollars in snake-oil ad revenues that the media have been wolfing down.

Andrew Wheat is research director of Austin-based Texans for Public Justice.