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Office of the AITORNEY GENERAL Montpelier,

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STATE OF VERMONT CHITTENDEN COUNTY, SS.

i SUPERIOR COURT l/?_J~ DOCKET NO./tf}~f(-f,:/ l4VO,

! 'I :1 I STATE OF VERMONT,

Plaintiff

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CHITTENDEN COUNTY CLERK FILED IN t;LERKS OFFICE

JUL 281994 DIANE A. I.AVAi.LEE

CLERK

' Lowensen International, Inc.

) ) ) ) ) ) ) ) ) ) ) ) ) )

d/b/a National Medical Research i Institute, and Louis-Martin !i Pilote II 11 j! 'I

Defendant.

CONSUMER FRAUD COMPLAINT

I. Introduction

1. Plaintiff State of Vermont, through its Attorney

General, Jeffrey L. Amestoy, brings this suit against a

Canadian corporation; the President of said corporation, Louis-

Martin Pilote; and the company it operates, for unfair and

deceptive acts and practices in violation of the Vermont

Consumer-Fraud Act, 9 V.S.A. § 2451 et~ The Attorney

General of the State of Vermont alleges that the Defendants'

1 advertisements and sales practices have violated the Vermont

Consumer Fraud Act, 9 V.S.A. § 2451 et~, by: a.) promoting

a weight loss product/program by falsely representing to

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consumers that it is a medical institution located within the

State of Vermont; b.) offering money back guarantees but

failing to provide prompt refunds as promised; and, c.)

promoting weight loss programs through the use of scientific

and factual claims which cannot be substantiated.

The State seeks injunctive relief, restitution to

consumers, civil penalties, and costs.

II. Background

2. LowJn~en International, Inc. (referred to herein as

"LI") is a business entity created and organized under the laws

of Canada and maintain principal offices at 111 Green Street,

Suite 101 in Saint-Lambert, Quebec, Canada J4P 1S6.

3. Louis-Martin Pilote is the President of LI and

resides in Ile Des Souers, Quebec, Canada.

4. LI has or is doing business as the National Medical

jj Research Institute (hereinafter referred to as "NMRI"). I

5. LI advertisements and correspondence, including but

not limited to those relating to product shipping and refund

processing, indicate that NMRI is•a Vermont company whose

address is Route 78 Ultraport, Swanton, Vermont 05488.

6. LI receives product orders and payments through a··· -

mail drop arrangement in Swanton, Vermont.

7. LI, through NMRI, markets a diet supplement referred

I to as "Panderyl", a cream referred to as "P5B12 Cream", and a

I book purportedly by Dr. Alan Lacey, M.D. entitled Doctor, How I

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Office of the AITORNEY GENERAL Montpelier,

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Come I Can't Lose Weight.

8. The containers in which the Panderyl Capsules and the

PSB12 Cream are distributed falsely state that the products are

"[d]istributed by Lowensen, Inc., Swanton, Vermont" and they

purportedly bear the signature of Dr. Alan Lacey, M.D.

9. Defendant Louis-Martin Pilote, has known, or should

have known, of the companies' methods of doing business; has

exercised control over these methods of doing business; and has

benefited from these methods of doing business.

10. Def~n4ant Louis-Martin Pilote is liable for the

unlawful conduct of Defendant, Lowensen International, Inc. as

described below.

III.

11. This action is in the public interest.-

Defendants Have Engaged in Unfair and Deceptive Acts and Practices

COUNT 1

FALSE AND DECEPTIVE MONEY BACK GUARANTEES

12. The allegations set forth in Paragraphs 1-10 above

are realleged and incorporated by reference.

13. LI offers in its promotional material a "Special

Invitation" which claims that "[consumers] can receive up to

194 Panderyl capsules ENTIRELY AT OUR RISK! (You pay only after

you have lost weight.)" A copy of the "Special Invitation" is

attached hereto as Exhibit . "A".

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Office of the ATIORNEY GENERAL Montpelier,

'ermonc 05609

14. LI offers in its promotional material a "Cert_ificate

of Warranty" which claims that consumers checks will not be

cashed for one month+ one week from the date they remit their

order with the post-dated check. A copy of the "Certificate of

Warranty" is attached hereto as Exhibit "B".

15. The "Special Invitation" (Exhibit "A") implies that

consumers are entitled to a refund if they do not lose the

weight promised, whether the refund demand is made before or

after the expiration of the trial period, by stating the

following; "By. allowing you to pay for more Panderyl capsules ONLY AF~ER you have noticed that you continue losing weight, on

a regular basis".

16. Defendant has routinely cashed post-dated checks

despite having received timely demands to cancel from

consumers.

17. Defendant has routinely failed to make timely refunds

to consumers requesting refunds within the trial period absent

the intervention of the Attorney General.

18. Defendant has. routinely refused, and continues to

refuse, to make refunds to consumers whose refund requests came

after the expiration of the trial period.

COUNT II

DECEPTIVE CLAIMS

19. The allegations set forth in Paragraphs 2-18 above

are realleged and incorporated by reference.

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Office of the ATIORNEY GENERAL Montpelier,

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20. LI, through NMRI, offers ~he Panderyl to consumers

for prices ranging from $59.99 to $107.99 plus postage and

11 handling, depending on the number of Panderyl tablets ordered.

I The cream and Dr. Lacey's book described in Paragraph "7" above

are purportedly free.

21. LI has distributed NMRI promotional material

nationwide falsely representing that NMRI and Dr. Alan Lacey

are located at Route 78 Ultraport, Swanton, Vermont.

22. LI claims in its promotional material for the

National Medidal Research Institute that its diet program and

the Panderyl tablets were developed by Dr. Alan Lacey, M.D.

I 23. LI claims in its promotional material for the

j National Medical Research Institute that Dr. Alan Lacey, M.D.

is the Nutritional Consultant for NMRI.

. I 24 • Promotional material for NMRI includes a five page j' letter from Dr. Alan Lacey, M. D. to consumers purporting to i explain the benefits of the NMRI diet plan. A copy of Dr. Alan

I Lacey's letter is attached hereto as Exhibit "C". 25. Promotional material for NMRI includes a document

entitled "Who is Doctor Alan Lacey?" which lists Dr. Lacey's

credentials beneath a photograph of a man in a white medical

I coat whom the consumer is led to believe is Dr. Alan Lacey. II

copy of the document entitled "Who is Doctor Alan Lacey" is

attached hereto as Exhibit "D".

26. LI distributes a book entitled Doctor, How Come I

Can't Lose Weight purportedly written by Dr. Alan Lacey.

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Office of the AITORNEY GENERAL Montpelier,

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-j 27. The pr. Alan Lacey, M.D. referred to in the I

1 promotional material for the NMRI does not exist.

28. Dr. Alan Lacey is a "pen name" for Dennis Jones,

Ph.D. who resides in Shelburne, Vermont.

29. Dennis Jones is not a Medical Doctor.

30. Dennis Jones is not the Nutritional Consultant for

NMRI and, upon information and belief, is not otherwise

employed by LI.

31. Dennis Jones did not author the promotional letter

\ ' attached hereto.as Exhibit "C", nor does he support the claims

made therein.

32. Dennis Jones did not author Dr. Alan Lacey's book

entitled Doctor, How Come I Can't Lose Weight.

33. The man depicted on the biographical document

attached as Exhibit "D" is not Dr. Alan Lacey or Dennis Jones.

34. LI claims in its promotional material for NMRI that

consumers can lose at least 4 pounds per week by taking the

Panderyl capsules while eating as much as they like, exactly

what they like, "without any diet whatsoever."

35. LI claims in its promotional materials for NMRI that

its weight loss program or methods will, or is likely to,

result in "permanent" weight loss.

36. LI claims in its promotional materials for NMRI that

LI programs, products and publications are supported by many

satisfied consumers by publishing sample letters of approval

identified by a first name and last initial.

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;! · 37. LI claims in its promotional materials for NMRI that

its weight loss program is the culmination of the studies of

several physicians, that it is physician developed and

physician approved.

38. Upon information and belief, the claims made in LI

promotional materials described in Paragraphs 21-35 are made

1 without reasonable factual or scientific substantiation. I

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WHEREFORE, Plaintiff requests that the Court grant the

following relle~ in its favor:

1. Temporary and permanent injunctions barring

ii , Defendants from engaging in any mail based business into or out I I I

of Vermont.

2. In the event that Defendants engage in any business

in Vermont, temporary and permanent injunctions requiring them

to comply fully with the Vermont Consumer Fraud Act, and

prohibiting the conduct described in this Complaint.

3. Full restitution to all consumers who purchased

merchandise from Defendants in sales tainted by the conduct

described in this Complaint, including postage, handling and

interest.

4. Civil penalties in the amount of up to $10,000.00 per

violation.

5. Reimbursement of Plaintiff's services and expenses in

investigating and prosecuting this action.

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6. Such other relief as the Court deems appropriate.

DATED at Montpelier, Vermont on this M_ day of July, 1994.

by:

STATE OF VERMONT

JEFFREY L. AMESTOY ATTORNEY GENERAL

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EXHIBIT

~ INMRI]fil:·

THE NATIONAL MEDIC~ RESEARCH INSTITUTE

CHFITTENDEN COUNTY CLERK fLED IN ~LEAKS OFFICE

JUL· 2i1994:_-·-·~/~;.:~. ··. ~-~~- ..

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DIANE A. LAVALLEE' CLERK . •. .

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WHO IS DOCTOR ALAN LACEY?.

Grad1.1:ate of The University of Cambridg~

• . University Demonstrator in Nutrition and Food Chemistry Department of Applied Biology-· University of Cambridge · · · · ·. · · • · · ·

;!il!tiF/: .. ~!§:§.:: F~ andPoorm=u~:md:~~ an~ 00 ~v:r'~,ii, -· f. •-. Collaborator, Unesco .. · .· ··· ·.- :

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,ti:~s;s~E~:SiillI,1;/}. , , r, Mem~. Can~an Institute ofF~ Sci~°": and T~ology •.· . ·. . •. . . . y:st:'5tl:!1t\,[~~/f .:--• Member,CanadianPharmaceuticalAssoc1at1on .,· -... · ... - : .. , .: ,.c;,;,, .. ,,.,., ... ,-:-:v· ··)·_ ,' _, . , , . • .. , , , : :C." ::-·/.:- ·.:._.:::·, :::,t/-::,:::·:.11:::·-·:;?:·;--::,'·'· __ ,.;, :,:!·'i During his illustrious career, Doctor Alan Lacey has published over 60 scientific papers in::;.''. >~/-{,\)/::':-\

·· '~ _ref~rred journals and was involved in scientific journalism for television, radio and ~e press ?if'{f}:f:: :~--;:tut: ,';:{ .. . _., and, at'one time, his own series of radio show~;- · . . . , \,;: ." .·. ,. •·::;::;: ·_ _ ··. , .c\:).:{f~r\t/::;\;:1:•J,?}f

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67~2!/~ You can recei~e_up to 194 Panderyl capsules

ENTIRELY AT OUR RISK! (you only pay after you have lost lVeight) ··· ·

.. ~-. -With the fourteen Panderyl capsules that ~e ~ff~r you fi

charge, you should lose at least .four pounds the very first week. : ·i~\t;t~:-. · You will probably want ·to lose more weight But at that time . :

you will have run out of capsules ... ·

And before your order arrives, before we can ship it,· and abriv'~ all, before the mail service reaches your home with your new supply._o( capsules, two weeks will have gone by. You will probably have put that weight back on by then ! · ·· •:·· /·'., ·:

.: .. \ . , . How can we avoid that? H~w can you continue lo~~g weight/'. ·

without interrupting your treatment - and without risk of losing mone:)"i

By allowing you to pay for more Pandetyl capsules ONLY :: )/. AFTER you have noticed that you continue losing weight, ·on a regttl~ · basis. ·· .J_.~:. , . . . , .. ;': ~-~~-'!." · =:·l~t.t,:.i.£~---.,.~ .~ ... : i ci" .. ·•"'-«i lose:wei r~af .,. . µftheiislcoflosing'·mori

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You are not buying anything.You are merely trying. Consequently, your check will ,ipt becash~dbefore 21' days; ;•::fd/

That me~s i~t ~ou have plenty of~~ (a •~1121 day~r:~ ~~'\;/ .

for yourself that the Panderyl capsules·mak~ you lose·ir~igb.L,:/'\ .

regularly, at the rate of at least four pounds a week. During that:f{( period, yo~ c~ 0eat as much as you like- and exactly ~Ii~i ycn1?r:1>

··•·•·.·like, without any diet whats~~~;. · Vi':i · · · ··::.:::: . ··:-·· ~ ~ ... : ·.

I, the undersigned, HILARY GREENE, General Maiiager

of the National Medical Research Institute,

guarantee that if the results are not as mentioned herein, or if, for any reason whatsoever, you are not completely,

100%, satisfied, all you have to do· is to return the

remaining c:apsules (at least the empty bottles) and your

. uncashed check will be returned by mail, at the latesi within the following days after reception. · ·'

The.foregoing is therefore your formal written and

.sign~ ~d sealed warranty. You dska,bsolutel)'., .•. · .

. _). no~g by accepting this invitation. -· "':";•; ~ .___ .. - . '. . ' '" ..

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lliilr ·. 0/f /P»ijf "j{:j. < C Dr~ Alan Laceyi_

Nutritional C~hsulbmtit;

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\Dear Friend:

0 EXHIBIT C DR ALAN LACEY M.D.

NUTRITIONAL CONSULTANT

New York r--:~=~--------C HI TT ENDE N COUNlY CLERlf'rli.day 10: 3 0 A. M. FILED IN ~LERKS OFFICE i

JUL 2 71994

DIANE A. LAVALLEE CLERK

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I have selected you to receive fourteen free Panderyl cap-sules to help you lose weight.

Of course, there is nothing to pay. Not now. Not later.

This is part of the recent discovery that help people lose weight (or stay slim) where all else had previously failed. All the medical research community is aware of this amazing development, and rn doctor hM all .th.e. ~-

I will tell you in an instant why I selected you. But it is possible that I made a mistake in your case.

That is why I would appreciate your answering the four questions you will find in the sealed envelope I have enclosed with this letter.

If you say yes to those four questions, you are exactly the type of person I am looking for. In that case, please accept absolutely free the following:

1 - My book: •DOCTOR, HOW COME I CAN'T LOSE WEIGHT?n In this book, you will find everything you need to know about the recent discovery which clearly shows that 98.4% of the people-who could never lose weight (or· regaip. t·he pounds they had lost) suffer from disorder in the way their bodies handle food they eat. Even when they ate little, they continued to build up fatty reserves.

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ply). These capsules will help you to straighten out your metabolism. You will see how you can to lose five or six pounds the very first week, without a formal diet plan.

No one will ask you one penny for my book, not even for the fourteen Panderyl capsules. Everything is offered to you free.

You probably have never heard about an offer like this -concerning a weight loss discovery.

You don't have to believe me, or believe the research about this new discovery: I want to send you my book, free of charge, as well as the fourteen Panderyl capsules.

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You will then be in a position to see for your-self how these capsules can help you lose those unwanted pounds while continuing to eat normal food - and - I remind you: it doesn't cost you anything.

When I say that I wanted to send you my book as well as the fourteen Panderyl capsules free of charge, that is exactly what I meant. I don't want you to send any money and I don't want you to pay anything whatsoever when the parcel arrives at your home. Nothing to pay before, nothing to pay after. That is my free offer to you.

You have nothing to lose and a hole new life to gain. All you have to do is send me back your INVITATION right now.

Why such a generous offer? The answer is simple. Medical statistics have shown that only 14% of the people who never succeed in losing weight eat more than average.

Why then does their body stock fat? How come their diets, their pills don't help them lose weight?

Because, as I mentioned earlier, recent research has estab-lished that these people suffer from a disorder in the way their bodies handle food they eat. Even if they eat little, their body turns much of the food they eat into fat reserves·.

The Panderyl capsules help you to re~establish a good metab-olism. And when you discover on your bathroom scale that by taking Panderyl capsules you lose weight the following day - and that you lose _ 5/6 pounds per week, thereafter, you'll be convinced they can work for you. You will notice that at last you are really losing weight. After all, seeing is believi~g.

Maybe all this seems too beautiful to be true. Maybe you are wondering how Panderyl capsules can help you lose those ugly pounds

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I - Page 3 -while every other promising formula that you tried disappointed you.

IFirst,IPanderyl capsules have ~othing in common with other products that you may have tried.

Doctors are now aware that when the body handles the food you eat sluggishly, it transforms the better part of your food into fatty reserves.

Panderyl capsules help you to re-establish a perfect working order of your digestive and metabolic function. And lose weight the natural way.

!second,! Panderyl capsules are based on research findings by leading nutritionists and doctors like:

- Brody Jane:"2 new studies point strongly to low metabolism rate as cause of obesity." The New York Times;

- Schwartz, R., Ravussin, E., Massari, M., et al "The Thermic Effect of Carbohydrate Versus Fat Feeding in Man." ]1etabolism, Volume 34;

- Barnett, Robert: "Why Fat Makes you Fatter" American Health;

- Ernsberger, Paul: "The death of Dieting" American Health.

I Third,lmore facts about the reliability of this discovery: following a recent survey, more and more weight loss specialists help people lose extra pounds - when nothing before worked - without any problem, by normalizing their response to the constituents of the food they eat.

In fact, thousands of men and women who had unsuccessfully tried to lose weight have already discovered that they look slim and that they feel slim, using exactly this approach.

!Fourth,ldon't forget the fact that I am also offering you fourteen Panderyl capsules absolutely free.

Naturally, I would never be able to offer you this opportu-nity if I were not absolutely convinced that you will lose .at.~ five pounds the very first week.

You see, right now, at.this very moment, many people who had tried everything without success are already reporting, one after the other, that they are losing weight. Most important: they're losing weight without sacrificing the food they like.

·· can -y-ou .. use Panderyl- -capsules · · · -~-· · · · · · · without any inconvenience?

Panderyl capsules only contain natural herbs and spices without chemical medication.

Recent long-term studies have shown that Panderyl capsules

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are not only highly effective but also totally safe. They have none of the serious side effects linked to diet drugs, and none of the risks associated with using your own idea of a diet without expert supervi-sion.

Panderyl capsules help restore your body's ability to handle food normally. If you think your body is in good shape, you can rest assured that it will be even better when you use these capsules.

But if you say uYES" to the four questions you will find in the sealed envelope (included with this letter) it is almost certain that your body does not respond normally to the food you eat. And THAT is what prevents you from losing weight.

While you normali.ze what we call "dietary thermogenesis", you lose weight NORMALLY

just like people who can eat what they want without ever putting on weight.

,If you hesitate to accept my invitation to receive absolute-. ' ly free fourteen Panderyl capsules, please allow me to relate the med-ical history of a young lady who could not lose weight.

She had tried everything. Sometimes on a stringent diet with hunger suppressants and by denying herself everything, she managed to lose 4/5 pounds. But as soon as she resumed eating normally, she regained the pounds she had just lost! We used to call this the "yo-yo• syndrome.

She was one of the first people to use Panderyl. Here's what she had to say:

"The following days were the most beautiful I had ever lived. In the morning, when I stepped on the scale, I couldn't believe my eyes. During the first week, I lost more than seven pounds while eating normally - without sacri-ficing anything. In six weeks, I had lost 35 pounds. I remember that day, my husband bought me some beautiful lingerie. He hadn't done · that in 14 years. I couldn't imagine that life could be so beautiful. I feel happier that I ever thought possible.•·

What about you? - Are you going to refuse this.beautiful life? Are you going to refuse this slim, seductive appearance that you have always dreamed about?

Don't forget, no formal diet to follow. Eat normal food. In a few weeks, you will no longer have to •bear" those ugly pounds, your heart, your kidneys and all your other vital organs will work incredibly better. You will feel more dynamic, more stimulated.

Furthermore, you will have more confidence, in the company of others, because you will look more appealing, younger ... and let me tell you: nothing in the world can beat that.·

But that's not.all. If you answered •YES" to the first four questions in the sealed envelope, simply take one Panderyl capsule

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before each meal to help your body handle the food. Remember, when your body handles food normally, you will no longer retain fat and you will systematically, regularly and automatically lose ALL those pounds you don't want.

The facts are there. They are based on a large volume of medical and scientific research.

This formula has been meticulously tested on people who, LIKE YOU, had also given up

on the idea of losing weight.

That is why, I invite you to take advantage of this absolutely free fourteen Panderyl capsules offer. When you realize that they make you lose at least 4/5 pounds a week, you'll probably want to lose more. And you will become a steady customer.

But the number of FREE Panderyl capsules is going rapidly. And the quantity is inevitably limited. So that you won't lose out on this exceptional offer, I urge you to return your invitation today to receive you~ £ree Panderyl capsules. See for yourself - lose at least 4/5 pounds the very first week. I stake my medical reputation on that!

If you don't do it for yourself, do it for your husband, your children. They will be proud of you.

But, do it right now ... while it's still time to receive your free fourteen Panderyl capsules and my book. What you are about to receive will cost you nothing and could literally transform your life.

Cordially yours,

Dr. Alan Lacey Nutritional Consultant

Note: Talk about this to your physician discovery.

he is aware of this new

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