May 21, 1968
In the Matter of the Complaint That
AMA-TOL INDUSTRIES
AMA-TOL INDUSTRIES, INC., and
P.O. BOX 35, RUGBY STATION
at
Brooklyn, New York 11203
(hereinafter called Respondent), is engaged in conducting a scheme for obtaining money through the mails in violation of 39 U. S. Code 4005.
P.O.D. Docket No. 2/266
APPEARANCES:
Abraham Levine, Esq.
Office of the General Counsel
Post Office Department,
for the Complainant
Solomon H. Friend, Esq.
Sheldon S. Lustigman, Esq.
Bass & Friend
342 Madison Avenue
New York, New York,
for the Respondent
INITIAL DECISION OF HEARING EXAMINER
The Complainant, the General Counsel of the Post Office Department, has charged that in the manner of its advertising and sale through the mails of a product known as Ama-Tol, the Respondent, Ama-Tol Industries, Inc., under that and other names, is engaged in a scheme proscribed by section 4005 of Title 39, United States Code.[1] The gist of the Complaint is that the Respndent has falsely and fraudulently represented that the product Ama-Tol is effective in producing weight loss for its users.[2]
It is concluded here that the Respondent has been conducting a fraud scheme through the mails in the manner alleged in the Complaint and it is recommended that a fraud order be issued.
The Issues
The issues to be determined herein are:
1. Does the Respondent make, or make in substance, the representations in regard to its product which the Complainant attributed to Respondent and which Complainant has set forth in the Complaint?
2. If the Respondent does make the representations attributed to it by the Complainant, are these representations true or false?
3. If the Respondent makes the said representations and if they are false, were the representations made with an intent to deceive?
Does the Respondent Make the Representations Set Forth in the Complainant?
In resolving this issue one must consider the advertisements of the Respondent in the light of the effect they “would most probably produce on ordinary minds.” Donaldson v. Read Magazine, 333 U.S. 178, 189. With this criterion in mind, a reading of the exhibits A and B to Appendix A hereto makes it abundantly clear that the average reader – and probably many sophisticated readers as well – would conclude that the Respondent represents its product, Ama-Trol, as being, and of itself, an effective preparation by means of which users could achieve significant loss of weight without dieting. This is the substance of the representations set forth in the Complaint, and those representations therein alleged are made by Respondent.
Are Respondent’s Representations True or False?
In response to the advertisements used by the Respondent, remitters would order a supply of Ama-Tol for various amounts of money depending upon the quantity ordered. The product consists of an elongated pill containing certain vitamins, 5.8 mg. of benzocaine and 750.8 mg. of sodium carboxymethylcellulose. (Dept. Exhibit I)
The theory urged by the Respondent is that the ingestion of this pill will reduce hunger by (1) the benzocaine’s anesthetic action which was said to (a) reduce the motility of the stomach and (b) reduce the stomach’s acidity; (2) the sodium carboxymethylcellulose’s hydrophilic action which was said to produce bulk in the intestine and engender a feeling of satiety; and (3) that the two ingredients in combination have greater effect than the sum of the effect of both ingredients singly used.
The position of the Complainant is that as to the benzocaine (1) it is not effective at all in the stomach, where hunger sensations originate, but only in the intestine, (2) in any event, it is not present in the pills in sufficient quantity to produce the effect described by the Respondent, (3) it would be destroyed by enzymes present in the stomach; and (4) that it would be washed out of the stomach before it could have any effect – if it had any effect there at all, which it has not. As to the sodium carboxymethylcellulose, the Complainant insists that the absorption of liquids by this substance takes place in the intestine and thus could not affect the sensation of hunger, which originates in the stomach.
There was testimony by a medical doctor called by each party. The testimony of these expert witnesses is conflicting in regard to the action in the body of certain of the ingredients of Ama-Tol.
There were certain important points of agreement, however, such as: (1) obese patients should consult with a physician before embarking on a weight-reducing program; (2) weight-reducing regimens should be individualized to meet the particular needs of each patient; and (3) the degree of success of any preparation in producing a reduction in weight is unpredictable at the beginning of such a program because of the varied reactions to different medications by different people. All of these points indicate the fallacy of offering, as the Respondent does, a product to be taken uniformly by everyone who is obese upon the assurance that a loss of weight will surely result. There are other noteworthy features in regard to the medical testimony in this case and Counsel for the Complanant has presented them in a careful, precise and well delineated manner in his logically reasoned brief.
The Respondent is the source from which comes the clearest showing that the representations heretofore found to have been made by the Respondent are false. Along with the pills which the remitter receives there is a diet program (Dept. Exhibit F-5). After being told in effect that all one has to do to lose weight is to take three Ama-Tol pills a day (Ama-Tol does the rest), the purchaser receives, along with his pills, two long strips of paper on which appears in fine print a very restrictive type of diet. The person who has been told and believes that he can eat spaghetti, pizza, malted milks and the like, can only be astonished and chagrined to learn that (1) there is no spaghetti in the “spaghetti,” (2) there is not pastry in the “pizza”; and that the “malted milks” he can drink must be made either of skim milk or buttermilk.
There is no need to belabor the matter to any greater extent. The sales representations used by the Respondent in promoting its product are grossly and materially false.
Were the False Representations of the
Respondent Made With an Intent to Deceive?
It is urged on behalf of the Respondent that readers of the advertisement are advised that there is a diet involved. What the Respondent actually says in the advertisement is that he has a “wonderful Ama-Tol formula”, a “miraculous formulation”, the “Ama-Tol Method”, an “Ama-Tol formula” which is manufactured by “a leading pharmaceutical house” and “the formulated plan of Ama-Tol.” Clearly, the emphasis is on “formula” which, in the context of the Respondent’s advertisement, means “recipe” or “prescription.” (Webster’s Unabridged International Dictionary, 3rd Edition)
Since it would have been such an easy matter to offer to the public (and to describe it as such) a reducing plan consisting of a pill and an accompanying diet, the use of such devious, ambiguous and equivocal language makes the Respondent’s intent readily apparent.
“***even if an advertisement is so worded as not to make an express misrepresentation, nevertheless, if it is artfully designed to mislead those responding to it, the mail fraud statutes are applicable.” (Farley v. Simmons, C.A.D.C. 99 F.(2d) 343 (1938), cert. den. 305 U.S. 651)
“When it appears that an advertiser deliberately induces its patrons to purchase its product in the belief that its value far exceeds its true worth, it is sufficient to support a finding that a fraudulent scheme was being conducted. *** This is so, even where there is a promise to refund the purchase price should the article sold prove unsatisfactory.” (Borg-Johnson Electronics, Inc. v. Christenberry, D.C.S.D.N.Y. 169 F. Supp. 746, 751 (1959); see also Leach v. Carlile, 258 U.S. 138 (1922).)
In the situation presented in the instant case, the contradiction between what is said by the Respondent in the advertisement and what is received by the remitter is so sharp and so clear as to make patent the Respondent’s intent to deceive without the necessity for any further proof. (Gottlieb v. Schaffer, U.S.D.C., S.D.N.Y., 141 F. Supp. 7, 16 (1956))
It is a rare occurrence when there is a prior case in which the facts and the applicable law apply hard-in-glove to the current proceeding, but such is the situation here. The prior case involved The Myconol Company (P.O.D. Docket No. 2/192, Fruad order No. 66-79, dated March 31, 1966). The advertising literature used in Myconol is so strikingly like that used by Ama-Tol that it scarcely could be attributed to coincidence, as reference in Apendix B to this decision will indicate. However, no finding is made in regard to circumstances which result in the strong similarity between the advertising circulars used by the two Respondents. It is sufficient to say that the Ama-Tol case is so like the Myconol case, of which official notice has been taken, that the memorandum decision by Judge Lane of the United States District Court for New Jersey in Myconol is completely dispositive of the instant proceeding. (Myron Wisotsky d/b/a The Myconol Company v. Conway, Civil No. 388-66, (May 5, 1966), copy attached hereto as Appendix C)
Findings of Fact
1. The Respondent, under the various names set forth in the caption hereof, is engaged in the advertising and sale through the mails of a product variously called Ama-Tol, Ama-Tol formula, Ama-Tol plan, Ama-Tol, Ama-Tol formulation.
2. In Respondent’s advertising matter in regard to its product, Respondent makes the representations set forth in paragraphs 3(a) through 3(i) of the Complaint filed herein.
3. The representations made by the Respondent in regard to its product are materially false.
4. The false representations made by the Respondent in regard to its product were made with the intent to deceive the readers of said representations.
Conclusion of Law
The Respondent in the conduct of its business in the matter described herein is engaged in a scheme for obtaining money through the mails by means of false or fraudulent pretenses, representations or promises within the meaning of section 4005 of Title 39, United States Code.
Recommendation
I recommend that the Judicial Officer, or other appropriate official, issue a fraud order in the form hereto attached for the suppression of the fraudulent scheme herein found.
William A. Duff
Chief Hearing Examiner
[1] Insofar as it is here pertinent 39 U. S. Code 4005 reads as follows:
Upon evidence satisfactory to the Postmaster General that any person is engaged in conducting a scheme or device for obtaining money *** through the mail by means of *** fraudulent *** representations ***; Postmaster General may—
(1) direct postmasters at the office at which registered letters or other letters or mail arrive, addressed to such a person or to his representative, to return the registered letters or other letters or mail to the sender marked ‘fraudulent’ ***; and
(2) forbid the payment by a postmaster to such a person or his representative of any money order or postal note drawn to the order of either and provide for the return to the remitters of the sums named in the money orders or postal notes.
* * * * * * *”
[2] The Complaint with its accompanying exhibits is set forth as Appendix A to this Initial Decision.