BEVERLY — A federal judge has ruled that two infomercials produced by Beverly-based ITV Direct for nutritional supplements were deceptive and that the firm's owners are liable for restitution being sought by the Federal Trade Commission, which is seeking nearly $55 million.
The same judge also dismissed a countersuit filed by Donald Barrett, ITV's president, who claimed the FTC was violating his First Amendment rights by taking him to court to force him to pull the ads.
The advertisements were for products called "Coral Calcium" and "Supreme Greens with MSM" and included claims that the products cured cancer, heart disease, diabetes, Parkinson's and helped people lose weight. A judge found all those claims were unsubstantiated.
The rulings by U.S. District Court Judge George O'Toole were released this week. The judge did not set a date for a hearing on restitution in the case.
In a prepared statement, ITV's attorney, Michael Sciucco, suggested the company may be willing to try to settle the two remaining counts left on the case, which involve charges that the "talk show" format of the ads and the company's automatic shipping program violate federal regulations.
"We are disappointed with the court's decision," Sciucco said. "However, as this case began over four years ago, the best thing for our customers and the company is to put this dispute behind us once and for all. Accordingly, we look forward to working with the Federal Trade Commission to resolve all remaining issues as expeditiously as possible."
ITV Direct, which has also used the name Direct Marketing, is headed by Barrett, who is from Saugus, and Robert Maihos of Beverly. The firm produces program-length infomercials for alternative health products and books and handles distribution of the products through call centers in Beverly and Maine.
In 2004, two of the products being pitched by ITV came under scrutiny because of the claims in the ad.
Soon after, the FTC won a preliminary injunction that forced ITV to pull the ads, one of which featured infomercial pitchman Kevin Trudeau.
That led Barrett to file a countersuit alleging that his right to free speech was being infringed by federal regulators. O'Toole dismissed that suit on Monday.
In granting summary judgment to the FTC, O'Toole "concluded that the FTC has shown that claims in the Coral Calcium and Supreme Greens infomercials are deceptive, that is, that they are likely to mislead consumers."
The judge went on to find that the corporations headed by Barrett and Maihos and two other businesses, King Media, which bought ad time on television stations, and Triad, which processed credit card orders, and the owner of those companies, Allen Stern, were also liable for the misleading ads. Stern and his businesses are no longer associated with ITV.
Heather Hippsley of the FTC said that while the infomercial format is widespread, most of the half-hour ads comply with regulations that require prominent disclosure that they are, in fact, advertisements. FTC rules also require companies to disclose exactly what a customer is signing on to when they make a purchase from a business, including full disclosure of any automatic shipping and billing programs.
Last fall, the FTC also filed suit against ITV over another infomercial featuring Trudeau, a Lynn native who has made his fortune with books on alternative medicine cures. The federal agency alleges that claims in the infomercial for Trudeau's book "The Weight Loss Cure They Don't Want You to Know About" were false, including claims that his diet was simple — in fact, the book requires severe limitations and daily injections of a drug not approved for weight loss.
A motion by lawyers for ITV seeking to dismiss the FTC's case was denied earlier this month.