A federal judge has made a major reversal in the case of Steve Warshak, the Berkeley Premium Nutraceuticals founder who was sentenced to 25 years for defrauding customers who bought his “male enhancement” pills, which were advertised in the notorious “Smiling Bob” ad campaign. We have discussed Warshak’s case in a previous blog post. Warshak had been accused of defrauding customers out of $400 million, and had been handed the lengthy sentence after being found guilty of fraud, money laundering, and conspiracy. Prosecutors said that the fraud included false advertising, lying to banks, and making unauthorized charges on consumer credit cards.
In December 2010, the U.S. Court of Appeals for the 6th Circuit ordered a new sentencing, stating that the lower court must more thoroughly examine the amount of money lost because of Warshak’s crimes. Indeed, while federal prosecutors accused Warshak’s company of bilking customers out of $100 million through deceptive ads, unauthorized credit transactions, and refusal to cancel orders or accept returns, Judge Spiegel originally ordered Warshak and his co-defendants to forfeit $411 million— a figure apparently based on the company’s net sales.
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