A federal judge Wednesday derided the efforts of a Norcross dietary supplement company to implement a court-ordered recall of its products.
U.S. District Judge Charles A. Pannell Jr. did not rule on whether Hi-Tech Pharmaceuticals President Jared Wheat and an associate should be jailed to enforce compliance with the recall, ordering at least another half day of testimony today . But he made his displeasure with the company known in several instances.
“I expected more,” Pannell said at one point, adding: “Your report in July was frankly an insult, a joke.”
He also suggested that he could appoint a receiver to oversee the recall and liquidate the company.
Wheat declined comment after the day’s proceedings in the decade-old civil suit brought by the Federal Trade Commission.
The FTC wants coercive incarceration imposed on Wheat and company Vice President Stephen Smith for failing to carry out the recall, part of a sweeping ruling from Pannell in May. The judge also ordered a $40 million judgment against the company for being in contempt of a 2008 ruling enjoining them from making false claims about four weight-loss products.
At Wednesday’s hearing, one of Wheat’s attorneys, Art Leach, informed Pannell that the contempt issue is also part of an ongoing criminal investigation of his client being conducted by the U.S. attorney’s office. For that reason, Wheat will invoke his Fifth Amendment right against self-incrimination if called to testify by the FTC, Leach said.
Three Hi-Tech employees testified for the company Wednesday, detailing how the recall has been handled. They said letters were sent to more than 2,400 customers on July 3, followed by phone calls and, in some cases, emails.
The letters didn’t go out until Pannell ruled in late June on a question from the company regarding specific wording on its packages.
Smith testified it could take two or three months to get products returned from some larger retailers Hi-Tech deals with. Hi-Tech has been informed by GNC that the health food giant has more than 5,000 bottles of one product subject to the recall, Fastin, but those bottles have yet to be returned, Smith said.
Melvin Kramer, a consultant who works with companies involved in food and drug recalls, testified as an expert witness for Hi-Tech and said the letters and followup calls are what would be in line with a U.S. Food and Drug Administration recall. Because the FTC doesn’t have its own recall procedure, the FDA is the best source for comparison, he said.
“I think you’re splitting hairs when there’s really nothing nefarious going on here,” he said under cross examination from FTC attorney Amanda Basta.
Pannell himself questioned Kramer, asking whether the consultant had ever seen a recall letter like the one sent by Hi-Tech. The letter seemed to “camouflage” the issue and read more like a legal brief in support of the company’s position, the judge said.
Kramer agreed that some of the comments weren’t necessary, but he didn’t see them as a “delaying tactic.”
FTC investigators who have recently purchased Hi-Tech products are expected to testify when the agency presents its case.
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