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Hi-Tech Pharmaceuticals Takes on the FTC

CEO Jared Wheat fights to keep his company alive after lawsuits, fines and jail time.

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In 2014, a judge sided with the Federal Trade Commission (FTC) in a clash with Hi-Tech Pharmaceuticals concerning the alleged use of unsubstantiated claims on supplement labels and marketing materials. The “misleading” assertions made by Hi-Tech? Describing some of its weight-loss products as “thermogenic” and a “metabolic aid.” The ruling left Hi-Tech, a Georgia-based supplements provider and manufacturer, on the hook for $40 million in sanctions.

Hi-Tech’s president and CEO, Jared Wheat, doesn’t believe the FTC cared to discover whether the products in question actually contained ingredients that would kick-start thermogenesis or boost metabolism. Instead, he says, it boiled down to Hi-Tech’s refusal to put the products through a $100 to $200 million double-blind placebo study.

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“I remember thinking, ‘If I can’t call something ‘fat burning’ or a ‘weight-loss aid’ without a double-blind placebo study, when we’ve been using ingredients that we know do those things, I need a new business,’ ” recalls Wheat. “In the past I’ve done doubleblind studies that cost $30,000 to $150,000, but you can’t patent most of the ingredients [in workout supplements]. So by the time you’re done with a two-year, $100 million study, the fad might be gone or the compound might not pay off.”

It wasn’t the first time Wheat battled the FTC. In 2004 he was smacked with a multimillion-dollar lawsuit and later jailed when he stood up to the FTC amid a product-recall demand. In 2014, history repeated itself. First came the fine—this one more than twice as much as the previous one—and then jail. (Wheat and another Hi-Tech executive were found in contempt of court, resulting in a 63-day lockup.)

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