$2.6m claim in fat-loss case

Zenith owners Winston and Sylvia Gallot were found guilty of advertising breaches. Picture / Herald On Sunday

The Commerce Commission is seeking fines close to the $2.6 million maximum against a company that made extravagant claims for its weight-loss product.

In papers filed in the Auckland District Court, the commission is also asking Judge Lindsay Moore to order Zenith Corporation to take out corrective advertising in newspapers, on radio and on its own website and to contact people who bought bottles of the company's Body Enhancer.

Zenith, owned by husband and wife directors Winston and Sylvia Gallot, was found guilty by Judge Moore in June of 26 breaches of the Fair Trading Act in its advertising.

The product was claimed to assist fat burning, muscle growth, liver detoxification and prevention of collagen depletion.

It was also said to help build bones and tendon cells, heal cartilage, strengthen joints and heart muscles, break down fat and control appetite.

Judge Moore was scathing about the claims made for Body Enhancer and about the Gallots.

Body Enhancer did not confer any of the claimed benefits and the couple "seized an opportunity to make very large profits", he said.

Mr Gallot was exposed as "calculatedly dishonest", he said in his judgment, and his wife, who did not give evidence, employed a "succession of blatant untruths" in trying to launch Body Enhancer in Britain.

The company was due to be sentenced this week. A new hearing has been fixed for September.

In papers filed with the court, the commission's lawyers, Mark Woolford and Todd Simmonds, asked the judge to impose a fine close to the maximum penalty of $2.6 million, plus nearly $180,000 costs.

There were significant sales of the product at between $82 and $92 a bottle and competitors as well as consumers were disadvantaged by the false claims for Body Enhancer, they said.

As a weight-loss product, Body Enhancer "was targeted at a particularly vulnerable and gullible section of the community who would very much want to believe these claims ... "

The claimed benefits were not only misleading, they were "proven to be patently false" leading consumers to part with large sums of money, said the prosecutors.

Judge Moore observed at this week's hearing that Zenith sold $7 million to $9 million of body Enhancer between March 2000 and December 2002, resulting in a "ball park" gross profit of around $5 million after paying the manufacturer for the product but before taking into account other business expenses.

The prosecutors said that the company had to be "stripped of any commercial gain" as a result of its widespread breaches of the legislation.

The commission withdrew an application for Zenith to provide the names of all customers in the 2 1/2 year period of offending and the purchase price they paid.

Mr Woolford told the judge that commission investigators had information from the product manufacturer about the quantities and cost of Body Enhancer supplied to Zenith which the judge said would "sharpen up" the court's view of the extent of the commercial operation.

The prosecutors said that the company had remained "vigorously unrepentant" and "totally indignant and devoid of any acknowledgment of any wrong-doing".

It had adopted a "dismissive approach" and had sought to minimise any wrongdoing through extensive media statements since the judgment.