Steve Warshak, the inventor of the bogus "male enhancement" product Enzyte, will be quietly toasted by CEOs across the land this week over his courtroom victory that requires prosecutors to get warrants before they search email accounts.
The ruling applies to anyone who uses email, but it will be of particular interest to executives who are the target of white-collar criminal probes. Email communications are now much more difficult for investigators to get hold of. Previously, the law allowed prosecutors to simply demand them from email providers, who then had to hand them over even if the email account user did not know.
Warshak's emails were used against him in a fraud trial at which he was sentenced to 25 years in federal prison. As head of Berkeley Premium Neutraceuticals (and a raft of other paper companies with ever changing names), Warshak was one of the most corrupt dietary supplement CEOs in an industry famed for its corruption. The ruling gives a potted history of Warshak's promotion of Enzyte:
In the latter half of 2001, Berkeley launched Enzyte, its flagship product. At the time of its launch, Enzyte was purported to increase the size of a man's erection. The product proved tremendously popular, and business rose sharply. By 2004, demand for Berkeley's products had grown so dramatically that the company employed 1500 people, and the call center remained open throughout the night, taking orders at breakneck speed. Berkeley's line of supplements also expanded, ballooning from approximately four products to around thirteen. By year's end, Berkeley's annual sales topped out at around $250 million, largely on the strength of Enzyte.Everything about Enzyte was fake
Warshak used bogus customer surveys, the ruling says, to persuade customers that Enzyte actually works (it does not). His biggest stroke of genius was inventing the "Smilin' Bob" pitchman, familiar to anyone who has watched cable TV late at night:
According to the ads, "Enzyte was developed by Dr. Fredrick Thomkins, a physician with a biology degree from Stanford and Dr. Michael Moore, a leading urologist from Harvard." The ads also stated that the doctors had collaborated for thirteen years in developing a supplement designed to "stretch and elongate."
In reality, the doctors were just as fictitious as "Smilin' Bob." Investigators who contacted Stanford and Harvard learned that neither man existed.Warshak used an "autoship" system that continued to charge customers' credit cards unless they opted out of future purchases. Cards were "double dinged" and "triple dinged" in order to keep the ratio of legit charges to customer-complaint chargebacks high enough not to attract attention from Visa and other credit providers.
In a separate prosecution, one of Warshak's warehouse workers played cat and mouse with the FDA during a surprise inspection. The worker loaded up a rental truck with mislabelled product and shuttled it backward and forward from various Berkeley sites to avoid the inspector.
The new ruling means Warshak may get his sentence reduced. But it will also make it harder in future for prosecutors to target CEOs who are running fraudulent companies.