Facts

The Federal Trade Commission and the State of Connecticut filed suit against Leanspa LLC and others, asserting violations of the FTC Act. Boris Mizhen, who was the chief executive officer of the various companies, owned all Leanspa, and other, companies. Mizhen used these companies to market dietary supplements and related health products over the internet.

PLAINTIFF'S CONTENTIONS:
The FTC alleged that Mizhen, through his companies, harmed consumers in the United States through unfair and deceptive business practices. They asserted that the defendants used fake news sites to lure consumers to their products, and hired third party affiliates to promote those products. The affiliates used domain names for websites that appeared to make it look like legitimate news or health websites, and were meant to create the impression that they were objectively reporting on Leanspa's products.

Defendants also enticed customers with deceptive "trial offers," which were also falsely characterized as being available only for a limited time. Once consumers signed up for a trial, they would be charged for the trial samples if they did not affirmatively cancel their participation within the trial period.

The FTC asserted causes of action for misrepresentation, failure to disclose, and false and unsubstantiated product claims.

DEFENDANTS' CONTENTIONS:
Defendants contended that it did not mislead consumers in its product claims or billing practices, and was itself a victim of deceptive and fraudulent conduct by its marketing partners. The settlement is a pragmatic compromise, which admits no wrongdoing by LeanSpa and Mizhen, and spares them expensive, protracted litigation.

Result

The court ordered a permanent injunction, enjoining Leanspa and the other defendants from various business practices, including making certain misrepresentations. In addition, plaintiffs were awarded $32,725,453, which will be suspended upon the completion of a number of asset transfers. The assets are valued at approximately $5.7 million to $7 million.

Other Information

Defendants claimed they were "forced by heavy-handed government tactics and financial circumstances, including an unwarranted freeze of the personal assets of LeanSpa principal Boris Mizhen and his wife" to enter into the settlement.