In the Matter of the Complaint Against:

SERGIO & SPIEGEL TELEVISION FOR ONCOR, INC.,
c/o OLIVER MESERVY,
821 Riverside Drive Reno, NV 89503-5518
and
ONCOR,
P. O. Box 29012,
Phoenix, AZ 85038-9012
and
TAYLOR-WRIGHT PHARMACALS, INC.,
1023 Edwards Rd.,
Burlingame, CA 94010-2318
and
WILLIAM SERGIO and PETER SPIEGEL,
2714 Pico Blvd., Suite 200,
Santa Monica, CA 90405-1951,
and
ROBERT T. McILVENNA and WINNIE O. McILVENNA,
1023 Edwards Rd.,
Burlingame, CA 94010-2318

P.S. Docket No. 37/105

09/16/91

Mason, Randolph D., Administrative Law Judge

APEARANCES FOR COMPLAINANT: Geoffrey A. Drucker, Esq.,
Betty A. Garner, Esq., Consumer Protection Division,
Law Department, United States Postal Service,
475 L'Enfant Plaza West, SW, Washington, DC 20260

APPEARANCES FOR TAYLOR-WRIGHT PHARMACALS AND R.T. and W. O. McILVENNA:
Kirkpatrick W. Dilling, Esq., Dilling and Dilling, 150 N. Wacker Drive,
#1242, Chicago, Illinois 60606 and Arthur Wells, Esq.,
1171 Cragmont Avenue, Berkeley, CA 94108

APPEARANCE FOR SERGIO & SPIEGEL FOR TELEVISION FOR ONCOR, INC,
PETER SPIEGEL, WILLIAM SERGIO:
Dale B. Hinson, Esq., 900 17th St., N.W. #900, Washington, DC 20006-2596

INITIAL DECISION

This proceeding was initiated on January 11, 1991, when the Postal Service filed a Complaint alleging that the Respondents named in the caption are engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations in violation of 39 U.S.C. § 3005. Specifically, the Complaint, as amended, alleges in paragraph 8 that Respondents falsely represent, directly or indirectly, in substance and effect, whether by affirmative statement, implication or omission, that:

(a) SST Super Stories is a talk show that regularly features and reviews products and is not a program length commercial;

(b) Oncor is recommended by impartial health professionals who are independent from the distributor of the product;

(c) Oncor can cure or treat impotency;

(d) Oncor can increase sexual desire in men;

(e) Oncor is recognized by the medical community as an effective drug for the treatment of impotency;

(k) Oncor is safe and non-habit forming for all users;

(m) Oncor is recommended by someone who has no reason to be biased.

After the hearing, the Complaint was amended to delete subparagraphs (f)-(j) and (l) as duplicative, and to amend (m) as above.

In timely filed Answers, as amended, Respondents deny that they make the false representations alleged in the Complaint or that they have otherwise violated the statute.

A hearing was held by the Administrative Law Judge on June 12, 1991, in Phoenix, Arizona. All parties were represented by counsel and afforded full opportunity to be heard, adduce relevant evidence, and examine and cross-examine witnesses. Complainant presented the testimony of Thomas H. Stanisic, M.D, Marvin Dean Crothers, M.D., and Postal Inspector Joseph Beyers. Respondents presented the testimony of John Charles Reed, M.D., Tariq Kuraishy, J. Dudley Chapman, D.O., and Peter Spiegel. All parties presented documentary evidence. Both parties presented additional documentary evidence after the hearing, all of which is rejected as untimely.

At the conclusion of Complainant's case, Respondent moved to dismiss and the Administrative Law Judge reserved judgement on the motion and asked Respondent to put on its case (Tr. 109). In view of the conclusions reached herein, the motion is denied.

During the hearing, Respondent presented the testimony of Dr. Chapman concerning a study that he conducted. However, Respondent did not notify Complainant of this study prior to the hearing in accordance with the Order requiring prehearing witness summaries. Accordingly, that testimony is hereby stricken. (It is also noted that Respondents TWP and the McIlvennas replied to Complainant's pretrial discovery request for medical studies by saying the latter were "irrelevant, and not reasonably calculated to lead to the discovery of admissible evidence.") Notwithstanding this ruling, all of Chapman's testimony has been considered by the Administrative Law Judge in making this decision, and it does not change the result reached herein.

On August 9, 1991, the parties filed proposed findings of fact and conclusions of law which have been duly considered. To the extent indicated below, proposed findings and conclusions have been adopted; otherwise, they have been rejected as irrelevant or contrary to the evidence. The findings of fact and conclusions of law set forth below are based on the entire record herein, including observation by the Administrative Law Judge of the witnesses and their demeanor, the briefs, stipulations, exhibits, and other relevant evidence adduced at the hearing:

FINDINGS OF FACT

1. P.O. Box 29012, Phoenix, AZ is controlled by Respondent Sergio and Spiegel Television for Oncor, Inc. ("SST"), a direct response advertising agency (Stip., Tr. 7-8). SST is a Nevada corporation with a registered office at 821 Riverside Drive, Reno, Nevada 89503 and a business address of 2714 Pico Boulevard, Suite 200, Santa Monica, CA 90405 (Complaint ##2, 3; SST Ans.).

2. Peter Spiegel is the chief executive officer of SST (Tr. 227). Mr. Spiegel and his partner, William Sergio, specialize in the production of program length television commercials known as "infomercials" (Tr. 227-229, CX-7). Respondent William Sergio is both a director and president of SST. Messrs. Sergio and Spiegel direct and control the activities of SST (Compl. #3; SST Ans.).

3. Taylor-Wright Pharmacals, Inc. ("TWP") is a Delaware corporation registered in California as a foreign corporation. Its principal place of business is 1023 Edwards Road, Burlingame, CA (Complaint #4; TWP Ans.).

4. Respondent Robert T. McIlvenna is president and secretary of TWP. Respondent Winnie O. McIlvenna is vice president and treasurer of TWP. They direct and control the activities of TWP (Complaint #5; TWP Ans.).

5. The product Oncor is a homeopathic drug which contains avena sativa in the strength "1-X."

6. The scheme to market Oncor was a joint enterprise undertaken by SST and TWP. Their contract provided, inter alia, that TWP was responsible for manufacturing, assembling, packaging, and labelling the product; providing two professional endorsements of the product, at least one of which was to be from a medical doctor licensed in the United States; and providing at least 10 strong customer testimonials (CX-7, #4).

7. The contract provided, inter alia, that SST would draft a production script for a 28 minute "television show in the format of an infomercial," employ a celebrity host, secure a professional television studio, edit the show, pay expenses of persons appearing on the commercial, develop a direct response advertising program for Oncor, analyze all advertising media, and select those media most suitable for direct response advertising of Oncor (CX-7, ## 2, 3). SST would also provide a written estimate of projected sales and inventory requirements to TWP, provide a merchant credit card account, and create a logo and package design for the product. SST retained the exclusive right to the name.

8. Both Spiegel and Sergio participated in drafting the script for the Oncor commercial (Tr. 253-254). SST would not be compensated unless the show went on the air and sales of the product Oncor were profitable (Tr. 237).

9. Under the contract, TWP was obligated to provide legal review of the program. SST hired Kirkpatrick Dilling, Esq., for this purpose and paid for his services with the understanding that TWP would reimburse SST. Mr. Dilling kept both parties advised of potential legal problems with the program (Tr. 235). Also, Mr. Speigel kept TWP advised of Mr. Dilling's advice (Tr. 248). Mr. Dilling ultimately advised them that the program in question was in compliance with applicable law (Tr. 238; SST Ex. A-E). Mr. Dilling's employment was terminated by SST on January 28, 1991 (Tr. 250).

10. TWP provided the individuals who gave testimonials in the Oncor commercial.

11. Proceeds were distributed in accordance with the contract (Tr. 259). Oncor was sold for $49.95, and consumers were directed to either (a) mail a check payable to Oncor to P.O. Box 29012, Phoenix, Arizona 85030, an address controlled by SST, or (b) authorize a charge to a credit card account over the telephone. All credit card sales were made through SST's merchant credit card account. Pursuant to formulas set forth in the contract, SST shared a substantial portion of the proceeds from the sale of Oncor with TWP (CX-7, ## 10-11; Tr. 7, 259; CX-4, lines 186-188).

12. SST has produced an infomercial on the Bahamian diet and is working on one for the Malibu cookie diet (Tr. 250-251). It produced one for Push Button Weight Loss which was never aired (Tr. 251). Although SST did not produce it, an advertisement for SST, drafted by Mr. Sergio, takes credit for an infomercial for another homeopathic product for impotency called Y-Bron (CX-13; Tr. 252). n1

n1 CX-13 was received for the limited purpose of rebuttal of Mr. Spiegel's testimony that SST did not produce the Y-Bron program; however, Mr. Spiegel's testimony on this point is credible, and the exhibit has not otherwise been considered. Respondent's post-trial motion to strike this exhibit is untimely and is denied.

Complainant's Expert Witnesses

13. Thomas H. Stanisic, M.D., has been a professor of surgery/ urology at the University of Arizona Health Sciences Center since 1977 (Tr. 12). After graduating from Northwestern University Medical School summa cum laude in 1969, he subsequently became Board Certified in urology. He is currently involved in patient care and research, with a specialty in male sexual dysfunction and impotence (Tr. 13). For the past 10 years a large portion of his practice has been in impotence (Tr. 21). He has published on the subject of pharmacologic treatment of impotence in geriatric medicine (Tr. 14; CX-1). He is trained in traditional medical practice, and has no experience with homeopathic medicine (Tr. 14-15). He is a well-qualified expert in sexual dysfunction and his testimony was both forthright and credible.

14. Dr. Stanisic is very familiar with the world literature in the treatment of diseases of male sexuality (Tr. 26). He performed in depth research in medical journals and text books on the product in issue, and found no reference to this drug as a remedy for impotence (Tr. 21). He finds that avena sativa or oat plant is not recognized in traditional medicine or urology as a drug for impotence (Tr. 22, 24).

15. Impotence is usually caused by either physical or psychological problems (Tr. 23). The latter individuals are treated with psychotherapy or behavioral therapy by a sex therapist or a psychologist skilled in sexual dysfunction (Tr. 23). Physically impotent persons are diagnosed only after sophisticated testing. They may have hormone deficiencies, a problem with blood supply to the penis, or a need for a permanent penile prosthesis (Tr. 24).

16. Dr. Stanisic believes the product in issue is dangerous since a person might delay getting effective treatment for the cause of their problem, which may be multiple sclerosis or prostate cancer (Tr. 27). Also, some people may actually be dissuaded from seeking any other treatment since Oncor is not effective for the treatment of impotence (Tr. 43).

17. Dr. Stanisic's opinions herein are in accord with the informed medical consensus among urologists (Tr. 28).

18. Marvin Dean Crothers, M.D., is a physician in private practice specializing in homeopathic medicine and family practice, and has treated patients for impotence or sexual dysfunction (Tr. 47-48, 52). After receiving his M.D. degree in 1973, he began his formal training in homeopathy in 1976, and started teaching homeopathy in 1980 at the International Foundation for Homeopathy in Seattle, Washington. He is also Treasurer of the Council on Homeopathic Education, which is an accrediting agency for homeopathic courses in the United States (Tr. 48). He is a past president and current member of the board of directors and trustees of the American Institute of Homeopathy (Tr. 48-49). The latter is a national organization of medical doctors and dentists similar to the American Medical Association. Dr. Crothers is a well-qualified expert in homeopathic medicine and was a credible witness.

19. Homeopathy is based upon the "law of similars", i. e. that if a medicine produces certain symptoms in a healthy person, that the same medicine will cure diseases which produce the same symptoms (Tr. 50). A typical homeopathic medical examination entails examining all physical and mental complaints of the patient, medications taken, and family medical history (Tr. 51). Factors affecting the symptoms in question are reviewed. Thereafter, reference is made to traditional homeopathic texts such as Materia Medica to ascertain the one medication which most closely matches all of the patient's symptoms (Tr. 51). In view of this approach, the best match for a patient complaining, in part, of impotence may be a medicine which is not even listed as a cure for impotence (Tr. 53). Only one medicine is given since a second medicine might complicate what happens to the patient (Tr. 62).

20. There is very little information about avena sativa in the homeopathic texts, and it is not frequently used (Tr. 53). It has been listed as a cure for "impotency" in the Pocket Manual of Homeopathic Materia Medica, Boericke (9th Ed.) (Tr. 64-66), and for "irregularities of the male sexual system" (among other symptoms) in Dictionary of Practical Materia Medica, Clark. These are both authoritative homeopathic reference works. However, the texts also list at least 30 other medicines for impotence, and it is the job of the homeopathic physician to evaluate the total picture of that person's symptomatology to find the one medicine that is likely to work. In Dr. Crothers' opinion, giving a single medication like avena sativa to every patient with impotence would not be effective (Tr. 57).

21. It follows that the mere listing of avena sativa in any of the standard, authoritative homeopathic reference works as being indicated for impotence, does not establish that the substance will be an effective remedy for that disease.

22. Homeopathic products are sold over the counter for acute conditions with recent and sudden onset or self-limiting conditions (Tr. 79, 82). Since impotence or sexual dysfunction is chronic rather than self-limiting and is potentially dangerous, it is inappropriate to market a product through the mail without medical supervision (Tr. 56, 82).

23. Also, Dr. Crothers thinks that the product is dangerous since it is likely to be ineffective, and the patient is unlikely to seek appropriate homeopathic care which could be effective (Tr. 56-57).

24. Dr. Crothers' testimony is in accord with the informed consensus among reputable homeopathic practitioners (Tr. 59-60).

Respondents' Expert Witnesses

25. John Charles Reed, M.D., is a licensed homeopathic doctor. After graduating from the University of Pennsylvania School of Medicine in 1970, he had the equivalent of a residency in family practice and thereafter entered the Public Health Service until 1974. He was a family physician until 1982 in a pre-paid health plan. Thereafter he has been in private practice focusing on chronic pain and stress-related disorders. He uses acupuncture, oriental medicine, homeopathy, nutrition, and psychological therapies (Tr. 111). He is a member of the American Institute of Homeopathy and the National Center for Homeopathy (Tr. 113). He is also a member of the Arizona State Board of Homeopathic Medical Examiners and is a past president of the board (RX-1).

26. He notes that the Pocket Manual of Homeopathic Materia Medica, Boericke (9th ed.) (RX-3), which is used as a reference work by homeopathic practitioners (Tr. 117), lists avena sativa as a medicine for "sexual debility" and "spermatorrhea: impotency; after too much indulgence." The Dictionary of Practical Materia Medica, Clarke, lists it for "irregularities of the male sexual system." Dr. Reed considers those references to be "indications for the use of avena sativa in those conditions" (Tr. 119-120).

27. Tariq Kuraishy is a consultant to manufacturers who market homeopathic products. He has a master's degree in pharmaceutics from the University of London, England. He is an expert in the actual manufacture and formulation, and the purity of extractions (Tr. 131). He was vice president of the American Association of Homeopathic Pharmacists (Tr. 133). In his opinion, the product Oncor complies with the guidelines of the Homeopathic Pharmacopeia of the United States (HPUS), a compilation of standards for source, composition, and preparation of homeopathic drugs (Tr. 134; RX-6, p. 2).n2 Drugs listed in the latter publication have specific criteria for their production and manufacture. The term 1-X applied to avena sativa indicates one tenth of the product weight per volume of the active ingredient to the final form. The oat plant is extracted one part with nine parts of alcohol/water solvent (Tr. 135). He was a consultant to Taylor-Wright Pharmacals when they produced the product in issue (Tr. 137).

n2 According to FDA Compliance Policy Guide 7132.15, a product's compliance with requirements of the HPUS does not establish that it has been shown by appropriate means to be safe and effective for its intended use (RX-6, p.3).

28. Joseph Dudley Chapman, D.O., is a gynecologist, teacher, author, editor, and sex therapist. He is an expert in sexual dysfunction (Tr. 150). After receiving his B.S. from Roosevelt University of Chicago, he attended the College of Osteopathic Medicine and Surgery in Des Moines, Ohio. He later received a Ph.D. from the Institute for the Advanced Study of Human Sexuality, where he is now on the faculty (Tr. 139-140). He is also a clinical professor of obstetrics and gynecology at Ohio University (Tr. 140). He has written two books, "The Feminine Mind and Body" and "The Sexual Equation," presented many papers before professional groups, written about 100 articles on a broad range of subjects including many on gynecology and obstetrics, and has given many lectures and media appearances on sexuality because of his intense convictions about the subject (Tr. 141; RX-7).

29. He participated in an informal study designed by Dr. Loretta Haroian, Research Director for the Institute for Advanced Study of Human Sexuality (CX-4, p. 3; Tr. 155), in California on a homeopathic product containing avena sativa. He performed his part of the study in Cleveland, Ohio. The study began with a questionnaire on sexual history including questions about difficulty obtaining erections (Tr. 156). The people who identified themselves as dysfunctional, including men who had trouble obtaining erections, were asked to participate in a double blind cross-over study (Tr. 157). He had about 60 women and about 28 men as subjects (Tr. 161). Twelve of the original 40 men dropped out early because "it was not working" (Tr. 166-167). He does not know how many persons Dr. Haroian studied (Tr. 165).

30. Dr. Chapman has never known what amount of avena sativa was given the subjects in his group (Tr. 171). In fact, he allowed his subjects to vary the amount that they took indiscriminately (Tr. 191). At first, he used avena sativa in a dry, powder form, which he told the subjects to mix with orange juice. Later, he switched the subjects to a liquid form of avena sativa (Tr. 172). By talking with his subjects, he determined that a large segment of the men were starting to have enhanced sexual desire and function (Tr. 143-144, 183). Then he asked these men to participate in a hormone study, which was his primary interest (Tr. 144, 167). Dr. Chapman theorizes that avena sativa enhanced male sexual desire and erectile function by interfering with the binding of sex hormone binding globulin with testosterone (Tr. 146-147), thereby increasing testosterone levels in men (Tr. 176-177). He concluded that the amount of free testosterone increased in all of the final 28 subjects, but that avena sativa did not help about 35% of the original 40 male subjects (Tr. 182, 184). However, Dr. Chapman admits that the improvement in sexual dysfunction may have been due to the placebo effect (Tr.185). Finally, although he maintained written data, Dr. Chapman has never put his findings into the form of a report because he says "it's still confusing, and I need more research" (Tr. 173). Dr. Haroian has never made a written report of her findings (Tr. 202).

31. Based on his study, Dr. Chapman believes that Oncor is indicated for impotency, sexual debility, spermatorrhea and nervous exhaustion (Tr. 147). However, when he gave this opinion at the hearing, he was not even aware of the dosage level of the Oncor product (Tr. 188). He does not believe the dose makes any difference, although he says that a "dropper-full" daily is the minimum dose (Tr. 190-191). However, the dosage of homeopathic preparations and the frequency of repetition must be individualized to the patient (RX-5 at 38). Dr. Chapman's study lacks credibility and his opinion regarding Oncor's effectiveness is not persuasive.

The False Representations

32. In their television commercial, Respondents make the representations set forth in subparagraphs (a)-(e), (k) and (m) of paragraph 8 of the Complaint. The language of the program length commercial which makes these representations is set forth under the representations quoted below. Each of these representations is materially false.

(a) "SST Super Stories" is a talk show that regularly features and reviews products and is not a program length commercial.

33. Respondent's "SST Super Stories" is presented in the format of a typical television talk show. The "host" of the show, Chad Everett, interviews "guests" while an audience watches attentively and claps at appropriate times. The show consists of three segments, each of which is followed by a commercial with a toll free number to order the product, plus a fourth segment consisting of closing comments and disclaimers. The juxtaposition of material in television advertisement format with material in talk show format reinforces the impression that "SST Super Stories" is a talk show rather than a paid advertisement (CX-3).

34. The impression that "SST Super Stories" is a regularly scheduled show is made by the name of the show and by several references to Oncor being the topic of the day, implying that the show appears on other days with other topics (CX-4, lines 5, 26-27, 35-38, 528-529).

35. As previously stated, the "show" consists of four segments, with a standard television commercial for Oncor appearing after each of the first three segments. The first and fourth segments each have two references to the fact that the program is a paid advertisement. However, viewers tuning in after the first commercial could see two segments and two more commercials with an opportunity to order the product through a toll free number, and they would not see or hear the "paid advertisement" language. Even if they saw the disclaimer in the last segment, they may have already ordered the product. The second and third segments do have words appearing on the screen for a few seconds stating "Results may vary from individual to individual," which is a type of advertisement disclaimer; however, many viewers would fail to see this language or would still not realize that the program is a paid advertisement.

36. Thus the above disclaimers are insufficient to dispel the overall impression that the program is a talk show. Since the Oncor program is a program length commercial, Representation (a) is false. The representation is material because it enhances the credibility of the representations made regarding the effectiveness of the product, and makes the statements made by the doctors and audience members appear independent and objective.

(b) Oncor is recommended by impartial health professionals who are independent from the distributor of the product.

37. The program contains numerous endorsements of the product by Dr. Dudley Chapman, Dr. Loretta Haroian, and one by Dr. Marguerite Rubenstein. Dr. Chapman received a Ph.D. from the Institute for Advanced Study of Human Sexuality ("Institute") and is a member of the Institute's faculty. Dr. Haroian is Dean of Professional Studies at the Instutute, and Dr. Rubenstein is both Director of Practicum Studies and a member of the Institute's Board of Directors.

38. The program conveys the impression to the ordinary viewer that these health professionals were selected to be on the show by the producer and that they are impartial. Accordingly, the program makes Representation (b).

39. The representation is false since each of these professionals is closely tied to Respondents Robert and Winnie McIlvenna, who direct and control TWP. Robert is president and a member of the Board of Directors of the Institute. Winnie is the Comptroller and a member of the Board of Directors of the Institute (CX-9; CX-11; CX-12 at 29-30). The representation is material since their alleged impartiality tends to enhance the credibility of the product and induce its purchase.

(c) Oncor can cure or treat impotency.

40. The program clearly makes Representation (c) by statements such as the following:

So today we're gonna take a look at the subject of male impotence, or lack of sexual desire, or of sex drive, and an exciting homeopathic product called ONCOR, which is helping victims of this problem by stimulating their sexual desire. This product is recommended for men who are impotent, as well as for men who may need a little extra something in their sex life.

(CX-4, lines 35-42; see also lines 5-9).

41. In addition, the "host" and many guests on the show stated or implied that Oncor was effective for impotence (CX-3).

42. Representation (c) is false. The active ingredient in Oncor is avena sativa (CX-5), and the traditional medical community does not consider that substance to be an effective treatment for impotence (Tr. 21-22, 24). This conclusion is in accord with the informed medical consensus (Tr. 28).

43. Furthermore, although avena sativa is one of a number of substances that a reputable practitioner of homeopathic medicine might prescribe for impotence, the substance is not always a proper treatment. A homeopath does not attempt to cure or treat a single symptom such as impotence in isolation. Instead, he treats the patient as a whole. A typical homeopathic medical examination entails examining all physical and mental complaints of the patient, medications taken, and family medical history (Tr. 51). Thereafter, reference is made to traditional homeopathic texts such as Materia Medica to ascertain the one medication which most closely matches all of the patient's symptoms (Tr. 51). In view of this approach, the best match for a patient complaining, in part, of impotence may be a medicine which is not even listed as a cure for impotence (Tr. 53).

44. There is very little information about avena sativa in the homeopathic texts, and it is not frequently used (Tr. 53). It has been listed as a cure for "impotency" in the Pocket Manual of Homeopathic Materia Medica, Boericke (9th Ed.) (Tr. 64-66), and for "irregularities of the male sexual system" (among other symptoms) in Dictionary of Practical Materia Medica, Clark. However, the texts also list at least 30 other medicines for impotence, and it is the job of the homeopathic doctor to evaluate the total picture of that person's symptomatology to find the one medicine that is likely to work. It is the informed consensus among reputable homeopathic doctors that giving a single medication like avena sativa to every patient with impotence would not be effective (Tr. 57, 59-60). Accordingly, Representation (c) is materially false.

(d) Oncor can increase sexual desire in men.

45. This representation is made during the program by statements such as the following:

So today we're going to take a look at the subject of male impotence and lack of sexual desire or of sex drive and an exciting homeopathic product called "ONCOR" which is helping victims of this problem by stimulating their sexual desire. (CX-4, lines 5-9; also 38-40)

. . .

It seems to enhance in three areas: the first is libido, or sexual desire; the second is sexual performance, or the ability to have an erection; and the third is sexual sensation, or the feeling of pleasure. (CX-4, lines 118-121)

46. Representation (d) is materially false for the same reasons stated above with respect to Representation (c).

(e) Oncor is recognized by the medical community as an effective drug for the treatment of impotency.

47. The program makes this representation through the statements of Doctors Haroian, Chapman, and Rubenstein, who are introduced as medical experts. Dr. Haroian states that "According to the Homeopathic Materia Medica, the active ingredient in ONCOR is indicated in situations of impotence, sexual debility, and nervous exhaustion." Dr. Chapman states:

Anyone who is impotent or can't get an erection can try it before he tries more dramatic measures. If there isn't some physical reason (as I said before), any man who suffers from lack of sexual desire or lack of sex drive can try "ONCOR" to get things going again. [CX-4 at 245-249; see also 291-308]

48. Dr. Rubenstein, described as a leading sex therapist, states:

And I can see Oncor as a product that, for some people, can make a difference. It can enhance your sexuality, your orgasms, erections, arousal, it can increase libido, it can make you feel good about your sexuality again. And that's a lot to say about a product. Oncor is a good product and I'm going to continue to recommend it.

49. For the reasons stated above with respect to Representations (c) and (d), Representation (e) is materially false.

(k) Oncor is safe and non-habit forming for all users.

50. This representation is made by the language "Oncor is a male potency formula that, taken as directed, can be a safe and effective approach for some forms of non-organic impotence" (CX-4, lines 175-177). Moreover, the representation is implied in such an advertisement for a medical treatment.

51. Representation (k) is materially false since many users of Oncor would not be helped, and taking the drug would cause them to delay seeking help for the cause of their problem. Some of these people may have serious conditions such as diabetes, prostate cancer, or multiple sclerosis (Tr. 27, 43, 56-57, 90). However, since Dr. Stanisic is not an expert in alcoholism, his opinion that 20 drops twice a day of the product, which contains alcohol, would be a problem for an alcoholic, is rejected. Since there is no credible evidence that Oncor is habit forming, Representation (k) is only partially false.

(m) Oncor is recommended by someone who has no reason to be biased.

52. One of the primary "guests" on the program is Ray McIlvenna, who is portrayed as an ordinary consumer who has had a positive experience with the product and who highly recommends it to viewers. He was seated on stage with the medical experts. The program gives the impression that Ray McIlvenna has no reason to be biased in favor of the product.

53. Representation (m) is materially false. Ray McIlvenna is a close relative of Respondent Robert "Ted" McIlvenna, the manufacturer of the product, and they are both on the Board of Directors of the Institute for Advanced Study of Human Sexuality (CX-11, CX-12 at 30; Tr. 255-257). Thus Ray McIlvenna is not an ordinary consumer and the program should have disclosed that he has a reason to be biased.

CONCLUSIONS OF LAW

1. (a) The meaning of an advertisement is to be determined in light of the probable impact of this material on a person of ordinary mind. Donaldson v. Read Magazine, 333 U.S. 178, 189 (1948); Peak Laboratories, Inc. v. U.S. Postal Serv., 556 F.2d 1387, 1389 (5th Cir. 1977). The statute is intended to protect the gullible, naive, and less critical viewer, as well as the more sophisticated, wary viewer. Fields v. Hannegan, 162 F.2d 17 (D.C. Cir. 1947), cert. denied, 332 U.S. 773 (1947); M.K.S. Enterprises, Inc. v. United States Postal Service, 459 F. Supp. 1180, 1184 (E.D.N.Y. 1978); Gottlieb v. Schaffer, 141 F. Supp. 7 (S.D.N.Y. 1956); Leo Daboub, P.S. Docket No. 19/185 (P.S.D. July 10, 1986). Express misrepresentations are not required. It is the net impression which the advertisement is likely to make upon individuals to whom it is directed which is important, and even if an advertisement is so worded as not to make an express representation, if it is artfully designed to mislead those responding to it, the false representation statute is applicable. G.J. Howard Co. v. Cassidy, 162 F. Supp. 568 (E.D.N.Y. 1958); See also, Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976).

(b) Where an advertisement is ambiguous or capable of more than one meaning, if one of those meanings is false, the advertisement will be held to be misleading. Rhodes Pharmacal Co. v. F.T.C., 208 F.2d 382, 387 (7th Cir. 1953); Ralph J. Galliano, P.S. Docket No. 19/15 (P.S.D. May 2, 1985 at p. 9). It is not difficult to select words that will not deceive. See, United States v. 95 Barrels of Vinegar, 265 U.S. 438 (1924).

(c) An inconspicuous disclaimer is not sufficient to dispel the effect of false representations. Leo Daboub, supra; Gottlieb v. Schaffer, supra.

(d) The Administrative Law Judge can determine whether the representations are made, their effect on the ordinary mind, and materiality without the assistance of lay or expert testimony. Standard Research Labs, P.S. Docket No. 7/78 (P.S.D. Oct. 27, 1980); The Robertson-Taylor Company, P.S. Docket Nos. 16/98-102, 16/120-121, (P.S.D. March 31, 1986 at page 29); Vibra-Brush v. Schaffer, 152 F. Supp. 461, 468 (S.D.N.Y. 1957), rev'd on other grounds, 256 F.2d 681 (2nd Cir. 1958).

2. Applying the foregoing standards, I find that Respondents' advertisements make the representations alleged in ## 8(a)-(e), (k), and (m) of the Complaint. The language and other matter contained in the television program which directly or impliedly makes these representations is described in the findings of fact.

3. As set forth in the findings of fact, the representations set forth in subparagraphs (a)-(e) and (m) of paragraph 8 of the Complaint are false. Representation (k) is partially false.

4. Complainant established through the credible and forthright testimony of Drs. Stanisic and Crothers that the informed consensus among both allopathic and homeopathic doctors is that Oncor is ineffective for the treatment of impotence and lack of sexual desire. Accordingly, it is encumbent upon Respondents to produce persuasive evidence proving the consensus to be in error. Standard Research Laboratories, P.S. Docket No. 7/48 (P.S.D. April 4, 1980). Respondents have failed to produce such persuasive evidence. Respondent's expert, Dr. Reed, did not even testify as to the effectiveness of the product, but merely noted that the homeopathic texts "indicated" the use of avena sativa for impotence and "sexual debility." As stated previously, the testimony of Dr. Chapman about his "study" has been rejected due to the failure of Respondents to inform Complainant of this study prior to the hearing. However, even if this testimony were considered, it would not persuade the Administrative Law Judge that the informed consensus is in error. In this regard, the study was neither reliable nor scientific, and Dr. Chapman was not a credible witness.

5. The fact that Respondents may have relied upon the advice of counsel is not a defense to an action under 39 U.S.C § 3005, where it is not necessary to prove scienter, or an intent to deceive, to establish a violation of the statute. Lynch v. Blount, 330 F. Supp. 689, 693 (S.D.N.Y. 1971).

6. The representations made by Respondent are material because they have a tendency to persuade viewers to order and pay for Respondent's product.

7. Since the Respondents Taylor Wright Pharmacals, Inc. and Sergio and Spiegel Television for Oncor, Inc. were in a joint venture for the sale of Oncor, and remittances were solicited through the mail, the jurisdiction of the Postal Service under 39 U.S.C. § 3005 is established for all respondents connected with the scheme, including the principals of the corporations.

8. Complainant has established its case by a preponderance of the reliable and probative evidence of record. S.E.C. v. Savoy Industries, Inc., 587 F.2d 1149, 1168 (D.C. Cir. 1978).

9. Respondents are engaged in the conduct of a scheme for obtaining remittances of money through the mail by means of materially false representations in violation of 39 U.S.C. § 3005.

10. Accordingly, the attached False Representation Order and Cease and Desist Order should be issued.