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No Mail, No Deliveries : Grapefruit 45 Seller Says Firm's in Bind Over Rules

March 12, 1985|BILL RITTER | San Diego County Business Editor

CARLSBAD — The firm that markets Grapefruit 45 says it is in a "Catch-22" position because federal trade laws require the company to respond within 30 days to orders from consumers for its products at the same time that, for three weeks now, postal authorities have been seizing the mail containing those orders.

The orders, averaging about $90,000 per day, are sitting unopened in the U.S. Post Office in Carlsbad.

Jay M. Kholos, president of World Communications Inc., which markets Grapefruit 45 as "fat burner pills," claimed that much of the detained mail is for WCI products other than Grapefruit 45.

Postal authorities began seizing the mail after concluding that WCI had violated a 1984 consent agreement that prohibited it from making claims about its weight loss products for oral ingestion. Their cease and desist order was amended on Friday to include not only WCI but also Kholos, his wife, Lois, and Brian Bernheim, WCI general manager and vice president of operations.

TV Disclaimers

Kholos said in an interview that the television advertisements for Grapefruit 45 offer disclaimers cautioning consumers that use of the product will not result in weekly weight losses of more than two pounds for women and 3 1/2 pounds for men.

Federal authorities maintain that the typical consumer will not see the disclaimer, which appears briefly and in small print late in the commercial.

"The disclaimer is part of the Catch 22," said Kholos. "The Post Office tells us that the disclaimers are hard to read and in fact may not be worthwhile. So what they have asked us to do and what they are now finding fault with are at odds."

WCI attorneys last week filed its response to the government's detainment order, claiming that it did not violate the prior consent agreement and maintaining that the Grapefruit 45 product is effective.

"The Post Office's position is that we are selling a pill. Our position is that we're selling a plan with a pill that is a grapefruit substitute," said Kholos.

The WCI president countered postal authorities' claims that their experts have determined the Grapefruit 45 pill will not cause or aid weight loss.

"The plan has been tested and we're confident that it creates weight loss and that it's safe and effective," Kholos said.

Government and WCI attorneys now are negotiating a hearing date to determine how long the mail seizures will last. In addition, Kholos said, the Post Office has agreed to deposit all of the detained funds and orders into an escrow account until the controversy is resolved.

Postal authorities have said that if their complaints are validated in the hearing, the funds will be returned to the customers.

The government's investigation of Grapefruit 45 began last August. "We were very cooperative," said Kholos. "Then all of a sudden, out of the blue, they hit us with an order."

Kholos said his firm expects revenues to top $50 million in the fiscal year ending Sept. 30, 1985, about double last year's revenues.

In addition to Grapefruit 45, WCI also markets a Nat King Cole record collection, makeup, a cookbook, pearl collection, jewelry catalogue and produces a television series on women and children in history for independent networks.

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