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Metabolife Pleads Guilty in Tax Case

October 06, 2005|From Associated Press

SAN DIEGO — Metabolife International Inc., which made millions of dollars selling a now-banned herbal supplement, pleaded guilty Wednesday to filing false tax returns.

Robert Humphreys, a lawyer for the company, said in federal court that Metabolife evaded paying more than $339,000 to the Internal Revenue Service by failing to report income of more than $1 million in tax years 1997 and 1998.

Prosecutors have agreed to recommend a fine of as much as $1.2 million during sentencing in December, according to the plea agreement.

The guilty plea ended a three-year search by IRS agents through shell companies, charities and offshore accounts where the company and its owners stashed money.

"It just boils down to greed," said Kenneth Hines, special agent in charge of the IRS in San Diego.

"Greed motivates criminal enterprises and criminal individuals more than anything in the world."

Defense attorneys referred calls to a Metabolife representative, who did not return a call for comment.

Metabolife and co-founder Michael Ellis are still fighting federal charges of lying to the Food and Drug Administration about the dangers of Metabolife 356, a popular diet supplement containing ephedra, the now-banned herbal stimulant linked to dozens of deaths.

Ellis, 52, who was convicted for his role in a methamphetamine lab in the 1980s, also is fighting federal charges of being a felon in possession of a firearm.

Prosecutors have increased the pressure on Ellis in the last week by securing guilty pleas from two of the three owners of the privately held herbal supplement company.

Michael Lee Blevins, 54, who was convicted along with Ellis in the methamphetamine lab bust, pleaded guilty Friday to being a felon in possession of firearms.

On Wednesday, William R. Bradley, 55, pleaded guilty to evading income tax and to helping Metabolife and a charitable foundation evade taxes.

Prosecutors will recommend a sentence of as many as two years in prison for Blevins and Bradley in exchange for their cooperation.

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