Alliance USA Assessed Large Fine; Manufacturer Fined and Jailed

October 15, 2002

In 1995, Texas Attorney General Dan Morales reached a settlement with the manufacturers of Nature’s Nutritional Formula One that requires the product to contain labeling that warns consumers about potential side effects and refrains from making unsubstantiated therapeutic claims [1]. Morales obtained an agreed judgment against Alliance USA, Inc., doing business as Alliance USA, and The Chemins Co., in the U.S.District Court for the Northern District of Texas, Dallas Division. The judgment requires the defendants to:

  • Pay the state $400,000 to cover attorneys’ fees and investigative costs.
  • Label Formula One to warn consumers with certain health conditions that the product may be harmful to their health. Ephedrine, an ingredient found in Formula One, may pose a health risk when taken by certain individuals with medical conditions
  • Notify the Texas Department of Health within 10 days of any adverse health
    reactions reported by consumers
  • Refrain from adulterating Formula One with synthetic ephedrine or caffeine
  • Notify all Formula One distributors that products manufactured before June 1, 1994, have been recalled and may be returned for a refund.

In 1993, Alliance USA, based in Richardson, Texas, began selling Nature’s Nutritional Formula One in capsule form through a multilevel marketing system. Chemins, based in Colorado, had a contract with Alliance to make the pill.

In 1994, following reports of several deaths and many cases of serious illness among abusers of products containing ephedrine, the Texas Commissioner of Health banned the sale of Formula One, charging that the product contained more than five times the level of ephedrine found in ma huang. A state court lifted the ban on a technicality, but Morales took additional action, charging that:

  • Defendants made claims that Formula One was a drug that was not approved by the FDA.
  • Formula One’s labeling literature made unsubstantiated claims that it could lower blood pressure, normalize the thyroid and strengthen the heart.
  • The labeling also failed to include warnings that the product contained concentrated amounts of caffeine and ephedrine [2].
Manufacturer Prosecuted

In November 1994, after receiving more than 100 reports of adverse effects, the FDA warned consumers not to use Formula One products labeled as containing Ma huang (ephedrine) and kola nut [3]. FDA inspectors who visited The Chemins Company were falsely told that no artificial chemicals were used to make Formula One products. The company also attempted to conceal its misconduct by making a late night transfer of the ingredients to an employee’s home during an FDA inspection and creating false manufacturing and inventory records that were shown to FDA inspectors.

In 1999, Chemins and its owner James R. Cameron were indicted on federal charges of conspiracy, violating federal food and drug laws, making false statements, and obstructing an FDA investigation. After pleading guilty to one count of defrauding the United States government, Cameron was sentenced to 21 months in prison and he and the company were fined $2,325 each [4]. In the plea agreement, Cameron admitted that Chemins manufactured Formula One between December 1992 until about June 1994, and falsely claimed it was an natural supplement when in fact it contained pharmaceutical grade phedrine and caffeine that were not listed on the product’s label. Cameron also admitted the company used both drug substances in many other products, including one called Supercharge, without notifying consumers.

  1. Texas Attorney General. Morales settles case with Formula One. News release, May 5, 1995.
  2. Plaintiff’s second amended complaint, State of Texas vs Alliance U.S.A., Inc., d/b/a Alliance USA, The Chemins Company, Inc., and James Cameron, Individually. Civil Action No. 3-94-CV-1002J in the United States District Court, Northern District of Texas, Dallas Division.
  3. FDA warns consumers against Nature’s Nutrition Formula One. FDA news release, Feb 28, 1995.
  4. Lewis C. Dietary supplement maker fined twice what company profited. FDA Consumer Jan/Feb 2001.
  5. Dept. of Justice. Dietary supplement maker fined for misbranding. Company owner sentenced to 21 months in jail. News release, July 7, 2000.

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This article was posted on October 15, 2002.