On Health Care Renewal, we frequently discuss deceptive marketing schemes designed to sell tests and treatments whose benefits for patients do not clearly outweigh their harms, and sometimes which are useless or dangerous. In fact, we have to be selective about discussing such cases, because they are all too common. Therefore, we tend to focus on cases involving the biggest and most powerful health care organizations, and/or the worst risks to patients.
We have generally not discussed the myriad promotions of dubious "nutritional" tests and therapies, because there are just so many of them, the players involved are generally small, and these products were effectively deregulated in the US by the 1994 Dietary Supplement Health and Education Act.
However,...
Just Another Multi-Level Marketing Scam?
In 2016, we posted about what appeared to be just another nutritional scam, but one that seemed at the time to have broader implications. A colorful account of how it worked came from a 2011 New Yorker article, which focused on a marketer named Izzo:
He would order the vitamins from a company called Ideal Health. She would earn a commission on the sale and he, in turn, would become a part of her team and encourage other people to buy the vitamins. For those sales, Izzo would earn a commission, as would she (his 'upline'), and then the people he sold the vitamins to would become part of his sales team and would go on to create their own sales teams, who would go on to create their own sales teams, etc., ad infinitum, all of them funneling commissions from their sales up to Izzo and the woman on the phone. As he listened, 'something clicked,' Izzo says. 'I saw the beauty of the business model. And I said, ‘How can I do this, and do this big?’ '
Note that this was an interesting scam in that it involved a multi-level marketing (MLM) model, which sometimes are called pyramid schemes. What most interested the New Yorker back then, however. was that the scam got connected to a prominent, flashy New York businessman, one Donald J Trump, yes, that Donald J Trump:
'The name is hot!' Donald Trump booms over the speakerphone from his office at 725 Fifth Avenue, where, ever since The Apprentice breathed new life into his brand, he has presided over an ever-diversifying array of businesses. He is, of course, speaking of his own name. 'It’s on fire!'
In March 2009, Trump purchased Ideal Health, rebranding it the Trump Network. Though the packaging has now been imprinted with the Trump family crest, the product line is still much the same. There are the two multivitamins: Prime Essentials and the more expensive Custom Essentials, the ingredients of which are determined by the Trump Network–branded PrivaTest, a urine test that claims to determine which vitamins the user needs. There’s also a line of healthy snacks for kids called Snazzle Snaxxs, QuikStik energy drinks, and a Silhouette Solutions diet program. With the Trump investment, the company has added a skin-care line that goes by the seductively foreign name BioCé Cosmeceuticals.
How much of a scam was this? The trick to this scheme was that it involved not only the sale of nutritional supplements, but the use of bogus urine testing to develop customized nutritional regimens.
The Trump Network sold many health and wellness products, and its main one was a customized nutritional supplement whose composition was determined by a urine test, called the PrivaTest.
A former marketer provided STAT with a kit for Ideal Health’s PrivaTest. It contained a urine collection cup, five test tubes, a cold pack, a biohazard bag, a prepaid FedEx mailing label, and detailed instructions. Customers collected their urine and shipped it to a lab for analysis. That lab analyzed the urine with three tests and produced a report, which was sent to The Trump Network.
The Trump Network bundled the report with a package of pills and shipped it all back to the customer. The pills were marketed as 'Custom Essentials,' formulations based on the results of the test and manufactured by another lab. In all, there were 48 formulations.
According to an archived version of The Trump Network’s website that can still be found online, the PrivaTest, along with a month’s worth of the Custom Essentials, cost $139.95. Retesting was available for $99.95, plus shipping and handling. The company recommended retesting every nine to 12 months.
Other products purportedly tested for food allergies, stress, and digestive health. One claimed to measure 'the balance between your ‘good’ estrogen and your ‘bad’ estrogen.'
There was, however, no evidence that any of this testing meant anything, or that nutritional regimens constructed using it would do any good for patients. First, there appeared to be no publicly available data on how the tests worked, what they actually tested, or how accurate they were. Then there was no data about how the test results could rationally be used to suggest particular mixes of vitamin supplements. Also, there was apparently no public data about what vitamins were in the potions sent to consumers, their purity, their strength, etc.
The New Yorker asked some experts about this:
While the FDA may not have evaluated the tests or supplements, independent scientists have — and raised many questions.Note that this did not discuss, but implied that administering bogus tests to people and patients could either make them think they have important medical problems when they do not, or make them think that they do not have problems which they actually have. Thus systematically administering bogus tests to a population could harm that population.
Cohen, one of several scientists who reviewed materials from Ideal Health and The Trump Network, said that the tests were marketed too broadly and seemed to be 'pathologizing normal human life.'
The website, for example, recommended its “AllerTest” to anyone who had dark circles under their eyes, occasional digestive problems, fluctuating blood sugar, sinus and respiratory problems, or tiredness after eating.
'Does your blood sugar fluctuate?' Cohen said, laughing. 'If your blood sugar does not fluctuate, you are extremely ill. You will not be long on this planet.'
What’s more, the AllerTest did not measure food allergies, as the network’s website claimed it would, according to outside analysis of materials from the testing lab and Ideal Health publications.
The test measured information about an antibody known as immunoglobulin G, or IgG, according to company publications. The antibody is normally produced in the body and not indicative of a food allergy, said Dr. Robert Wood, director of pediatric allergy and immunology at Johns Hopkins School of Medicine.
'There’s no disease condition for which the IgG antibodies have any relevance at all,' Wood said.
In any event, like many such scams, the whole thing eventually faded away, and Trump pulled out of the licensing deal in 2011.
There basically ended our post, noting that maybe it was significant that a then 2016 presidential candidate who was favored to win the Republican nomination once got involved in such an obvious, if relatively small-time health care scam (and one involving a possible pyramid scheme, and bogus diagnostic testing to boot). And yet this story, like many involving unethical health care practices, seemed to fade away. Of course, in this case, it was also rapidly drowned out by the increasing chaos being produced by Trump and his cronies.
But wait, there is more.
The Class Action Lawsuit Against Trump and Family for Allegedly Fraudulent Multi-Level Marketing Schemes
The Trump candidacy, of course, despite many predictions to the contrary, did not fade away.
And in 2018, a story appeared that again was nearly drowned out by the then ongoing Trump chaos. As reported by the NY Times in October, a lawsuit surfaced:
The 160-page complaint alleges that Mr. Trump and his family received secret payments from three business entities in exchange for promoting them as legitimate opportunities, when in reality they were get-rich-quick schemes that harmed investors, many of whom were unsophisticated and struggling financially.
Those business entities were ACN, a telecommunications marketing company that paid Mr. Trump millions of dollars to endorse its products; the Trump Network, a vitamin marketing enterprise; and the Trump Institute, which the suit said offered 'extravagantly priced multiday training seminars' on Mr. Trump’s real estate 'secrets.'
Voila, the Trump Network scam reappears.
Of course, early in the NYT article was the caveat:
the lawsuit comes just days before the midterm elections, raising questions about whether its timing is politically motivated.The Times always likes to report on both sides of the argument, regardless of the merits, but anyway...
Again, all was silent, while chaos raged about other matters, at least until early 2019, when Trump's legal filed their protest asking a judge to dismiss the lawsuit, as reported by Bloomberg,
In a filing Monday, the Trumps claimed they had nothing to do with any alleged fraud. Donald Trump provided celebrity endorsements to ACN from 2006 to 2015, but never owned or controlled the company. And the plaintiffs haven’t identified a single fraudulent statement made by any of the other defendants, the family said.
'No plaintiff is alleged to have paid or lost money to the defendants or to any Trump business, and no defendant is alleged to have solicited any plaintiff for anything,' the Trumps said in the court filing. 'It is undisputed that ACN -- and ACN alone -- through a network of ACN representatives, solicited and collected fees from plaintiffs, for the benefit of ACN'”
At least in the Bloomberg report, there was not a word about the small health care scam that was also alleged, and certainly not about the evidence from that New Yorker article from long ago about how involved Trump was in that, but never mind, and all was silent once again, until....
However, in July, 2019,this month, the judge ruled, again per Bloomberg,
President Donald Trump, his company and three of his children must face a class-action lawsuit in which people claim they were scammed into spending money on fraudulent, multilevel marketing ventures and a dubious live-seminar program.
U.S. District Judge Lorna Schofield in Manhattan ruled Wednesday that the case can go forward with claims of fraud, unfair competition, and deceptive trade practices. The decision likely opens the door for the plaintiffs to start gathering evidence from Trump and his company, including documents and testimony.
The implications are important. The suit is not just against the Trump Organization, but against Donald J Trump personally, and three of his children. Absent another challenge from the Trumps et al, there could soon be a discovery process, meaning lots of documents, emails, etc, the sorts of information Trump et al have struggled to keep secret in other contexts, might be disclosed. Furthermore, additional coverage of this legal development underlined Trump's personal involvement with these schemes - as did, by the way, the old New Yorker coverage of the Trump Network nutritional testing scam, facts that long vanished from the public eye.
For example, Salon reported,
The complaint added, 'Central to Defendants' fraudulent scheme was a company called ACN, a multi-level marketing company ('MLM') that offers a business opportunity to individual participants. From 2005 to at least 2015, Defendants received millions of dollars in secret payments to promote and endorse ACN. In return, Donald J. Trump ('Trump') told prospective investors that '[y]ou have a great opportunity before you at ACN without any of the risks most entrepreneurs have to take,' and that ACN's flagship videophone was doing 'half-a-billion dollars' worth of sales a year.' Trump also told investors that he had 'experienced the opportunity' and 'done a lot of research,' and that his endorsement was 'not for any money.' Not a word of this was true.'"So it appears that Trump personally profited quite a bit from these little scams
It has since been revealed that Donald Trump earned $450,000 each for three speeches that he delivered for American Communications Network.
Discussion
The nearly anechoic Trump Network story just adds to Trump's and cronies' long history of deception, unethical behavior, and to the questions about crime and corruption that have swirled around them for years, including times well before anyone ever could conceive of Trump as US President. However, unlike many of the other cases (see this most recent summary here), this one involves health care, diagnostic testing, and patients, not just investors, as potential victims.
Thus this just adds to concerns that the Trump regime is enabling worsening of the ongoing problem of health care corruption in the US. As we have said before, health care corruption has been nearly a taboo topic in the US, anechoic, presumably because its discussion would offend the people it makes rich and powerful. As suggested by the recent Transparency International report on corruption in the pharmaceutical industry,
However, strong control over key processes combined with huge resources and big profits to be made make the pharmaceutical industry particularly vulnerable to corruption. Pharmaceutical companies have the opportunity to use their influence and resources to exploit weak governance structures and divert policy and institutions away from public health objectives and towards their own profit maximising interests.
Presumably the leaders of other kinds of corrupt organizations can do the same.
Yet, Health Care Renewal has stressed "grand corruption," or the corruption of health care leaders. We have noted the continuing impunity of top health care corporate managers. Health care corporations have allegedly used kickbacks and fraud to enhance their revenue, but at best such corporations have been able to make legal settlements that result in fines that small relative to their multi-billion revenues without admitting guilt. Almost never are top corporate managers subject to any negative consequences.
In the last few years, as discussed here, voluminous reports have surfaced about the corruption of the Trump regime (although none of which, of course, mentioned the small case of Trump's sleazy health care scams). They included numerous, ongoing cases of Trump's violations of the emoluments clauses of the US Constitution, which forbids a President from receiving payments from foreign countries, of US or state and local governments. They included numerous appointments of gross instances of the revolving door, in which people with leadership positions in industries, including health care corporations, were given control over agencies which regulate and enforce laws pertaining to the corporations they previously served. They included numerous instances in which US government decisions were made seemingly to benefit Trump, his associates, and his conflicted appointees. They included instances in which the federal government was used to promote Trump's ongoing business interests.
And now they should include one small health care scam that might have harmed patients.
So anyone concerned about health care corruption needs to realize that when the fish is rotting from the head, it makes little sense to try to clean up minor problems halfway towards the tail. Why would a corrupt regime led by a president who is actively benefiting from corruption act to reduce corruption? The only way we can now address health care corruption is to excise the corruption at the heart of our government.
It was just a small health care scam...
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