Leo Daboub Convicted of Mail Fraud

Stephen Barrett, M.D.

In 1991, Leo Leal Daboub, Sr. and four members of his family pled guilty to various charges related to the sale of bogus health-related products and/or income tax evasion [1]. Daboub, a California resident, admitted that from 1991 through 1998, he had operated mail-order businesses under the names Zellen Cell Pharmaceuticals, Pharmatec, International Trade, and Intermedica, selling products such as Energy Complex, Live Cell Therapy, Neutralizer GH, and Zellen Cell Therapy. Although the products were intended for use in the treatment and mitigation of diseases such as impotence, degenerative brain disease, liver disease and obesity, no application for approval of a new drug was ever submitted to the FDA for these products.

Daboub solicited sales only in the United States, but had the customers send their checks for the purchase of the product to a post office box in Tijuana, Mexico. Daboub or his employees would then bring the checks to the United States, where they were deposited into a bank account in San Ysidro, California. The indictment stated that (a) all of the businesses sold products purported to treat medical conditions such as arthritis, asthma, diabetes, degenerative brain disease, impotence and obesity, (b) the products were falsely represented to be recommended by certain doctors, and (c) the product sales totaled millions of dollars [2].

Daboub admitted that he knew that promotional literature for his products had falsely promised consumers a 100% money back guarantee, which was not honored. He also acknowledged that he knew that the literature had falsely stated that the products were recommended by Dr. Hans Byron, Dr. William Byron, Dr. Leland Thomas, and/or Dr. John Christianson. Those doctors, if they existed, were not consulted by the defendant regarding his products before or during the sales of the products, nor did they ever review the products at any time. As part of the plea agreement, Daboub agreed to forfeit $1.5 million to the United States, pay restitution to victims of the offense, pay a criminal fine in an amount to be determined by the court, and to pay any unpaid taxes to the Internal Revenue Service for the tax years 1993-1996. He was sentenced to prison and released on July 7, 2002.

"Live Cell" Nonsense

The marketing of Zellen Cell Therapy by Zellen Cell Pharmaceuticals actually began in the late 1980s. Ads for the product had claimed that it was a form of live cell therapy that was effective against diabetes, epilepsy, high blood pressure impotence, neurosis, obesity, Parkinsonism, and more than 30 other diseases and conditions. According to the promotional flyer:

Vigorous young [sheep] cells, with their life force still active, are injected into a human host. . . . According to Dr. Niehan's theory, they circulate from the site of the injection until they recognize and congregate at the human counterpart of the organ from which they are taken (liver cells go to the liver, sex cells go to the sexual organs, heart cells go to the heart, etc.). These young cells which are a functional organ specific but not species specific, imprint their vigor upon old, tired and degenerating cells, stimulating them to function with renewed efficiency. The organ itself then retains its vigor and vitality. . . .

The Live Cell Therapy tablet is designed to pass the stomach and reach the lower intestine where it is absorbed directly into you blood stream [3].

These claims are false, of course, because sheep cells do not rejuvenate human organs when injected and, even if they did, the digestive process would prevent them (or a freeze-dried derivative) from being absorbed if they were taken by mouth.

In 1988, the product was added to the FDA's Import Alert, as an unapproved new drug that could not be imported into the United States. However, the product was mailed to customers all over the United States from the Post Office in San Ysidro, California. A three-month supply cost $195.

Family Involvement

In April 2001, Daboub's wife Maria pled guilty to four felony counts of tax evasion for the tax years 1993-1996. Together with her husband, she agreed to forfeit $1.5 million, pay any unpaid taxes, pay a criminal fine in an amount to be determined by the court, and make restitution of $75,000 to victims of the mail fraud. On the same day, Daboub's son Leo Gutierrez Daboub pled guilty to one felony count of tax evasion and agreed to pay a criminal fine in an amount determined by the court and forfeit $150,000 to the United States.

In March, Daboub's son-in-law, Norberto de la Parra, entered pled guilty to one felony count of tax evasion before visiting Judge Fitzgerald, admitting that he had underpaid his taxes for 1995 by approximately $8,000. As a part of his plea agreement, he agreed to pay a fine as determined by the court, and to pay any unpaid taxes due for the years 1994-1999, and to forfeit $5,000 to the United States.

In January, Maria Daboub's nephew, Andres Alvarez, pled guilty to one felony count of selling an unapproved drugs in violation of the Food, Drug and Cosmetic Act. Alvarez admitted that he operated mail order businesses under the names NutriMail, MultiHealth and Intermail, from 1994 to the end of 2000, selling products such as Energy Complex, Chronopal and Yuan-Hsing. Although the products were intended for use in the treatment and mitigation of diseases such as impotence and obesity, no application for approval of a new drug was ever submitted to the FDA for these products.

In 1996, Energy Complex, marketed by Nutrimail, was added to the FDA's Import Alert, as an unapproved new drug that could not be imported into the United States. Alvarez acknowledged that he solicited sales only in the United States, but had the customers send their checks for the purchase of the product to a post office box in Tijuana, Mexico. Alvarez or his employees would then bring the checks to the United States, where they were deposited into a bank account in San Ysidro, California. The product was mailed to customers all over the United States from the Post Office in San Ysidro, California.

Some of the solicitations for the products contained a letter purportedly written by a "Dr. Franz Muller," recommending the product. Dr. Franz Muller was a name made up by Alvarez, who wrote the Muller letter himself. As a part of his plea agreement, Alvarez agreed to make restitution of approximately $3,000 to his victims, pay a fine in an amount determined by the court and to forfeit $25,000 to the United States.

Previous Offenses

Leo Leal Daboub's mail-fraud career dates back at least into the early 1980s, during which he operated under five company names: Health Energetic Corp., Vita-Health Research, Nutritional Research, The American Diet Association, and the Diet Stores.

  • In 1981, the Postal Service stopped him from selling products falsely claimed to promote hair growth and slow the aging process.
  • In 1982, he advertised in newspapers that Willpower Diet Tablets would "make you skinny in 45 days. . . even if you cheat!!! Or double your money back!" The plan consisted of two types of tablets—Energetic Weight Reduction Appetite Suppressant (methylcellulose plus benzocaine) and S-Energetic (a vitamin mixture)—plus a 1200 calorie diet.
  • In 1983, Daboub signed a consent agreement to stop making false claims for Willpower Diet Tablets, but he continued to do so and was again ordered to stop by an Administrative Law Judge [4].
  • In 1984 and 1985, the Postal Service issued cease-and-decist orders related to several other Daboub products falsely claimed to produce weight loss or improve appearance [5,6].
  • In 1985, the Ventura County, California District Attorney obtained a preliminary injunction ordering Daboub to stop making false and misleading claims for his products. He persisted, however, until the court found him in violation of the injunction. He was then permanently enjoined and was ordered to pay over $81,000 in civil penalties [7].
 


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Comment

Leo Daboub collected millions of dollars by marketing fraudulent health-related products over a period of close to 20 years. Repeated civil (noncriminal) actions by state and federal authorities were not sufficient to stop him. If the American public wishes to be protected from mail-order health fraud, it will have to persuade Congress to strengthen the law so that criminal prosecution can be done quickly, efficiently, and more often.

References

  1. U.S. Justice Department. News release, May 23, 2001.
  2. Superseding indictment. USA v. Leo Leal Daboub, Sr., Maria Daboub a/k/a Maria Arcella Gutierrez de la Sierra, and Leo Gutierrez Daboub. U.S. District Court, Southern District of California, Case No. 00CR0442K, March 28, 2000.
  3. Zellen Cell Pharmaceuticals. The world famous "Live Cell Therapy" from Switzerland that will make you enjoy life free from the cruel aging symptoms, disease, weakness or physical limitations! Mail order flyer, late 1980s.
  4. In the matter of the complaint against the Health Energetic Corp, P.S. Docket No. 16/50, May 24, 1984.
  5. In the matter of the complaint against Nutritional Research, Dec 14, 1984.
  6. In the matter of the complaint against Leo Daboub, Sandra Brooks, Nutritional Research, American Diet Association, and Vita-Health Research, P.S. Docket No. 19/185, April 25, 1985, and July 10, 1986.
  7. Smith D. Operator of diet pill business must pay $81,412 in fraud case. Los Angeles Times, July 24, 1986.

This article was revised on January 23, 2011.

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