366 F.2d 423 (2nd Cir. 1966), 277, United States v. Andreadis

Docket Nº:277, 29912.
Citation:366 F.2d 423
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. John ANDREADIS a/k/a John Andre and Drug Research Corporation, Defendants-Appellants.
Case Date:September 01, 1966
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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366 F.2d 423 (2nd Cir. 1966)

UNITED STATES of America, Plaintiff-Appellee,

v.

John ANDREADIS a/k/a John Andre and Drug Research Corporation, Defendants-Appellants.

No. 277, 29912.

United States Court of Appeals, Second Circuit.

Sept. 1, 1966

Argued March 23, 1966.

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Joseph P. Hoey, U.S. Attorney, E.D.N.Y.; Jonathan L. Goldstein, Attorney, U.S. Dept. of Justice; Jerome C. Ditore, Asst. U.S. Attorney, for plaintiff-appellee.

Maurice Edelbaum, New York City, for defendants-appellants.

Before LUMBARD, Chief Judge, and WATERMAN and MOORE, Circuit Judges.

WATERMAN, Circuit Judge.

Appellants, John Andreadis, a/k/a John Andre, and Drug Research Corporation, a company that Andre controlled, appeal from judgments of conviction entered after a jury trial before Judge Bartels in the United States District Court for the Eastern District of New York. Appellants were indicted, tried, and convicted on forty-two counts of knowingly using either the United States mails or radio and television communication in interstate commerce, in furtherance of an intentional scheme to defraud prospective purchasers of the product 'Regimen Tablets' by false or fraudulent pretenses, representations and promises in violation of 18 U.S.C. §§ 1341 (mail fraud) 1 and 1343 (wire fraud); 2 on one count of conspiring to violate the federal statutes just cited in violation of 18 U.S.C. § 371; and on one count of causing to be introduced and delivered in interstate commerce, with intent to defraud and mislead, a quantity of cartons of a product labeled 'Regimen Tablets,' together with a display kit, which contained statements that were false and misleading in violation of 21 U.S.C. §§ 331(a), 333(b) and 18 U.S.C. § 2. We find no error and affirm the judgments on all counts.

'Regimen Tablets,' manufactured for, and sold by, appellants, consisted of supplies of three pills, a green pill containing 22.5 mg. of benzocaine plus vitamins and minerals that was supposed to deaden the tongue and sense of taste; a pink pill containing 648 mg. of ammonium chloride and various vitamins that was supposed to act as a diuretic; and a yellow pill containing 75 mg. of phenyl-propanolamine (PPA) that was supposed to act as an appetite depressant. Boxes of 'Regimen Tablets' were sold, without prescription, over-the-counter, in two sizes; a $3 box containing 78 tablets, a so-called 10 day supply; and a $5 box containing 156 tablets, a so-called 20 day supply.

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For a period of years between the mid-1950's and 1962, when the Federal Drug Administration finally removed 'Regimen Tablets' from the market, appellants devised and executed a scheme to merchandise this product as a miracle weight-reducing drug. At the start Drug Research Corporation, controlled by Andre, who was also its President, 3 used mail order advertising to sell 'Regimen Tablets.' The advertising material mailed to the public claimed that 'Regimen Tablets' was a new 'wonder drug for fat people' that made possible 'no diet reducing' and that without dieting, special eating, or giving up 'the kinds of food you like to eat' the pills would cause 'your body to lost weight the fastest acting way * * *.' In 1957, Andre retained Kastor-Hilton, Chesley, Clifford & Atherton, Inc. (hereinafter Kastor-Hilton), an advertising agency, to develop advertising copy to be placed in various national media. 4 Kastor-Hilton remained Andre's advertising agency for the 'Regimen Tablets' account until 1961. During that time reliance on mail order advertising to sell the product was replaced by reliance on more sophisticated advertising techniques. Kastor-Hilton arranged for advertisements to be placed in the newspapers of every major city in the country, in magazines of national circulation, and on programs televised on all the major networks, which claimed that 'Regimen Tablets' made possible 'no-diet' reducing, or reducing 'without dieting' and that the pills had been 'clinically tested' or 'proven clinically effective.' In certain instances these claims were qualified when a national magazine or television program refused to accept the 'Regimen Tablets' copy as first submitted by Kastor-Hilton, but Andre agreed to such changes grudgingly and he ordered Kastor-Hilton to retain these extravagant claims in the copy submitted to other, less particular, media. Without much doubt, the most successful of the advertising schemes devised by Kastor-Hilton for 'Regimen Tablets,' and assuredly the most spectacular, involved the use of 'endorsers,' that is, individuals who for a period of time would appear each week, 'live,' on a television program, demonstrate their weekly weight loss, which usually was quite substantial, 5 and state inter alia that they were losing the weight while eating the foods they normally ate and 'without dieting,' that, 'thanks to Regimen Tablets (they) felt satisfied with a fraction of the calories (they) used to eat * * *,' and that they 'never felt better.'

Each of the counts charging a scheme to defraud by means of false or fraudulent pretenses, on which appellants were convicted, set forth a specific instance in which the United States mails or interstate radio or television communication had been utilized by appellants to disseminate their advertising claims that 'Regimen Tablets,' taken as directed, would cause a person of normal health to lose weight 'without dieting,' or that this product made possible 'no-diet reducing' and that it had been 'clinically tested' or 'proven clinically effective.' The thrust of the Government's case was that there was here an intent to defraud because these representations and statements were scientifically and factually false, and yet appellants continued to include these representations and statements in their advertisements for 'Regimen Tablets.' 6 It is the Government's

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contention that proof of these facts sufficed to convict appellants under 18 U.S.C. 1341 and 1343 on each of the counts on which they were convicted. This contention will bear some further analysis. 7 But, assuming for present purposes that the Government is correct and that proof of this set of facts warrants the conclusion that 18 U.S.C. §§ 1341 and 1343 were violated, the essential issue before us becomes that of determining whether the Government adduced evidence sufficient to support the jury's determination that this set of facts existed in every instance in which it returned a verdict of guilty.

At the outset we note that, first, on appeal from a jury conviction we must view the evidence in the light most favorable to the Government, United States v. Press, 336 F.2d 1003, 1009 (2 Cir. 1964), cert. denied, 379 U.S. 965, 973, 85 S.Ct. 658, 13 L.Ed.2d 559 (1965), and second, when the verdict of the jury is attacked for an alleged lack of evidence to support it, the verdict will not be set aside if it is supported by substantial evidence, e.g., United States v. Valenti, 134 F.2d 362 (2 Cir.), cert. denied, 319 U.S. 761, 63 S.Ct. 1317, 87 L.Ed. 1712 (1943). Within this perimeter of the area of permissible review, we hold that the Government presented evidence sufficiently probative to support its claims that certain representations and statements found in most advertising for 'Regimen Tablets' were scientifically and factually false, that appellants knew them to be false, and, despite this falsity and appellants' knowledge thereof, appellants continued to include these representations and statements in their advertising. A brief summary of the evidence tending to support these claims follows.

In order to establish that appellants' advertising claims were scientifically false the Government introduced two expert witnesses, Dr. Jean Mayer and Dr. Arthur Grollman, both of whom were well-qualified to assess the scientific merit of the claims that 'Regimen Tablets' would cause a person to lose weight 'without dieting,' and would make possible 'no-diet reducing.' Taken together, the testimony of Drs. Mayer and Grollman almost conclusively established that a dosage level of PPA double that found in 'Regimen Tablets' would not, even when combined with the other ingredients found in 'Regimen Tablets,' cause a loss of weight unless accompanied by a diet. Dr. Grollman also testified that certain Andre-sponsored clinical tests of the effectiveness of 'Regimen Tablets' could not have produced valid scientific results and that the results of these Andre-sponsored clinical tests were flatly contradicted by the Fazekas test, a test of the effectiveness of PPA recognized as authoritative by experts on the problem of obesity.

In order to establish that appellants knew that the claims they made for 'Regimen Tablets' were scientifically false the Government introduced evidence tending to prove that several impartial observers had called Andre's attention to the mass of material that cast fundamental doubt on the truthfulness of the claims made for 'Regimen Tablets,' but that Andre had ignored all requests that he modify his advertising unless he could substantiate his claims and had only diluted his claims when prominent advertising media had refused to run the undiluted claims, and even then had only diluted the copy supplied to the media that objected. For example, it was established that throughout the period of the...

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