Metabolife: its rise and fall
The Associated Press
But his company, Metabolife International Inc., had a problem: Its customers were winding up in emergency rooms across the country.
Health complaints flooded headquarters. One user's heart rate zoomed to 300 beats a minute. Another's pulse stopped for 16 minutes. One 25-year-old woman suffered a seizure after a week on Ellis' wonder pill.
If this became public, Ellis allegedly told one employee who handed him a written complaint in the late 1990s, federal regulators would "stomp bloody holes in my chest."
So, prosecutors say, Ellis wadded up the complaint and tossed it in the trash.
Now, Ellis and Metabolife are accused of covering up a health crisis that escalated as the company became a diet-supplement leader.
Charges against Ellis stem from a 1998 letter to federal regulators in which he claimed no customer had registered even a single health complaint about Metabolife 356, his signature product. It was a claim the company repeated a year later.
In fact, according to prosecutors, the company was receiving a cascade of complaints — some 14,000 from 1997 to 2002. Among them: 18 heart attacks, 26 strokes, 43 seizures and five deaths. Others may never have complained.
In the courts
Ellis, 51, and Metabolife — now a shadow of its former self, no longer selling Metabolife 356 but remaining in the supplement business — call the charges "utterly baseless" and a "hypertechnical violation" concocted by taking statements out of context.
A judge recently dismissed six of eight counts on the original grand-jury indictment, including obstruction-of-justice charges. Remaining charges accuse the company and Ellis of lying to the U.S. Food and Drug Administration.
Attorneys for Metabolife and Ellis declined to comment. "We will wait and see what the outcome is and let the system do its job," said company spokeswoman Jan Strode.
The U.S. attorney's office in San Diego said it could not comment beyond what it had disclosed in court papers.
Those papers reveal new details about Metabolife's woes.
A high-school friend whom Ellis made a Metabolife board member is facing federal gun charges. An affidavit briefly unsealed in the gun case showed Ellis and others are under investigation for allegedly hiding millions in overseas tax havens and personal safes.
Last November, shortly after the documents were unsealed, Metabolife's outside accountant, Michael Compton, committed suicide. In a document presented to the federal judge hearing the Metabolife case, prosecutors said Compton had admitted falsifying tax returns for company executives, including Ellis.
Weight loss, then strokes
Connie Thornburg thought Metabolife 356 was a miracle.
The 48-year-old mother of two from Childersburg, Ala., began her regimen in 1999 and dropped 65 pounds fast.
The strokes began the following year. She suffered four and was hospitalized 11 times before a doctor told her what was in her diet supplements.
The main ingredients in Metabolife 356 were ephedra and caffeine, a combination that had been discovered in Denmark a quarter-century ago.
Ephedra is the herbal form of the stimulant ephedrine, an ingredient in cold medicines that raises heart rates, suppresses appetites and staves off sleep. Ephedrine also is a key ingredient in methamphetamine.
Earlier this year, the Bush administration banned sales of ephedra after linking it to 155 deaths. Perhaps the most famous victim was 23-year-old Baltimore Orioles pitcher Steve Bechler, who died trying to shed pounds during spring training last year.
Thornburg's case was the first of scores of Metabolife lawsuits to reach trial in 2002. An Alabama jury found Metabolife 356 was unreasonably dangerous, but jurors also found that the plaintiffs had failed to follow directions. The company is appealing the $4.1 million verdict.
According to the company Web site, Ellis discovered the formula for Metabolife 356 in 1989 while searching for something that would give his father energy to fight terminal cancer.
It was also the year Ellis and Michael Blevins, the longtime buddy he would later make a Metabolife co-owner, were indicted in what the Drug Enforcement Administration called the biggest single roundup of methamphetamine manufacturers in U.S. history.
Blevins had bought chemicals and lab materials from a supply house that was part of a massive undercover drug sting. Federal agents raided the home Ellis rented in Rancho Santa Fe, an exclusive San Diego suburb, and found a clandestine methamphetamine laboratory. A forensic chemist determined that more than 50 pounds of methamphetamine had been made in the house.
Facing prison time on the methamphetamine charges, Ellis cut a deal. He became an undercover FBI informant and testified before a federal jury in 1990 about meeting a major marijuana dealer.
In testimony before the jury, he revealed that he left his job as a police officer in the working-class San Diego suburb of National City after he was subpoenaed in an investigation of the sale of illegal automatic weapons.
For his efforts as an informant, Ellis received probation.
Ellis drove Blevins to a prison in the Mojave Desert, where he was sentenced to serve more than five years. Blevins wrote a federal judge that, in parting, Ellis promised to build a business for the both of them.
When Blevins was transferred to a San Diego halfway house in 1995, a job was waiting at recently founded Metabolife.
"With hard work and dedication, we are going to build something we can all be proud of," Blevins wrote the judge.
Metabolife got its start less than a year after Congress deregulated the dietary supplements industry in 1994.
The law, sponsored by Sen. Orrin Hatch, R-Utah, who dabbled in the vitamin business as a young man, treated dietary supplements as food instead of drugs. Dietary-supplement makers no longer had to show their products were safe. The burden was on the federal government to show a product was unsafe.
Under the law, Metabolife had no duty to report even the deaths of its customers.
Congress had created "a legalized form of drug dealing," said Dr. Peter Lurie of the watchdog group Public Citizen, which successfully petitioned the government in 2001 to pull Metabolife 356 and similar pills.
There is widespread agreement that ephedra has been one of the law's biggest oversights.
Hatch blames FDA
Earlier this year, Hatch called the health problems linked to the key ingredient of Metabolife 356 "extremely troubling" and said the Food and Drug Administration took "too long" to respond. FDA representatives declined comment for this story.
By 1999, the company boasted that Americans were gobbling 225,000 of its pills an hour.
Revenues at the privately held company had soared to more than $360 million in four years.
The company had so much cash that in 1999, Ellis offered to pay the Russian government $15 million to put Metabolife's logo on an international-space-station rocket. He suggested cosmonauts make Metabolife part of their in-space diet.
Between 1999 and 2001, Ellis and two other company owners were paid a total of $146 million, Metabolife's vice president of finance testified in a deposition.
Documents show that Ellis, the son of a Lebanese immigrant who ran men's clothing stores, enjoyed his personal fortune. He paid cash for his $2.2 million mansion in Rancho Santa Fe and a 200-acre mountain cattle ranch. Foundations set up for Metabolife and Ellis distributed more than $6.75 million to charities.
All along, some of Metabolife's customers were falling ill.
In 1998, when Ellis wrote the FDA that Metabolife had received no serious health complaints, the company already had heard from nine consumers of Metabolife 356 who had to be hospitalized, prosecutors say in court papers.
When a company lawyer repeated the claim to the FDA the following year, Metabolife had heard from 12 more seriously ill customers, according to company records cited by prosecutors.
A review by the U.S. House Committee on Government Reform of the 14,000 health complaints Metabolife handed over concluded the company showed an "indifference to the health of consumers."
Nearly a decade after they created the loophole that allowed Metabolife to flourish, federal lawmakers last year subpoenaed Ellis and demanded to know whether he "put sales above safety." Ellis took the Fifth Amendment, declining to reply.
Answers may emerge in San Diego federal court. Former employees are cooperating with the investigation.
Ellis understood how company documentation might one day become evidence.
He was unhappy when the company's newly hired medical director started tracking complaints on a computer. Ellis viewed it as "an admission of guilt," according to prosecutors.
"Help us," one man wrote after doctors said Metabolife 356 was responsible for his wife's grand-mal seizure. "Her experience could occur again."
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