Judge to Rule on Postal Ban of Grapefruit 45 Diet Pills

The fate of Grapefruit 45, the mail-order diet plan under attack by federal authorities, is now in the hands of an administrative law judge, who is expected to rule in the next two or three months whether to continue the Postal Service’s mail seizure or return more than $3 million worth of detained product orders.

Both the government and officials of World Communications, the Carlsbad-based marketer of Grapefruit 45, express optimism that a weeklong judicial hearing will result in a favorable verdict.

Administrative Law Judge Quentin Grant of Washington, D.C., would not comment on the specifics of the case. He said only that it “will take me some time to study the record.”

But no matter the outcome of the case, World Communications executives boast that, unlike other businesses that have surrendered without a struggle, they have stood their ground against the giant federal bureaucracy.

“There was no way I was going to sit back; I’ve worked too hard as an entrepreneur,” said Jay M. Kholos, president of WCI.

Kholos is a 44-year-old advertising industry executive who moved to North San Diego County in 1978. His WCI employs about 200 people and expects to gross about $50 million this year marketing through the mail a Nat King Cole record collection, makeup, a cookbook, jewelry catalogue and the Grapefruit 45 diet plan, advertised nationally as “the fat burner.”

In February, postal authorities began seizing all money and product orders for Grapefruit 45 that were mailed to three WCI post office boxes in Carlsbad. The seizures were expanded last month to include four additional post office boxes in Enicnitas, the City of Orange, Long Beach and Orange City, Fla.

Postal officials charged at the time that WCI had violated a 1984 consent agreement that prohibited it from making claims about any orally ingested weight loss products. Specifically, postal authorities alleged that WCI had broken its pledge that it would not sell products that promised weekly weight losses of more than two pounds for women and 3 1/2 pounds for men.

Sources close to the case said last week that the two sides are now negotiating a settlement. The settlement would deal only with the detained mail, according to one Postal Service source. WCI would still be subject to civil penalties, if postal officials decide to file for relief.

The Postal Service’s ability to seek civil relief is relatively new. Prior to October, 1983, postal authorities could only secure a false representation order that returned the mail to the sender and had “no effect on people selling the products,” according to Jim Harbin, an attorney for the Postal Service inspector’s office.

But now, authorities can obtain a cease and desist order that is enforceable in federal court.

Such authority typically intimidates most firms, especially because fighting back is expensive.

WCI, for example, has already spent about $150,000 in legal fees and related costs, according to Kholos.

“Most people can’t really fight back,” he admitted.

Kholos has made his campaign nearly a David versus Goliath-type crusade. “They can go ahead and push us around and not have to be accountable for it,” he said. “They can hide behind the government. We’re out there exposed and we had to either stand up and fight or forget about it.

“Whatever happens, if the Postal Service was interested in a pound of flesh, they got it.”

WCI, said Kholos, generates about $15 million worth of cash-on-delivery mail per year, making it one of the largest c.o.d. users in the country.

The hearings themselves--held two weeks ago in San Diego and Los Angeles--generated testimony that both sides claim aided them.

The government’s star witness backed up Postal Service claims that if customers of Grapefruit 45 lost weight it was because of a dramatic decrease in caloric intake and not because of the pills, postal authorities claim.

The witness, Dr. Ernest Drenick, is a consultant to Weight Loss Clinics of America.

Interestingly, WCI officials believe that Drenick’s testimony actually helped their case. “He verified our findings,” said Kholos.

WCI representatives were so enthusiastic over Drenick’s testimony that they did not present much additional medical evidence in support of their claims.