D.A. Moves to Close ‘Boiler Room’ Scam on Vitamins

In a flurry of legal maneuvers, Orange County law enforcement authorities have moved to shut down a $15-million-a-year Buena Park firm that allegedly used phony prizes to lure unwitting customers across the country into buying cure-all vitamins, officials announced Friday.

Acting on dozens of complaints from around the country, the Orange County district attorney’s office this week secured a search warrant as well as civil injunctions against Omni Pharmaceuticals Inc., cutting off telephone service, freezing its financial assets and preventing it from making any future misrepresentations to customers.

In what law enforcement officials described as a classic “boiler room” scam, a sales team of about 300 telephone workers at Omni Pharmaceuticals allegedly used enticements of Mercedes Benz convertibles and dream vacations to keep potential customers on the line and obtain credit card numbers.

Then, the targets allegedly were offered an 18-month supply of vitamins that Omni representatives asserted could combat cancer, blood clots, heart disease, high blood pressure and hair loss, claims that authorities said are both patently false and illegal.

Officials Raid Facility

Officials on Thursday raided Omni’s 36,000-square-foot facility on West Artesia Boulevard in Buena Park. They seized about 100 boxes of records and other materials for an ongoing criminal investigation of the firm headed by Gary Allan, said Deputy Dist. Atty. Gay A. Geiser-Sandoval of the consumer protection unit.

Officials and lawyers for Omni Pharmaceuticals could not be reached for comment late Friday, after the district attorney’s

office announced its actions. Geiser-Sandoval said she understood from Omni employees that the firm had shut down its operations.

It was not the first time Omni has been investigated by local authorities. A search warrant, based on similar allegations, was executed two years ago against the company, which then was based in Brea.

No criminal or civil action resulted from that seizure, which was one of the first undertaken by a local law enforcement task force set up locally to combat so-called “boiler room” operations in Orange County, which has developed a reputation as the nation’s capital for such scams that rely on telephone sales and high-pressure sales tactics to defraud customers.

“Not enough was done (in the 1987 investigation),” Geiser-Sandoval said Friday. This time, however, she said law enforcement authorities are intent on “making sure something happens” and shutting down Omni’s operations permanently. The firm has been in business locally for six years, she said.

Working undercover, a district attorney’s office investigator answered a newspaper advertisement for a $12-an-hour position in telephone sales and worked at Omni for three days in May.

According to a court declaration by investigator Craig Hammer, Omni workers are given detailed instructions on how to make their sales pitches most convincing.

“I’m glad I got you in today, (customer name),” callers are instructed to say at the outset, according to a sales presentation sheet filed in court in Santa Ana. “I’m calling to give you some good news. Can you stand a little good news for a change?”

Those called are then allegedly told that they have been specially selected to receive one of six luxury prizes.

‘Guaranteed to Win’

“Basically, the pitch is that you’ve been selected to win a guaranteed prize, that you’ve been specially picked because you’re a credit card holder and you’re guaranteed of winning one of these six prizes, from an ounce of pure gold to a Mercedes Benz,” Geiser-Sandoval said Friday.

“But in actuality, out of every 100,000 people, all but 10 get a watch worth maybe $25,” she said. Before the watches, the company allegedly gave to most of its customers “worthless utility bonds and fake limited-edition lithographs,” according to court documents.

Included in the sales instructions are responses to dozens of possible objections raised by the potential customer--such as “I don’t take vitamins!,” “I’ve heard about boiler rooms!,” and “I need to talk with my husband/wife!”

All the responses are designed to keep the customer on the line for as long as possible, secure a credit card number, then talk the customer into buying an 18-month supply of vitamins for $479.25, authorities said.

In securing court orders this week against Omni, the district attorney’s office alleged that the firm violated a host of health and safety codes in its inflated and misleading sales pitches for the vitamins.

According to court documents, Omni representatives told customers that it offered them: Vitamin C, “to counteract the formation of . . . cancer-causing substances”; Vitamin E to prevent and dissolve blood clots; Biotin to help balding men keep their hair longer, and Betaine HCL to reduce the risk of heart attacks.