Settlement to Give Customers Bulk of Hair Treatment Firm’s Assets

Consumers will get 80% of the assets owned by a man whose Los Angeles-based company made $100 million selling a supposed baldness cure known as the “Helsinki Formula,” federal officials said Wednesday.

Under a settlement announced by the Federal Trade Commission, consumers will get the bulk of the money from Bankruptcy Court proceedings involving former Pantron I Corp. owner Hal Z. Lederman. The agreement resolved FTC claims against both Lederman and the company, which went out of business in 1995.

An FTC spokeswoman said the ultimate amount to be recovered will probably be less than the $27 million that a Bankruptcy Court judge last month awarded the agency for consumer redress.

Los Angeles-based Pantron I marketed the product through infomercials, primarily in the late 1980s. The FTC charged that the Helsinki Formula didn’t actually prevent or cure baldness, contrary to Pantron I claims.

In 1992, U.S. District Judge Richard A. Gadbois in Los Angeles ordered Pantron I to stop claiming that scientific evidence established the product was effective. The judge said the company could say only that the product was effective to some extent for some people.

Gadbois refused to award consumer redress, however, and the FTC appealed that issue. In 1994, the U.S. 9th Circuit Court of Appeals said Pantron I and Lederman must pay the FTC to reimburse customers. Last month, a Bankruptcy Court judge calculated that Lederman would owe $27 million, if he had that much money. FTC officials say they don’t know exactly how much consumers will ultimately recover.

The settlement announced Wednesday prohibits Lederman from making any claim about the effectiveness of a hair growth product, even if Lederman works through another company, unless the Food and Drug Administration has approved the claim.

Lederman could not be reached for comment.