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Soon after graduating from law school in 1990, Edward D’Alessandro Jr. took on a fortuitous representation. He handled a trademark case for photographer Harry Siskind and later helped him raise money to start a diet-supplement company in which D’Alessandro had a 50 percent share. The business “grew beyond my wildest dreams,” he says. Court papers show that in 2001, the company, Mark Nutritionals, paid him $2.2 million in 2001. But the litigator eventually got a rude awakening, to the tune of a Federal Trade Commission suit charging the San Antonio, Texas, company with pitching its Body Solutions weight-loss products with false and unsubstantiated claims. The FTC won a settlement for a suspended judgment of $155 million, the company’s estimated sales since its founding in 1999. Mark Nutritionals sought bankruptcy court protection from creditors in September 2002. It has been out of operation since last April, when the court converted its Chapter 11 to a Chapter 7 liquidation. And last week, court orders shut the business down. D’Alessandro may get off lightly. A federal judge in San Antonio on Oct. 27 approved a settlement by which the lawyer agrees to pay $140,000 to the FTC. But if he doesn’t pay it on time, or if it turns out he lied about his finances, he could be held to answer for the full amount of the $155 million judgment. D’Alessandro, a partner with Florham Park, N.J.-based D’Alessandro Jacovino & Gerson, must also pay $25,000 to Texas and $7,500 each to Pennsylvania and Illinois in separate suits by those states. FTC lawyer Thomas Carter says the advertising that prompted the suits ran on 650 radio stations nationwide. Area stations included WOR-AM and WLIR in New York. The FTC complaint alleged that “radio personalities” with names like Charles Osgood, Read Shepard and “Trapper Jack” induced listeners to buy the company’s Evening Weight Loss Formula at $48 per bottle with claims that it could burn off pounds while users slept and that the weight would stay off. The claims were also made on the company’s Web site and in television spots. The endorsements were often mixed in with the general patter so they were not discernible as advertisements, says Carter. On top of money paid to the stations, the company paid $500 bonuses to deejays who came up with particularly good spiels and collected the spots on compact disks to circulate as exemplars. D’Alessandro was the company’s secretary and treasurer but says he had no involvement in day-to-day management, which was in the hands of Siskind, the company’s president, chief executive officer and co-owner. D’Alessandro also denies knowledge of any false marketing. Siskind told him the advertising had been cleared with the FTC and “I accepted him at his word,” D’Alessandro says. D’Alessandro paints himself as a victim of corporate mismanagement and abuses, noting Siskind’s unauthorized purchase of a $7 million corporate jet and opening of a nightclub. Siskind refused to respond to his requests for financial information, so last year, D’Alessandro hired an attorney and accountant with the intent to compel disclosure, remove Siskind and have a receiver appointed. Only around June 2002 did he learn of the FTC investigation, he says. By September, the company had filed for bankruptcy. The choice to settle the FTC and state claims was “a business decision,” necessitated by the company’s deteriorating finances, which prevented it from mounting an adequate defense to the suits, D’Alessandro says. He contends he would have prevailed if he had been willing to move to Texas for a few months to fight the government in court, but “I’m a practicing lawyer, I have to make a living.” But Carter says the FTC needed to prove that D’Alessandro participated in the illegality, or knew about it but failed to stop it, and “we felt we could meet that burden.” The amount of the settlement was based on D’Alessandro’s financial disclosures, says Carter. The bulk of it will be paid from D’Alessandro’s $150,000 share of money from the sale of company assets earlier this year. “If we find he underreported or failed to report significant assets, we go back and kick in the $155 million judgment.” The stipulated order signed by U.S. District Judge Xavier Rodriguez in Federal Trade Commission v. Mark Nutritionals, SA-02 CA 1151, recites D’Alessandro’s denial of any liability or violation of law, calling the $140,000 payment “equitable monetary relief” for “consumer redress and/or disgorgement” and administrative expenses for any redress fund. The order bars D’Alessandro from any false or misleading representations about weight-loss products and requires him to cooperate with the FTC in pursuing the claims case against Siskind, which are stayed pending the FTC approval of a separate settlement its lawyers negotiated with him. In six months, D’Alessandro must file a sworn report on his compliance with the order. For the next five years, he must inform the FTC within 10 days of any changes in address, telephone number or employment status. And for an apparently indefinite period, the agency is authorized to monitor his compliance by pursuing discovery from third parties and him.

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