WIREDGOV

Insolvency Service detoxes the business world of 27 misleading health supplements companies

News Release issued by the COI News Distribution Service on 08 September 2010

Twenty-seven companies involved in the mis-selling of health supplements have been wound up in the High Court following an investigation by Company Investigations of the Insolvency Service.

The investigation found that all of the companies (see list below) had their registered offices in the County Durham area but traded internationally, mainly from locations in Barcelona and Malta by placing "Free Trial Offers" for health supplements on numerous websites.

Customers responding to a "Free Trial Offer" supplied their payment card details believing that only a small charge to cover postage and packaging (typically £3.95) was required. However, if the customer failed to cancel the “Free Trial Offer” within the cancellation period (usually 15 days) they were deemed to have agreed to an ongoing supply of the product from the companies, at a cost of around £70 to £80 each month.

Commenting on the case, Stephen Speed, Chief Executive of The Insolvency Service said;

"The Insolvency Service is determined to come down hard on companies who seek to rip off the public by mis-selling products. I urge all consumers to be vigilant when it comes to ‘free trial offers’, and remember if it looks to good to be true, it often is."

Analysis of the available records for just seven of the companies found that they had turnover in excess of $19 million in the period August 2009 to March 2010 which was processed through merchant accounts based in Germany.

The products offered by the companies included Acai Berry Detox, Acai Power, Effective Acai, Acai Detox, Absolute Acai, Colon Cleanse Fresh, Colon Purify, Life Cleanse, Resveratrol, Resvmax, Miraculous Teeth Whitening, PureClean Teeth, Dermasensation and Dermainfuse.

The investigation found that there was a serious lack of transparency as to who controlled the companies with the named directors being otherwise unconnected individuals residing in the Consett area of County Durham. Those spoken to by the investigators said they knew nothing about the affairs of the company of which they were the only director and said their only task was to forward any post received for the companies to a local formation agent, Brinken Merchant Incorporations Limited. Each had been approached to act as a director by Brinken who paid them around £150 a year.

However, the Court heard that 25 of the companies were found to be under the common control of Local Billing Solutions Limited ("Local Billing"), a company registered in Malta. Local Billing maintained throughout the inquiry that it acted only as a payment processor and that the beneficial interest in the companies belonged to Canonizado International, a company said to be registered in Panama, of which the investigators could find no trace. On the documents available, the investigation established that the beneficiaries of the companies’ trading were most likely to be Local Billing and its principal Clayton Douglass.

Grounds for winding up the companies included,

· The websites used by the companies misled customers into believing that the trial offer was risk free and limited in nature,

· The terms and conditions of the offer were designed to confuse the customer and were not provided in any durable medium,

· The length of the trial offer was not made clear. Customers were provided with a 30-day supply of the product, but had, typically, only 12 days from receipt of the product in which to cancel any future supply,

· The companies abused the privilege of trading through a limited company by effectively continuing the same method of operating as that used by Trading Planet Limited, Viv3lab Limited and Vivera Limited. Those three companies having previously been wound up by the Court in the public interest.

The winding up orders were all made on 26 August 2010.

Winding up petitions were presented on 21 June 2010 against:-

LB Belvedere Limited, LB Cygnus Media Limited, LB Deluxepass Limited, LB Eridanus Entertainment Limited, LB Evil Angel Limited, LB Friendfinder Limited, LB Global Web Solutions Limited, LB Internet Media Productions Limited, LB Ilogic Solutions Limited

Winding up petitions were presented on 22 June 2010 against:-

LB LFP Internet Limited, LB Lyra Entertainment Limited, LB Nomad Media Limited, LB Pegasus Media Limited, LB Price Communications Limited, LB RSC Limited, LB Southint Prop Limited, LB Watt Media Limited

Winding up petitions against the following companies were presented on 23 June 2010 and on 25 June 2010 the Official Receiver was appointed as Provisional Liquidator of the companies:-

LB Carsed Marketing Limited, LB Nakedsword Limited, LB Cassiopeia Media Limited, LB Cybernet Entertainment Limited, LB RHS Limited, LB Pride Studios Limited, Intercontinental Consignment Logistics Limited and Gillmap Limited

Petitions to wind up Fyso-UK Limited and H5-UK Limited were presented on 13 July 2010.

Ends

Notes to Editors

1 A full list of the companies, their dates of incorporation and registered office addresses may be obtained by contacting the Insolvency Service Press Office (details below)

2 The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.insolvency.gov.uk

3 All public enquiries concerning the affairs of the companies should be made to: The Official Receiver, Public Interest Unit, 2 nd Floor, 3 Piccadilly Place, London Road, Manchester, M1 3BN. Tel: 0161 234 8531 Email: piu.north@insolvency.gsi.gov.uk

4 Media enquiries should be directed to: -
Denise Rawls Press Office Manager 020 7634 6910
Ade Daramy Press Officer 020 7596 6187

Contacts:

Ade Daramy
Phone: 020 7596 6187
ade.daramy@insolvency.gsi.gov.uk

Denise Rawls.
Phone: 020 7674 6910
denise.rawls@insolvency.gsi.gov.uk