Current Events in May 2002

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    Investigators Close Down Longitude Pill Works

    May 30, 2002
    A Scottsdale, Ariz., company that sold what it claimed were penis- and breast-enlargement pills over the Internet was raided by state and federal agents who said they seized more than $30 million in assets, including cash, jewelry, luxury homes and automobiles including eight Mercedes, a Cadillac, a Rolls-Royce and a Lamborghini.

    C.P. Direct, Inc. and three of its officers -- Geraldine Consoli, 76; her son, Michael A. Consoli, 44; and Vincent J. Passafiume, 28 -- were accused of fraud, theft, money laundering and racketeering in court documents filed by the Arizona Attorney General.

    Their names are familiar to local authorities. In 1996, the three agreed to a consent judgment in Superior Court that prohibited them from doing business in Arizona through the mail or Internet. The judgment was obtained after the three were named in a consumer fraud suit that involved a discount buying club that sold computers and other devices.

    The company bilked consumers hoping to enlarge strategic body parts by signing them up for a multi-month regimen of its "Longitude" pill, investigators said. The initial cost of the pills was $59.99, plus shipping and handling for a month's supply and $39.99 a month thereafter. Records showed the pills cost $2.50 per bottle to manufacture, police said.

    Investigators said it appeared the firm was doing "quite a bit of volume."

    Investigators Close Down Longitude Pill Works - Potion supposedly makes penis longer, breasts bigger...

    FDA Seizes Gel Candies After Choking Deaths

    Choking Risk Cited

    WASHINGTON, May 22, 2002 -- Following at least six deaths from choking, the Food and Drug Administration today seized all New Choice Food mini-gel candies at the firm's facility in Irwindale, California.

    "The FDA has had this product seized so that these choking hazards will not be distributed to the public", said FDA Deputy Commissioner Dr. Lester Crawford. "They pose an unacceptable risk to U.S. consumers."

    The company, which has refused to recall the candy, denied the FDA's claims and said it would file a court challenge.

    The candies are brightly colored and are made of thick fruit-flavored gel that users suck out of cups. Unlike most gel products, the candies do not dissolve when placed in the mouth. Paramedics have said the substance gets so sticky that they have been unable to dislodge it from the throats of choking children.

    The candies contain the ingredient "konjac" (also known as conjac, konnyaku, yam flour, or glucomannan). The FDA and staff physiologists from the Consumer Product Safety Commission consider this type of candy to pose a serious choking risk, particularly to infants, children and the elderly.

    The candies are sold under the brand names New Choice Mini Fruity Gels, Yummy Choice Fruit Gel Snack, and Sheng Hsiang Jen (Chinese label) Conjac Coconut Jelly in the following flavors: apple, grape, taro, lychee, peach, pineapple, mango, orange, lemon, strawberry, and as "assorted" flavors.

    Each gel cup is about the size of a single-serve coffee creamer. The gel cups are sold in 250 gram (8.75 oz) and 300 gram (10.5 oz.) plastic bags or in 1100 gram (38.5 oz.) and 1500 gram (52.5 oz.) plastic jars. Some labels of these products have a warning suggesting that they are a choking hazard, and some labels state that they should not be consumed by children of various ages, ranging from 3 to 6 years of age.

    The State of California Food and Drug Branch embargoed a large amount of the product at the Irwindale warehouse.

    In August and October 2001, the FDA issued general warnings against consuming mini-cup gel candies that contain the ingredient "konjac." Other firms have voluntarily recalled these gel candies.

    Although the agency issued an import alert to address importation of these candies in October 2001, some candies imported prior to the import alert may still be in the US market. These candies are sold under various brand names, distributed by various companies. The FDA continues to investigate and follow-up on this issue.

    Following at least six deaths from choking, the Food and Drug Administration today seized all New Choice Food mini-gel candies at the firm's facility in Ir...

    Rental Scooters, Mopeds Can Be Risky

    Vacation Danger Exposed

    NEW YORK, May 16, 2002 -- When vacationing, many Americans rent scooters or mopeds to get around. They are convenient, cheaper than renting cars and ideal for the narrow streets of tropical islands or quaint resorts. But vacationers don't realize how dangerous these small vehicles can be without proper training. On Friday, May 17, Inside Edition reports on how tourists can be at risk on scooters and mopeds.

    The newsmagazine reports on the tragic death of 28-year-old Nicole Timmerman of Minneapolis.

    In October 2000 Nicole and her friends were on a Caribbean cruise that made a stop in Key West, FL. They decided to rent scooters in order to see the island. Just moments after leaving the scooter rental shop, Nicole lost control at a busy intersection and hit a large truck. She died before paramedics arrived.

    Nicole's parents believe that their daughter accidentally accelerated when she meant to stop, a common problem according to authorities. Lee Timmerman, Nicole's father, doesn't know how much training his daughter received from the rental shop before her fatal accident, but whatever it was, he feels it wasn't enough.

    "You spend a minute or two going through some cones in a parking lot. If you don't fall over, you're kind of given the okay to go You exit the parking lot, and you're instantly in busy heavy traffic. It isn't cones anymore. It's cars," he said.

    Although Key West, FL has established ordinances requiring scooter rental companies to provide specific instruction to riders, there have already been 116 scooter accidents this year. Inside Edition's Senior Investigative Correspondent Matt Meagher recently visited a few Key West rental shops to see if tourists get the required training.

    At one shop, Meagher was given just six minutes of instructions and told to test the scooter on the street. If he felt comfortable, Meagher was told to keep going. At another rental shop, Meagher's training was much more extensive. Since he was a novice rider, this shop suggested that Meagher rent a moped, which is supposedly easier to handle, and urged him to use a helmet even though Florida law does not require it.

    Comparing the training between both shops, Meagher returned to the first and confronted the owner about the inadequate training. The shop's owner apologized to Meagher if he left feeling uncomfortable. He told Meagher, "I think I give better instruction than any other scooter place in town."

    As part of its report, Inside Edition also looks at scooter and moped accidents that occur abroad. In Bermuda, where tourists are not permitted to rent cars, scooter use has become a tradition. But with narrow and winding roads and Americans not used to driving on the opposite side of the street, there were nearly 500 scooter accidents in Bermuda in 2000 alone.

    Dr. Ewart Brown, Bermuda's Minister of Transportation, tells Inside Edition that he is very concerned about scooter accidents. Dr. Brown says increased training has caused the number of accidents to drop drastically in recent years, but explains how vacationers can easily underestimate the danger of riding a scooter.

    "This place may be deceiving You look around and you see pink sand and turquoise water. But if you don't handle your moped correctly, you could end up in the hospital We want our tourists to be safe. We're upset when there's one accident."

    When vacationing, many Americans rent scooters or mopeds to get around. Vacationers don't realize how dangerous these small vehicles can be without proper...

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      PayPal Named in Class Action Suit

      Paypal is named in a class action suit charging it illegally froze clients' funds without their knowledge and without providing a means for customers to contact the online payment service.

      The suit alleges that PayPal violated the Electronic Fund Transfer Act, which provides that a phone number be made available to customers who want to inquire about their electronic fund transfers.

      The suit, filed in federal district court in San Francisco, also claims that PayPal unlawfully freezes customers' accounts and fails to fully compensate customers who are damaged by erroneous financial transactions.

      The suit was filed by Girard Gibbs & De Bartolomeo of San Francisco. Joining the action was Horwitz, Horwitz & Associates of Chicago, acting on the basis of complaints filed with

      PayPal faces other problems as well. Several states are trying to require PayPal to be licensed; the company suspended service to Louisiana residents after the Bayou State threatened to fine PayPal for transferring money without a license. New York, California and Idaho have also notified PayPal that it may be operating an unlicensed banking business.

      Although it concedes that most states regulate nonbank payment and money-transfer systems, PayPal has argued that it is only required to be licensed in its home state of California.

      In what may turn out to be good news for PayPal, the Federal Deposit Insurance Corporation (FDIC) recently issued an opinion stating that at least some PayPal customer accounts may qualify for FDIC insurance. But the agency cautioned that the opinion would be applied on a case-by-case basis and would apply only to funds being handled by PayPal for deposit into accounts at FDIC-member banks.

      PayPal customers have the option of placing their funds into their own bank accounts, which are presumably insured by the FDIC, or depositing them in a PayPal money market account which, like other money market accounts, is not insured.

      PayPal Named in Class Action Suit...

      Showerhead Hot Water Heaters

      Sold in Puerto Rico

      WASHINGTON, May 7, 2002 -- Eugenio Serafin Inc., of Bayamon, Puerto Rico, is voluntarily recalling about 32,500 electric showerhead hot water heaters because they pose a danger of electrocution.

      The showerhead hot water heaters are attached to the shower's water supply piping and connected to the household electrical supply source when central hot water is not available. The nozzle can be easily unscrewed, exposing the uninsulated heater coil. The heater coil's grounding screw does not sufficiently reduce the current through the water, posing an electrocution and shock hazard to the bather.

      The recall is being conducted in cooperation with the U.S. Consumer Product Safety Commission (CPSC), which said it had not received any reports of injuries or incidents associated with these showerhead water heaters.

      The recalled showerhead hot water heaters were sold under the Corona, Corona Maxi, and Fammy model names. They are packaged in a clear plastic bag with a card that reads in part, "ducha", "HECHO EN VENEZUELA POR: TECHNI" and "MIRANDA, VENEZUELA".

      Hardware stores and home improvement centers sold the recalled hot water heater components in Puerto Rico from January 1999 to March 2002 for about $18.

      Consumers should stop using these showerhead hot water heaters immediately and return them to the store where purchased for a refund. For more information, consumers can contact Eugenio Serafin toll-free at (800) 981-4029 between 9 a.m. and 5 p.m. ET Monday through Friday.

      Showerhead Hot Water Heaters...

      Dangers of Petting Zoos Often Overlooked

      Inside Edition Investigation

      NEW YORK, May 6, 2002 -- Each year hundreds of thousands of families visit petting zoos, but in the past two years there have been reports around the country linking petting zoos to illnesses in children. Outbreaks have been reported in Washington, Wisconsin, Pennsylvania and one in Canada. On today's broadcasts, Inside Edition investigates the potential danger at petting zoos and reports on test results illustrating just how easy it is to come in contact with germs from animals.

      In October 2000, Rick Jacobs of Jeffersonville, PA took his three-year-old daughter Erin to a petting zoo at Merrymead Farms in Pennsylvania. Jacobs tells the newsmagazine: "We had absolutely no idea that a child could become sick from petting farm animals." But just a few days after their visit, Erin became deathly ill. Eventually Erin's kidneys completely failed, and to keep her alive, Rick donated his kidney.

      The cause of Erin's sickness was traced to a deadly bacteria called E. coli 0157, which can be present in animal feces. Erin was among 51 people who were reported sick after visiting the farm. She and 15 others became so violently ill they were hospitalized. Inside Edition sought to ask the owners of Merrymead Farms about the outbreak, but they declined to comment.

      Today, Rick and Erin take weekly visits to the Dupont Hospital for Children's in Wilmington, Del. She is currently on a daily regimen of medicines, and, according to Rick, Erin will have to visit the hospital once a month for the rest of her life. Rick Jacobs is pushing for a state law in Pennsylvania that would require mandatory warnings and washing facilities, so what happened to him and Erin won't ever happen to another family.

      "We don't want people running into a panic saying don't go to petting zoos. Our message is just be aware of the dangers that are in these petting zoos. Your kid can literally die from petting a cow or a deer," he said.

      As part of its investigation, Inside Edition visited eight petting zoos in Florida and took 57 swabs from all types of animals, including cows, pigs, and goats as well as from some of the fencing that holds the animals. The newsmagazine sent the swabs to Micrim Labs in Ft. Lauderdale, FL. To be analyzed. The laboratory found heavy growths of bacteria and fungi on most of the samples.

      Dr. Philip Tierno, Director of Microbiology at NY's Mt. Sinai Hospital and NYU Medical Center and author of the book The Secret Life of Germs, analyzed the results, and said these germs are expected among farm animals, "What this shows is that there should be caution exerted whenever you're at a petting zoo."

      Many of the animals Inside Edition swabbed had excrement on them. Thirty-one swabs contained E. coli. However, none were the deadly type of E. coli that infected Erin. Six swabs, taken from animals like ducks and goats, contained Aeromonas hydrophela, a bacteria that can cause stomach problems and diarrhea. Two swabs were found to have a bacteria that can cause gangrene in a wound, and 37 contained Pseudomonas fluorescens, a bacteria dangerous enough that its discovery in eye-makeup remover caused the FDA to declare a recall.

      Responding to recent outbreaks, the U.S. Center for Disease Control (CDC) issued warnings and recommendations to petting zoos in May, 2001. But of the eight Florida petting zoos that Inside Edition visited, many of the CDC recommendations were not followed. For example, none informed patrons about the potential for dangerous germs on animals, and Inside Edition producers did not observe signs urging people to wash their hands after petting animals, which the CDC recommends.

      Ironically, three zoos did have signs warning that humans could infect the animals. One of the zoos had a communal washbasin, which the CDC advises against, preferring running water. And another had no washing facilities nearby. Instead, the particular petting zoo had a bathroom, without soap, fifty yards away.

      Inside Edition investigates the potential danger at petting zoos and reports on test results illustrating just how easy it is to come in contact with germs...

      Consumers File Class Action Suit Against Household

      Three alleged victims of predatory lending have filed a national class-action suit in the Circuit Court of Cook County, Ill., accusing Household International and its subsidiaries, Household Finance Corporation and Beneficial Corporation, of a wide range of fraud and misrepresentation.

      The suit accuses Household of deliberately misleading borrowers about the terms and conditions of their loans, including high rates and fees, principal amounts which exceed the actual value of their homes, and prepayment penalties that effectively trap borrowers in overpriced loans.

      Wall Street shrugged off the suit against Household, the nation's largest lender to consumers with poor credit. Analysts noted the company has taken action recently to prevent lending abuses.

      The class for the suit includes all borrowers induced to enter into secured loans to consolidate existing debt, an estimated 175,000 persons. It asks for rescission of the loans -- restoring interest paid and fees to the borrowers -- as well as for actual and punitive damages. Household made more than $45 billion worth of secured loans in the past three years.

      "Household has made a practice of making loans which hurt families and communities all across the country," said Maude Hurd, National President of ACORN, a homeowners group. "Household has stripped families of their major form of wealth - the equity in their homes - by targeting vulnerable people, deceiving them about the real costs and consequences of their loans, and trapping them in loans with high rates and high payments."

      On Feb. 6, ACORN and two victims of predatory lending filed a similar class-action suit covering borrowers only in the State of California.

      Among the borrowers named in the suit are Murelin and James Bell of Chicago. Murelin works as a teacher's aide and James is retired. Murelin received a live check in the mail from Household during a period when James went into the hospital for triple-bypass heart surgery. They needed money to pay the bills, and she cashed it. Household then consolidated this small, unsecured loan with the Bells' existing mortgage and other consumer debt into a secured loan for $98,508.43.

      In promoting the benefits of loan consolidation to the Bells, Household allegedly:

      • Told the Bells that consolidating their outstanding debts would save them money, when it would not;
      • Did not disclose that the loan included up-front finance charges of more than 7% of the loan amount, or that the APR on the new loan was 12%;
      • Did not disclose, with respect to credit life insurance sold with the loan, either the cost of the insurance or that the insurance provided protection for a limited period only (the first five years of the Bells' 20-year mortgage), and did not disclose that points were charged on the insurance and that the points would not be refunded if they cancelled the policy;
      • Did not disclose that up front points and fees and the credit insurance costs were added to the amount of the total debt secured against the Bells' home, significantly decreasing the Bells' equity in their home.

      On Jan. 10, Household agreed to pay $12 million to settle California regulators' allegations that Household deliberately overcharged tens of thousands of customers. On April 23, the 7th U.S. Circuit Court of Appeals in Chicago reversed a $25 million settlement of a class-action suit against Household and H&R; Block. The decision removed a legal shield that had protected Household and Block from allegations they illegally gouged customers by providing "refund anticipation loans" at interest rates frequently exceeding 100 percent. Household and Block could face damages of up to $2 billion in Texas alone, the appeals court said.

      Consumers File Class Action Suit Against Household...