LOS ANGELES (CN) - An ad agency claims in court that it was fleeced for more than $5 million by the companies behind a "male enhancement" nutritional supplement.
Inter/Media Time Buying and its affiliate Interquantum sued Biotab Nutriceuticals and more than a dozen other defendants in Superior Court.
Inter/Media claims Biotab ran a "multi-year" scheme in which it made "strategic payments" to avoid defaulting on its contracts, while Inter/Media advanced large sums to buy the defendant advertising.
Inter/Media says it was hired by defendants Robert Winter Jr. and his company Dish Direct to promote the product Extenze in 2003.
The so-called natural supplement is "controversial" in the words of the complaint, and was the subject of two class actions alleging deceptive marketing in 2009.
Inter/Media says those class actions, which were settled for $12 million, caused Dish Direct to file for bankruptcy while it owed Inter/Media roughly $2.25 million.
"Between 2003 and 2010, defendants repeatedly failed and refused to timely pay the amounts owed to plaintiff Inter/Media, and sent plaintiff Inter/Media millions of dollars in bad checks that were rejected by defendants' bank," the 71-page lawsuit states.
"In order to perpetuate their fraud and induce plaintiff Inter/Media to continue advancing larger and larger sums on behalf of defendants, notwithstanding their repeated defaults, defendants made strategic payments, at the eleventh hour, of just enough money to ensure the plaintiff Inter/Media continued providing services. Then, in furtherance of their fraudulent scheme, with a multi-million outstanding balance owed to plaintiff Inter/Media, defendants placed the primary obligor [Dish Direct] in bankruptcy and began conducting the identical operations through a different, successor company, defendant Biotab Nutraceuticals, Inc. ('Defendant Biotab'). This was all part of defendants' well orchestrated shell game."
In 2010, Inter/Media then entered into a new contract with Biotab after Biotab assured the ad agency that it had "turned over a new leaf," would honor its commitments and repay the outstanding debt, according to the complaint.
But Inter/Media claims that Biotab did not change its ways, but extracted "advertising services and monetary advances" without paying for them in full.
"Defendants were simply stringing plaintiff Inter/Media along, while their debt continued to grow, always intending to walk away when its served defendants' interests to do so," the complaint states.
The ad agency calls Biotab and its affiliates the "masters of debt avoidance" and claims they have left "countless creditors in their wake."
Inter/Media says that this year, after ordering $750,000 in advertising, the defendants "unilaterally and impermissibly" kicked the ad agency to the curb.
"Defendants attempted to support their wrongful termination, and concomitant refusal to pay any sums due and owing to plaintiff Inter/Media, through an indecipherable panoply of nonsensical, pretextual and illegitimate excuses that do not withstand even minimal scrutiny (packaged in a 28-page tome that defies all notions of logic, reason or legal precept)," the complaint says.
According to Inter/Media, Biotab then moved on to the ad agency's affiliate Interquantum and ran a scheme with "remarkable similarities" to the one it had run against the Inter/Media.
Direct Dish subsidiaries E-Vita Labs, Maximizer Health Products, Bio Beverage, Biotab "alter ego" Global Product Management, and Biotab directors Tamara Gibson, Robert Winter, Sr. are also named as defendants.
Also named are Siemens Financial Services, the Milstein, Adelman & Kreger law firm, and Crown Credit Co.
The plaintiffs seek roughly $5.4 million in damages for breach of contract, fraud, and other charges.
They are represented by Patricia Glaser with Glaser Weil Fink Jacobs Howard Avchen & Shapiro.
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