We Remember Caylee Marie Anthony

We Remember Caylee Marie Anthony
Last Photo of Caylee: 6.15.08

Monday, November 23, 2009

Casey Anthony Attorney Todd Macaluso Under California Bar Investiagation--The Back Story

Casey Anthony mysterious new addition to the defense team, Todd Macaluso, literally brings "Hollywood" Drama to case.

Following are details surrounding Todd Macaluso and his unprofessional involvement in a civil suit brought against NutraQuest, manufacturer of Xenadrine and other ehedra supplements. The civil suit was awarded, however, Macaluso and others are being investigated for unprofessional and unethical conduct towards the company during the proceedings

A San Diego Union-Tribune reporter and Todd Macaluso, one of the lawyers who won a $12.5 million class-action lawsuit against a New Jersey business, NutraQuest, are being sued for authorizing published stories that defamed the company.

Xenadrine RFA-1 is the ephedra supplement Steve Bechler's widow Kiley links to her husband's death in her $600 million federal lawsuit. The Monmouth County company that sold the diet aid, Nutraquest (formerly known as Cytodyne Technologies), filed for Chapter 11 bankruptcy protection on Oct. 16. According to the bankruptcy petition, Nutraquest had up to $50 million in estimated assets and up to $100 million in estimated debts.

At an Oct. 27 creditors meeting, however, Nutraquest general counsel Shane Freedman estimated the company sold at least $350 million and up to $600 million of Xenadrine RFA-1 between May 1997 and March 2003 - and that doesn't include sales figures for more than a half-dozen other products offered during those years, including Xenadrine EFX, a popular ephedra-free weight-loss pill.

Creditors want to know what happened to money from the sale of 20 million bottles of Xenadrine RFA-1.

Some fear Nutraquest filed for bankruptcy to duck court judgments, protect president Bob Chinery's personal assets and thwart future lawsuits. Since Bechler's death, the company has taken steps that have raised questions: It changed its name and sold its inventory and customer list to a subsidiary of the company that owns the Long Island lab it contracted to manufacture Xenadrine RFA-1 (Phoenix Laboratories of Hicksville, L.I., is also a defendant in the Bechler suit).

"This is a shell game," says David Meiselman, Kiley Bechler's attorney. "We will pursue Chinery until we satisfy any future judgment."

Freedman defends the bankruptcy filing. "Knowing the people here the way that I do, I can tell you this," he says. "You're dealing with honest, credible people who care about consumers."

The company was formed in 1997 by Chinery, who Freedman says had a "conceptual" role in the development of Xenadrine RFA-1 even though he has no formal degrees or training. Congressmen expressed concern about Chinery's lack of credentials during a hearing on ephedra in July, but Freedman calls his boss "a tremendous American success story" who rose from humble beginnings to head his own company.

Chinery learned the ropes by working for Cybergenics, his brother's supplement company, according to Freedman. Scott Chinery, who had one of the world's leading rare guitar collections and owned a Batmobile from the 1960s show, died of a heart attack in October 2000 at age 40. (In 1994, Scott Chinery and his company agreed to pay $1.45 million to settle charges by the Federal Trade Commission that it made false and unsubstantiated claims about body-building and weight-loss products.)

Meiselman and other lawyers representing plaintiffs who claim they've been damaged by Xenadrine RFA-1 say Nutraquest is an irresponsible company that failed to warn consumers that ephedra can cause serious ailments - and may even be fatal for some people.

Freedman says that while the Dietary Supplement Health and Education Act of 1994 (DSHEA) allows companies to sell ephedra and other supplements without testing them for safety and efficacy, Nutraquest conducted seven studies on Xenadrine RFA-1 and spent "tens of thousands of dollars in research.

"We've helped a lot of people lose weight and improve the quality of their lives," Freedman adds.

Nutraquest was forced to seek bankruptcy protection because of 70 lawsuits pending against the company, he says; the vast majority are product liability cases. Most of the lawsuits, he says, lack merit, and some were filed by lawyers who are nothing more than ambulance chasers.

"We're a very small company. As with other industries, we became inundated with lawsuits. We simply don't have the resources or the financial ability to continue to defend all these lawsuits across the country," Freedman says. "We felt it would be best to resolve everything in one forum."

The name change and assets transfer, according to Freedman, resulted from a long-term plan to license off some of the business to Evergood Products - Nutraquest, which at its peak only had 10 employees, couldn't handle skyrocketing sales growth.

It's too early to say how much money will be available for creditors, the Nutraquest lawyer adds. Revenues from the sale of Xenadrine RFA-1 and its other products were eaten up by legal fees, advertising and marketing, clinical testing, salaries and other operating costs, he says.

The bankruptcy filing stays all litigation, which gives Nutraquest an opportunity to reorganize and rebuild. Research is already underway on a new line of products.

Bankruptcy isn't Nutraquest's only weapon against attacks; this summer the company filed a defamation lawsuit against The New York Times for a June article that questioned the research behind Xenadrine RFA-1 and other supplements. In July, Nutraquest sued a San Diego Union-Tribune reporter and Todd Macaluso, one of the lawyers who won a $12.5 million class-action lawsuit against the New Jersey business, saying they worked together to publish stories that defamed the company.

(As this story was being researched, Freedman also threatened "immediate legal action" against the Daily News for "any irresponsible or inaccurate reports.")

"They are trying to chill the media and attorneys, but that's not going to happen," says Macaluso, who represents Ernie and Patricia Bechler, Steve Bechler's parents, and is a frequent subject of Freedman's anti-lawyer comments. "They are trying to use the First Amendment as a sword to go after critics."

Chapter 11 isn't a shield from New Jersey law-enforcement and regulatory agencies, and in July, New Jersey Attorney General Peter C. Harvey hit Nutraquest with a civil lawsuit that says the company deliberately withheld information about potentially life-threatening side effects of Xenadrine RFA-1 and Xenadrine EFX. Nutraquest denies the allegation and Freedman says it will vigorously fight the action.

"My goal is to remove ephedra-based supplements from the shelves of New Jersey," Harvey says. "I think these products are dangerous, especially for young adults."

The biggest debt listed in the bankruptcy papers, an $18 million court judgment, stems from a California class-action suit brought by Macaluso and other lawyers that claimed Nutraquest misled consumers about the safety of Xenadrine RFA-1. California judge Ronald Styn ordered Nutraquest to pay $12.5 million plus attorneys' fees and injunctive relief to California consumers.

In his May 30 ruling, Styn said the company manipulated and exaggerated research to fit marketing needs, and he had especially strong words about Chinery.

"Mr. Chinery's lack of candor can be seen throughout the trial," Styn said in his opinion. "Cytodyne has consistently failed to produce documents that could have explained things, pushed researchers to make studies come out favorable to them and paid money to key people involved in providing information to them to ensure the information was favorable to them."

Freedman calls Styn's decision "completely unsupported by testimony or evidence" and says his company has never attempted to manipulate the outcome of research on its product.

A federal judge in Utah ruled in 2000, Freedman points out, that his company's advertising and marketing claims do not misrepresent the results of published research. (U.S. District Judge Dale Kimball called Xenedrine's ad copy an exaggeration, but said that in the "freewheeling" world of supplements, overstatement is the norm.)

Nutraquest's legal problems didn't end with Styn's ruling, however. His decision was quoted extensively this summer by the very law firm that defended Nutraquest in the class-action suit. In a suit filed to recover legal fees, Mazzarella, Dunwoody and Caldarelli - Nutraquest's lawyers - echoed the claim that Nutraquest might be trying to hide assets by calling the spring reorganization "a device by which Chinery could evade his contractual obligations and debts."

The firm filed the suit as leverage in a dispute over legal bills, Freedman says; the action was dropped soon after it was filed and a settlement was reached. Lawyers at Mazzarella, Dunwoody and Caldarelli did not return calls to the Daily News, but in a Sept. 19 letter to Freedman, MDC's Dana Dunwoody wrote, "We have determined that our initial assertions were incorrect and that any claims against Mr. Freedman and Mr. Chinery are without merit and are hereby retracted."

Nutraquest's other battles won't be resolved so quietly. Kiley Bechler's attorney Meiselman says he won't allow Chinery to use the bankruptcy filing to dodge his responsibilities.

"Our intention is to go after Mr. Chinery and his assets," Meiselman says. "We will make sure he is going to have to work the rest of his life to satisfy any judgment we may get against him."

UPDATE 8.7.11:



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