In connection with his promotional activities he has had a felony conviction and has been an unsuccessful defendant in several Federal Trade Commission (FTC) lawsuits. Trudeau has been charged several times by agencies of the United States government for making claims without evidence. In these cases Trudeau signed a consent decree in which he did not plead guilty but did agree to stop making the claims and to pay a fine. Trudeau subsequently began to sell books, which are protected by the First Amendment. His change of
modus operandi has been explained thus:
- "Certainly pitchman Kevin Trudeau learned this lesson years ago. After serving a 2-year federal prison sentence for credit card fraud he changed course. He's since made far more money stealing from the gullible using phony self-help programs and books than he ever did as a common forger... Kevin learned a valuable lesson: outright stealing — doing things like forging checks and stealing credit card numbers might get you locked up — but dressing up a pyramid scheme to look like a legitimate business will probably only get you sued."
Trudeau was convicted of fraud and larceny in the early 1990s. The FTC has sued him repeatedly and keeps an extensive record of its conflicts with him. A court order currently restricts his ability to promote and sell any product or service; however, he is permitted to promote books and other publications due to free-speech protection under the First Amendment as long as they are not used to promote or sell products or services and do not contain misrepresentations. On November 19, 2007, a court found Trudeau in contempt of that court order for making what they consider deceptive claims about his book
The Weight Loss Cure "They" Don't Want You to Know About. In August 2008, he was fined more than $5 million and banned from infomercials for three years for continuing to make fraudulent claims pertaining to the book. The amount of the monetary damages was later increased to $37 million.
1990-1991: Larceny and credit card fraud
In 1990, Trudeau posed as a doctor in order to deposit $80,000 in false checks, and in 1991 he pleaded guilty to larceny. Trudeau had used the credit cards of eleven customers of a mega memory product to fraudulently charge approximately $122,735.68. He spent two years in federal prison because of this conviction
(Choi, 2005). Later, in his book
Natural Cures, Trudeau claimed that he has since learned from his experience, and is now motivated to help people rather than merely make money for himself.
1996: SEC and various states
Trudeau began working for Nutrition For Life, a multi-level marketing program, in the mid-1990s. In 1996, his recruitment practices were cited by the states of Illinois and Michigan, as well as the U.S. Securities and Exchange Commission. Illinois sued Trudeau and Jules Leib, his partner, accusing them of operating an illegal pyramid scheme. They settled with Illinois and seven other states for $185,000 after agreeing to change their tactics. Michigan forbade him from operating in the state. A class action lawsuit was filed by stockholders of Nutrition for Life for violations of Texas law, including misrepresenting and/or omitting material information about Nutrition for Life International, Inc.'s business. In August 1997, the company paid $2 million in cash to common stockholders and holders of warrants during the class period to settle the case. The company also paid the plaintiffs' attorney fees of $600,000.
1998: FTC fine
In 1998, Trudeau was fined $500,000, the funds to be used for consumer redress by the FTC, relating to six infomercials he had produced and in which the FTC determined he had made false or misleading claims. These infomercials included "Hair Farming," "Mega Memory System," "Addiction Breaking System," "Action Reading," "Eden's Secret," and "Mega Reading." The products included a "hair farming system" that was supposed to "finally end baldness in the human race," and "a breakthrough that in 60 seconds can eliminate" addictions, discovered when a certain "Dr. Callahan" was "studying quantum physics."
2004: FTC contempt of court and injunction
In June 2003, the FTC filed a complaint in the U.S. District Court for the Northern District of Illinois against Trudeau and some of his companies (Shop America (USA), LLC; Shop America Marketing Group, LLC; and Trustar Global Media, Limited), alleging that disease-related claims for Coral Calcium Supreme were false and unsubstantiated. In July 2003, Trudeau entered into a stipulated preliminary injunction that prohibited him from continuing to make the challenged claims for Coral Calcium Supreme and Biotape.
In the summer of 2004, the court found Trudeau in contempt of court for violating the preliminary injunction, because he had sent out a direct mail piece and produced an infomercial making prohibited claims. The court ordered Trudeau to cease all marketing for coral calcium products.
In September 2004, Trudeau agreed to pay $2 million ($500,000 in cash plus transfer of residential property located in Ojai, California, and a luxury vehicle) to settle charges that he falsely claimed that a coral calcium product can cure cancer and other serious diseases and that a purported analgesic called Biotape can permanently cure or relieve severe pain. He also agreed to a lifetime ban on promoting products using infomercials, but excluded restrictions to promote his books via infomercials. Trudeau was the only person ever banned by the FTC from selling a product via television. Lydia Parnes, speaking for the FTC's Bureau of Consumer Protection stated "This ban is meant to shut down an infomercial empire that has misled American consumers for years." Trudeau claimed the government was trying to discredit his book because he was "exposing them."
2005: Trudeau v. FTC
On February 28, 2005, Trudeau filed a complaint against the FTC in the U.S. District Court for the District of Columbia seeking declaratory and injunctive relief. Trudeau also filed a motion for preliminary injunction, which the court denied.
The complaint charged that the FTC had retaliated against him for his criticism of the agency by issuing a press release that falsely characterized and intentionally and deliberately misrepresented the 2004 Final Order. That conduct, Trudeau asserted, exceeded the FTC's authority under 15 U.S.C. § 46(f) and violated the First Amendment. The FTC responded with a motion to dismiss the complaint for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), and for failure to state a claim for which relief can be granted under Rule 12(b)(6).
The district court granted the FTC's motion to dismiss. First, the court concluded that it lacked subject-matter jurisdiction because the press release was not "a 'final agency action'" under “section 704 of the [Administrative Procedure Act]”, 5 U.S.C. § 704. Second, the court held, "in the alternative, that Trudeau’s claims failed to state a viable cause of action as a matter of law."
Trudeau later filed an appeal which was unsuccessful in reversing the court's ruling.
2005: Trudeau v. New York Consumer Protection Board
Trudeau filed a lawsuit on August 11, 2005, accusing the New York State Consumer Protection Board of violating his First Amendment rights by contacting television stations in New York state and urging them to pull Trudeau's infomercials promoting his book
Natural Cures "They" Don't Want You to Know About. Trudeau won a temporary restraining order on September 6, 2005 prohibiting the Board from sending letters to the television stations. The temporary restraining order was replaced by a preliminary injunction. However, Trudeau lost a motion to have the Board send a "corrective letter" to the television stations and subsequently dropped all claims for monetary damages. The case is still in litigation.
2007: FTC contempt of court action
The FTC filed a contempt of court action against Trudeau and the companies that market
The Weight Loss Cure 'They' Don't Want You to Know About, alleging that Trudeau was in contempt of a 2004 court order by "deceptively claiming in his infomercials that the book being advertised establishes a weight-loss protocol that is 'easy' to follow." The action was filed in the U.S. District Court for the Northern District of Illinois on September 17, 2007. According to an FTC press release, Trudeau has claimed that the weight loss plan outlined in the book is easy, can be done at home, and readers can eat anything they want. When consumers buy the book, they find it describes a complex plan that requires intense dieting, daily injections of a prescribed drug that is not easily obtainable, and lifelong dietary restrictions.
On November 19, 2007, Trudeau was found in contempt of the 2004 court order for "patently false" claims in his weight loss book. U.S. District Court Judge Robert W. Gettleman ruled that Trudeau "clearly misrepresents in his advertisements the difficulty of the diet described in his book, and by doing so, he has misled thousands of consumers."On August 7, 2008, Gettleman issued an order that Trudeau was not to appear in infomercials for any product in which he has any interest, for three years from the date of the order; and was to pay a penalty of $5,173,000, an estimate of the royalties received from the weight loss book.On November 4, 2008, Gettleman amended the judgment to $37,616,161, the amount consumers paid in response to the deceptive infomercials. The court denied Trudeau's request to reconsider or stay this ruling on December 11 of the same year.
Trudeau appealed the ruling to the United States Court of Appeals for the Seventh Circuit which upheld the contempt finding, but sent the case back to the lower court to explain the basis of the $37,616,161 damage finding and the three-year infomercial ban.
2010: Arrest on criminal contempt of court charge
On February 11, 2010, Trudeau was arrested and appeared in U.S. District Court before Gettleman for criminal contempt of court after he "asked his supporters to email the federal judge overseeing a pending civil case brought against him by the Federal Trade Commission." He was forced to turn over his passport, pay a $50,000 bond and was warned he could face future prison time for interfering with the direct process of the court. On February 17, Gettleman sentenced Trudeau to 30 days in jail and forfeiture of the $50,000 bond. Well-known critic of Trudeau, Stephen Barrett, the creator of Quackwatch.org, "has for years labeled Trudeau a fraud" and was quoted: "He struck me as somebody who (believes he) is omnipotent. That is, no one can touch him," Barrett said. "That’s almost been the case." Trudeau appealed the ruling and on May 20 the Seventh Circuit Court of Appeals granted his motion, dismissing the contempt citation.