Carlsbad-based Seasilver USA shuts down

By: PATRICK WRIGHT - Staff Writer | Wednesday, January 3, 2007 8:37 PM PST ∞

Carlsbad -- Seasilver USA, a Carlsbad maker and promoter of "health" drinks and dietary supplements, closed its doors for good last week because the founder said he was tired of fighting the Federal Trade Commission.

In June, a federal judge upheld an FTC judgment requiring the company to pay a $120 million penalty for failing to provide $3 million to the agency to refund customers who bought the products. The FTC said that the products were sold using false and misleading claims.

The commission even has a phone number -- (866) 217-3487 -- just for Seasilver customers who qualify for a product refund. Seasilver is appealing the order, according to a company official.

Bela Berkes, company founder, said Tuesday that he shut down Seasilver USA on Friday because FTC actions were causing distributors to stop selling Seasilver.

"The FTC just beat us up so much that we lost a lot of sales and can't keep the doors open," he said. "It's time for us to move on."

The June 2006 ruling was based on FTC and Food and Drug Administration actions against Seasilver that began in June 2003. In a June 12, 2003, complaint filed in Nevada, the two federal agencies said that Seasilver USA, Americaloe and the owners of the two companies, Bela and his son, Jason Berkes, misled customers into believing that Seasilver was clinically proven to treat or cure 650 diseases, including certain cancers and AIDS.

Jason Berkes was the president, chief executive officer and owner of Seasilver as well as president and owner of Americaloe. Seasilver is a liquid dietary supplement containing aloe vera, cranberry concentrate, herbs and other ingredients. It was sold through network marketing and had five manufacturing plants in Carlsbad.

Although located in Carlsbad, Seasilver USA was incorporated in Nevada. At its peak, Bela Berkes said that before the 2003 complaint, the company had 700,000 customers and distributors and had monthly sales as high as $20 million.

On March 4, 2004, the companies and Berkeses agreed to pay $3 million in restitution, destroy mislabeled product, and stop making misleading claims about Seasilver to settle the FTC's complaint. It would allow Seasilver USA and Americaloe to continue to sell Seasilver, but without the false and misleading claims. The agreement stated that if the parties failed to pay the $3 million in six months without proving financial hardship, they would have to pay $120 million in consumer refunds.

When the parties failed to pay the $3 million or prove financial hardship by February 2006, the FTC went back to court and got the June 2006 judgment ordering the companies and owners to pay the full $120 million.

Jan Charter, an attorney for the FTC in San Francisco, said in a telephone interview that the parties had more than enough time to pay the initial $3 million.

"We gave them over a year to come up with this money," she said. "We have a $120 million judgment, and we are serious about trying to collect it."

Founder Bela Berkes' decision means that Seasilver stops production completely, although he is appealing the judgment. Some products are still available from distributor inventories. Although the company didn't pay the full $3 million, FTC attorney Charter said it did pay about $800,000, which the agency is using for refunds.

Charter said that Berkeses might get some relief from the judgment if Seasilver USA declares bankruptcy. Bela Berkes said that he hadn't considered it, but would look into it.

In the meantime, Bela Berkes said that he would find a new job. US Farms, a publicly traded company in San Diego with a farm in Valley Center, said Jason Berkes is an aloe-growing consultant for the company. In a recent company news release, Jason Berkes is listed as president of American Nursery Exchange Inc., a subsidiary of US Farms.

Bela Berkes hopes to finish his business with the FTC soon. "I'm just trying to clean this mess up," he said.

-- Contact staff writer Patrick Wright at (760) 739-6675 or pwright@nctimes.com.

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Pre-Registration Comments[-]Go to Top

curious wrote on Jan 4, 2007 12:19 PM:does anyone know how many people will lose their jobs because of this?

AnotherScam wrote on Jan 4, 2007 2:22 PM:When will people learn that most of the stuff sold through network marketing is quackery? Having studied this industry for more than twenty years, I can tell you that if more people knew the facts behind these schemes, they'd run for the hills. But, the lure of "money-for-nothing" is too strong, and folks like this CEO and his son laugh all the way to the bank.

Another sucker wrote on Jan 4, 2007 3:41 PM:Well you know what I think? Its all in your head...someone tells you that its going to do this certain thing for you it will. The mind is a very powerful thing. Like Via Viente...ever heard of it? Well I got suckered into that one. and Sea Silver my brother

curious is clueless wrote on Jan 4, 2007 7:25 PM:sorry but by your comment you certainly qualify as one of those many people that may have joined a fine company like SeaSilver USA by being "naivE"...or as the mineral water company likes to spin it "Evian".

do your homework wrote on Jan 4, 2007 8:46 PM:how many people asked for a refund versus how much the ftc fined seasilver and the other parties named in the judgement? if it is not more than the ftc collected should seasilver and the other parties get a refund?

Ernie wrote on Jan 5, 2007 1:56 AM:The company itself did not make the unsubstantiated health claims - it was distributors, who the corporation failed to control. This is network marketing's biggest problem: overzealous distributors. Seasilver USA provided an excellent product, containing beneficial ingredients people don't usually get in their diet or from other supplements. The FDA made no claim against the product itself, other than slurring it by calling it 'snake oil' in their press releases. It is no more a scam to sell whole-food supplements that people want than it is to sell Big Macs that people want. This is America! The only thing Seasilver did wrong was to fail to control distributors early on. When the FTC went after them, they corrected the problem and that should have been the end of it.

saddened wrote on Jan 11, 2007 7:55 PM:I agree with Ernie. My husband will be p#$%#$ when I tell him..and my kids will probably cry! Seasilver is a high quality supplement that really assisted him when he worked 3rd shift in casinos. We are not 'dumb bunnies' as some of other commentators above think. It was a good product and the company changed and did everything the FTC wanted...and more..except pay the 3 Mil.. i would help pay that myself if I could! My condolences to the excellent Seasilver staff in San Diego area!

jackie wrote on Jan 12, 2007 4:15 PM:FOR THAT PERSON IS TALKING ABOUT "When will people learn that most of the stuff sold through network marketing is quackery?" TALK FOR YOURSELF HAVE HAD GREAT RESULT AND HAVE KNOWN MANY MORE...IF YOU HAD BAD EXPIRIENCE THAT BUSINESS WAS DEFENETLY NOT FOR YOU, NET MARKETING IS THE BEST BUSINESS IN THE WORLD ,AND I BELIEVED VERY SORRY THAT Seasilver USA IS CLOSING THERE DOORS, "SUCCESSFUL PEOPLE KEEP MOVING.THEY MAKE MISTAKES,BUT THEY DON'T QUIT." I LET ME REPEAT THERE NO BETTHER BUSINESS LIKE NET MARKETING YES THERE ARE SOME PRODUCTS ARE BETTER THEN OTHERS BUT SO! THERE MANY MORE THAT ARE NOT IN NET MARKETING AND ARE SOLE BY DRUG STORES AND STORES IN GENERAL O YE!!! WE DON'T HEAR ABOUT DOES.OK

Brenda wrote on Jan 20, 2007 7:02 PM:I have taken Seasilver for years and my husband who is a Chiropractor recommends it highly. Seasilver is the best nutritional product I have ever used. You would think that the FDA would go after the drug companies that are manufacturing all of these drugs that are killing the people that are taking them rather than going after a company that makes a product that is nutritionally good for you.

Skeptic wrote on Jan 21, 2007 8:13 AM:Ernie said "The company itself did not make the unsubstantiated health claims - it was distributors, who the corporation failed to control." Well who made up the label they had to destroy? If I sell you popcorn and say how naturally benificial it is and has proven ingredients to aid in the resistance to cancer (has fiber, right?) and then I hire people with dubious credentials to sway your opinion (mislead you?) to by my product for a highly inflated price, does that mean my popcorn has no nutritional value at all. No. It means I found a way to sell $0.30 worth of popcorn for $30.00 by trickery. If I also own the company that grows the popping corn, so much the better. Why didn't they pay $3 million to avoid the $120 million? Go here and get more info: http://www.quackwatch.org/01QuackeryRelatedTopics/DSH/seasilver.html

Ernie wrote on Jan 25, 2007 12:39 AM:It's too bad people choose sides so quickly. Seasilver was required to change the label so that it followed FDA nutritional facts disclosures. The product label did not make unsubstantiated health claims, it just didn't follow labeling requirements. The fines were divided among three parties - two top distributors and the company. My understanding is that all parties paid their fines, which totaled $3 million. Finally, Stephen Barrett and his quackwatch site have been criticized and discredited for their opposition to widely accepted complementary medicine - even opposing chiropractic! I don't think I'd put much stock in anything he says. The fact is that the government should go after companies that do what Skeptic gave in his popcorn example. But Seasilver did nothing of the sort.

Jackie L Reinick wrote on Jan 25, 2007 8:43 AM:Our govenment missed it big time...this really was an excellent product...with all the misleading info on supermarket foods, the nutitional support I, my family and many friends will be hard put to replace...not to mention triple financially.

Ernie wrote on Jan 25, 2007 3:50 PM:Seasilver is still available through a company that bought all their inventory - Sea Aloe. They also bought the rights to the formula and will likely go into production this Summer. I don't know if this company will maintain Seasilver's high standards, but you should be able to get a year's worth of original Seasilver product through them.

Karl wrote on Jan 27, 2008 2:54 PM:I tried Seasilver twice in 2003. It did none of the things it said it would EXCEPT...that I started to get leg cramps from a calcium deficiency. If it had "nature's perfect balance" I would not have had to start taking calcium. There are undoubtedly plant products out there that are nutritional powerhouses but there are no silver bullets to cure us of everything.

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