UPDATE: SensaSlim, the ACCC and Dr Ken Harvey

UPDATE: Subsequent to the ACCC freezing SensaSlim’s Australian bank account (see story below), Dr Ken Harvey reports that SensaSlim’s lawyers (Kennedys) have withdrawn from the case, and an external administrator was appointed to take over the company on June 30, 2011. A revised statement of claim from SensaSlim in the defamation case against Harvey was not submitted by the final date allowed by the court (July 1, 2011) and Harvey says his lawyers will now apply to have the case finally struck out (and costs awarded) at the next sitting of the defamation list judge on July 11, 2011.

“The case has highlighted some fundamental flaws in Australian regulation concerning complementary medicines and the promotion of therapeutic goods,” Harvey says, “which have been the subject of many submissions to recent government enquiries. Hopefully, some reforms will emerge.”

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EARLIER STORY FOLLOWS:

The Federal Court in Sydney has today (June 23, 2011) granted the Australian Competition and Consumers Commission’s application to extend a freeze over ‘weight loss’ company SensaSlim’s bank account. SensaSlim’s cross-application for release of part of the funds was refused.

The ACCC made its first move last week, without prior notice to SensaSlim, when the company’s account contained $282,000. To achieve that ‘ex parte’ freeze, the ACCC had to prove that there was a strong indication of illegal conduct by SensaSlim.

Today, Counsel for the ACCC informed the Court that its ongoing investigations were raising increasingly serious doubts about SensaSlim’s research. It appeared that the Geneva-based ‘Institute’ that had supposedly conducted the original study was fictitious. Its website included photos of supposed staff, whose identities had in fact been “stolen” to create the semblance of a genuine entity. It appeared that SensaSlim had practised a detailed, calculated fraud and had extracted some $6 million in fees for ‘area managerships’.

Some of these ‘managers’ went to the ACCC. One has given evidence of speaking with SensaSlim’s Mr O’Brien, whose voice was said to sound similar to veteran weight-loss fraudster Peter Foster.

Mr O’Brien was not in Court. Nor did SensaSlim have a solicitor, which would be normal on such occasions. Its lone barrister explained that Mr O’Brien was overseas and that SensaSlim had lacked the resources to serve any formal evidence in response to the allegations put last week. There was only a letter from SensaSlim’s solicitors. It quoted Mr O’Brien as denying being Foster, but stated that SensaSlim had “purchased advertising material and other documents relating to the product known as SLIMist” with which Foster had been involved.

SensaSlim’s account stays frozen until August 31. If the company has real evidence of bills it should pay, then it can approach the Court with a fresh application. The ACCC is continuing its investigations.

– Martin Hadley, Australian Skeptics’ legal advisor