Charities receive unclaimed millions from Cellasene class-action suit

posted on:
July 10, 2005

author:
Staff

category:
Uncategorized

Several Palm Beach County charities received a nice check recently courtesy of a Boca Raton company and its ill-fated fat buster.

Beginning in 2000, a number of lawsuits were lodged against Rexall Sundown, a Boca vitamin maker. The lawsuits were filed by customers who bought Cellasene, the highly touted Rexall product that claimed to reduce cellulite. Customers paid up to $240 for an eight-week supply of the soft-gel pills. But class-action lawsuits filed in Florida and California claimed Rexall overstated the products ability to rid women of fatty deposits on their thighs, buttocks and legs.
Without admitting wrongdoing, Rexall settled the lawsuits in 2003 for $12 million, according to Richard Greenfield, an attorney in the case. Money was paid to plaintiffs in the class-action lawsuits, to the lawyers bringing the cases and to the Federal Trade Commission as a fine, Greenfield said.

But after all that, some $3.5 million was left over, unclaimed by former Cellasene customers, Greenfield said.

As is not uncommon in these cases, the extra money was earmarked for charities.

But there was a proviso: Try as closely as possible to give the money to charities that would help women between the ages of 20 and 60, the primary group that bought Cellasene, said Greenfield, a Maryland attorney who specializes in class-action lawsuits. Greenfield, also a Palm Beach resident, led the Florida class-action lawsuit.

After the settlement was reached, Greenfield began assembling the names of charities that served women. Greenfield then urged them to file applications. They came to us and said, If money was available, what would you use it for? said Scott Badesch, president of the United Way of Palm Beach County.

After a year of sifting through 200 applications, Greenfield sent his charity choices to a Florida judge presiding over the Rexall case. His California counterpart did the same. The courts approved the allocations, and the checks began going out last month. A number of Palm Beach County charities were recipients.

Checks were issued for $200,000 to the United Way, $62,500 to 211 (The Center for Information & Crisis Services), $140,000 to The Center for Family Services, $275,000 to the The Susan G. Komen Breast Cancer Foundation, and $75,000 to the Comprehensive AIDS Program.

Yolette Bonnet of the Comprehensive AIDS Program said the money will be used for the prevention of HIV, the virus that causes AIDS. We have not been able to get dollars for this. We tend to get dollars for people already infected, Bonnet said. This money means a lot to our group.

The Center for Family Services will spend the Rexall money at its West Palm Beach homeless center, the Pat Reeves Village.

Part of the money will be used to hire a part-time employee wholl direct activities for children staying at the shelter with their families, said Jean Branneky, director of development. The idea is to give children as normal a life as possible while their families return to self-sufficiency, she said. The Rexall settlement money also will be used to renovate the homeless shelter and upgrade the shelters computers. As for the United Way, the Rexall money will be used in programs that educate people about finances and credit decisions. This is neat. We can provide an extra level of support for the community, Badesch said.

Former Cellasene customers may not have sleek thighs today, but perhaps theyll take some comfort in seeing how their pill purchases ended up.

Class actions are a way of giving back to victims of wrongdoing, Greenfield said. To the extent theres money left over that goes unclaimed, we still have an obligation to give back.

Cash infusion to help Stainsafe grow

Palm Beach Capital Partners is a private investment firm with an eye for investing in local companies led by strong managers.

During the past four years, the Palm Beach-based firm has invested in 13 South Florida businesses. Among the most recent investments is Furniture Service Industries, parent of Stainsafe, a growing Palm Beach Gardens business.

Stainsafe, a closely held family-owned business, is one of the largest home furnishings protection and service companies in the country. It sells products used to make furniture resistant to stains. Stainsafe operates a distribution facility as well as a call center at its Palm Beach Gardens site.

Palm Beach Capitals Mike Schmickle said Stainsafe counts more than 40 of the nations 100 furniture retailers as customers. But it needed an extra cash infusion to help it grow further.

So Palm Beach Capital provided an undisclosed sum that will help Stainsafe refine its existing products and explore new ones. Stainsafe now employs more than 250, a figure that could grow, Schmickle said.

Other recent investments by Palm Beach Capital include CAPRI Engineering, a Sunrise-based engineering firm, and DArcy Laboratories, a Pompano Beach maker of skin and hair-care formulas. Palm Beach Capital is keen to invest in another eight to 10 companies in the next year, but it is selective. It shies away from high-tech, high-risk companies, preferring established businesses. And there are plenty to be had locally, said Shaun McGruder, a Palm Beach Capital principal.

Were very bullish on South Florida, McGruder said. Weve not seen a shortage of opportunities.

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