Dr. Oz made reputation as a surgeon, a fortune as a salesman
By BRIAN SLODYSKO and MARC LEVY
Associated Press
HARRISBURG, Pa. (AP) — Dr. Mehmet Oz rolled onstage inside of an inflatable orb, put on a hydrating face mask and proceeded to pitch a new line of skin care products to a convention of supplement distributors at Salt Lake City’s Vivint Arena in 2018. The crowd roared in applause.
The celebrity surgeon’s appearance seemed like an extension of “The Dr. Oz Show” on daytime TV. But his attendance was in service of the convention’s host, Usana Health Sciences, a Utah-based supplement manufacturer that has been investigated by federal authorities, sued by its own shareholders and accused of operating like a pyramid scheme.
The company was also a top advertiser on Oz’s show, paying at least $50 million to be a “trusted partner and sponsor” featured in regular segments that often blurred the line between medical advice and advertising, while also donating millions of dollars more to Oz’s charity, according to records reviewed by The Associated Press.
Oz may have made his reputation as a surgeon. But he made a fortune as a salesman. Now he is trying to leverage his celebrity as the Republican nominee in a bitterly contested U.S. Senate race in Pennsylvania that could determine which party will hold power for the rest of President Joe Biden’s term.
The outcome of the race could turn on whether voters view the first-time candidate as the trusted doctor he portrayed on TV or a pitchman who repeatedly promoted products of questionable medical value.
“I like Mehmet Oz, but we did a lot of bull – – – – when I worked there,” said Dr. Gregory Katz, a cardiologist and assistant professor at the New York University’s Grossman School of Medicine.
Katz, who worked in the medical unit on Oz’s show to check segments for accuracy in 2010, said Oz was a kind boss who taught him a lot about communicating complicated medical issues with patients. While many statements Oz made were factually accurate, Katz said, the way they were assembled often got the story wrong. Katz also questioned whether viewers were healthier as a result of watching or “just wasting their money on bad supplements.”
Oz, who stopped operating on patients in 2018, also did not make clear to his audience just how closely he worked with the companies.
Oz’s campaign declined to make him available for an interview. In a statement, his campaign said the show was “very diligent about disclosing” its “paid partners,” as required by federal regulation.
“I am very proud I was able to help so many people by bringing more transparency to health and wellness,” Oz said in a statement. “We won ten Emmy’s and had the most successful health show in the world which has inspired millions to take charge of their health.”
In a statement, Usana said any suggestion of wrongdoing was “misleading, incorrect or just false” and referred a reporter to statements that the company has made in required disclosures to the Securities and Exchange Commission. The AP has reviewed those documents.
With the gloss of Oprah Winfrey’s approval, Oz was a fixture on television, hosting his show for 13 seasons. It also led to a net worth valued between $100 million and $315 million, according to a federal financial disclosure he filed this year, which gives dollar values in ranges but does not provide specific figures.
Once in the business of trying to attract viewers, Oz took most of those episodes offline after announcing his campaign last November. Those who worked on the production were required to sign a nondisclosure agreement that prohibits them from discussing the show’s arrangements with its advertisers, as well as “Dr. Oz and/or his business or private life,” according to a copy obtained by the AP.
How much Oz personally made from his agreements with Usana or other advertisers is unclear. His financial disclosure reveals he earned $9.3 million last year for his duties as host and senior producer, as well as his ownership stake in Oz Media LLC. The disclosure also states that he had paid agreements with Usana and its subsidiaries to work as a brand ambassador, which included making appearances on the company’s behalf, meeting with company officials and creating promotional content for Usana. Neither Oz nor Usana has publicly disclosed the terms of compensation.
“We cannot comment on any figures or deliverables as this would disclose items agreed upon in a confidential business environment,” Usana spokesman Dan Macuga said in a statement.
In recent years, Oz was named in lawsuits that alleged he made misleading claims on the show, which ended its run after Oz got into the Senate race. One suit was brought by a company that accused Oz of disparaging its weight loss program to boost a rival that advertised on his show. Oz’s company settled out of court.
In another suit, Oz elaborated on his approach.
“Describing the ingredient as ‘magic’ or a ‘miracle,’ was my colorful way of explaining to the audience my excitement over recent research,” Oz said in a 2020 court filing. “My use of this language is also consistent with one of the Merriam-Webster definitions of ‘magical,’ that is, something ‘extremely or extraordinarily pleasant, enjoyable or exciting.’ I had no intention to express any false or misleading statements by such descriptions.”
In at least one case, products Oz promoted have raised health concerns. Usana settled a California case in 2018 after a watchdog group discovered they contained unsafe levels of lead.
Several of the companies he has promoted, including Usana, are structured as multilevel marketing businesses whose practices have repeatedly drawn the attention of federal regulators. Such companies offer distributors a vision of wealth and independence via paid commissions on the products they sell — and on the sales of neighbors, friends and colleagues whom they also recruit to work underneath them in the enterprise.
One company, Vemma Nutrition, settled charges of violating various prohibitions on deceptive acts or practices brought by the Federal Trade Commission.
Vemma officials did not respond to repeated requests for comment made through a new company they have established.
Oz entered into an arrangement with Usana in 2012, claiming publicly to have “meticulously” screened the company, which he praised for its “tremendous integrity.”
Under the agreement, Oz showcased a different Usana product on his show each month and sold company merchandise on his website. He also regularly joined company leadership calls and agreed to make appearances at company gatherings.
The company, which is publicly traded, first drew attention from regulators in 2007 when Barry Minkow, a convicted fraudster who later worked with the FBI and the SEC to uncover financial crimes, issued a 500-page report that alleged the company was an illegal pyramid scheme.
At the time, Minkow was widely acclaimed and his research had been used to prosecute at least seven federal financial crimes cases, earning him a 2005 letter of commendation from the FBI. He later returned to crime and pleaded guilty in 2014 to an embezzlement scheme.
His 2007 report on Usana found that most of the company’s revenues came from expanding the number of independent “associates” allowed to sell their products — not from sales to actual consumers. The analysis by Minkow’s firm, which was widely reported on at the time, was based on insider accounts and the company’s own financial disclosures.
The report found that only about 1% turned a profit when startup and operations costs were factored in, while about 87% of associates lost money. Roughly 75% quit within a year.
The fallout was swift.
The SEC, which regulates financial markets, opened an investigation, though no action was ultimately taken against the company. Usana’s accounting firm abruptly quit. Several high-level Usana officials were revealed to have misrepresented their qualifications, including a doctor on the company’s medical advisory board whose medical license was suspended in Ohio and Georgia.
Suits from investors and Usana distributors followed, largely unsuccessful. Still, federal investigators continued to monitor the company.
A year after reaching a deal with Oz, Usana in 2013 disclosed another SEC investigation over trading irregularities, in which high-level officials, including founder Myron Wentz, received subpoenas, records show. No punitive action was taken by the SEC.
The Justice Department and SEC investigated the company again in 2017 for possible violations of the Foreign Corrupt Practices Act — an anti-bribery law — in connection with BabyCare, a company subsidiary operating in China.
Usana said in a 2020 filing that the case was closed without enforcement action by the department and the SEC because the company disclosed the matter, cooperated with authorities and took steps to correct its conduct.
The Justice Department and the SEC declined to comment.
In 2017, Usana entered into a settlement in California after a nonprofit group found unsafe levels of lead in 75 different products and flavors of a powdered drinks, including its “Nurtrimeal” meal replacement shake. Oz featured some of the products on his show in the summer of 2015 and held a sweepstakes contest, including one that gave away 1,000 bags of the supplement.
Usana agreed to pay $275,000 and said it would reformulate the powdered drink to contain less lead or place a warning label on products that still contained significant levels of lead that were sold in California.
Oz’s campaign said it was “common practice” for the show to screen advertisers using publicly available information. In Usana’s case, Oz traveled to their manufacturing facility to witness supplement production.
In his Senate race, Oz has taken steps to put those connections behind him. Oz’s political advisers took over his website and removed footage from the show that had been archived there, according to two former workers on the show who insisted on anonymity to discuss their experience because they signed nondisclosure agreements.
Some segments have been documented in skeptical news stories over the years.
In one in 2015, Oz advised a woman who was concerned about her past partying to try a “liver detox supplement,” adding, “I’ll show you one that I like a lot.”
He told her that Usana’s Hepasil could “reverse a lot of things that may have happened” to her liver, as first reported by the Los Angeles Times. There is little clinical evidence to support the use of these dietary supplements, according to the U.S. Department of Health and Human Services.
Another segment posted on YouTube in 2018 promoted VisionEx. Oz said the product could “renourish” the eyes and fight the loss of eyesight before turning to a Usana “scientist that I trust for this issue,” who appeared in the TV studio.
“You want healthy eyes everybody?” Oz later asked the audience, before announcing that everyone in attendance would get a free bottle of the supplement. The segment, unlike others from Oz’s show, remains available online.
During the coronavirus pandemic, Oz promoted the anti-malaria drug hydroxychloroquine as a potential treatment. The drug can cause heart rhythm abnormalities, severe liver inflammation, and kidney failure. It was also found to be ineffective treating the virus. Oz’s financial disclosure shows he held at least $630,000 of stock in two companies that offered the product, as first reported by CNBC.
Other companies whose products he promoted also have run into regulatory scrutiny.
Around 2005, Oz met Benson Boreyko, the founder of New Vision International and Vemma Nutrition, which were sued by the FTC. In between those legal entanglements, Oz promoted one of the Vemma’s products, while Boryeko served on the board of a nonprofit that Oz founded and Vemma was a donor to.
The first FTC suit in 1998 was filed several years before Oz and Boreyko met and targeted what it called unsubstantiated claims by New Vision International that its product could treat attention-deficit/hyperactivity disorder. The second, in 2015, accused Vemma Nutrition of being an illegal pyramid scheme.
The companies settled in both cases, but admitted no wrongdoing.
The FTC said the Vemma settlement resulted in the company and top officials paying refunds of $2.2 million to people who lost money.
Oz participated in various Vemma activities, including speaking at three of its annual conventions and joined marketing calls with the people who signed up to sell the products. At one convention, Vemma’s promotional material said that Oz “will educate Vemma Brand Partners about nutrition in an intimate and interactive, town-hall-style event,” according to statements made by the company.
Oz also promoted Vemma’s products in public.
He featured one of them, Verve, an energy drink, on his show, social media and elsewhere. In a 2013 episode, he included it in his health diet recommendations as one of his “favorite fatigue-fighting snacks, it’s one that gets me through the day: one handful of almonds and half a Verve energy drink.”
In Esquire magazine’s “Ask Dr. Oz” column in 2008, he promoted Vemma’s drink product line, “liquid Vemma,” as one of his two recommendations for best multivitamin for a man under 60.
Both endorsements ended up in Vemma’s promotional materials.
The relationship between Oz and Boreyko extended beyond the promotion of products on his show to a nonprofit group founded by Oz in 2003 called HealthCorps, which aimed to improve health education in schools.
Boreyko became a HealthCorps board member and Vemma was listed as a donor in HealthCorps’ annual reports from 2008 through 2013.
The nonprofit consumer watchdog, Truth in Advertising, reported Vemma gave more than $1 million to HealthCorps and that Oz, in part, endorsed Verve on his show because of Vemma’s contributions.
Usana also gave substantially to Oz’s HealthCorps, donating at least $8 million since 2012, according to tax statements and annual reports. In addition, former Usana CEO Dave Wentz, the son of the company’s founder, gave between $700,000 and $1.5 million between 2016 and 2020, records show.
Like Donald Trump before him, Oz has a public persona that is a draw for some voters, including Eileen Walker, a believer in natural remedies from the Philadelphia suburb of Warminster.
“He always had people on there to back him up, that had information on why you want to take this pill or that pill, or eat this way or not eat that way,” said Walker, 75, who added that she “absolutely” trusted his advice.
Oz’s role as a promoter follows a long line of TV pitchmen, with one important distinction.
“American television has always been about selling stuff,” said Robert Thompson, a Syracuse University professor, who pointed to the “Camel News Caravan,” an NBC program from the beginning of the television era that was dripped out in Camel advertising and urged viewers to “Sit back, light up a Camel and be an eyewitness to the happenings that made history in the last 24 hours.”
But, he added, Oz’s show is materially different because what was going on was not obvious.
“It’s overt versus covert. It was not called the ‘Usana Dr. Oz Show,’” he said. “He built your trust. You visited your physician once a year. You visited Dr. Oz daily.”
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Slodysko reported from Washington.
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