A health-supplement firm could have made up to $1.2 million by overstating the amount of deer velvet in its product, a court has heard.
Invercargill-based Silberhorn (now Gateway Solutions Ltd) and sole director Ian Carline, whose products were endorsed by Sir Bob Charles and the late Sir Colin Meads, came before the Dunedin District Court yesterday after the company pleaded guilty to 26 charges of misleading conduct under the Fair Trading Act and both parties admitted failing to give investigators information. The guilty pleas came in 2017 — on the eve of an eight-week trial — but Carline, a former Act candidate, disputed some of the allegations made by the Commerce Commission.
More than a year ago, Judge Kevin Phillips heard evidence on those contested points and sentencing hearings have been repeatedly adjourned, until yesterday — four years after charges were laid.
Submissions were not completed yesterday and sentencing is expected to conclude today. Prosecutor John Dixon, QC, said the deer velvet deception was clearly deliberate in relation to 22 batches of the product from between 2011 and 2015.
That involved 11 million capsules with a retail value of $5m. The disparity in the deer velvet content stated, versus what was actually in the supplement, could have resulted in a $1.2m gain for the company.
The shortfall was made up with carob, Dixon told the court. "Doing so generated an unlawful profit," he said.
Sportsvel, as promoted by Charles, was advertised as containing 250mg of deer velvet but sometimes had as little as 180mg, the court heard.
Despite the mislabelling, Carline said the altered product was twice as effective. During last year's hearing, he gave evidence about the methods he used for testing his supplements.
The defendant said he and Meads would act as "guinea pigs". Carline told the court he varied the dosage until he gave himself nose bleeds.
"Consumers were exposed to an unscientifically tested product," Dixon said. He also outlined Carline and his company's continued attempts to "obstruct and frustrate" the Commerce Commission's investigation, by failing to provide relevant documents for the investigation.
Carline believed there was a high-level conspiracy against him.
Dixon suggested the court impose a fine on the company starting at $425,000 and on Carline about $8000, before mitigating factors were considered by Judge Phillips.
Carline will apply for a discharge without conviction, which was opposed by the prosecution.
Defence counsel Judith Ablett-Kerr, QC, said the errors her client made were not deliberate.
Silberhorn and Carline must be dealt with separately, she stressed.
The commission wants more than $15,000 costs, saying it would be a tiny portion of the total bill incurred.