AdvoCare Wins $14.3 Million Federal Verdict in

Breach of Contract, Fraud Case

DALLAS – A federal jury in Dallas has awarded a verdict worth more that $14.3 million to Carrollton, Texas-based AdvoCare International L.P. following a two-week trial against a former company consultant and a manufacturer that produced weight-loss products for AdvoCare.

AdvoCare was represented by attorney Daniel Sheehan of Dallas’ Daniel Sheehan & Associates in the trial before Judge Barefoot Sanders in the U.S. District Court for the Northern District of Texas.

During trial, jurors learned about Richard Scheckenbach, a nutritionist and former AdvoCare consultant who was responsible for formulating products to be sold by the company. As a consultant, he agreed not to receive payment from suppliers or manufacturers in connection with AdvoCare products he developed.

However, evidence in the case showed that Mr. Scheckenbach orchestrated a scheme in which he created companies to sell the raw materials needed to make AdvoCare’s products. He then sold these materials at inflated prices to AdvoCare’s manufacturer, California-based Horizon Laboratories Inc.

The jury found that Mr. Scheckenbach committed fraud and breached his fiduciary duty to AdvoCare. He was ordered to pay $9 million in actual damages and $2 million in exemplary damages.

“AdvoCare trusted Mr. Scheckenbach, both with the products he developed and in the way he handled his business,” says Mr. Sheehan, lead counsel for AdvoCare. “It is a shame he betrayed that trust and used his close relationship with the company for his personal gain.”

Additionally, the jury found that Horizon Laboratories breached its contract with AdvoCare by failing to maintain products liability insurance for the ephedra-based products it manufactured for the company. AdvoCare has been named in 11 ephedra-related lawsuits. The jury awarded AdvoCare damages of almost $3.4 million from Horizon Laboratories to cover its costs from the ephedra litigation.

The eight-woman and three-man jury returned their verdict on Feb. 15, 2006. The verdict is still awaiting entry into judgment by Judge Sanders.

Daniel Sheehan & Associates specializes in business litigation and legal malpractice cases. Mr. Sheehan is board certified in civil trial law, and handles trials and appeals in state and federal courts, including the Supreme Court of Texas and the U.S. Supreme Court.

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