A Carmel man who built a business around Mini Thin dietary supplements has agreed to pay $1 million in his company’s bankruptcy case.
The money, or what remains after attorneys take their fees, will go to creditors of Body Dynamics Inc., the company Richard A. Deer started in 1981.
Mini Thins were popular as a legal upper until the U.S. Food and Drug Administration banned the product’s main ingredient, ephedra, in 2004. Before the ban, Body Dynamics, which did business as BDI Marketing, sold its products in 80,000 retail outlets.
Body Dynamics filed for Chapter 7 bankruptcy protection in 2009. Revenue had plummeted from $11 million in 2007 to $2.2 million, according to the company’s filing.
The company also faced three lawsuits, originating in different parts of the country, from people who said they’d suffered a stroke or other health problems after taking Mini Thins. Those plaintiffs have tried to file claims in the bankruptcy case, but the judge has not yet ruled on whether they’ll go forward.
Body Dynamics listed $33,000 in assets and $1.3 million in liabilities, but bankruptcy Trustee William Tucker suspected there was more to be recovered on behalf of creditors.
Tucker filed a lawsuit last January, alleging that Deer and company insiders used Body Dynamics’ assets to continue selling dietary supplements through a similar business, DBI Distributions, and to grow a startup company, Candy Dynamics.
Both DBI and Candy Dynamics operated out of the same headquarters at 9700 N. Michigan Road. They shared the same president, Karen Windle-Burcham, who is no longer with the company.
Tucker alleged that Body Dynamics transferred virtually all its assets—more than $730,000—to Deer shortly before the bankruptcy filing. He also alleged that the company loaned Candy Dynamics $2 million to $3.5 million in the form of cash, rent, expense payments and employees’ time, and that Deer had directed Body Dynamics to write off the loans.
According to a 2008 financial statement, Body Dynamics was the main financier of Candy Dynamics’ parent company, Circle City Marketing and Distribution.
“Without revenue from BDI’s main product to provide the needed cash for its operations as well as Circle City’s growth, both companies are at risk,” the statement said.
Tucker and Deer reached a settlement last fall, and it was filed with the court in December. It’s unclear at this point how the money will be distributed.
Tucker’s special counsel, Rubin Levin PC, has asked the court to approve payment of its $400,000 contingency fee, plus $7,592 in expenses.
In addition, forensic accounting firm Fouts & Co. LLC has requested payment of about $60,000, in fees and expenses.
Rubin Levin attorney John Rogers did not return a call seeking comment.
One of Body Dynamics’ local creditors is law firm Krieg DeVault, which was owed more than $300,000 for work on one of the personal-injury cases.
“We’re hoping to get some dividend from the bankruptcy estate, but I don’t think there’s much left,” said Max Hittle, a Krieg DeVault partner.
Body Dynamics’ attorney, David Jurkiewicz at Bose McKinney & Evans, did not return a phone call seeking comment. He has filed motions to prevent the personal-injury plaintiffs from filing claims in the bankruptcy case.
Meanwhile, Candy Dynamics, which sells super-sour “Toxic Waste” candy worldwide, is still in business, Deer said. Candy Dynamics has 13 local employees and 35 product brokers, he said.
The company no longer makes its “Nuclear Sludge” products, which were the subject of a recall for lead contamination in 2010, but Deer said the latest product, Smog Balls, was recognized as best new candy last year by a candy manufacturers association.
Lead, which in high doses can kill a small child, or cause neurological problems, was discovered in a California inspection in 2010.
Deer blasted the California lead standard, which he said is stricter than the world standard, and serves for “lawyers to shake down everybody.”
He said Candy Dynamics’ product was “just a hair” over the California standard of 1 part per million.
“It was nothing,” he said. “They analyzed one piece of candy.”
Candy Dynamics’ Nuclear Sludge chew bars originated in Pakistan. Deer said he continues to use a Pakistan supplier, but there’s no danger of contamination.
“There’s three checks before it gets to us,” he said.•