“You learn as you go, and you make some mistakes,” he says of the company he and four friends and relatives started in his basement in 2001. “We started out like rookies. We weren’t Harvard MBAs. We outgrew our systems almost every six months. We had some growth issues.”
A warning: In Warshak’s world, these kinds of boner-related double entendres seem to pop up all the time. But this one holds a particular irony. Growth—or at least the promise of it—made Warshak a very wealthy man.
His background was in marketing, not physiology. Raised in the suburbs of Cincinnati by a factory worker and a stay-at-home mom, he was an unexceptional student in high school and then at Ohio University—but he was great at selling. His first company sold ads displayed at hockey rinks. But Warshak had grander visions. In 1999 he noticed that every men’s magazine was selling potency in some form or another, so he turned his attention to herbal supplements. “It was never a passion of mine to make sexual-health products,” Warshak says. “If the marketplace had wanted pencils, we would have sold pencils.”
Enzyte wasn’t Warshak’s first supplement, but it quickly became his best seller. He invested heavily in advertising, commissioning the Smilin’ Bob campaign and buying airtime on channels like CNN and ESPN. By 2004, Berkeley had annual revenues of more than $200 million, at least half of it from Enzyte. That was also the year that the FBI, the FDA, the Postal Inspection Service, and the IRS teamed up to investigate the company that had prompted thousands of complaints to the Better Business Bureau. Soon a grand jury would name Warshak, four of his colleagues, and Warshak’s 75-year-old mother, Harriet, in an eighty-four-page indictment that alleged petty theft on a vast scale. (Warshak was charged with 112 counts of mail fraud, bank fraud, credit card fraud, money laundering, and obstruction of justice.) Several unindicted co-conspirators—among them Warshak’s sister and her husband—would eventually cooperate with the government in hopes of receiving lesser sentences.
Warshak opted not to testify in his own defense. Most days during the trial he sat impassively, his blithely handsome face betraying neither remorse nor anger nor fear, even as prosecutors painted him as a con artist who preyed on people’s insecurities. But during my nearly four hours at Federal Correctional Institution Gilmer, a cluster of gray cinder-block buildings on a treeless plot three hours south of Pittsburgh, Warshak proves expansive. He tells me how Berkeley quickly grew from a start-up to a complex operation that employed 1,400 people in round-the-clock shifts, and how the number of calls from prospective customers jumped from 26,000 in 2001 to 7.8 million in 2004. He will acknowledge that, amid this avalanche of interest, the company was overwhelmed at times. But he will insist that he is not guilty of a single crime.
“I get it: We’re all tired of poor customer service. But I’m the only one spending my life in prison over it,” he says, alleging that an overzealous government has repeatedly twisted his words and actions. In flusher times, Warshak told anyone who asked that he was building the Pfizer of the supplements industry—classy and credible, with fifteen products ranging from vision care to heart health.
As Warshak talks, his two defining characteristics emerge: earnestness and extremely porous logic. He can’t be guilty of fraud, he says. Why? Because he didn’t believe he was doing anything wrong. Enzyte must have been a good product, he asserts. The proof: It was hugely popular. “The products were definitely effective,” he says, citing the government’s lack of proof to the contrary. “Enzyte was a brand that millions bought and rebought. It was quality.”
The prosecution didn’t do much to debunk these obvious syllogisms, drilling down on Warshak’s business practices, not on his products’ efficacy. “It’s not illegal to sell snake oil if people are willing to buy it,” says Special Agent John Maser, the lead FBI investigator on the case. Adds assistant U.S. attorney Karl Kadon, one of the prosecutors: “We focused on the activity that is criminal: the way they sold it.”
*****
THE RUMOURS ARE TRUE! Ladies love a man with confidence. Regain Your Confidence TODAY! read one of Warshak’s Web sites, which boasted that Enzyte users enjoyed improved length and girth, roundness, and expanded tissue mass. At about $1.50 apiece, the pills—a compound of herbs, minerals, and vitamins—were cheaper than Viagra (especially if you bought two months’ worth and got one FREE!).
If Steve did NOT disclose the auto ship then how did 1 MILLION customers cancel during the free trial period? Yes Steve got greedy and let his fast growth turn to arrogance, if he was outgrowing his systems every six months then he needed to slow down the TV ads and play catch up something very few business people want to do, he should have freely issued refunds and been kind to his customers. the proof of penis growth and attempting to re sell current clients the same product under false pretense is flat wrong! however the 25 years is legally and clearly way too long of a sentence.