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5-Hour Energy’s ‘No Crash Later’ Claim Is Disputed

Label: Health

The distributor of the top-selling energy “shot,” 5-Hour Energy, has long claimed on product labels, in promotions and in television advertisements that the concentrated caffeine drink produced “no crash later” — the type of letdown that consumers of energy drinks often feel when the beverages’ effects wear off.

But an advertising watchdog group said on Wednesday that it had told the company five years ago that the claim was unfounded and had urged it then to stop making it.

An executive of the group, the National Advertising Division, also said that 5-Hour Energy’s distributor, Living Essentials, had publicly misrepresented the organization’s position about the claim and that it planned to start a review that could lead to action against the company by the Federal Trade Commission.

“We recommended that the ‘no crash’ claim be discontinued because their own evidence showed there was a crash from the product,” said Andrea C. Levine, director the National Advertising Division. The organization, which is affiliated with the Council of Better Business Bureaus, reviews ad claims for accuracy.

The emerging dispute between Living Essentials and the National Advertising Division is unusual because the $10 billion energy drink industry is rife with questionable marketing. And Living Essentials, which recently cited the advertising group’s support in seeking to defend the “no crash” claim, may have opened the door to greater scrutiny.

Major producers like 5-Hour Energy, Red Bull, Monster Energy and Rockstar Energy all say their products contain proprietary blends of ingredients that provide a range of mental and physical benefits. But the companies have conducted few studies to show that the costly products provide anything more than a blast of caffeine, a stimulant found in beverages like coffee, tea or cola-flavored sodas.

The dispute over 5-Hour Energy’s claim also comes as regulatory review of the high-caffeine drinks is increasing. The Food and Drug Administration recently disclosed that it had received reports over the last four years citing the possible role of 5-Hour Energy in 15 deaths. The mention of a product in an F.D.A. report does not mean it caused a death or injury. Living Essentials says it knows of no problems related to its products.

The issue surrounding the company’s “no crash” claim dates to 2007, when National Advertising Division began reviewing all of 5-Hour Energy’s marketing claims. That same year, the company conducted a clinical trial of the energy shot that compared it to Red Bull and Monster Energy.

At the time, Living Essentials was already using the “No crash later” claim. An article on Wednesday in The New York Times reported that the study had shown that 24 percent of those who used 5-Hour Energy suffered a “moderately severe” crash hours after consuming it. The study reported higher crash rates for Red Bull and Monster Energy.

When asked how those findings squared with the company’s “no crash” claim, Elaine Lutz, a spokeswoman for Living Essentials, said the company had amended the claim after the 2007 review by the National Advertising Division. In doing so, it added an asterisklike mark after the claim on product labels and in promotions. The mark referred to additional labeling language stating that “no crash means no sugar crash.” Unlike Red Bull and Monster Energy, 5-Hour Energy does not contain sugar.

Ms. Lutz said that based on the modification, the advertising accuracy group “found all of our claims to be substantiated.”

However, Ms. Levine, the advertising group’s director, took sharp exception to that assertion, saying it mischaracterized the group’s decision. And a review of the reports suggested that Living Essentials had simply added language of its choosing to its label rather than doing what the group had recommended — drop the “no crash” claim altogether.

That review concluded that the company’s 2007 study had shown there was evidence to support a “qualified claim that 5-Hour Energy results in less of a crash than Red Bull and Monster” Energy. But it added the study, which showed that 5-Hour Energy users experienced caffeine-related crashes, was inadequate to support a “no crash” claim.

Ms. Levine said Living Essentials had apparently decided to use the parts of the group’s report that it liked and ignore others.

Companies “are not permitted to mischaracterize our decisions or misuse them for commercial purposes,” she said.

She said the group planned to notify Living Essentials that it was reopening its review of the “no crash later” claim. If the company fails to respond or provides an inadequate response, the National Advertising Division will probably refer the matter to the F.T.C., she said.

A Democratic lawmaker, Representative Edward Markey of Massachusetts, has asked that the agency review energy drink marketing claims.

Asked about the position of the National Advertising Division, Ms. Lutz, the 5-Hour Energy spokeswoman, stated in an e-mail that the “no sugar crash” language had been added to address the group’s concern.

Dow surges 308 points on 'fiscal cliff' deal

Label: Business

NEW YORK — Investors poured back into the stock market on the first trading day of 2013 in a rally seen as a sigh of relief that President Obama and Congress were able to avert the so-called fiscal cliff and an immediate economic downturn.

The Dow Jones industrial average surged 308.41 points, or 2.4%, to 13,412.55 on Wednesday — the best one-day rise in more than a year. Wall Street followed rallies in European and Asian equities markets after Washington's last-minute fiscal deal late Tuesday.

The broader Standard & Poor's 500 index rose 36.23 points, or 2.5%, to 1,462.42. It was the S&P's best first-trading-day jump since 2009, according to Howard Silverblatt, senior index analyst for S&P Dow Jones Indices. The technology-heavy Nasdaq composite index gained 92.75 points, or 3.1%, to 3,112.26.

Though Washington may have averted an immediate downturn, political leaders put off stalemates over broad spending cuts in military and social programs to reduce the country's long-term deficit.

"They turned off the bomb," said Sean Kelly, head of equity trading at Knight Capital Group. "There's still danger in the whole thing, but as of right now there's no immediate danger."

Another fight over whether to raise the country's debt ceiling, or borrowing limit, could also rattle markets in coming weeks.

Doug Cote, chief investment strategist with ING Investment Management U.S., said the rally was one of "false relief" not based on the country's longer-term deficit problems, which remain an unresolved threat.

"There's relief that something got passed that was better than the worst-case scenario," he said.

andrew.tangel@latimes.com

Hong Kong real estate investors pursue parking spaces

Label: World

HONG KONG — The hottest properties in this frenetic city have no walls, windows or even front doors. Forget condos, apartments and homes.

Real estate investors are scrambling for parking spaces.

Single slots are now selling for more than some modest Southern California homes. Witness the $288,000 paid in November for a parking place in a luxury apartment complex on Hong Kong Island. Or the $166,000 tab for a spot in a suburban development called Festival City. A space attached to an exclusive cliffside townhouse community in the ocean view neighborhood of Repulse Bay fetched $385,000 in March.

And those are just the recorded sales.

Jacinto Tong, head of Gale Well Group, a real estate investment firm, was offered $640,000 each for his two ground-floor parking spaces in an office building in the Wan Chai commercial district. He said he turned it down because he likes parking his Mercedes S500 on prime real estate near the elevator. The other spot is reserved for his driver.

"This market has gone crazy," Tong said. "These spaces aren't worth that much money."

Parking has long been a prized commodity in land-scarce Hong Kong. Tenants outnumber available slots by as much as 20 to 1 in some residential buildings, creating strong demand for spaces. But experts say the recent price explosion is the unintended fallout from a government effort to cool red-hot housing values.

Home prices in the former British colony have nearly doubled since early 2009, driven largely by wealthy buyers from mainland China. A typical 600-square-foot apartment now costs about $577,000, according to property broker Savills. Prices soar into the millions in parts of Hong Kong Island, the city's commercial and financial center.

Under pressure to slow housing costs, the Hong Kong government in the last year introduced curbs aimed at speculators. Starting in late October, a 15% "stamp duty" was levied on sales to non-permanent Hong Kong residents. A tax of 20% was imposed on properties resold within six months of purchase.

The result: Investors channeled their money into parking spaces, where the new rules did not apply.

Parking space transactions in November rose more than five-fold compared with a year earlier at 1,640, according to Centaline, one of the largest real estate firms in Hong Kong. The average price of each space sold was $92,307, up 20% from a year earlier.

"Hong Kong people always have to invest in something," said Shih Wing-ching, Centaline's chairman. "Not many were willing to pay the stamp duty, so they needed to find something else."

Naturally, Hong Kong banks offer mortgages for parking spaces. Small lenders are reportedly battling for customers with ever lower-interest loans.

Some investors are looking to flip for a quick profit. Others are looking for a steady source of rental income. At nearly $745 a month, the average cost of leasing a space in Hong Kong in 2011 was behind only London and Zurich, according to Colliers International.

The International Monetary Fund recently warned that soaring real estate values posed the biggest risk to Hong Kong's economy should there be a major correction.

However, unlike in the U.S. subprime fiasco, most of Hong Kong's buyers aren't highly leveraged; many deals are all cash. The local market is not subject to oversupply either. Since a market crash in 1997, the Hong Kong government has been cautious about freeing up remaining land in the largely hilly, 426-square-mile territory. As a result, Hong Kong suffers from an inadequate supply of housing, analysts say.

The lofty prices paid for parking berths are unthinkable for working-class Hong Kong residents — many of whom are finding their city painfully unaffordable. The city's wealth gap is now at a 30-year high. The credibility of the local government rests partly on its ability to shrink the divide and defuse growing animosity toward rich mainlanders.

Real estate has become a symbol of that struggle and a lightning rod for criticism. The city's leader, Leung Chun-ying, is enmeshed in a scandal over illegal additions to his mansion on Victoria Peak.

Meanwhile, a shortage of affordable housing has swollen the ranks of families living in squalid rented rooms in what are known here as subdivided apartments.

Lee Pak-shun rents a room with his mother and sister in a space barely big enough for a bunk bed and a desk in a grimy section of Mong Kok, one of the most densely populated places in the world. About 30 other people are crammed in beside them on the fifth floor of a dilapidated building. Everyone shares a single squat toilet. Rooms are divided by thin plywood.

"People go crazy living in such a small place," said Lee, a 26-year-old bakery employee, who pays $192 a month for the room — which is about half the size of a typical parking space. "It feels like the rich are getting richer and the poor poorer. Some people here have so much money to speculate in property and speculate in parking spaces. They're cooking something up every day."

Analysts say Hong Hong's parking space bubble is bound to burst. Developers have been releasing new spaces onto the market. Investors are also finding it harder to flip spaces because of rules in some property developments that restrict potential buyers to tenants only.

"I think this is a short-term phenomenon," said Shih, of Centaline. "It won't happen again."

Not everyone is convinced. Francis Liu, an economist at Hong Kong University of Science and Technology, thinks the next big investment scheme could be taxi licenses — the costs of which have been spiraling up to $900,000.

"Mainlanders like to invest in them because they're easy to buy and sell," Liu said. "It's the same concept as parking spaces."

david.pierson@latimes.com

Special correspondent Shirley Zhao in Hong Kong contributed to this report.

Thieves stole more than $1 million worth of Apple products during a New Years Eve heist

Label: Technology

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Playboy Hugh Hefner marries his 'runaway bride'

Label: Lifestyle

LOS ANGELES (AP) — Hugh Hefner's celebrating the new year as a married man once again.

The 86-year-old Playboy magazine founder exchanged vows with his "runaway bride," Crystal Harris, at a private Playboy Mansion ceremony on New Year's Eve. Harris, a 26-year-old "Playmate of the Month" in 2009, broke off a previous engagement to Hefner just before they were to be married in 2011.

Playboy said on Tuesday that the couple celebrated at a New Year's Eve party at the mansion with guests that included comic Jon Lovitz, Gene Simmons of KISS and baseball star Evan Longoria.

The bride wore a strapless gown in soft pink, Hefner a black tux. Hefner's been married twice before but lived the single life between 1959 and 1989.

Ground Zero Volunteers Face Obstacles to Compensation

Label: Health

On the day the terrorists flew into the World Trade Center, the Wu-Tang Clan canceled its meeting with a record mixer named Richard Oliver, so Mr. Oliver rushed downtown from his Hell’s Kitchen apartment to help out.

He said he spent three sleepless days at ground zero, tossing body bags. “Then I went home, ate, crashed, woke up,” he said. He had left his Dr. Martens boots on the landing outside his apartment, where he said they “had rotted away.”

“That was kind of frightening,” he continued. “I was breathing that stuff.”

After the Sept. 11 attacks, nothing symbolized the city’s rallying around like many New Yorkers who helped at ground zero for days, weeks, months, without being asked. Now Mr. Oliver, suffering from back pain and a chronic sinus infection, is among scores of volunteers who have begun filing claims for compensation from a $2.8 billion fund that Congress created in 2010.

But proving they were there and eligible for the money is turning out to be its own forbidding task.

The other large classes of people who qualify — firefighters, police officers, contractors, city workers, residents and students — have it relatively simple, since they are more likely to have official work orders, attendance records and leases to back them up. But more than a decade later, many volunteers have only the sketchiest proof that they are eligible for the fund, which is expected to make its first awards early this year. (A separate $1.5 billion treatment fund also was created.)

They are volunteers like Terry Graves, now ill with lung cancer, who kept a few business cards of people she worked with until 2007, then threw them away. Or Jaime Hazan, a former Web designer with gastric reflux, chronically inflamed sinuses and asthma, who managed to dig up a photograph of himself at ground zero — taken from behind.

Or Mr. Oliver, who has a terse two-sentence thank-you note on American Red Cross letterhead, dated 2004, which does not meet the requirement that it be witnessed or sworn.

“For some people, there’s great records,” said Noah H. Kushlefsky, whose law firm, Kreindler & Kreindler, is representing volunteers and others who expect to make claims. “But in some respects, it was a little bit of a free-for-all. Other people went down there and joined the bucket brigade, talked their way in. It’s going to be harder for those people, and we do have clients like that.”

As documentation, the fund requires volunteers to have orders, instructions or confirmation of tasks they performed, or medical records created during the time they were in what is being called the exposure zone, including the area south of Canal Street, and areas where debris was being taken.

Failing that, it will be enough to submit two sworn statements — meaning the writer swears to its truth, under penalty of perjury — from witnesses describing when the volunteers were there and what they were doing.

Proving presence at the site might actually be harder than proving the illness is related to Sept. 11, since the rules now allow a host of ailments to be covered, including 50 kinds of cancer, despite an absence of evidence linking cancer to ground zero.

A study by the New York City health department, just published in the Journal of the American Medical Association, found no clear association between cancer and Sept. 11, though the researchers noted that some cancers take many years to develop.

Unlike the original compensation fund, administered by Kenneth Feinberg, which dealt mainly with people who were killed or maimed in the attack, “This one is dealing with injuries that are very common,” said Sheila L. Birnbaum, a former mediator and personal injury defense lawyer, who is in charge of the new fund. “So it’s sort of a very hard process from the fund’s point of view to make the right call, and it requires some evidence that people were actually there.”

Asked how closely the fund would scrutinize documents like sworn statements, Ms. Birnbaum said she understood how hard it was to recreate records after a decade, and was going on the basic assumption that people would be honest.

In his career as a record mixer, Mr. Oliver, 56, has been associated with 7 platinum and 11 gold records, and 2 Grammy credits, which now line the walls of his condominium in College Point, Queens. He said he first got wind of the Sept. 11 attacks from a client, the Wu-Tang Clan. “One of the main guys called me: ‘Did you see what’s on TV? Because our meeting ain’t going to happen,’ ” he recalled.

Having taken a hazmat course after high school, he called the Red Cross and was told they needed people like him. “I left my soon-to-be-ex-wife and 1-year-old son and went down,” he said. “I came back three days later,” after surviving on his own adrenaline, Little Debbie cakes handed out to volunteers and bottled water. After working for three days setting up a morgue, he was willing to go back, he said, but “they said we have trained people now, thank you very much for your service.”