While scouting for new income sources two years ago, she received an audiotape from a lawyer friend. It touted an opportunity to make big money by selling dietary supplements manufactured by Rexall Showcase International (RSI) and by recruiting others to do the same -- a business known as multilevel, or network, marketing. RSI is a division of publicly traded Rexall Sundown Inc., a $530million company based in Boca Raton. Largely through the use of such tapes, RSI has lined up thousands of distributors around the country, about 30 percent of whom are doctors and other health care professionals. Net sales grew a sizzling 51 percent last year.
Although skeptical about network marketing at first, Leonard was impressed by the number of doctors on the tape testifying to the dramatic medical benefits of RSI products. She was also reassured by the Rexall name, which she fondly associates with the corner drugstores of her youth. Actually, that chain went bankrupt in 1985. A small suntan-lotion and vitamin firm called Sundown bought the Rexall trademark in 1989 for $2 million, changed its name to Rexall Sundown in 1993, and went public shortly after that. The remaining Rexall stores have no connection to Rexall Sundown.
But Leonard knows nothing of this history. "Since it's Rexall, it's nothing to be ashamed about," she said in a recent interview. "It's more appealing than selling Amway soap, and it's preventive health care, which fits better with my professional life."
Through RSI, Leonard offers what she considers a valuable service. Like two dozen other physicians in the tricounty area, she sells her patients vitamins, minerals, and homeopathic and herbal remedies that she claims protect vision, lower cholesterol levels, and combat coronary artery disease, allergies, asthma, and obesity. RSI encourages her and other distributors to make a profit by selling the products at 25 to 45 percent above cost, but Leonard says she adds only a "handling" charge -- for instance, $5 on a $17.50 product. She also recruits others, including patients, to distribute the products, so that she can receive a commission on their sales. "I've got three people distributing under me now, including one doctor, and it's becoming very lucrative," she said.
Flip Lechner is one of the patients whom Leonard recently convinced to try RSI products, though she declined the offer to sign up as a distributor. Although the 72-year-old Pembroke Pines retiree was surprised when her doctor offered to sell her dietary supplements, it didn't bother her. "She's done several operations on me, and I have a lot of faith in her," the chatty Long Island native, who suffered a heart attack last year, said during an interview a few weeks ago. "I don't think she's making money on this. Dr.Leonard isn't like that."
At a cost of $123 a month, Lechner started using three products in June -- for her partially blocked heart arteries, diabetes, and cholesterol level -- and says she experienced great results in the first ten days. "I've been taking a lot of vitamins and herbs for at least 50 years now, and I've never felt like this before," she gushed. "It's like I laid down on the ground, my body opened up, and out came a new person."
But the American Medical Association (AMA) worries that moneymaking pursuits like Leonard's could destroy the faith that Lechner and other patients have in their doctors. Last month the Chicago-based medical group voted in favor of imposing strict ethical guidelines on doctors who choose to sell dietary supplements and other health-related products to their patients.
"Doctors shouldn't sell Rexall products if they are not available in the stores," says Rakatansky, chairman of the AMA ethics council that drafted the policy, which he interprets as prohibiting doctors' involvement in network marketing. "It's taking advantage of a vulnerable population," he explains. "As a patient you have a right to expect your doctor to do what's best for you, not what's best for the doctor. There are lines one shouldn't cross in medicine, and this is one."
But a breach in doctor-patient relations is not the only line that Rexall Showcase and its distributors appear to have crossed. Amazing is the word one Federal Trade Commission (FTC) official used in describing RSI's promotional claims about the curative powers of its products, claims that may violate FTC rules against misleading advertising. And many RSI distributors admit that they primarily focus on recruiting other distributors, not selling products to retail customers -- an indicator of a fraudulent pyramid scheme. Officials at the FTC and the Florida Attorney General's Office said these practices may prompt investigations by their agencies.