Saturday, March 29, 2008

Insider Exclusive Features Kimkins Scandal

The Insider Exclusive TV show with host Steve Murphy has aired a 30-minute feature episode exposing the Kimkins diet scandal. This news program is the longest and arguably the best coverage of this diet scam so far. This in-depth report features clips from the excellent surveillance work of private investigator Robert Charlton, as well as previously aired clips from the KTLA news reports with Chip Yost, Fox TV's The Morning Show with Mike and Juliet, and ABC's Good Morning America. This exclusive report also features interviews with lead attorney and health fraud expert John Tiedt, co-counsel and class action expert Michael Cohen, cardiologist Dr. Americo Simonini of Cedars-Sinai Medical Center, and former Kimkins member Terry Lind, who articulately related her own negative experiences with Kimkins.

Highlights include John Tiedt explaining that having a defendant's assets frozen via Writ of Attachment in a proposed class action suit prior to certification is virtually unprecedented, simply never done. Yet due to the unusual circumstances of this case, the writ to freeze Heidi Diaz' assets was granted. (In fact, the writ was granted by one judge and even upheld by another judge.)

Michael Cohen stated that certification of class action status is expected soon, and that in addition to the return of class members' fees, the suit will be seeking injunctive relief, which, if granted, means that the site will be shut down.

John Tiedt also reported that evidence in this case has been turned over to the FTC, the District Attorney, and the Attorney General, and criminal prosecution in the near future is a very real possibility.

Click the Insider Exclusive image to watch the full report in another window:





A shorter version (the first 10 minutes or so) is also available through YouTube:


Things are not going well for Ms. Diaz of Kimkins, and they do not look to get any better any time soon.

Thursday, March 13, 2008

An Obvious Comment

So much more can and will be said about Heidi "The Kimmer" Diaz's prodigious use of falsehood as a "creative outlet".

For now, let's just take one recent example, from the new blog of former Kimkins member amyb.

In early November, while discussing with SingingLass some possible success stories to showcase on the upcoming Kimkins scam exposure on the Mike and Juliet Show, Heidi Diaz said of Amy:
Kimmer wrote:

Hmmm, unsure on AmyB since I’m not sure she’s an actual Kimkins supporter. She has some medical concens that may not help our case.

Amy was soon banned, and she asked to be reinstated shortly thereafter. In a response message (a saved copy of which the attorney will have, along with many similar documents)Heidi Diaz told her:

Original Message —–
From Kimmer

To answer your question, you are banned.
I am done dealing with the issues on the group. I will let you back in group but you will follow what I say.
No more talk about your hair. You have hair so stop talking about it. IT can not be falling out that much.
I do not want any talk about your Dr telling you to add foods back in. That will just make you gain weight . NO talk of vitamins .No medical issues at all.
You do not mention Jimmy Moore on my site. You need to reconsider a lunch meeting. I am very upset that you would consider this after the UTube video he made making fun of Kimkins. Just do not meet him.
Enough of the fake niceness. No one can be that nice. You pop in and out with fake nice post. Stop it. It seems you do this to make me mad.
I gave you a membership, use it wisely. Or Else.

So here it seems that Heidi Diaz was fully aware that Amy B was reporting health complications from Kimkins. Yet, instead of being concerned, Heidi was annoyed and angry. The owner of Kimkins not only failed to acknowledge the harm caused by the diet, she chose to squash all truth to the contrary, completely forbid all discussion of the matter, and even countermanded the advice of Amy's doctor.

(Your doctor says you are suffering from starvation and malnutrition and need more healthy food? No way! "That will just make you gain weight.")

For that matter, the original admins brought up health concerns being reported by some members back in late July- very early August 2007. Her response at that time, paraphrased, was something like It isn't happening, and if it is, it's not Kimkin's fault, and even if it is, they can't prove it, and even if they do, I'm too smart for them and they won't get my money.

Yet, even after all the very public discussion of health issues on the Kimkins forums and elsewhere, with copies of posts and PMs and emails to prove it, STILL, on January 23, Heidi Diaz swore under oath upon penalty of perjury that she
" . . . never received any complaints of injury from anyone who tried the Kimkins diet. She never reviewed complaints such as irregular heartbeat, hair loss or failure to have menstrual cycles. To her memory, she states that she never received an email concerning a single complaint or injury. She did not collect any adverse event reports."

As Little Red Riding Hood might say,
Why, Heidi, what very big CREATIVITY you have!

THE DEPOSITION OF HEIDI DIAZ, PART TWO, concluded

DECLARATION OF HEIDI DIAZ FILED WITH MOTION TO SET ASIDE WRIT OF ATTACHMENT

Before signing her declaration, she did not determine whether or not her bank accounts were attached. In paragraph 3 of her declaration, which was attached to the deposition as Exhibit 69, she explained that she had severe family hardship, which means that she could not buy the things she needed to conduct household repairs, purchase earthquake insurance and make car payments. She said her son was sleeping on the floor. However, she admitted that her son was an adult who never had a job and is the only family member currently living at her home. She testified that Brandon Diaz had a broken bed when she moved into the Calhoun home and that despite the fact that she had $1 million in the bank, she did not order a new bed for her son, as it “didn’t occur to her.” Even though she had $1 million in the bank when she purchased the home, she did not purchase earthquake insurance.

She also complained that the writ of attachment interfered with her ability to earn a living because she could not issue refunds to her members and she could not use traditional vendors. However, during the course of her deposition, she cannot confirm a single person who had been terminated as a result of the writ of attachment. She also complained that she did not have medical insurance. She could not apply to Medicare because she makes too much money. Her SSDI benefits were terminated two months prior to part two of her deposition which was taken on January 23, 2008.


FINAL COMMENTS

We have sent out an initial set of written discovery in preparation for our motion for certification. The defendant’s responses were unsatisfactory, and therefore we will send additional discovery and seek further responses. It is our expectation that we will have a Motion for Certification on file within the next 30 days. We will soon be taking the deposition of Delaney Deaver and other former administrators of Kimkins.com.

The District Attorney’s office in San Diego will be reviewing the non-confidential documents of this file. A decision by the California Attorney General’s office concerning criminal prosecution is purportedly pending.



Very truly yours

TIEDT & HURD
John E. Tiedt

THE DEPOSITION OF HEIDI DIAZ, PART TWO, continued

She also admitted to lying about representations that she made to members that she had to borrow to buy out her former partner. She also admitted to using the name Brad Johnson with regard to Kimkins.com business. She said that Brad Johnson is actually her little brother that died. She provided the following explanation as to why she uses false names.
Q. “Don't you foresee that by using other people's names, you're giving the false impression that your company is staffed with a number of people rather than just you?”

A. I -- I don't see it that way. I understand what you're saying, but I don't see it that way.”

Q. “When you use false names, aren't you giving the impression that the company is much bigger than it really is, as far as staff?

A. I see it as a creative outlet. I get tired of seeing my own name.

Q. You don't see that as dishonest or deceptive?

A. No.” 2


She contends she never received any complaints of injury from anyone who tried the Kimkins diet. She never reviewed complaints such as irregular heartbeat, hair loss or failure to have menstrual cycles. To her memory, she states that she never received an email concerning a single complaint or injury. She did not collect any adverse event reports.


2 California Penal Code Section 529 states: Every person who falsely personates another in either his private or official capacity, and in such assumed character either: 1. Becomes bail or surety for any party in any proceeding whatever, before any court or officer authorized to take such bail or surety; 2. Verifies, publishes, acknowledges, or proves, in the name of another person, any written instrument, with intent that the same may be recorded, delivered, or used as true; or, 3. Does any other act whereby, if done by the person falsely personated, he might, in any event, become liable to any suit or prosecution, or to pay any sum of money, or to incur any charge, forfeiture, or penalty, or whereby any benefit might accrue to the party personating, or to any other person; is punishable by a fine not exceeding ten thousand dollars ($10,000), or by imprisonment in the state prison, or in a county jail not exceeding one year, or by both such fine and imprisonment.

THE DEPOSITION OF HEIDI DIAZ, PART TWO

[Note: The second deposition of Heidi Diaz was taken on January 23, 2008.]

SUMMARY OF THE DEPOSITION OF HEIDI DIAZ, PART TWO


Assets and Income of Heidi Diaz

Heidi Diaz stated that her sole source of income in 2007 was income generated from Kimkins.com, benefits from SDI, alimony, and income from foster care. Although she announced that Halcyon Web, LLC was the new owner in October 2007, she claimed at the time of her deposition that Halcyon did not have any cash. She claimed that her Kimkins business did not have any assets other than its computers. She claimed that Halcyon Web LLC does not own other websites. She does own a number of domain names related to Kimkins.com. She owns no other corporation, limited liability company, or interest in any partnership. Other than her corporate assets, she merely has her house and her car. She never checked to see if her assets were actually attached prior to her deposition. She does not keep track of her money and does not balance her checkbook. Since her PayPal account was frozen, she did open a CCBill account. She now accepts checks. She said that she had her Medicare benefits terminated and cannot afford medical insurance at this time. She filed a tax return in 2006, but did not pay federal taxes.

Heidi Diaz did produce financial records, which were marked as confidential and cannot be discussed in this document at this time.


Additional Acts of Fraud and Asset Concealment

Heidi Diaz was shown additional screenshots of individuals who were featured on the Kimkins.com website as success stories. She admitted that she took pictures of various women on the internet and placed said picture on the Kimkins.com website along with text on how these women purportedly lost weight as a result of the Kimkins diet. Models who were provided names such as Destiny, Raquel, Jasmine, Gretchen, and Petr were not users of the Kimkins diet and their photos had been misappropriated from other websites.

She also admitted to passing a rumor that Jessica Alba was using the Kimkins diet and she knew that was a false statement. She admitted that repeating the rumor that Jessica Alba originally used the Kimkins diet to lose weight was deceptive.

She admitted making certain false statements to administrators and members of Kimkins.com. As an example, Exhibit 57 falsely revealed that Kimmer and Heidi Diaz were best friends since high school. She also stated that in October of 2007, Kimkins.com did not have any money despite the fact that the company had $1 million in assets in the bank. Also in Exhibit 57, she misrepresented the fact that she had partners.

In an email response regarding this case, Kimmer made the following statement: “before I left, I thought I would share with you my thinking. I won’t know for sure until Monday until I talk to an attorney, but if worse comes to worse, we can close Kimkins.com and a lawyer can fight over the carcass. He probably thinks it is a large company.”

In connection with the email marked as Exhibit 57, she admitted to implying to Jeannie Baitinger that the company did not have any money despite the fact that the company had $1 million in liquid assets. In the same email, she stated that the database would be moved to a new domain name, “www.???.com and move the forums, members and everything there.”

She was aware that Jeannie Baitinger, Delaney Deaver, and Christin Sherburne were going to be on the Mike and Juliet Show on Fox TV on November 12, 2007.
Q: “Did you view this particular program as an opportunity to get new members for Kimkins?”
A: “No. actually, I thought it would have the opposite effect.”

Exhibit 65 is an email from Heidi Diaz to Jeannie Baitinger and Delaney Deaver dated November 9, 2007 that discussed the Mike and Juliet Show. Ms. Diaz said in the email: “I expect we will get many new members from the TV exposure,“...”Shhh, the lawyer is sniffing around for money $$$”

Heidi admitted that she wasn’t lying to Ms Baitinger and Ms. Deaver, but was actually giving a motivational speech in an email for their benefit. Finally, she admitted she was not telling the truth.

THE DEPOSITION OF HEIDI DIAZ, PART ONE, concluded

How Did Heidi Diaz Profit From her Deception?

Heidi Diaz testified that her gross income for Kimkins.com for 2006 was approximately $50,000. Her best estimate of income earned by Kimkins.com from January through November 2007 was $1.5 million. She claimed $878,000 in profit, and from that, she purchased a home for cash in the amount of $444,000. She also stated that she paid $700,000 in taxes to the federal government and $100,000 to the State of California for the Franchise Tax payment. She claims Clexus New Media, the computer programmer/web designer, received approximately $400,000.00 in income.

She planned to pay refunds through an account at Bank of America, which totaled approximately $38,000.00. She claimed that the total members who subscribed to Kimkins.com as of November 12, 2007 ranged between 37,000 and 40,000. She claimed affiliates were paid a total of $55,000.00. Up until the date of her first deposition, all payments to Kimkins.com were made by PayPal.


Were the Representations Made By Heidi Diaz On November 12, 2007 on the Kimkins Website Truthful?

Heidi Diaz admitted that she did not lose 198 pounds in 11 months, but claimed to lose 100 pounds in six months. However, when pressed on this issue, she admitted that she had no photographic evidence of said weight loss. She never used her own website to record the alleged weight loss. She made no written record of the weight loss referenced in her website. She also claimed that there are no witnesses that will testify to her alleged weight loss. Incidentally, the deposition of Brandon Diaz revealed that he did not witness his mother losing 100 pounds at any time. She last weighed herself on November 11 and at that time she weighed 294 pounds. She claimed to have lost 23 pounds in the last two weeks as of November 12, 2008.

Why Did Heidi Diaz Block Members?


She claimed that certain members were blocked from access to chat with other members because they were “troublemakers”. Troublemakers could retain access to the full website, diet, and food list, but were restricted from the community areas. She claims that the term troublemaker was defined by each administrator. Accordingly, administrators were given the power to block member’s access to the community areas. There were no written parameters for blocking members or any oral instructions by Heidi Diaz. She admitted to using moles on the website, which she defines as “somebody who operates quietly to go through the website to make sure everything is operating.”

THE DEPOSITION OF HEIDI DIAZ, PART ONE, continued

Asset Concealment

Heidi Diaz had a plan to conceal and dissipate her assets when she found out that a class action lawsuit was contemplated by the members of Kimkins.com. 1

On the date of the original writ of attachment hearing, October 16, 2007, Heidi Diaz had $878,252.79 in a mutual fund. A copy of the T. Rowe Price mutual fund account statement is attached to the deposition transcript of Heidi Diaz as Exhibit 39. On October 18, 2007, Heidi Diaz directed T. Rowe Price to close the account and send her a check for $878,252.79, which she placed in her Bank of America account. Heidi Diaz was then served with a deposition notice for November 4, 2007, but pursuant to her request, her deposition was rescheduled for November 12, 2007.

On Friday, November 9, 2007, the last business day before the deposition of Heidi Diaz, Heidi Diaz contacted an accountant referred to her by her lawyer. The accountant, Rahul Shaw, had not reviewed any of the financial documents of Heidi Diaz or of Kimkins.com. Nevertheless, Heidi Diaz stated that the accountant who had never examined or evaluated any financial document advised her to unilaterally write a check to the U.S. Treasury Department in the amount $700,000.

Heidi Diaz also testified at her deposition that on the afternoon of November 9, 2007, this same accountant advised her to write a check to the California Franchise Tax Board, without having reviewed a single document. Accordingly, on the afternoon of November 9, 2007, Ms. Diaz wrote check number 1501 to the U.S. Treasury for $700,000, and check number 1502 to the Franchise Tax Board for $100,000.

Heidi Diaz bragged on the internet about her efforts to conceal and dissipate assets. She prepared for the class action lawsuit and anticipated collection efforts. On August 14, 2007, Heidi Diaz and Kimkins.com member and administrator Christin Sherburne engaged in an internet conversation concerning anticipated lawsuits. Allegations of fraud and misleading advertising had been made and Heidi Diaz made the following, unsolicited statement to Mrs. Sherburne:
Heidi Diaz: Christin, have time for Law 101?

Christin: Sure

Heidi Diaz: In a nutshell, there can be no class action lawsuit or any lawsuit. ... If you had a bad car accident -- broken arm, concussion but hit a poor person with no insurance you COULD NOT get a lawyer. There is no ‘recovery’. There is no money to receive. It’s the same with Kimkins. There is no $$$. They don’t even have jurisdiction. No lawyer would touch it. do they even know who “kimmer” is. well, in a real class action suit the company is ordered to pay legal costs. but who will pay?... Anyhow, bottom line for today’s law lesson: No recovery, no lawyer.... You have to make allegations. They must be substantiated. Backed up with doctor’s reports, etc., not just that (1) prove their health before Kimkins; (2) prove that “but for” doing Kimkins there would not have been damages; (3) must have damages; (be hurt) all that takes $$$. they have to hire a doctor, get tests, deposition of doctors & whoever they can find at kimkins ;)”


Also on August 14, 2007 Ms. Diaz informed Mrs. Sherburne that “technically you can get a judgment and sue a person in court, but so what? How would you get your $$? can’t.” However, the exchange ends with an ominous statement by Heidi Diaz regarding possible future litigation. Heidi Diaz told Mrs. Sherburne, “If anything ever happened and you were involved, I am here for you $$$.”

Another attempt to evade collection was a statement publicly made by Heidi Diaz that she was no longer the owner of Kimkins.com. She now admits under oath that her statement was false. On October 4, 2007, Heidi Diaz told members that the Kimkins website was under new ownership. She claimed that she would not be the owner but would merely serve as an advisor. At her deposition, she stated that representation was false. A true and correct copy of the announcement prepared by Heidi Diaz revealing the change of ownership is attached to the deposition of Heidi Diaz as Exhibit 48.

Heidi Diaz admitted under oath to further testimony confirming her plan to dissipate assets. She admitted to making the following statement as “Kimmer” to one of her administrators:
“Unfortunately for this brilliant attorney, he is going to be disappointed to find that there is no pot of gold for recovery in the suit. Heidi collects the revenue, but does not keep it. You can imagine him telling the judge that wants to certify a class action against a housewife? Hehehe.”

Heidi Diaz has also recently formed other companies and a trust. For example, she recently paid a paralegal to form a family trust in which she intends to place assets. However, the family trust is misleading as it uses the name “Beauchamp” instead of Diaz. She formed a company known as Halcyon Web, LLC on September 24, 2007 with the specific intent of transferring all of the Kimkins assets to that company. She has also paid a paralegal to form a company known as Sharp Plumbing, LLC. She stated the company was for her son. However, upon examination she admitted that her son is not a licensed contractor and the address for the plumbing company is merely a P.O. Box. It is the same P.O. Box of Kimkins.com. She admitted that there is no physical business for Sharp Plumbing, but that company is on the internet.


1 California Penal Code Section 531 states: Every person who is a party to any fraudulent conveyance of any lands, tenements, or hereditaments, goods or chattels, or any right or interest issuing out of the same, or to any bond, suit, judgment, or execution, contract or conveyance, had, made, or contrived with intent to deceive and defraud others, or to defeat, hinder, or delay creditors or others of their just debts, damages, or demands; or who, being a party as aforesaid, at any time wittingly and willingly puts in, uses, avows, maintains, justifies, or defends the same, or any of them, as true, and done, had, or made in good faith, or upon good consideration, or aliens, assigns, or sells any of the lands, tenements, hereditaments, goods, chattels, or other things before mentioned, to him or them conveyed as aforesaid, or any part thereof, is guilty of a misdemeanor.

THE DEPOSITION OF HEIDI DIAZ, PART ONE

SUMMARY OF THE DEPOSITION OF HEIDI DIAZ, PART ONE

Who is Heidi Diaz?

Heidi Diaz has been known by the following names: Kimmer, Jennifer Dancer, Brad Curtis, Kimberely Stewart, and Kimberely Drake. She also testified that she was known on the Kimkins.com website as Vanessa, an affiliate manager. She had used the email Vanessa2lucky@yahoo.com. She also used Brandon Diaz name without his permission to receive an affiliate payment. She registered Brandon Diaz as the owner of the Kimkins website without his permission. She then switched the name of the owner to Renee Drake who was the mother of Ms. Diaz. Ms. Drake died in 1970. She has also used her niece’s name, Vanessa Romero.

How did Heidi Diaz Deceive Kimkins.com Members?


Heidi Diaz admitted that she has used false testimonials to promote the Kimkins.com website. Exhibit 2 to her deposition transcript revealed a picture of the alleged founder of Kimkins.com. This picture is the well-known photograph of the Russian woman in a red dress. She admitted that the woman featured in Exhibit 2 as Kimmer is not Heidi Diaz. It is a picture that she obtained from the internet. The text adjacent to the photograph was also false. “Kimmer” did not lose 198 pounds in 11 months as promoted on the website. She also admitted that the woman featured in the picture did not receive a graduate degree in public administration and was not a volunteer court appointed special advocate for abused children.

Exhibit 3 featured another screenshot from the Kimkins.com website that contained the image of the infamous woman in the red dress that was identified as Kimmer. Again, she claimed that the adjacent text was partially false and that the photo of Kimmer was in fact the same photo that she obtained off the internet. On that same page, she admitted that the featured story of Bambi, who purportedly lost 122 pounds was in fact false. She did claim that a company known as Clexus New Media employed an individual known by the name of Aliyar Firat. Mr. Firat reportedly supplied Heidi Diaz with a picture of the woman in the red dress. Mr. Firat stated that he would rather use an actual photo of Heidi Diaz, but Ms. Diaz purportedly did not want to reveal her identity.

Exhibit 4 is another screenshot from the Kimkins.com website. She admitted that the “before” picture was actually Heidi Diaz taken years before the start of Kimkins.com website. She again confirmed that the “after” photo was not her and was a picture she had taken from the internet. The text provided in Exhibit 4 was also false in that she had not gone from 318 pounds to 118 pounds in 11 months.

Exhibit 5 contained four photographs. The first photograph on the top was actually Heidi Diaz, but the subsequent photographs, used in various advertisements for Kimkins.com and designated as Kimmer, were in fact models. She had taken said photographs from other internet sites to be used on Kimkins.com.

She claimed the sole reason for not disclosing her identity prior to November 12, 2007 was to preserve her privacy. However, she admitted that at the time she made the subject misrepresentations, she did not feel her customers, who signed up for lifetime memberships, were entitled to the truth about her personal weight loss success with the Kimkins diet. In retrospect, she did put her privacy rights over that of her customer’s rights to know the truth about the weight loss results of the Kimkins diet.

She also admitted that she used numerous pictures of women from other websites and put these pictures adjacent to fictionalized Kimkins weight loss success stories. She admits that the women featured in the photos marked in Exhibit 50 were not in fact members of the Kimkins.com website and were not on the Kimkins Diet. She stated that the adjacent texts were false, but were predicated on success stories from the Low Carb Friends website that predated the Kimkins.com site. However, she has absolutely no documentation of any of the alleged success stories that were used as a basis for the fraudulent testimonials that were attached as Exhibit 50. Further, she has no witnesses to back up her explanation.

She admits that she knew that potential Kimkins.com customers would rely on her false representations. As a consequence, she claimed that she had offered a full refund for those people who relied on her past misrepresentations.

Official Update on Kimkins Case from John Tiedt

[Note: I haven't blogged in a while, but when John Tiedt sent this and asked us to help get it out where potential class members might see it, I was happy to post it here. If I can learn how to post the PDF link here, I will, but for now this is the best I can do. This is a 44 page document in total, 9 pages of summary of Heidi Diaz' two depositions, plus the referenced exhibits, so I will be posting it in segments. I do not want to try to condense it or explain it, because it is best left as John Tiedt wrote it. So, stay tuned for much more.]

March 13, 2008

VIA EMAIL
To Plaintiff Class Representatives and Potential Class Members

Re: Fenderson, et al. v. Diaz, et al.

Dear Friends:

We have been quite busy with the discovery process and several law and motion issues. The purpose of this letter is to bring you up to date. We were granted authority by the court to take an early deposition of Heidi Diaz concerning limited issues relating to documents, witnesses, and assets. The first deposition was conducted on November 12, 2007 at my office in Riverside, California. The second deposition was taken on January 23, 2008. Some of the testimony and documents produced at the second deposition are subject to a protective order and cannot be revealed to the public at this time. However, it is my intent to file a motion to make certain documents public. At this time, we have no set trial date. A Case Management Conference is set for July 15, 2008. Defendant Heidi Diaz filed a Demurrer to the First Amended Complaint for Damages. A demurrer is a tactic used by defendants to challenge the validity of the complaint. We have already prepared our opposition to the demurrer and we are confident that it will be overruled by the presiding judge. The hearing on the demurrer is scheduled for April 28, 2008. On March 21, 2008, the Court will hear the defendant’s motion to set aside the writ of attachment order. As you may recall, on November 16, 2007, the court entered an order to issue a writ of attachment on certain assets held by Heidi Diaz. Accordingly, the court effectively “froze” certain assets held by Heidi Diaz, such as her home and PayPal account. Our opposition to defendant’s motion to set aside the writ of attachment was filed under seal because it contained confidential information. However, I can reveal that it is our contention that the defendants do not have statutory authority to have the court reconsider its original order to issue a writ of attachment.