According to the November 5, 2007, Herbalife (NYSE:HLF) response to the Fraud Discovery Institute (FDI) report, the company states: “We have confidence in our direct-selling business model, our integrity and transparency as a NYSE-listed company and the fundamentals of our business.”

Asks FDI’s Barry Minkow, “Have Herbalife forgotten the imputed credibility of being on the New York Stock Exchange lost its value when another, well-known NYSE company failed – specifically, Enron? There was not one word about the 24-page expert analysis of the Herbalife that challenges the very core and foundation of its business fundamentals and business model.

Multi-level marketing company Herbalife has denied the allegations made in Barry Minkow’s report about their fraud in China with this press release:

We have confidence in our direct-selling business model, our integrity and transparency as a NYSE-listed company and the fundamentals of our business. With regard to our business in the People’s Republic of China, the Chinese government thoroughly reviewed our company, our global operating model and our specific operating plan in China as part of the licensing process. We received our first direct-selling license in China in March 2007 and subsequently received an expanded license in July 2007, which further validated the legitimacy of our operating plan in China. We believe our China marketing plan is compliant with all applicable laws, as are our marketing plans and business practices worldwide.

I started blogging for AllBusiness.com at the end of September. My blog is called Business Fraud Focus. I am one of many bloggers on AllBusiness writing about issues that affect business owners and executives. The articles range from topics to help entrepreneurs start a business, to timely business issues in the news. My blog is a mix of fraud-related business items, from creating a fraud investigation policy to news stories like the Dell Computers internal investigation.

My blog is being featured on the feature box of the AllBusiness home page all week, with the below graphic. And it’s the first time that a single blog has been included in the front page feature!

Google Search:

herbalife fraud

Answer:

Apparently so. See here and here. And come back to this blog frequently, because I will have regular updates that will be easily found with this link.

A falling stock price is good! Allegations of fraud are good! Why? “When these business models are doubted, returns tend to be the greatest.” That’s a quote from an analyst. Fraud in China by Herbalife (NYSE:HLF) apparently equals “doubt about the business model” to him.

Here are his statements as reported by the Associated Press:

Goldman Sachs analyst Simeon Gutman said in a note to investors that “reputation challenges” are common for all multi-level operators and that the stock may become even more attractive, given Monday’s price drop.

“When these business models are doubted, returns tend to be the greatest,” he said. “Given our confidence in Herbalife’s business model along with its strong fundamentals, we believe that such an opportunity has emerged.”

Gutman also said the report concerns only the company’s China business, which makes up only 10 percent of overall sales.

He said any weakness should be at least partly offset by a “very forceful” response from management discrediting the allegations, strong third quarter results and a positive outlook for the fourth quarter and fiscal 2008.

The Fraud Discovery Institute (FDI) has just released a report corroborated by video and audio evidence indicating that Herbalife LTD (NYSE:HLF), a multi level marketing company based in Los Angeles, California, has been operating an underground multi level marketing business in China where they are only licensed to “direct sell” products. The investigation also demonstrates that the problem of recruitment in China extends to Herbalife distributor down lines in countries outside of China which taints company earnings.

“China, after much research, concluded in November of 2005 that multi level marketing would be banned in the country,” said Barry Minkow, founder of the Fraud Discovery Institute. “However, as one Herbalife employee in China stated during a taped, in-person meeting, ‘No company will make money if they perform business in accordance with the Chinese laws.’ No truer statement has ever been uttered,” said FDI’s Barry Minkow.

Multi-level marketing company Herbalife (NYSE:HLF) is the target of the most recent investigation done by Barry Minkow and Fraud Discovery Institute. A new website, Doomed By Design has been developed, and a written report has been released. A short video clip is included, and a full documentary will be released later this year.

Herbalife is the world’s largest multi-level marketing (MLM) company. Barry Minkow and team found that the company is illegally doing business in China. Chinese laws prohibit multi-level marketing businesses from existing in China, and do not even permit their products in the country.

Over on my consumer awareness site, Pink Truth, I have put together a few articles about Primerica Financial Services.

Like Mary Kay, Usana, and Mannatech, Primerica is a multi-level marketing company (MLM). The big difference, however, is that these other companies have a tangible product for sale, and many of the abuses come from loading participants with inventory they won’t ever be able to sell.

Primerica sells insurance (mostly life insurance), mutual funds, mortgages, and debt consolidation services. It appears that “debt consolidation” is the cash cow for the company, and it’s questionable whether consumers are really better off with the Primerica products than without. (i.e. The representatives are incentivized to push these products, even if it may actually cost the consumer more money!)

Primerica is a subsidiary of Citigroup, so many think this gives them instant credibility. Not for me. All it means is that Citigroup executives figured out how lucrative MLM is for the owners of the scam.

Here’s where Primerica enters the territory of being a scam:

• Overpriced products pushed to low- and middle-income people who probably have little to no experience with these financial services. They won’t realize the products are overpriced.
• Most of the sales are made by unlicensed representatives, meaning they aren’t well-trained about the things they’re selling.
• The representatives are generally paid lower commissions than at other companies. This is because Primerica is paying up to six levels of people about the salesperson. This is a hallmark of multi-level marketing. The seller gets a small payday so that many in the upline can get paid too.

You can find more information about Primerica on Pink Truth.

Let’s all join in now, shall we? Here ya go, Sheboygan Police Department.

Sheboygan officials must not be able to come up with any better ways to waste taxpayer money. In lieu of better ideas, they’re trying to get people to stop posting links to the police department. And no, I’m not kidding.

The Sheboygan Press gives the details of the story, which include:

A Sheboygan woman who runs a Web site often critical of Mayor Juan Perez has been ordered by the city to remove a Sheboygan Police Department link on her unrelated business site, a demand a legal expert says the city has no right to make.

In a move initiated by Perez, City Attorney Steve McLean sent a cease-and-desist letter earlier this month to Jeni Reisinger, who was among the leaders of a mayoral recall effort last year, officials acknowledged Friday.

The letter, dated Oct. 19, states, “maintenance of this link could be construed as having been authorized or endorsed by the city and/or its police department” and should be removed “until such time as the city were to authorize such a link.”

Madison attorney Bob Dreps said the law is clear that neither Reisinger nor anyone else needs permission to link to the police Web site.

What a joke.

And if you feel the need to contact anyone in Sheboygan about this, here’s a list of links to help you out:

City Of Sheboygan website

Mayor Juan Perez Mayor@ci.sheboygan.wi.us (920) 459-3317

City Attorney Stephen McLean SMclean@ci.sheboygan.wi.us (920) 459-3917

Sheboygan Alderperson List

We love a happy ending. Sam has written in with the good news that Amex was able to get a full refund from Best Buy after they sold him a box of bathroom tiles instead of a hard drive.

read more | digg story