Herbalife Denies Allegations in Fraud Discovery Institute Report

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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.

Barry Minkow states in the footnotes to his letter, he is hoping to use video gathered during his investigation as a stepping stone to a weekly television show that will benefit him financially. Minkow is a convicted felon trying to create a sensational story by drafting a 90-page letter, cobbling together one-party consent undercover video and calling it “evidence.”

We stand behind the integrity of our company.

Notice they talk about their “operating plan” and their “marketing plan” being compliant with Chinese laws. What about actual operations? Are those compliant? Not according to the evidence secured by Fraud Discovery Institute.

4 thoughts on “Herbalife Denies Allegations in Fraud Discovery Institute Report

  1. Barbara

    Tracy,
    Looks to me like they are going to pull a Usana. They have already begun to point out that Minkow is a convicted fellon (forgetting all the good he has done since his release). Is there a handbook out there for MLM companys being investigated telling them what steps to take along the way. With all this happening first with Usana now with Herbalife do you see anything really happening to get a formal investigation into the companys? When should this documentary be released?

  2. Tracy Coenen

    Deflect, deny. Deflect, deny. That’s the MLM handbook. I suspect, much like Usana, the SEC will start an “informal” investigation. It could take some time, as Usana’s investigation is taking. But I do believe the SEC takes these allegations very seriously.

  3. I think Herbalife was investigated by the Canadian Competition Bureau, but I don’t think that the charges of misleading advertising actually held up. It is odd, since the Competition Act has a pretty stiff test for MLM to pass regarding earnings claims, which is part of the regulation governing misleading advertising.

  4. James

    Sounds like the investigator has rock solid credentials. Anyone reading the bio should see that especially since it is verifiable. It is really too bad as Herbalife has good products, but you just have to hate MLM’s.
    Take a look at the higher up distributor’s in Herbalife. Definitely a different crowd. I am surprised thay haven’t been hammered. She should look those organizations.

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