pershing square

Herbalife’s Fake Business Opportunity

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MLM bussines structure.In a video released this week, Pershing Square (the hedge fund that exposed the Herbalife fraud) contrasts Herbalife’s public statements about the “business opportunity” with the statements made behind closed doors.

Herbalife claims to offer “the best business opportunity on the face of the earth.” But the reality is that it is an opportunity in which you are almost guaranteed to fail, with 96% of distributors making less than half of what is earned by employees making minimum wage (per the video). Despite Herbalife executives and high level distributors publicly repeating how lots of money can be made, the numbers really look like this (according to the video): Continue reading

Herbalife False Health Claims

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Multi-level marketing companies that advertise shakes and potions designed to help you lose weight and get healthier are generally all guilty of the same offense: Distributors making false health claims.  The products are generally terrible for losing weight and maintaining the weight loss. And the health benefits are nothing more than one could get from eating well and taking a simple multivitamin.

Nonetheless, people involved in MLMs routinely claim these potions cure things like ADHD, arthritis, high cholesterol, lupus, asthma, migraines, cancer, fibromyalgia, and more. The most disturbing part of this is when the distributors encourage people to stop taking medications that are critical to their health. This advice is simply dangerous.

Today Bill Ackman released a video demonstrating that Herbalife distributors are violating U.S. law by making false and deceptive claims about the Herbalife products. How do they get away with this? The company likely would contend that there is nothing illegal about distributors giving personal testimonials about the results they received from the products.  Good luck with that defense. Continue reading

Herbalife Documentary by Herb Greenberg: Selling the American Dream

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herbalife-selling-the-american-dreamHerb Greenberg, a stocks commentator for CNBC did a ten-month investigation of multi-level marketing company Herbalife. Its conclusion is this 20 minute documentary, and the timing couldn’t be better. Herbalife has been accused of being a pyramid scheme again, this time by Bill Ackman of Pershing Square.

Despite the fact that CEO Michael Johnson claims he’s never heard of Herbalife being referred to as a scam, there are plenty of people who will tell you different. This documentary is a very, very good piece and well worth the time to watch.

More on Herbalife, Bill Ackman, and Law Enforcement

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As we patiently wait for Herbalife’s “analyst and investor meeting” on January 10 to address the pyramid scheme allegations made by short seller Bill Ackman, there is plenty of good discussion of HLF around the world wide web.

Kid Dynamite said Bill Ackman is wrong about Herbalife, citing that:

  • HLF  is not a pyramid scheme because commissions are paid based on sales of products, not recruitment (Wrong. Commissions are paid largely based on required minimum purchases of products by recruits.)
  • Herbalife has not committed accounting fraud in reporting their product sales. (I’m not so sure about that. The numbers as reported are deliberately and materially misleading.) Continue reading