What do we know about the Herbalife grand jury?
News broke yesterday that an individual had been subpoenaed to appear before a grand jury in New York.
This particular convening of a grand jury is significant because it involves an investigation related to Herbalife.
As best as I can tell, the grand jury news was broken by the Hartford Courant. Before we get into the specifics of yesterday’s news though, let’s recap what we currently know.
Four days ago I ran an article discussing the revelation that the FBI had now launched their own Herbalife investigation.
The FBI and other federal authorities have interviewed people hired by activist investor Bill Ackman as part of a probe into potential manipulation of Herbalife stock.
The probe is looking into whether people, including some hired by Ackman, made false statements to regulators and others about Herbalife’s business model, the Journal reported.
The false statements were made to spur investigations into Herbalife and lower its stock price, according to the report, which cited people familiar with the matter.
As part of the probe,
Preet Bharara’s US Attorney’s Office in Manhattan have conducted interviews and sent out document requests.
At the time it was also reported that’neither Ackman nor Pershing Square is under investigation‘.
So to recap, we know the investigation has something to do with Herbalife… but without further clarification from either the FBI or the Manhattan US Attorney’s Offtice, we’re not exactly sure what.
Neither the Bharara’s Office or the FBI chose to comment on the investigation, so we don’t have anything more than that.
Enter the Hartford Courant, who yesterday wrote that Israel Alvarez had been subpoenaed to appear before a grand jury last month.
Who is Israel Alvarez?
One of the firms Bill Ackman hired to assist him in his campaign against Herbalife is Global Strategy Group.
The firm is registered to lobby in Connecticut for Ackman’s Pershing Square Capital Management fund.
As part of their engagement in Ackman’s campaign, Global Strategy Group hired a sub-contractor to put together a letter-writing initiative.
This initiative saw individuals mail letters critical of Herbalife to government regulators, with the aim of instigating a regulatory investigation into the company.
One of the government officials targeted was Connecticut Attorney General, George Jepsen.
About 30 letters or other complaints critical of Herbalife reached Jepsen, who made them public last week in response to a Freedom of Information request. Some are so similar that an investigator who has examined them suggested they are form letters.
One of the letters carries the signature of Israel Alvarez, a hair stylist and owner of Hair by Israel on Lewis Street in Hartford.
And it is this same Israel Alvarez who was subpoenaed last month.
Alvarez was subpoenaed late last month to appear before a federal grand jury in New York, according to a lawyer familiar with the matter.
Alvarez said he has been instructed by federal authorities in New York not to discuss the matter.
For those unfamiliar with a grand jury proceeding,
A grand jury may issue an indictment for a crime, also known as a “true bill,” only if it finds, based upon the evidence that has been presented to it, that there is probable cause to believe that a crime has been committed by a criminal suspect.
Grand jury proceedings are secret. No judge is present; the proceedings are led by a prosecutor; and the defendant has no right to present his case or (in many instances) to be informed of the proceedings at all.
While court reporters usually transcribe the proceedings, the records are sealed.
In response to questions regarding their conduct, Global Strategy Group told the Hartford Courant
“It is our clear understanding that we are not a target of any investigation, and we are confident that all our work surpasses the highest legal and ethical standards,” a Global Strategy spokesman said in a statement.
“We spoke with the government and provided full transparency into all of our efforts. GSG has never made false statements about Herbalife, nor do we believe anyone else has either.”
So the big question now is who is the subject of the grand jury proceedings?
It might seem to have something to do with the conduct of those acting on Pershing Square’s behalf, but even that is murky waters.
Legal experts have said that making statements that tend to discredit a company, even if those statements turn out to be false, does not necessarily amount to market manipulation.
What matters in the legal analysis is the alleged manipulator’s intent.
No one has been charged in connection with the Herbalife campaign.
Ackman and Pershing have been meticulously transparent regarding the intent of their campaign against Herbalife. They have a billion dollar short on the company and stand to profit if the share price drops.
Which it will if a regulatory investigation finds Herbalife to by a pyramid scheme.
Pershing Square have also been meticulously transparent in the sharing of data, with everything they’ve based their public campaign on being made readily available by the firm itself.
As to third-parties they’ve hired, I find it hard to extend their motives beyond “they were hired to assist Pershing”. Certainly none of the third-parties hired by Pershing Square would appear to, at least on the surface, have a personal motive to see Herbalife investigated.
You’ve got Pershing Square, who hired a third-party who subcontracted out work to an individual who then organized a letter-writing campaign to various government officials.
Where’s the grand jury proceedings in that?
At this stage I’m not discounting someone from Global Strategy Group (or one of their sub-contractors) from being the subject of the grand jury proceedings, but I think we can safely rule out Ackman and Pershing Square.
In televised interviews last week, Ackman said his criticism of Herbalife is not connected to his fund’s short position.
Should the stock fall and his bet pay off, Ackman said he will donate any personal profit to charity.
Stay tuned for any updates as they come to hand, otherwise it looks like we might have to wait for the proceedings to finish before we find out anything further – and even then only if an indictment is handed down.
Murky waters indeed!
some more info;
according to the bureau of justice statistics, in 2010, out of a total of 162.000 federal ‘grand jury’ prosecution cases, the grand jury returned an indictment, in All Cases Except 11 [eleven].
so, preet bharara’s office is definitely looking for an indictment here.
question is indictment of whom? alvarez may just have been a witness deposition [who instructed him to write the herbalife complaint letter? was he paid etc]
here’s how israel alvarez is connected to the murky mess:
pershing square [ackman] hires global strategy to lobby it’s cause in connecticut.
global strategy’s tanya meck, hires republican lobbyist christopher healy, to work his magic. healy has some murky history, where he was found a co conspirator in some shit, where a former governor was convicted.
healy got his friends to write letters to jepsen [ connecticut AG], the chairperson of the FTC, and other govt officials.
israel alvarez, is healy’s hairdresser.
since healy is the immediate boss of alvarez, in this chain, maybe the indictment is targeted at him?
i’m sure alvarez squealed.
proving things upward in the chain will be a nightmare, because unless there is any documentation, it will be a he said/she said, barrage of counterargument, which will lead nowhere.
Yeah but for what?
Healy’s acted on info supplied by Global Strategy Group. Getting people you to send letters to government officials isn’t illegal, much the less an indictable offense.
Obviously Alvarez didn’t misrepresent a connection with Herbalife (posing as an ex-affiliate etc.), otherwise he’d be doing more than providing information.
Healy does look like the obvious suspect but I can’t work out why. Unless he has a secret short stake in Herbalife or something and went rogue… but even then, all he did was get friends to send off cookie-cutter letters!
according to john hempton’s tweet, this white collar crime of misleading federal agencies falls under USC title 18,section 1001 :
you know what.
if there is an indictment, this whole herbalife/ackamn/FTC saga could speedily derail, and sprint off into an unimagined anti-climactic end.
the FTC could just call off/suspend it’s investigation, saying it needs to wait for the conclusion, about whether they were goaded into investigating herbalife, on misleading information.
this is not a conspiracy theory, but ‘forward thinking analysis’ [mamma said use big words! 🙂 ]
@anjali
Herbalife being a pyramid scheme has nothing to do with a possible grand jury indictment.
Herbalife’s business model and flow of money through the company defines them as a pyramid scheme, whatever else happens is irrelevant.
Yep, I know “what”
without words like “could” and “forward thinking analysis” Anjali wouldn’t have a single thing to contribute to the discussion,
which is entitled “What do we know about the Herbalife grand jury?”
that’s “what”
this is the letter written by israel alvarez to the FTC chairperson, and connecticut AG [why is everything non copiable these days!]:
scribd.com/doc/259194026/Alvarez-Israel-Herbalife-Complaint
I guess its not illegal like you say. Maybe all other mlms are legal too.
aol.com/article/2015/03/18/supplement-company-herbalife-sees-pyramid-scheme-suit-tossed/21155007/
That’s not why the suit was tossed. It was tossed because neither the shareholders nor Bill Ackman have access to Herbalife’s retail data.
The company purposefully hides that information from the general public, with only themselves and the regulators currently investigating the company having access to it.
Why they built the case without required information such as Herbalife’s revenue data is beyond me, but that’s why it was dismissed.
They should have instead built a solid enough case to warrant discovery, milked Herbalife’s revenue data and built a case around that.
Anyway, let’s hope that’s exactly what the regulators are currently doing.
the pressing question then becomes, that without access to any data, how has ackman gone to the press and TV saying that herbalife ‘IS’ a pyramid and a criminal organisation which should be shut down. this is a very strong statement to make publicly against a listed company, which will naturally affect it’s stock.
he should have used a more muted tone, eg,- on the basis of info available to me, i feel herbalife may be a pyramid which is deserving of an investigation. or something like that. he called the management of herbalife ‘criminals’ at a press conference!
Because Herbalife’s business model and compensation plan are not a secret. I’ve gone over both and concluded as much myself.
Coupled with the ridiculously high turnover rate, the complete lack of retail focus within the company (see business model and comp plan) – it’s not hard to put two and two together.
Herbalife don’t hide their retail revenue figures because they enjoy having to spend millions defending themselves from anyone with half a brain who’s looked into the opportunity.
They do so because revealing they little to no retail activity is the end of the company.
It’s not a question of Herbalife’s retail revenue figures negating everything else that indicates they are running a recruitment-driven scheme, otherwise they’d have released the figures two years ago when all of this began.
Those hidden figures are damning, hence Herbalife’s hiding them from the public.
They can’t of course hide them from regulators, but they can do their best to mask their lack of retail activity (no preferred customers for example, falsely claiming affiliates reselling product = retail and furthermore failing to keep track of any alleged resale activity).
One card that might not be able to be publicly played is Ackman has seen Herbalife’s retail figures. How these might have been leaked means it’s not information he can publicly disclose, but his confidence certainly suggests he’s just waiting for regulators to draw the same conclusion on the same data.
Again, I don’t really give a shit about Ackman but as someone who’s gone over Herbalife compensation plan and flagged it, then witnessed their whole “we’re going to be transparent about our preferred customers” lies – I’m not giving them any benefit of the doubt. It stinks of fraud and they need to be held accountable.
more info today from the buusiness insider:
– when alvarez was interviewed last year in march by the new york times, he said he did not remember sending any letter about herbalife to anyone. he said herbalife was a ‘vitamin thing,and food thing’
– mary turner who’s letter was sent a few days after alvarez’s letter also claimed that she did not remember anything.
when she was asked why the language in the letters was so similar she said: ‘i guess we are really smart’. mary turner is the the Enfield Republican Town Committee chair.
you can read both the letters here:
businessinsider.in/These-are-the-letters-that-may-be-at-the-center-of-a-probe-related-to-Bill-Ackmans-1-billion-short-of-Herbalife/articleshow/46615648.cms
Ah well if Healy was sending out the letters himself and just using the names of people he knew (paying them or otherwise), then he deserves to go down.
Healy’s conduct of course has no bearing on the information in those letters, Ackman’s research or Herbalife’s business model.
Because what you are trying to copy isn’t the original .doc or .pdf file, it’s an image of the original file
It’s funny that you didn’t quote the reason why the lawsuit was tossed:
Basically, Judge Fischer said merely accusation, even documented by Ackman, is does not conclusively demonstrate fraud, and thus, prove that they were victims.
Basically, only an internal audit of Herbalife, and full transparency of their finances, i.e. how much of their revenue is really “retail”, and how much are only “sort of” retail (i.e. went to distributors, and no further) can prove if they’re a pyramid scheme or not, and they are obviously NOT going to provide such numbers. After all, they have had YEARS to prove such.
It’s not illegal to make a statement which will affect the stock price of a company, it is only illegal when such statements are false and can be proven to have been done to deliberately affect the stock price.
Otherwise, no one could ever speak out against against a publicly listed company and / or its’ practices
It’s a very long bow to draw to assume Ackman / Pershing Square didn’t or don’t believe they are on solid ground legally before making such statements.
IOW, what better way to bring things to a head than force a court case or Federal investigation where everything will be on the table ??
i personally believe that there is a WORLD of difference in bloggers, with no monetary interest, calling a listed company a pyramid scheme, and a short seller, inviting the press, and based on his ‘own research, without access to important data’, saying a company is a pyramid scheme and should be shut down.
ackman has sent a lot of information to the FTC, to encourage their investigation. when he makes public statements about herbalife, he is –
according to the USC 18, he does not have to address this statement directly to the agency, but just within their earshot and jurisdiction.
anyway, there is some noise in the herbalife camp about Big News this month, regarding this grand jury and the FTC investigation, so interesting times may be up ahead.
Not if the information they are basing their claims on is the same.
Any information Ackman has sent to regulators is verifiable by them, as they’ll have complete access to Herbalife’s revenue data (and whatever else they need).
To date, neither Ackman or Pershing Square have been the focus of any known regulatory investigation.
You keep trying and failing to make Ackman the center of this story. Give it a rest.
Of course there is.
Like you and others who ignore Herbalife’s business model, they’ve whipped themselves into a frothing frenzy believing that Ackman is now going to go to jail for eleventy billion years, that all regulatory investigations into Herbalife will be dropped and (insert more fantasy here) scrutiny of the company’s business model will somehow come to an immediate stand-still.
to be fair, even ackman has been whipping up a frothing frenzy, besides, the frothing frenzy should be partly pardonable, because this is playing out much like a bollywood masala movie 🙂
You are basing your beliefs on the combined opinions of countless bloggers, media organizations and Herbalife supporters.
None of us know what research he has done or what facts he has, or what legal advice he has received.
Implicit in your stance is the underlying belief he and his legal advisers have somehow “got it wrong” and laid both he and Pershing Square open to the mother of all prosecutions.
The truth is, however, none of us know.
It’s irrelevant. The issue is Herbalife here.
The only people who keep pointing to Herbalife are those who are hell-bent on shifting the focus away from Herbalife, their shonky business practices and subsequent regulatory troubles.
To be fair, Ackman has stated publicly multiple times it’s not about him or Pershing Square, it’s about the fact he / they believe Herbalife is an illegal pyramid scheme which targets minority groups.
What’s more he has also publicly stated he will put his money where his mouth is and donate any ensuing profits from his shorting of Herbalife stock.
The Pershing Square Foundation has already begun make good on his promise by publicly announcing it is donating some of the money to TheDream.us
what! has acky traded in his herbalife stock, and made a profit already, to give away to charity? not possible dahling, he’s in a loss on his position currently.
what does ‘charity’ have to do with anything. even herbalife does ‘charity’.
really LRM, you do bring up arguments based on thin air.
it’s the press. they are putting out articles about how ‘there is investigation around bill ackmans short’. the press is misguiding me.
No, it’s you.
there are the facts “as we know them” speculation and conjecture free and then there is what you’re doing
The only “arguments” here are yours, complete with what seems to be an endless supply of strawman arguments to reinforce them.
well, pershing square is not giving any money earned from the herbalife bet, yet, to any charity, as their position in herbalife is still fully live.
so, this was just speculation and conjecture on your part. besides, giving charity does not make acky ‘a good man, and therefore, Right’.
anyway, (Ozedit: If you want a review of Herbalife’s compensation plan I’ve already written one. Don’t waste my time.)
sigh
Did anyone (other than Anjali) say anything about it making Mr Ackman a “good man”?
Yet another strawman argument.
*sigh* [50%] + *shock&dismay* [50%]
i knew there was something fishy about your press release, because i know for a fact, that ackman has not traded a single herbalife share. so how could he have made any profit?
then i found a more revealing press article:
USAtoday dated jan8,2015:
well, today is march 19th, and ackman is in the red. the stock went to ackman’s break even point for a short while, and he ran around promising ‘future profits’ to poor latino students?
how much ‘cash’ has he paid to date, from this ‘future profit’to thedream.us. why does his press release Not say how much cash they paid on that date [9th,jan,2015]?
it’s terribly irresponsible to promise future profits to poor latino students. ackman should have Added, that even if he loses in herbalife, he will stand by his promise to the poor latino students.
ackman should have Added, that even if he went to jail for eleventy billion years, he would stand by his promise to the poor latino students.
No, you don’t
All you know is what you’ve been allowed to know.
this is a very ‘strange’ comment which can have two possible explanations:
1] some tech savvy aliens, secretly control the flow of information on earth and thus, All we know is what we’ve been allowed to know.
2] ackman is not half as transparent, as his lackeys think he is, and thus, All we know is what he’s allowed us to know.
see, even his firms press release, praising his ‘charity work’ did not even tell the whole story. it did not say how much money they paid ‘NOW’ or what would happen if acky lost his bet. nice controlled information, just as much as he needed to let the poor latino students ‘know’.
PS: LRM has some ‘serious’ conspiracy related issues. when he says ‘All you know is what you’ve been allowed to know’, i hear doors creak and footfalls and see strange shadows, and i feel bery bery scear.
No, to be accurate, that should read: “two possible explanations THAT ANJALI can come up with
We can play battle of the media reports all night and day, but neither of us know the truth, the whole truth and nothing but the truth and only one of us is pretending it is any other way.
No amount of clever (to you) witticisms on your behalf can change that.
1] ‘philosophical truth’ will always remain an enigma.
2] ‘informational truth’ will always be beyond our grasp, because discovery channel says, we can NEVER have the total information present in the universe, for certain technical reasons.
what to do?
Alright that’s enough Ackman playtime. He’s back to being offtopic.
right.
here is an interesting sentence from the order:
well, herbalife was the defendant, the investors could have asked the court for discovery, and asked herbalife to provide certain data to the plaintiffs, which would help them prove their case. but they didn’t?
they wanted to show that herbalife is a ‘pyramid’ based only upon einhorns questions and pershing squares presentations etc
why did they miss such a golden opportunity? strange! i don’t know what to make of it.
No idea, but I raised the same questions in comment #10.
Can you request discovery until motions to dismiss have been dealt with? Even then they should have answered the motion explaining that planned to exhibit data via discovery that would prove their case.
Ackman contends this is the explicit reason he himself hasn’t been sued by Herbalife, because they know he’ll defend himself with their own data via discovery.
Can you request discovery until motions to dismiss have been dealt with? —oz
if the court is asking you to prove your case, i assume you should be allowed discovery, as plaintiffs cannot have access to company data otherwise.
cunningmind says this case dismissed by the california federal court, establishes two things amongst others:
– ackamns presentations etc were all merely accusations, and did not reveal anything new, and were not of the standard of ‘proof’
– these ‘accusations’ caused herbalife shares to fall in tandem, with the time these accusations were made to the press.
what says, if herbalife were to pursue a ‘market manipulation’ case on ackman, this ‘order’ will not help?
That’s not what a motion to dismiss is though. If file a response stating you plan to obtain vital data (such as non-existent retail figures) via discovery, then I can see it being raised – but that doesn’t appear to have occurred here.
Because their lack of retail activity data obtained via discovery would trump everything else. The guys who filed this lawsuit might have been clueless, but Ackman has openly stated he’d go after the data via discovery if sued.
And so Herbalife sit on their hands… and hope that the regulators investigating them are blind.
hmmm. [cunningmind] but what if the NY AG’s office were to sue ackman for market manipulation, and not herbalife itself? then questions of herbalife data, wont be in the picture?
lets see, i think we should know in a fortnight or so.
This is a game that has no end.
(Ozedit: If you want to discuss the “short operation”, do it elsewhere.)
sanders, executive director of the Spanish Speaking Center of New Britain, connecticut, has admitted to taking on contracts from the global strategy group, the bristolpress reported on 21st, march:
centralctcommunications.com/bristolpress/news/article_236dc62c-d025-11e4-9b37-cf519b6225fd.html
marketwatch and wall street journal are reporting some fresh movement, in the federal investigations which are trying to ascertain, whether there was any manipulation of herbalife stock.
last year in march, ackman had a press conference, in which he detailed ‘proof’ that herbalife was operating illegally in china. this presentation was based on ‘research’ conducted by pershing square or its hired agents.
federal prosecutors are now, investigating these documents:
marketwatch.com/story/ackman-report-on-herbalife-in-china-figures-in-probe-2015-04-01
Sigh.
If one doesn’t blindly accept Herbalife’s PR dept explanation, regulators could very well be investigating the claims themselves.
Without anything concrete from the regulators, this is non-news as far as I’m concerned (really it’s a Herbalife PR press-release dressed up as a news article).
if regulators were investigating herbalife’s china model, this news would have come from the ‘ackman press campaign initiative’. both sides are girlfriending the press 🙂
speaking of concrete info, the AG of connecticut, jepsen, has formally announced, that his office is unable to substantiate any allegations that herbalife is a pyramid scheme.
naturalproductsinsider.com/blogs/supplement-law/2015/04/connecticut-ag-unable-to-substantiate-pyramid-sch.aspx
Fixed.
You really don’t understand the world of spin doctoring, public relations and strategic information release, do you ??
^^ Agreed. Herbalife would be aware of regulators requesting further information from the company regarding their Chinese business operations.
Rather than have it come out later
people familiar with the matterHerbalife PR put a definitive spin on it, baselessly claiming it’s to do with the stock market manipulation investigation.A transparent attempt to preemptively discard the possibility it’s part of one of the ongoing investigations into the company itself.
hahaha
at least it’s confirmed that you guys are Great Spin Doctors!! 🙂
Well who’s going to know about an investigation into Herbalife’s Chinese business operations? Herbalife or Ackman?
It’s pretty stupid to suggest Ackman would beat them to the punch in announcing it (however it’s spun).
If Herbalife kept quiet about it everybody might be none the wiser. The PR dept couldn’t help pushing the “hay guys, this is about the stock manipulation investigation even though we have no idea if it is or not” angle but.
Herbalife’s PR dept is probably full of some of the highest paid bullshit artists on Earth.
m’lord i humbly submit:
herbalife is already under formal, publicly announced investigations by the SEC, FTC, AG’s of illinois and new york for over an year.
if these agencies are investigating herbalife activities in china or venezuela, what difference does it make? herbalife cannot be fined, jailed, or shut down for business practices in china or anywhere else, except for their business practices in the US.
hence its hardly news worthy to report an agencies investigation into herbalife’s business model in china, seeing that they are already in the midst of an investigation, and china getting added to the soup, doesn’t change anything much.
herbalife have no reason to spin doctor this, and bring it before the press. [besides, market watch and WSJ may print ‘friendly stories’ but wont ‘LIE’ for anyone]
but, federal ‘prosecutors’ [as in DOJ, not FTC] who are already investigating market manipulation around ackman’s short position, could have stepped up their act, to looking at ackman’s presentations themselves.there have been hints that the NY AG’s investigations are ‘reaching’ for ackman.
so, herbalife’s highest paid bullshit artists, ie their PR dept, ran to market watch and WSJ with a bouquet of red roses, and got the story published.
now wait for a rebuttal from the ackman PR artists.
people, do you understand the world of politics and well, politics?
Say what?
say this:
warning: do not confuse the nuskin, SEC fine, for ‘investor misinformation’ arising out of it being fined by china, with the herbalife china story. it’s different. herbalife has not been charged or fined by china.
Good news everyone!
Scams can now base themselves in the US, operate offshore and be totally safe from prosecution by US regulators.
Huzzah!
it’s herbalife INTERNATIONAL, it has seperate registrations in in all the countries it works in. US regulators can only interfere in herbalife america operations. simple.
howzzat!
That’s one of the most godawful stupidest things I’ve ever read on here.
Let’s leave it at that.
okay sir, may i please just add one stupider point which i forgot in post#57 : herbalife international is NOT an american company. it is a cayman islands company. only herbalife america is answerable to US regulators.
muah and thanks.
Anjali, if you think a handful of internet bloggers could possibly know what is going on inside the billion dollar battle between Ackman, Icahn, Herbalife, the community organizations and the notoriously secretive FTC, what tactics are being used and how many high priced lawyers and spin doctors are involved, you’ve got rocks in your head.
No “spin doctoring” required.
yeah right. i only know…. ‘What I’m Allowed To Know” [infamous LRM quote]
cue: scary noises and some 3D effects.
wooooooooo
Federal agencies managed to include Ympactus Comercial Ltda. (Brazil) in the TelexFree investigation, e.g. by exchanging information with Brazilian authorities. They didn’t “interfere” with Ympactus’ operations, it had already been partially shut down by a Brazilian court.
The first reliable information about an investigation in the U.S. came from the Public Prosecutor in Acre, but she couldn’t reveal any details.
So the “different company / different geographical jurisdiction” method isn’t a bulletproof protection.
Don’t get me wrong, I think you should carry on.
Watching a non US based blogger with a history of trolling, whose source of information is second and third hand media reports, trying to second guess and analyse the tactics being used by players in a billion dollar battle, has got to be one of the funniest things I’ve seen in years
the agencies of two countries sharing information, to build their case against a ponzi scheme, has nothing to do the US shuttingdown/fining/jailing, herbalife in the US, for its business operations in china. that’s just not legal, it cannot be done.
amway has been prima facie found to be a pyramid scheme, by a high court of india.
what difference does that make to amway america operations? can regulators take action on this basis?
it can affect amway’s reputation a bit, but that’s all.
nuskin was fined by china recently, for running a pyramid like scheme there. did US regulators move against nuskin?
no. the SEC fined them for ‘investor misinformation’ because nuskin is listed on the US stock exchange, and because a company disclosure said, that nuskin was working within the law in china.
6th, april, 2015, CNBC:
it is not clear who these top 10 distributors are, or exactly which federal agency is asking these questions.
it may be the FTC, which is currently investigating herbalife, or the FBI/DOJ, who are investigating misinformation/stock manipulation.
cnbc.com/id/102561717
Here’s hoping those conversations went something like this:
“Hi there, this is the FTC/DOJ. Can you please tell us about your retail sales?”
“Oh yes, I make tons of them all the time. I made ninety five thousand dollars in retail sales just yesterday.
Did you Herbalife generates eleventy gatrillion in retail sales each year?”
“You have documentation to verify this?”
“Um…”
“…”
“Yes, are you there? Can you send us documented proof you aren’t just recruiting Herbalife affiliates and getting them to do the same?”
“…can I call you back? Herbalife PR didn’t tell me what to say to that…”
Also…
Why do you need legal counsel to answer questions about your business?
Nothing suss…
Oh and I like how Herbalife PR are only talking about the manipulation probe. They aren’t answering any questions on their top affiliates being contacted.
Bunch of absolute slippery snakes that lot, and they deserve everything coming to them.
Did you Herbalife generates eleventy gatrillion in retail sales each year? —oz
now you’re just over exaggerating bulltrillion times.
herbalife have just 5 billion in sales last year, to consumers.
“Yes, are you there? Can you send us documented proof you aren’t just recruiting Herbalife affiliates and getting them to do the same?”–fake DOJ
‘no sir, Most recruited members have no downlines at all, and are not on the compensation plan”–fake herbalife member.
the fact that herbalife is offering legal aid to the top distributors, shows that they believe the distributors have not broken any MLM law.
if herbalife thought, for a moment that these distributors, would get caught out for transgressing laws, they would keep a ‘strictly hands off’ policy.
BTW herbalife will be limiting new member purchases to 1000$.
they are good boys, who are improving their game, and pleasing the FTC, every day in every way. slippery snakes? nah. i know a Slippery Lizard though, who seems to be in Big Trouble 🙂
“no sir, Most recruited members have no downlines at all.”
“Cool story bro, but we were asking for the specifics as to your business. What you claim “most members” have or don’t have is irrelevant.”
Right. Your top 10 US affiliates (likely to be global top-earners even through their active downlines aren’t in the US) get busted by the feds and you go “hands off”.
Lol, Herbalife PR aren’t that stupid. They know how that’d look abandoning their affiliates.
Either way, when your top earners become the subject of regulatory investigations you can’t win. There’s no way to positive spin it.
Provide them legal assistance and you’re all but confirming the seriousness of the investigation, including the legal ramifications.
Do nothing and you’re abandoning your top affiliates while the ship goes under.
Once again with the “they would” crystal ball gazing
You have no idea what “they” have done, much less what “they” would do.
‘yessir, we have to list 10 retail sales per month, and declare that 70% stock has been sold before ordering new stock. if herbalife compliance asks, we have to show them these details, and from time to time they audit this data’—fake herbalife distributor.
if herbalife compliance has been weak, and not enough audits were done previously, we know that by hiring an ex FTC head for compliance, herbalife has improved it’s game. they may get fined for previous slack compliance.
ho hum.
Record keeping isn’t the issue. A lack of retail sales is.
There is no retail activity in Herbalife, with the business model itself being rotten.
well, then FTC will take herbalife to court, and get an injunction to stop it’s operations.
let’s wait for the twelfth of never.
further good boy behavior by herbalife, which includes disclosure which will please the critical wizard of oz.
herbalife products can be ordered directly from it’s website as of march, 2015, and des walsh, president, says sales are rocking. they will even discuss data of this sale in an analysts call in may [gasp]. such transparency!!
the FTC is doing (Ozedit: Trollish speculation removed. You have no idea what the FTC is or isn’t doing.)
LA times, 6th, april, 2015:
latimes.com/business/la-fi-herbalife-online-20150407-story.html?fb_action_ids=10152895834021871&fb_action_types=og.shares
Can we have a little “shutting the stable door after the horse has bolted” music please, Mr Maestro
no, because there is no such music in the known world. how silly.
but, you can enjoy a ‘nobody can shut us down, as long as we spring clean’ happy horse dance, ‘showing now live’ at the maestro herbalife’s stable.
Nah.
whatever happens, the FTC has had a win.
Whoever said the intention was for Herbalife to be forced to close down ??
Herbalife is doing what industry observers have been saying for years needed to be done.
A perfect example of the FTC “speaking softly and carrying a big stick”
One point left unsaid is that Herbalife has obviously been operating for all these years without retail sales.
You can’t just slap products on a website and artificially generate a sustained retail interest in your products.
If a stop is put to the recruitment-driven model (which as of yet has not happened), the opportunity is likely to collapse on itself.
Think what happened to NuSkin when China put the brakes on their local pyramid scheme operations, but without the return to the status quo a year or so later.
but but but if herbalife is a product based pyramid, then it has to be shut down, right?
the FTC cannot allow a product based pyramid to carry on, no matter how nicely they clean up, right?
so LRM, are you saying that herbalife is NOT a product based pyramid, but just a dirty faced bugger, who needed a good wash?
have you recently changed your position on herbalife LRM? have you finally seen the light?
there is no point in comparing the US to china. china has banned MLM, only direct selling is allowed there.
if herbalife has a recruitment driven model, then the FTC has to shut it down. just like burnlounge, or zeek, or telexfree.
if those pyramid schemes did not have an opportunity to ‘clean up’ neither can herbalife. so, if the FTC does not shut down herbalife , then we know it is not a recruitment driven model and hence not a product based pyramid scheme.
(Ozedit: Made up stuff about retail in MLM removed.)
Only a moron or troll would even consider for a moment Herbalife would or could be “shut down”.
Whatever happens from here on in, Herbalife will never be able to operate as it has for the past 35 years.
There’s winning the battle/s and there’s winning the war.
well, then we know ackman is a moron and troll for sure, inspite of the fact that you think he ‘gives’ to charity, and hence must be good.
uh, are you saying this whole drama of of investigations around herbalife, have been going on, to NOT shut it down? are you saying herbalife is too Big for the regulators?
uh , i don’t quite know how to say this, but, er, someone here has been saying that herbalife is a recruitment scam with no retail, and should be shut down by regulators.
really LRM, you should know when to zip it! you emberrising persan!
Then we know nothing.
The FTC is a regulatory body. It doesn’t have the power to “shut down” Herbalife.
It can fine Herbalife and it can penalize Herbalife and it can continue to do both as for as long as Herblife refuses to conform with the law/s, but it can’t force Herbalife to “shut down”
Another Anjali invention
really!!
your licence to be ignorant has expired LRM!
the FTC is the main agency which investigates and gets pyramid schemes Shut Down.
they investigate – find enough incriminating evidence that a scheme is a pyramid – go the court and get an injunction to shut down the company – a civil case ensues – where the FTC proves it’s point.
sometimes with smaller pyramid schemes the FTC may just get the company to agree to shut down, promise to never participate in a pyramid scheme again, and fine them.
sometimes when the FTC does not find any pyramid scheme, but just some ‘bad behavior’, they may slap the wrist of the company and fine them, but not shut down the company.
BTW i understood what you meant by ‘fine herbalife’ but what did you mean by ‘penalize herbalife’??
^^^hahahahahaha!! then who can, ackman ?? hahahahhaha!!
Who is claiming anyone can or wants to ??
You’re saying it, no one else, not even Bill Ackman
Broadly, administrative penalties can involve both fines and/or restitution orders.
(bolding mine)
Can they close down a pyramid without going to a court ???
They can’t do it on their own
IOW, my original statement remains true:
Interesting history lesson, but, we’re not talking about “smaller pyramid schemes” we’re talking about Herbalife, which is neither small, nor does it operate purely as a pyramid scheme
^^^^hahahahahaha! in dec 2012, ackman wagered a 1 billion bet that herbalife was a pyramid scheme, which would get Shut Down by regulators, and the stock would go to zero, and he would become a gatrillionaire!
and now you, his worshipping lackey, is saying that he never said he wanted herbalife to be shut down! hahahahahaha !
LRM, in your esteemed opinion, is herbalife a pyramid scheme or not. state your position clearly!
i have a feeling you are secretly on my team, on this! [ie herbalife is not a pyramid scheme]. come out of the closet, it’s safe.
can the police put a criminal in jail, without going to court?
yet we say, the ‘police’ puts criminals away.
similarly the regulators like the SEC/FTC shut down ponzi/pyramid schemes.
the court does not report on how many pyramids it shuts down, the FTC does.
eg;
see?
huh? what do you mean by ‘nor does it operate purely as a pyramid scheme’.
if any part of herbalife functions as a pyramid scheme, and that part is responsible for the major cash flow, then herbalife is a pyramid scheme. otherwise it’s not.
zeek was huge, but it was a pyramid scheme, inspite of its penny auctions and shopping daisy etc.
LRM, which part of herbalife is the pyramid and which is not?