Herbalife, a Los Angeles-based company that sells nutritional shakes and supplements through a network of millions of distributors, is now reportedly under criminal investigation by the Department of Justice and the Federal Bureau of Investigation. According to a story in the Financial Times, the inquiry is still in its preliminary phase, and no charges have been filed against the company. Herbalife, however, says that it is not aware of any DOJ or FBI investigation.[contentblock id=1 img=adsense.png]
“We have not received any formal nor informal request for information from either agency,” Herbalife says in a statement. “We take our public disclosure obligations very seriously.” Herbalife says it does not plan to make additional statements on the alleged investigation until there are “material developments.”
The reported DOJ and FBI investigation would follow a civil investigation opened by the Federal Trade Commission. Herbalife has become a battleground for several financial big shots. Hedge-fund manager Bill Ackman has publicly accused Herbalife of being a pyramid scheme and published several reports alleging fraud among the company’s senior distributors. He has been opposed by several billionaires, including Carl Icahn, Dan Loeb, and George Soros, who threw their weight behind Herbalife’s stock.
Both Ackman and Herbalife have spent heavily on lobbying in recent years, with Herbalife contributing far more in total. Neverthless it seems Ackman’s public persistence is finally paying off, with Herbalife now facing investigation from no less than three government agencies.
Nightline, ABC News revealed some of the results of its in-depth, six-month investigation of Herbalife Ltd. Using undercover footage of Herbalife-sponsored extravaganzas and hidden camera video of recruiting presentations at nutrition clubs, ABC’s investigative report revealed examples of the pervasive and fraudulent wealth and health claims that drive Herbalife’s pyramid scheme.
via The Verge