Saturday, 19 May 2012

'Herbalife' and 'NuSkin' shares are proved to be effectively-valueless

I have previously, clearly explained on this Blog that, despite their banal external appearance (and celebrity associations), the demonstrably-fake 'direct selling' companies known as 'Herbalife' and 'NuSkin' are the corporate fronts for vast, and ongoing, dissimulated closed-market swindles and associated advance fee frauds (a.k.a. 'Tool scams'). To date, no one has attempted to refute these detailed charges by producing the quantifiable evidence (in the form of audited accounts; particularly, income- tax payment receipts) which would prove that a significant percentage of the participants in any so-called 'MLM income opportunity' has actually generated an overall net-income lawfully from regularly retailing goods, and/or services, directly to the general public for a profit.

Although the grinning 'Herbalife' and 'NuSkin' racketeers have copied their cultic blame-the-victim criminal activities from the grinning bosses of the 'Amway' mob, by also withholding key information from financial regulators, they have significantly raised the stakes in the already-outrageous 'MLM' bluff - fraudulently generating billions of dollars via their peddling millions of effectively-valueless shares in their essentially-identical, camouflaged criminal enterprises. Sadly, before these counterfeit documents were launched on the stock market, some blindingly-obvious questions were evidently never put to the corporate officers of 'Herbalife' or 'NuSkin' by anyone from the SEC or the FBI; principally:

Where has the bulk of your alleged 'lawful direct selling companies' alleged 'income opportunities'' alleged 'sales revenue' actually come from:

the regular retailing of goods, and/or services, directly to the general public by your alleged 'distributors' for a profit,


from an endless-chain of recruits' regular, losing-investments laundered as 


On May 1st 2012, American hedge-fund manager, David Einhorn, publicly began to extract the ugly truth lurking behind so-called 'Multi-Level Marketing,' in a conference call with the evasive and inflexible bosses of the 'Herbalife' mob. 

Michael Johnson

Des Walsh
Des Walsh
John DeSimone
John DeSimone
Brett Chapman

The following is a transcript of the initial exchange (the 'Herbalife' racketeers were Messrs. Michael Johnson, Des Walsh, John DeSimone and Brett Chapman):

Q. (David Einhorn)... how much of the sales that you’d make in terms of final sales are sold outside the network and how much are consumed within the distributor base?

A. ('Herbalife') So, David, we have a 70% custom rule which is basically says that 70% of all products sold to consumers or actually consume by distributors for their own personal use. So obviously what we’ve seen with nutrition clubs is that we now have visibility for the first time to our customers. We know that we reported on this call for the first time the number of commercial clubs around the world, which is in excessive of 30,000, so that has given us feasibility to the tremendous amount of products that are being sold directly to the consumers and we see that as a growing trend in our business.

Q. (David Einhorn). So, what is the percentage actually sold to consumers who are not distributors?

A.('Herbalife') So, we don’t have an exact percentage David because we don’t have visibility to that level of detail.

Q. (David Einhorn). Do you have an approximation?

A. ('Herbalife') So well again going back to our 70%, where we believe is that it is that 70% or potentially in excess of that.

Self-evidently, given the wider evidence, during the course of David Einhorn's brief interrogation of the 'Herbalife' mob, everything these crooks said (and did not say), fitted into an overall pattern of ongoing, major racketeering activity (as defined by the US federal Racketeer Influenced and Corrupt Organizations Act, 1970, and clarified by subsequent US Supreme Court judgements). By failing to make a full public disclosure of their dissimulated closed-market swindle, when invited to do so by an investor (or potential investor) in their counterfeit company's shares, the 'Herbalife' bosses committed wire fraud and attempted to obstruct justice. Laughably, they continued with their absurd 'MLM direct selling' bluff - withdrawing into Orwellian double-think - first steadfastly pretending that 'Herbalife's' must be a law abiding company, because it has a 70% retail sales rule. However, when pressed, they said that they only believe that at least 70% of 'Herbalife's' declared multi-billion dollar annual sales are to persons who are not 'Herbalife Distributors,' but almost in the same breath, the 'Herbalife' racketeers tried to convince David Einhorn that it is perfectly normal for them not to have access to any evidence which would support their anecdotal claim to be acting within the law. In the adult world of quantifiable reality, this predictable dodging of a rather fundamental question, quickly wiped around 33% off the counterfeit share-values of 'NuSkin' and 'Herbalife'. In 'Herbalife's' case, this represented $1.7 billions. Yet, even in the light of these remarkable events, only a few independent commentators have begun to use their critical, and evaluative, faculties and comprehend the full-horror lurking behind the pernicious 'MLM' fairytale of which 'Herbalife' and 'NuSkin' are just two reality-inverting chapters.

In a recent court case in Belgium, part of the pernicious 'MLM' fairytale was challenged by attorneys acting for a Belgian consumer protection association. At this time, 'Herbalife's' attorney's were given the perfect opportunity to produce evidence that the company's so-called 'MLM income opportunity' has had a significant and sustainable source of revenue other than that deriving internally from its own constantly-churning participants. However, when 'Herbalife's' Belgian attorneys failed to produce this evidence (for the simple reason that it does not exist), the company's activities were judged to be an unlawful pyramid scheme, but, predictably, this common-sense verdict was immediately appealed

David Brear (copyright 2012)

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