Thursday, 10 January 2013

Wall Street Erupts Over Claims of 'MLM' Fraud

The following aricle is reproduced from Pyramid Scheme Alert:

Herbalife Is Focus
Wall Street Erupts Over Claims of MLM Fraud

After years of willful ignorance or neglect about a business sector worth $17 billion in stock value and that has solicited money from virtually every household in America, Wall Street has suddenly taken notice of multi-level marketing (MLM). One major hedge
Whistle Blower, William Ackman of Pershing Capital
Wall Street Leader, William Ackman, Says Herbalife Is an Illegal Pyramid Scheme
fund manager, William Ackman of Pershing Square Capital, has blown the whistle on one iconic member of the MLM field. Ackman charged that Herbalife International is not a business, but a harmful fraud. He charged that its true stock value is zero. Herbalife's stock quickly plunged into volatility in the ensuing debate.

Whatever this heated controversy brings forth, finally there is a real focus on and investigation of what previously was kept in the dark.  Those who had dared to raise questions were personally vilified or sued by MLM lawyers or even harrassed by government regulators. The MLM industry is one of the largest influence-buyers and lobbyists in Washington.  Ackmam stated that his position against Herbalife is "patriotic" based on the enormous harm that Herbalife does to the country and the public, especially those who are financially struggling. He has purchased a  "short" position (if Herbalife's stock value goes down, he makes money) and he said he will donate all personal gains to charity.

See William Ackman's in-depth analysis of Herbalife.

What's Your Herbalife Story?
Herbalife is at the center of headline news stories. Major investors are calling Herbalife a "pyramid scheme" and a money trap. The news media are investigating.

You can help regulators, attorneys, and investors better understand this controversial company by adding your experience and opinion. Please let us hear from you.
    Email Us Your Herbalife Story
     Are you an Herbalife distributor? Supervisor?
  • Have you ever been involved in Herbalife as a distributor in the past?
  • Did you personally retail the products? Did you recruit others to join up?
  • Did you try to sell or recruit and but were not successful? Why?
  • Did you make a lot of money? Lose money?
  • Did you buy "leads"? Go to conferences?
  • Why did  you  join up? Make money?  Retail products? Get the products yourself at a discount?
  • Are you still buying the products even if you are no longer a distributor?
  • Would you recommend others to join up too?

SEC Staff Reportedly Opens Investigation of Herbalife

 The business media is reporting that the staff of the U. S. Securities and Exchange Commission, the watchdog over the stock market, is opening SEC Logoan investigation of the multi-level marketing company, Herbalife. Hedge Fund manager, William Ackman of Pershing Squarte, publicly laid out charges against Herbalife, which may have prompted the investigation. Earlier questions, claims and complaints about deception and fraud from consumers, a Belgian court ruling that Herbalife is an illegal pyramid, two class action lawsuits against Herbalife for fraud, and the findings of other fraud investigators regarding Herbalife have been ignored by the SEC and FTC.

Among the charges made by William Ackman:

  • Herbalife is an unsustainable pyramid scheme in which funds are gained by constantly recruiting salespeople
  • Salespeople are the main source of Herbalife's sales, not consumers.
  • Herbalife's products  - diet shakes - are purchased because they are bundled with a deceptive income promise. Standing alone, the products are over-priced, unknown and unadvertised and are no different from many other less-expensive and more conveniently available products. They would not sell without the income scheme attached. 
  • Virtually no one who signs up under Herbalife's pay plan ever makes a profit
  • The commissions on sales to the new recruits are transferred and concentrated to a tiny few at the very top.
  • Most people fail and quit the Herbalife scheme in less than a year, after suffering financial losses, but are convinced that their failure is their own fault, not that of the flawed and deceptive scheme.  

Business Media Investigating MLM 

Stock analysts, business writers and television financial networks are focusing on MLM. They are going undercover to MLM recruitment meetings. They are looking at MLM payouts, interviewing distributors and asking the big question, where does MLM money come from, distributors or end-user reail buyers? Retail defines a sales company, recruiting distributors is the hallmark of an "endless chain" fraud.

Business Media have seen that MLM deception, secrecy and manipulations are bad for Wall Street. Will the mainstream media recognize the harm to Main Street?

CNBC Documentary on MLM: "Selling the American Dream"
CNBC Documentary on MLM/Herbalife
Click on the Image to See the Documentary

No comments:

Post a Comment