Thursday, 6 November 2014

'Herbalife (HLF)' Wall Street Bubble finally about to burst.

More than two years ago, I posted some articles in which I clearly explained why, despite the dense wall of thought- stopping 'American Dream' jargon and imagery, the nightmare-enterprise lurking behind two so-called 'Multi-Level Marketing Direct Selling' companies, 'Herbalife' and 'NuSkin,' has been unlawful, and why, consequently, shares in these corporate-fronts for fraud, are effectively-valueless.

Faced with a further significant loss of its monopoly of information, it now seems that the Wall Street 'MLM' bubble is finally about to burst. Yet it would appear that I remain almost alone in publishing a clear explanation of why 'Herbalife,' and various other essentially-identical organizations, should be investigated, and prosecuted, not as wayward multi-national commercial companies in breach of civil legislation, but as subversive fronts for an up-dated form of ongoing, major, racketeering activity (as defined by the US federal Racketeer Influenced and Corrupt Organizations Act, 1970). That said, a significant part of my published analysis of the 'Herbalife MLM income opportunity' racket has been in broad agreement with various other informed observers, notably Robert FitzPatrick of the Pyramid Scheme Alert and, lately, Bill Ackman of Pershing Square Capital.

In December of 2012, Bill Ackman called the outrageous 'Herbalife' bluff, and announced that he had bet $1.2 billion that the company's shares are effectively-worthless, because, although legally-registered in the USA and elsewhere, 'Herbalife' is a fundamentally unlawful enterprise run by manipulative charlatans who, for decades, have been allowed to withhold key-information from the regulators and from the public, and who have never faced an intellectually-rigorous, independent inquiry.

In simple terms, Bill Ackman's central charge against the so-called 'Herbalife MLM Direct Selling Income Opportunity' is that, since common-sense, +  the available independent evidence, indicates that the scheme's revenue can only have largely-derived internally from its own participants (based on their false expectation of future reward) rather than from authentic profitable external retail sales to the general public (based on value and demand), 'Herbalife' has been hiding a giant pyramid scheme in plain sight, in which billions of dollars of unlawful, losing investment payments have been laundered as 'sales,' simply by giving a never-ending chain of ill-informed participants banal, but over-priced products, of a dubious pseudo-medical nature, which virtually no rational customer would choose to buy on the open-market, and which, therefore, might as well not exist.

Like all 'MLM Income Opportunity' racketeers, the 'Herbalife' mob have never said that  their company makes its profits by retailing anything directly to the general public. For decades, if challenged, they have steadfastly pretended that their company makes its money lawfully by selling its exclusive good-value products to its distributors at a discount, who then can sell these highly-desirable materials for a profit themselves, to their own customers and end-users. Amazingly, even though certain key-information would obviously reveal to regulators whether 'Herbalife' is a dissimulated pyramid fraud, the company's bosses initially responded to Bill Ackman's central charge that 'Herbalife's' profits have largely been unlawful, because they have derived from the company's own non-salaried agents, by making the extraordinary claim that they have never tracked and, therefore, do not know for sure, what percentage of their company's own products sales have actually been resold by their company's distributors, but that they believed that this percentage of outside retail sales (to customers and end users) has always been significant.  

The common-sense key-questions which the 'Herbalife' bosses have always avoided answering, are as follows:

Since the instigation of your company: 

  • Exactly how many people overall have signed up to become so-called 'Herbalife Distributors?' 

  • What percentage of all these many millions of former so-called 'Herbalife Distibutors' (whom you lately have attempted to re-define as 'Herbalife Members/Customers'), have actually got back more money from the so-called 'Herbalife MLM Direct Selling Income Opportunity,' than they invested in it?

  • What possible lawful reason can you put forward for withholding full, and truthful, answers to the above questions, from regulators and the public?

David Brear (copyright 2014) 


  1. Let's not forget the excellent work done by the Salty Droid, while you have written valuable articles on the herbalife pyramid scheme the Droid has been fighting this stuff for years.

    1. Thanks Barbara, but I think that you will find that I have not just been denouncing the 'Herbalife' racket.

      Furthermore, I think that you will also find that the US attorney who uses the name 'Salty Droid' on the Net., was probably still in high-school when, in the mid 1990s, I first began to deconstruct, formulate and denounce-publicly the ongoing, criminogenic phenomenon of 'blame-the-victim "MLM income opportunity" cultic racketeering.'

    2. David, your blog now has had half a million pageviews. What percentage of these have been to your articles about Herbalife?

    3. Anonymous - Please send me your given name and contact details in a comment (these will not be published)? Also please explain exactly why you want to know what percentage on my Blog's traffic has been specifically interested in the 'Herbalife' racket.

      Depending on your responses, I will then decide whether you merit access to the detailed information which you have requested.

  2. Do you think this latest dismal performance by herbalife's stock will finally cause the company's collapse? If so, do you think the FTC, SEC, FBI and other investigatory bodies will still announce their findings into herbalife's supposed business opportunity? Thanks.

    1. Barbara - Judging by their predecessors' tragicomic track-record, the latest generation of amoral attorneys who hold sway at the FTC, SEC and FBI, probably aren't going to do their jobs and protect the American public, unless they are forced (by circumstance) to do so. After all, many of them (like Pamela Jones Harbour) know that if they keep their noses clean (whilst supposedly working for US tax payers), they can then expect to walk into much more highly-paid jobs in the private sector.

      I mean, why would any govenment lawyer want to risk the wrath of his/her colleagues, by facing reality and killing-off this growing flock of golden-egg- laying 'MLM' geese?

      That said, I actually think that what might finally cause the demise of 'Herbalife,' and indeed of the entire pernicious phenomenon of 'MLM income opportunity' racketeering, is the loss of its instigators' monopoly of information.

      Perhaps the biggest mystery in all of this, is why haven't US regulators, law enforcement agents and prosecutors, simply applied common-sense, gone straight to the IRS and requested the documentary evidence which will prove that effectively no one has ever declared an overall net-profit from participating in any one of the hundreds of so-called 'MLM income opportunities' which have been allowed to multiply, and fester, in the USA during many decades.

    2. It's not fair to say that all attorneys are amoral David.

  3. Anonymous - That's why I didn't say that 'all attorneys are amoral.'

    What I did say was that successive generations of attorneys who have held sway in US government agencies have evidently been amoral.

    I base this analysis on the fact that not one of them would have advised their own friends and family members to sign up with any so-called 'MLM income opportunity,' but not one of them was prepared to break ranks and issue a clear warning to the public (i.e. their employers).

    Senior American regulators, and their political masters, have falsely justified their failure to protect their employers by imagining that they have been maintaining confidence in the overall economy.

    When given the choice between economic depression and dishonour, US politicians and regulators chose dishonour, but they've got economic depression.

  4. Matt Stewart has just posted an article on Seeking Alpha: 'Herbalife's Top Recruiters Could Face Racketeering Charges.'

  5. Anonymous - I have already read Matt Stewart's recent article. In it, he repeats his previous analysis that 'Herbalife operates very much like a casino.'

    I think that it would be far more accurate to say that the bosses of 'Herbalife' and other 'MLM' rackets have all operated a form of rigged casino where every ordinary player has been condemned to lose, but in which various under-bosses have peddled this never-ending chain of losers 'infallible systems for winning.'