Sunday, 17 July 2016

Carl Icahn breaks 'Herbalife's (HLF's)' dodgy deal with the FTC

          July 15th 2016
                                         PROHIBITED MISREPRESENTATIONS
IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, and
employees, and all other persons in active concert or participation with any of them, who
receive actual notice of this Order, whether acting directly or indirectly, in connection with
the advertising, marketing, promoting, or offering of any Business Venture, are
permanently restrained and enjoined from misrepresenting or assisting others in
misrepresenting, including by providing others with the means and instrumentalities with
which to misrepresent, expressly or by implication:

A.That participants will or are likely to earn substantial income;

B.The amount of revenue, income, or profit a participant actually earned or can likely


C.The reasons participants do not earn significant income, including but not limited to

    representations that participants fail to devote substantial or sufficient effort

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Former Fuller Brush Salesman : turned Billionaire tycoon, Carl Icahn.

I have always believed in Herbalife’s strong fundamentals and am pleased the Board has decided to increase my ownership limit from 25% to 34.99% of the Company’s outstanding shares.  A significant part of my investment success is directly tied to our in-depth investment research and understanding of often complex and unique issues facing companies.  One can be sure that this was the case with Herbalife where we spent considerable time and resources studying the false pyramid scheme accusations made against the Company.  Unlike many of those that “shorted” Herbalife, we did not rely on one or two research papers prepared by non-experts.  As a result of our research, over three years ago we concluded that Herbalife was not a pyramid scheme.  The FTC settlement announced today, coming after a two-year investigation also concluded that Herbalife is not a pyramid scheme – a conclusion that obviously vindicates our research and conviction.  While Bill Ackman and I are on friendly terms, we have agreed to disagree (vehemently) on this subject.  Simply stated the shorts have been completely wrong on Herbalife.  Now that the Company has reached a settlement with the FTC, it is time to consider a range of strategic opportunities, including potential roll-ups involving competitors, as well as other strategic transactions.
I have the greatest confidence in Herbalife’s CEO, Michael Johnson, and the entire management team, who have skillfully led the Company through adversity, including holding firm against a high-profile PR campaign against the Company by Bill Ackman where it was alleged more than once that the Company would be shut down. Obviously, we are still here.  I genuinely commend management’s steadfastness in the face of short sellers desperate to rally a bear raid based on false accusations. The short-sellers should also note that since joining the Board three years ago, we have paid attention to their accusations and while the vast majority have been baseless, a handful of their points were valid and the Company has made appropriate changes.  Interestingly, ending and modifying certain practices has not hurt earnings one iota.
Herbalife produces some of the finest nutrition products in the world and its direct sales model gives people an opportunity, either full- or part-time, to start their own business.   Without the Herbalife sales opportunity many of these people would be unemployed or otherwise have a difficult time finding work. In my teens I spent several summers working as a Fuller Brush man going door to door often working 12 hours per day.  I ended up earning more during the summer than my father.  Many of my friends who also started with me but were not willing to work as hard failed as salesmen.  But no one would believe their failure made Fuller Brush a “bad” company.  Fuller Brush, much like Herbalife, provided many people with potential income opportunities where such opportunities may not have otherwise existed.  Just because not everyone can be successful selling Herbalife products does not mean Herbalife is a “bad” company.”  I believe that now the cloud over Herbalife is gone, the Company will continue to grow and continue to provide much needed employment for many more hard-working people.”
Carl Icahn

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Ironically, the Fuller Brush Company (a lawful direct selling company, founded in 1906) recently filed for bankruptcy with debts of $50 millions.


  1. Icahn is potty if he really thinks you can flog 'Herbalife' crap door-to-door.

    1. Anonymous - Icahn might be arrogant and devoid of empathy towards 'Herbalife' victims, be he isn't 'potty' nor does he think that 'Herbalife' is/was an entirely lawful enterprise.

      Icahn has evidently gambled that the FTC wouldn't try to close 'Herbalife,' because that would have really opened the 'MLM' can of worms.

      What the FTC has actually done, but which Icahn doesn't yet seem to grasp, is unscrew the lid of the 'MLM' can a worms to a point where it should now fall off by itself. In other words, Icahn is in deep shit with his 'Herbalife' shares, but he refuses to face reality.

      The reason being that 'Herbalife' has never had any sustainable or significant revenue other than that deriving from its own never-ending chain of losing victim/contractees (based on their false-expectation of future reward). The FTC now seems to understand how this closed-market trick has been pulled and has effectively-ruled that 80% (by value) of 'Herbalife's' revenues must now derive from genuine retail sales to members of the general public (based on value and demand).

      The 'Herbalife' racket should now collapse, because unlawful losing investment payments can no longer be laundered as lawful sales in the USA.

    2. Notice how Icahn first says 'sales opportunity' then he says 'income opportunity,' but he also talks about 'work' and 'employment.'

    3. Anonymous - After the recent FTC ruling, I think 'sales opportunity' is probably going to be adopted as the universal new thought-stopping 'MLM' jargon.

      It has always amused me that 'MLM' racketeers have never claimed to offer a 'net-income opportunity.'

      As for the terms 'work' and employment, 'MLM' racketeers have always offered non-salaried work/employment - which is a another way of describing slavery.

  2. I would love to hear Icahn's explanation of your briliant analysis David.

    1. Anonymous - It is highly-revealing that all the major 'MLM' racketeers (and their attorneys and propagandists) have consistently ignored my existence, with the notable exception of the unmasked 'Amway Lord Hee Haw, David Steadson. At one time, Mr. Steadson's pretended that I was a member of an 'international anti-capitalist cult' bent on destroying 'MLMs' in general and 'Amway' in particular. Steadson once posted a paranoid fairy story entitled 'The Internet War Against Amway.'

      Personally, I don't think Mr. Icahn has either the moral or intellectual capacity to read, let alone understand, my overall analysis of blame-the- victim 'MLM Income Opportunity/Prosperity Gospel' cultic racketeering. It is my considered opinion that he should be facing criminal charges under the RICO Act.

  3. What law has Icahn broken?

    1. Anonymous - Mountains of evidence stretching back decades proves that 'Herbalife' is the effectively-valueless (albeit legally-registered) corporate front for a criminogenic organisation. Carl Icahn has bought shares in this pernicious racket and has sought, and is still seeking, to make money by publicly denying the fact that 'Herbalife' has been dissimulating a massive blame-the-victim closed-market swindle and related advance fee frauds.

      I personally cannot believe that Carl Icahn is so dim as to not know what he has got himself involved in.