Today, it was announced that the corporate officers of 'Herbalife' have been served with a U.S. Code § 1968 - Civil Investigative Demand.
http://www.reuters.com/article/2014/03/12/us-herbalife-ftc-idUSBREA2B1KS20140312
http://dealbook.nytimes.com/2014/03/12/herbalife-discloses-f-t-c-inquiry/?_php=true&_type=blogs&_r=0
http://www.foxbusiness.com/industries/2014/03/12/gasparino-ftc-hits-herbalife-with-civil-investigation-demand/
http://www.marketwatch.com/story/ftc-investigating-herbalife-trading-halted-2014-03-12?link=MW_latest_news
http://www.businessinsider.com/herbalife-halted-2014-3
http://abcnews.go.com/Blotter/federal-trade-commission-investigate-herbalife/story?id=22882424
http://www.usatoday.com/story/money/business/2014/03/12/herbalife/6330287/
http://www.forbes.com/sites/nathanvardi/2014/03/12/ftc-launches-herbalife-inquiry-shares-plunge/
http://online.wsj.com/news/articles/SB10001424052702303730804579435303342418222?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB1000
When the news broke, the extraordinary measure of immediately suspending all trading in 'Herbalife,' and 'NuSkin,' shares, was also taken. When trading resumed half an hour later, 'Herbalife' shares nose-dived and 'NuSkin' shares followed suit, before bouncing back .
U.S. Code § 1968 - Civil Investigative Demand.
(a) Whenever the Attorney General has reason to believe that any person or enterprise may be in possession, custody, or control of any documentary materials relevant to a racketeering investigation, he may, prior to the institution of a civil or criminal proceeding thereon, issue in writing, and cause to be served upon such person, a civil investigative demand requiring such person to produce such material for examination.
(b) Each such demand shall—
(1) state the nature of the conduct constituting the alleged racketeering violation which is under investigation and the provision of law applicable thereto;
(2) describe the class or classes of documentary material produced thereunder with such definiteness and certainty as to permit such material to be fairly identified;
(c) No such demand shall—
(d) Service of any such demand or any petition filed under this section may be made upon a person by—
(1) delivering a duly executed copy thereof to any partner, executive officer, managing agent, or general agent thereof, or to any agent thereof authorized by appointment or by law to receive service of process on behalf of such person, or upon any individual person;
(e) A verified return by the individual serving any such demand or petition setting forth the manner of such service shall be prima facie proof of such service. In the case of service by registered or certified mail, such return shall be accompanied by the return post office receipt of delivery of such demand.
(f)
(1) The Attorney General shall designate a racketeering investigator to serve as racketeer document custodian, and such additional racketeering investigators as he shall determine from time to time to be necessary to serve as deputies to such officer.
(2) Any person upon whom any demand issued under this section has been duly served shall make such material available for inspection and copying or reproduction to the custodian designated therein at the principal place of business of such person, or at such other place as such custodian and such person thereafter may agree and prescribe in writing or as the court may direct, pursuant to this section on the return date specified in such demand, or on such later date as such custodian may prescribe in writing. Such person may upon written agreement between such person and the custodian substitute for copies of all or any part of such material originals thereof.
(3) The custodian to whom any documentary material is so delivered shall take physical possession thereof, and shall be responsible for the use made thereof and for the return thereof pursuant to this chapter. The custodian may cause the preparation of such copies of such documentary material as may be required for official use under regulations which shall be promulgated by the Attorney General. While in the possession of the custodian, no material so produced shall be available for examination, without the consent of the person who produced such material, by any individual other than the Attorney General. Under such reasonable terms and conditions as the Attorney General shall prescribe, documentary material while in the possession of the custodian shall be available for examination by the person who produced such material or any duly authorized representatives of such person.
(4) Whenever any attorney has been designated to appear on behalf of the United States before any court or grand jury in any case or proceeding involving any alleged violation of this chapter, the custodian may deliver to such attorney such documentary material in the possession of the custodian as such attorney determines to be required for use in the presentation of such case or proceeding on behalf of the United States. Upon the conclusion of any such case or proceeding, such attorney shall return to the custodian any documentary material so withdrawn which has not passed into the control of such court or grand jury through the introduction thereof into the record of such case or proceeding.
(5) Upon the completion of—
(i) the racketeering investigation for which any documentary material was produced under this chapter, and
(ii) any case or proceeding arising from such investigation, the custodian shall return to the person who produced such material all such material other than copies thereof made by the Attorney General pursuant to this subsection which has not passed into the control of any court or grand jury through the introduction thereof into the record of such case or proceeding.
(6) When any documentary material has been produced by any person under this section for use in any racketeering investigation, and no such case or proceeding arising therefrom has been instituted within a reasonable time after completion of the examination and analysis of all evidence assembled in the course of such investigation, such person shall be entitled, upon written demand made upon the Attorney General, to the return of all documentary material other than copies thereof made pursuant to this subsection so produced by such person.
(7) In the event of the death, disability, or separation from service of the custodian of any documentary material produced under any demand issued under this section or the official relief of such custodian from responsibility for the custody and control of such material, the Attorney General shall promptly—
(ii) transmit notice in writing to the person who produced such material as to the identity and address of the successor so designated.
Any successor so designated shall have with regard to such materials all duties and responsibilities imposed by this section upon his predecessor in office with regard thereto, except that he shall not be held responsible for any default or dereliction which occurred before his designation as custodian.
(g) Whenever any person fails to comply with any civil investigative demand duly served upon him under this section or whenever satisfactory copying or reproduction of any such material cannot be done and such person refuses to surrender such material, the Attorney General may file, in the district court of the United States for any judicial district in which such person resides, is found, or transacts business, and serve upon such person a petition for an order of such court for the enforcement of this section, except that if such person transacts business in more than one such district such petition shall be filed in the district in which such person maintains his principal place of business, or in such other district in which such person transacts business as may be agreed upon by the parties to such petition.
(h) Within twenty days after the service of any such demand upon any person, or at any time before the return date specified in the demand, whichever period is shorter, such person may file, in the district court of the United States for the judicial district within which such person resides, is found, or transacts business, and serve upon such custodian a petition for an order of such court modifying or setting aside such demand. The time allowed for compliance with the demand in whole or in part as deemed proper and ordered by the court shall not run during the pendency of such petition in the court. Such petition shall specify each ground upon which the petitioner relies in seeking such relief, and may be based upon any failure of such demand to comply with the provisions of this section or upon any constitutional or other legal right or privilege of such person.
(i) At any time during which any custodian is in custody or control of any documentary material delivered by any person in compliance with any such demand, such person may file, in the district court of the United States for the judicial district within which the office of such custodian is situated, and serve upon such custodian a petition for an order of such court requiring the performance by such custodian of any duty imposed upon him by this section.
Hopefully Amway's up next!
ReplyDeleteAnonymous - Hopefully, yes, but what is actually at stake here is whether America is a grown-up democracy governed by the rule of law, or a sleazy de facto kleptocracy ruled by an axis of billionaire 'MLM Income Opportunity' racketeers, their amoral attorneys (many of whom have been former regulators), co-opted academics and corrupt, and/or stupid, politicians.
DeletePersonally, I do not believe that the 'Herbalife' racketeers should be allowed to use one further cent of the money they have stolen from around the globe, to obstruct the inevitable closure of their criminal enterprise.
David Brear (copyright 2014)
Anonymous - It might be interesting for you take a look at how the 'Herbalife' racketeers, and their shyster attorneys, have recently rewritten the orginal 'Amway/MLM' fairy story in an attempt to convince the SEC that they have not been telling lies.
DeleteThe modified description of the victims of the 'Herbalife's' racket, is a classic Orwellian inversion of reality. All persons fomerly defined as 'Distributors/Independent Business Owners' ,are, henceforth, to be known as 'Members.'
In order to avoid being held to account for fraud, the bosses of 'Herbalife' now want the world to believe that the overwhelming majority of their loss-making 'Members,' have merely been 'Discount Customers.'
I'm not making this up - the following is what it actually says in 'Herbalife's' latest declaration to the SEC:
'Herbalife distributes and sells its products through a network of independent members, or Members, using the direct selling channel. We are in the process of changing our terminology to identify “distributors” as “Members.” Those Members who participate in the business opportunity that our network marketing program presents are referred as “sales leaders.” As of December 31, 2013, we sold our products in 91 countries to and through a network of approximately 3.7 million independent Members. Most of our Members are discount customers, however as of December 31, 2013, 672,000 achieved sales leaders status.
Read more: http://www.nasdaq.com/symbol/hlf#ixzz2vpfYIDkt
Herbalife's new SEC declaration is a joke. I've just read your piece on John Tartol and the bit where you said
Delete"On entering the 'Herbalife' racket, all these would-be 'MLM millionaires' have been arbitrarily, and falsely, defined on their Orwellian take-it or leave it contracts as 'Independent Business Owners:' on leaving (after failing to receive any of the attractive financial rewards they were offered by world-class liars like John Tartol), the same persons have then been arbitrarily, and falsely, defined as discount customers who never expected to make any money."
Perhaps the biggest joke here, is that po-faced SEC officials have apparently accepted this encrypted Orwellian 'Herbalife' description of the company's activities, just like they accepted the previous encrypted Orwellian description.
DeleteIn effect, only when faced with investigation, the bosses of 'Herbalife' have suddenly said that many millions of transient contractees whom they have previously insisted were sellers, weren't actually sellers at all, they were just buyers.
Even now, the 'Herbalife' bosses aren't too certain who is who, because they apparently say that they have got 3.7 millions (transient contractees) to be known a 'members' (formerly known as 'distributors' ), of whom a minority are to be called 'sales leaders' and who are both buyers and sellers, whilst the majority are just buyers to be called 'discount customers'.
However, when the 'Herbalife' bosses say that 'as of December 31, 2013, 672 000 (transient contractees) achieved sales leader status,' do they mean that 672 000 (transient contractees) are currently buyers and sellers, or that 672 000 (transient contractees) have become buyers sellers during 'Herbalife's' entire existence?
David Brear (copyright 2014)
You'd think by now the SEC would be able to spot how pyramids and Ponzis work, because Madoff used to call his victims 'investors.'
DeleteAnonymous - The latest modification to the thought-stopping jargon in which the 'Herbalife' fairy story has been presented, conforms perfectly to my analysis of how blame-the-victim 'MLM income opportunity' racketeering has functioned.
DeleteIf we set up a self-perpetuating money circulation game and persuaded players to hand over $200 per month and to recruit 6 more $200 per month players, who each could recruit 6 more $200 per month players, etc. ad infinitum, on the pretext that all players who obeyed the rules of the game could eventually earn unlimited monthly commission on the $1200 monthly payments of their recruits and on the $7200 monthly payments of the recruits of their recruits, etc. ad infinitum, it would be immediately obvious that such a game is based on the crackpot pseudo-economic theory of infinite geometric expansion and is, therefore, a fraud.
Once you understand the above, it doesn't take a genius to work out that, if you want to dissimulate exactly the same self-perpetuating money circulation game, all you need to do is launder the unlawful payments (made on the false expectation of future reward) by telling casual observers that your losing players were 'customers' and by giving your losing players some cheaply-procured commodity, and/or service, in exchange for their money, and then telling casual observers that all these unlawful transactions were 'sales.'
David Brear (copyright 2014)