'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.

http://www.bloomberg.com/news/2014-11-01/herbalife-to-pay-15-million-to-end-pyramid-scheme-suit.html

http://www.latimes.com/business/hiltzik/la-fi-mh-herbalife-is-tanking-20141104-column.html

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)