Saturday 21 February 2015

60 'Herbalife' victims come forward in Hong Kong with losses of HK$ 50 millions.

The following familiar article has appeared in 'The South China Morning Post (Hong Kong).' 

Claudia Mo (left) and two of the 60 alleged victims of the scam. Photo: Sam Tsang
'Two women who claimed to be presidents of one of the world’s biggest nutrition and weight loss companies took more than HK$50 million in product orders before disappearing, the alleged scam victims said today.
Some 60 people said they had been duped by two women, surnamed Choi and Ng, who claimed to be presidents in the Hong Kong office of multilevel marketing company Herbalife.
Choi and Ng allegedly told the victims they could buy Herbalife products at a cheaper price from them directly on which they could make a resale profit of between 5 per cent and 10 per cent.
The victims said that initially they received the goods and made a profit, so they started to invest more money in the scheme. However, they said the two so-called presidents disappeared at the end of last month and they had been unable to find them.
One of the victims, who gave her surname as Tsang, said she had lost HK$2.6 million in the scheme. She said she had known one of the women for years and that she had approached her around two years ago to invest in the products.
“I believed she was a president of the company. Herbalife’s office had her photo,” Tsang said.
The victims said Herbalife had claimed the two women were only ordinary members of the organisation and were not on its staff.
Herbalife said it was “shocked” and appalled” to hear about the case. A spokesman said the memberships of the two women had been terminated, though it did not specify when.
“Herbalife takes any case of violation of the company’s rules of conduct by our independent members very seriously. Herbalife has a very strict ethics policy and code of conduct, which all our independent members are contractually bound to comply with,” the spokesman said, adding that he could not comment further due to an ongoing police investigation.
Civic Party legislator Claudia Mo Man-ching, who is assisting the victims, said Herbalife should shoulder some of the liability for the victims’ losses.
“Herbalife as a multinational company should take some responsibility. We are talking about business ethics ... You can’t just say some members had inappropriate practices and you have nothing to do with it,” she said.
Mo said the victims had reported the case to police and the commercial crime bureau is investigating.'

Unfortunately, the author of the above article, Timmy Sung, completely failed to comprehend that the fake 'direct selling' company known as 'Herbalife' has itself been the bait in a cultic trap, and only part of an ongoing criminogenic phenomenon of historic significance. Thus, Mr. Sung repeats thought-stopping 'MLM income opportunity' jargon without any detailed qualification or heavy irony.

Predictably, in response to victims coming forward, the bosses of the 'Herbalife' cultic racket have yet again steadfastly pretended that they were totally unaware of, and are not at all responsible for, any criminal activity occurring within the ranks of their entirely 'ethical' organization. 
However, these carefully-scripted reality-inverting denials are clearly an attempt by US citizens to obstruct justice in China in order to continue to commit related-frauds on a global scale. As such, the 'Herbalife' bosses' misleading statements to the Chinese media (and to law enforcement agents) form part of an overall pattern of ongoing major racketeering activity (as defined by the US federal Racketeer Influenced and Corrupt Organizations Act, 1970).

This age-old pattern has been followed all over the world for decades, and by literally hundreds of copy-cat 'MLM' mobs, but law enforcement agents, legislators, prosecutors, etc., never seem to cotton on to how it works (but then, certain law enforcement agents, prosecutors and legislators, have continued to be offered piles of stolen cash by 'MLM' racketeers).

In reality, just like 'Mafia' rackets, 'MLM' rackets have simply been hidden behind mystifying labyrinths of apparently independent corporate structures and individuals, so that their real bosses can isolate themselves from criminal liability.

Thus, once any intellectually-rigorous observer understands how this criminogenic system has functioned, the various 'MLM' front companies are revealed as having been luring countless millions of individuals into essentially the same thought-stopping trap, so that apparently independent individuals and companies can steal their time and money. For decades, whenever a significant number of 'MLM' victims have complained to the media, and/or law enforcement agencies, 'MLM' bosses have followed their classic organized crime tactic, and thrown up their hands in  feigned horror whilst publicly-excommunicating the expendable  front-line thieves from their organizations. 

This truly evil system, has remained beyond the understanding of all casual observers, but particularly, beyond the understanding of its chronic victims - many of whom have sided with the billionaire racketeers who've been exploiting them: rather than face reality.

Herbalife Capitol
Meanwhile, at virtually the same time as the latest chapter in the 'Herbalife' tragicomedy was unfolding in Hong Kong, a claque of deeply-deluded, uniformly-dressed 'Herbalife' adherents turned up at the California State Capitol in Sacramento, and (without producing any quantifiable evidence) attempted to convince State legislators and law enforcement agents that the version of the unoriginal 'MLM' fairy story entitled 'Herbalife,' is entirely true.

It is to be hoped that California State officials had the gumption to take the names and addresses of all these de facto 'Herbalife' slaves, so that checks can be made on their income-tax records. 

David Brear (copyright 2015)


  1. How is it possible herbalife's stock price has risen this week?

  2. Anonymous- perhaps a more important question is:

    How was it possible that the demonstrably fake 'direct selling' company known as 'Herbalife,' was allowed to be capitalized on Wall St., in the first place?

    There is absolutely no independent quantifiable evidence proving that significant quantities of updated snake oil 'Herbalife' wampum have ever been lawfully sold to the general public (based on value and demand), but there is a growing mountain of evidence which proves that virtually every stolen cent which has flowed into the 'Herbalife' racket, has secretly derived from the unlawful losing investment payments of ill-informed 'Herbalife' adherents (based on their false expectation of future reward) which have been laundered as 'lawful sales' (based on value and demand).

    When you read the latest limp articles in the financial press which state that various stock market analysts, and companies, remain convinced that Herbalife is not a pyramid scheme and that the company's share value will, consequently, soar in the near future, you begin to realize the low moral and intellectual calibre of those who work on Wall St.

    Anyone who ignores the above evidence-based analysis and who says that 'Herbalife' is a good investment, is tantamount to a criminal. However, anyone investing their own money in 'Herbalife's' effectively-valueless stock, deserves to lose it.

  3. Today's Seeking Alpha article confirms your analysis by including the seven SEC hallmarks of a pyramid scheme, as listed by the SEC:

    * No genuine product or service. MLM programs involve selling a genuine product or service to people who are not in the program. Exercise caution if there is no underlying product or service being sold to others, or if what is being sold is speculative or appears inappropriately priced.

    * Promises of high returns in a short time period. Be leery of pitches for exponential returns and "get rich quick" claims. High returns and fast cash in an MLM program may suggest that commissions are being paid out of money from new recruits rather than revenue generated by product sales.

    * Easy money or passive income. Be wary if you are offered compensation in exchange for little work such as making payments, recruiting others, and placing advertisements.

    * No demonstrated revenue from retail sales. Ask to see documents, such as financial statements audited by a certified public accountant (CPA), showing that the MLM company generates revenue from selling its products or services to people outside the program.

    * Buy-in required. The goal of an MLM program is to sell products. Be careful if you are required to pay a buy-in to participate in the program, even if the buy-in is a nominal one-time or recurring fee (e.g., $10 or $10/month).

    * Complex commission structure. Be concerned unless commissions are based on products or services that you or your recruits sell to people outside the program. If you do not understand how you will be compensated, be cautious.

    * Emphasis on recruiting. If a program primarily focuses on recruiting others to join the program for a fee, it is likely a pyramid scheme. Be skeptical if you will receive more compensation for recruiting others than for product sales.

    1. Anonymous the SEC officials who wrote this deeply-ambiguous 'MLM' jargon-laced warning have failed to state that the fundamental identifying characteristic of all pyramid, and ponzi, schemes (no matter how they are dissimulated), is that they have no significant or sustainable source of revenue other than their own losing participants.

      Without any evidence, the SEC officials even imply that certain 'MLM' schemes are perfectly lawful, because people are buying the products (based on value and demand).

      In reality, when challenged, 'MLM' racketeers have so far fooled regulators by pretending that their victims weren't really losing participants in their so-called 'income opportunities' , but that they were just 'customers' who wanted to buy the 'MLM' products at a discount.

      I've recently been writing about a typical 'MLM' racket in Sweden called 'Zinzino'. In this, losing participants have been offered exclusive coffee products from a famous Belgian company, Rombouts, but at fixed prices many times those at which the same products are readily available on the Net.

      In other words, no one has bought coffee products from the 'Zinzino' racketeers (based on value and demand). On the contrary, 'Zinzino' victims (falsely defined by the 'Zinzino' racketeers as 'customers') have been deceived into buying an investment commodity at exorbitant prices (in the false expectation of future reward)which has rendered the commodity effectively unsaleable on the open market.

      LIke all 'MLM' rackets, the one known as 'Herbalife,' is essentially no different to any of the others.

    2. Are you saying herbalife has no customers?

    3. Anonymous - For decades, the bosses of 'Herbalife' offered jargon-laced contracts which identified millions of signatories as: 'MLM Distributors'. Suddenly, when faced with a federal investigation, the wording of these take or leave it documents, was changed to make it appear to casual observers, that 'Herbalife' operates within the law and has had significant, and sustainable, external revenue deriving from 'customers.'

      Thus, as part of an overall pattern of ongoing major racketeering activity, in order to avoid closure and prosecution as a pyramid fraud, 'Herbalife MLM Distributors', became 'Herbalife MLM Members,' and losing 'Herbalife Direct Sellers' (who didn't actually sell anything and who were unable to sign up further recruits), became satisfied 'Herbalife Customers' who never expected to earn anything.

      Thus, no one disputes that the majority of cash which has flowed into the 'Herbalife' racket has come from persons who have been defined arbitrarily by the racketeers, as 'Distributors' and 'Customers.' However, this means that when you ignore the arbitrary thought stopping definitions in the contracts, and apply common-sense, virtually all of 'Herbalife's' declared sales have really been internal transactions between the company and persons under contract to the company.

      Yet the evidence clearly demonstrates that, despite what it says in 'Herbalife' propaganda about 'selling products,' effectively all 'Herbalife' adherents have been taught to attempt to duplicate an economically-suicidal plan of recruitment and self-consumption.

      The bosses of the 'Herbalife' racket have lately been attempting to convince the world that only a minority of all the many millions of persons who have been under contract to 'Herbalife' as 'Distributors,' were actually participants in the so call 'Herbalife MLM income opportunity.'

      Thus, when translated into plain English, what the 'Herbalife' bosses are now saying is that, if you read the words 'Direct Sellers' as Direct Buyers', then pyramid fraud is perfectly lawful.

    4. Yoy analysis could not be clearer David. It's a shame you don't work for the FTC!

    5. Anonymous -

      For a long time I've been saying that 'MLM income opportunity' racketeers have compiled their unlawful fortunes by knowing that you can fool some of the people all of the time and all of the people some of the time, but you can't fool all of the people all of the time (with the notable exception of the many greedy dunces with law diplomas temporarily holding down low paid jobs at the FTC).

      I think that Pamela Jones Harbour again proves the validity of this analysis perfectly. My analysis also explains why the truth has not yet been welcome at the FTC.