Herbalife President Falsified Credentials - Barry Minkow

According to a Wall Street Journal article by Keith J. Winstein published today, Gregory Probert, the president and chief operating officer of Herbalife Ltd. (HLF) does not have a Masters of Business Administration degree from California State University as claimed in at least 19 SEC filings by the company. My good friend, former fraudster turned fraud fighter, Barry Minkow, co-founder of the Fraud Discovery Institute, hired a private investigator to examine and verify the biographies of Herbalife executives.

According to the Wall Street Journal:

In response, Mr. Probert, 51 years old, said he nearly completed an M.B.A. at Cal State, but "the truth is that my vanity prevailed and I did not take action" to correct Herbalife's biography of him "even though I was aware it was not accurate."

"I suppose that some of us who have been blessed with a certain degree of good fortune are tempted to see the paths we took in romantic versus strictly factual ways," Mr. Probert wrote in an email. "I was wrong for succumbing to my vanity and apologize for doing so."

Barry Minkow has publicly acknowledged that he is shorting Herbalife and has provided law enforcement with online access to his trading account. The Fraud Discovery Institute has exposed over 20 frauds totaling in excess of a billion dollars.

Herbalife told the Wall Street Journal that the company would correct its disclosures and remove any mention of Mr. Probert's falsely claimed M.B.A.

Gregory Probert's lie about obtaining a Masters of Business Administration degree from California State University violates Herbalife's Corporate Code of Ethics and Business Conduct. See the quote below:

Under various laws, the Company is required to maintain books and records accounting for the Company's transactions. It is mandatory that these books and records be accurate and that they include all pertinent information on a timely and understandable basis. In addition, reports and documents that the Company files with or submits to the Securities and Exchange Commission (SEC), as well as other public communications, must contain full, fair, accurate, timely and understandable disclosure.

Dishonest reporting, or failure to disclose material terms of a transaction on a timely basis, is strictly prohibited. An individual cannot knowingly report information that is inaccurate or organize it in a way intended to mislead or misinform those who receive it.

Employees must not make false or misleading statements in external financial reports, SEC filings or submissions, environmental monitoring reports, other documents submitted to or maintained for government agencies, or other public communications. Dishonest reporting can lead to civil or criminal liability, including significant monetary fines for the Company and possible jail sentences and/or fines for you.

Note: Bold print and italics added by me.

Message to Gregory Probert: You should immediately resign and hire a good securities law attorney. How long did you really think you could continue with your charade knowing that the Fraud Discovery Institute was carefully examining Herbalife's SEC dislosures? If you don't resign, Herbalife Chairman and CEO Michael O. Johnson should fire you. You can read the SEC's Code of Ethics requirements under the Sarbanes-Oxley Act here. There is a saying, "It takes one to know one."

In a previous blog post, I detailed the Fraud Discovery Institute's "Top Ten Red Flags for Fraud at Herbalife."

Disclosure: In the past, I have provided funds to the Fraud Discovery Institute to cover costs of investigations. At the time of this blog post, I am not short or long Herbalife.

Comments

[toofastforyou]

As a former Disney employee who knows Greg Probert, this informatioin does not surprise me at all. "Mr. Probert" is one of the least personable managers I have ever witnessed and it baffles me as to how he can successfully manage business development and sales personnel. He has historically been quick to point out the weaknesses or mistakes of others, so it will be very interesting to see how his own mistakes are handled by him and his close personal friend / boss, Michael O. Johnson.

If Herbalife, a company whose market share has grown on questionable claims about the effects of its products, wants to maintain any air of credibility, they should terminate his employment immediately.

[Solomon]

So what?

What does any of this have to do with the financial performance of the company.

News flash - People lie, cheat and steal.

Bush lied about WMDs, Clinton did not sleep with that woman. Barry Minkow did hard time, convicted of felony fraud, before "finding Christ".

All this fraud talk is an attempt by Minkow to make money shorting HLF because based on fundamentals, high growth rate of sales and earnings, the stock should appreciate from here.

[FourBrane]

This smells of scam. A former felon writes a column in which he pretends outrage over a credentials lie while quoting information developed by another former felon. To prove good faith, he proudly states that the other former felon is letting the Feds examine his accounts...which Minkow damn well has to do since he's still under court sentencing. In other words, if these two crooks actually manage to drive HLF down, the correct response will be to buy shares in HLF.

[HBrocks]

I am a current employee of Herbalife and I can tell you that Greg Probert IS an incredible leader. He is truly a man of integrity, intelligence and by the way, he is very personable toofastforyou. I am not condoning his actions, and he made a mistake, but Mr. Probert will be extremely missed, he was an amazing leader and did so much for our organization.

[weebler76]

It is very irresponsible to say that Barry Minkow is a fraud fighter. the Fraud Discovery Institute investigates and bashes companies in which Barry Minko "almost always holds a position". Shorting a stock then putting out misinformation. I'd hardly call that fraud fighting.