NY AG joins the Herbalife inquiry crowd


New York Attorney General Eric Schneiderman launches an investigation into Herbalife (HLF -2.9%) to determine if its business is a pyramid scheme.

The state has the fourth highest number of distributors in the U.S.

Last week the DOJ and FBI started their own inquiries.

This was corrected on 04/15/2014 at 12:42 PM.
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Comments (19)
  • Storming_norm
    , contributor
    Comments (30) | Send Message
     
    I hear Ringling Bros is also launching an investigation into HLF . They don't want to be left out
    15 Apr 2014, 11:39 AM Reply Like
  • Sk8ter2013
    , contributor
    Comments (148) | Send Message
     
    Herbalife is Ringling Brothers
    15 Apr 2014, 12:22 PM Reply Like
  • Distributor Dan
    , contributor
    Comments (458) | Send Message
     
    Good. Another high profile person checking the company out = another high profile backer further down the line.
    15 Apr 2014, 11:51 AM Reply Like
  • Kay Herbert
    , contributor
    Comments (1173) | Send Message
     
    D. Dan,
    You don't really believe that do you? First we read that there will be no investigation, then we read yes FTC investigates, but it will result only in slap on wrist. Now we have 5 agencies investigating Herbalife! You think there might be a kink in the slap on the wrist thesis?
    15 Apr 2014, 12:00 PM Reply Like
  • herbs4mike
    , contributor
    Comments (2064) | Send Message
     
    Nope.... no slap. Nothing...... for what? Herbalife meets all points of a legal MLM

     

    VanderNat Keep Guidelines.... easily passes, just ask Unemployed Dinneen
    End Users..... according to Independent Nielsens 8 million unique in 3 months
    Follows Judicial precendence..... mandates Distributors follow the 70/10 rule, I've been audited twice.
    Company inventory Buyback policy..... for 1 year, unbelievable & unmatched
    refundable distributor licensing fee.... 90 day no return necessary, unbelievable & unmatched.
    No earnings on recruiting at all.

     

    The above equals not a pyramid scheme, cut and dry. This decision, which without Ackman's billions, there would not have been action at all, will result in no supporting evidence of a pyramid scheme.
    16 Apr 2014, 01:25 AM Reply Like
  • Kay Herbert
    , contributor
    Comments (1173) | Send Message
     
    Here is an interesting paragraph

     

    § 359-fff. Chain distributor schemes prohibited. 1. It shall be
    illegal and prohibited for any person, partnership, corporation, trust
    or association, or any agent or employee thereof, to promote, offer or
    grant participation in a chain distributor scheme.
    2. As used herein a "chain distributor scheme" is a sales device
    whereby a person, upon condition that he make an investment, is granted
    a license or right to solicit or recruit for profit or economic gain one
    or more additional persons who are also granted such license or right
    upon condition of making an investment and may further perpetuate the
    chain of persons who are granted such license or right upon such
    condition. A limitation as to the number of persons who may participate,
    or the presence of additional conditions affecting eligibility for such
    license or right to recruit or solicit or the receipt of profits
    therefrom, does not change the identity of the scheme as a chain
    distributor scheme. As used herein, "investment" means any acquisition,
    for a consideration other than personal services, of property, tangible
    or intangible, and includes without limitation, franchises, business
    opportunities and services, and any other means, medium, form or channel
    for the transferring of funds, whether or not related to the production
    or distribution of goods or services. It does not include sales
    demonstration equipment and materials furnished at cost for use in
    making sales and not for resale.
    3. A chain distributor scheme shall constitute a security within the
    meaning of this article and shall be subject to all of the provisions of
    this article.
    http://bit.ly/1jIbuBM
    15 Apr 2014, 12:35 PM Reply Like
  • herbs4mike
    , contributor
    Comments (2064) | Send Message
     
    right Herbert..... everybody that understands has just been asleep concerning Herbalife, Usana, Nuskin, Amway,and about 20 others for decades.... Lets see who wins this. Obviously, Herbalife stock is still over $50 right. and there is a ton of fund companies (fidellity, vanguard, etc) with million and millions of dollars that have the best lawyers and analysts right,.... we'll see who is right, them or you
    16 Apr 2014, 01:29 AM Reply Like
  • loufah
    , contributor
    Comments (307) | Send Message
     
    Uh, the DOJ and FBI didn't announce inquiries last week. They declined comment, in fact.
    15 Apr 2014, 12:36 PM Reply Like
  • Dave Ritchie
    , contributor
    Comments (2664) | Send Message
     
    loufah: "Uh, the DOJ and FBI didn't announce inquiries last week. They declined comment, in fact."

     

    And the relevance of your condescending comment is...?

     

    My understanding is that the DOJ or FBI never "announce" an investigation of an ongoing white-collar criminal enterprise and usually do so on the basis of a referral from a regulatory or law-enforcement agency. If that's indeed true, I would think their declination to comment rather than deny an investigation speaks volumes; and it's implications are ominous for Herbalife.
    15 Apr 2014, 12:47 PM Reply Like
  • loufah
    , contributor
    Comments (307) | Send Message
     
    The relevance is that the third line of this article (as well as the link in the email that led to it) was incorrect when it said they "announced inquiries". I'm used to shorts here making incorrect claims, but news reports have to be held to a higher standard. SA have corrected the error now, and I thank them for that.

     

    Also, law enforcement virtually always declines to confirm or deny investigations (unless the investigation has previously been announced by a related party or by the target) and thereafter only comments when there is something to report (such as an indictment or deal). Declining comment means nothing. It does not speak volumes.
    16 Apr 2014, 12:59 PM Reply Like
  • Dave Ritchie
    , contributor
    Comments (2664) | Send Message
     
    loufah: "Also, law enforcement virtually always declines to confirm or deny investigations (unless the investigation has previously been announced by a related party or by the target) and thereafter only comments when there is something to report (such as an indictment or deal)."

     

    Thank you for answering my question. However, if you base your assertion on your or someone else's authoritative knowledge of law-enforcement policy, please cite it; and I'll respectfully bow to its veracity. If not, it's no more than a speculative statement, as was mine--expressed as such.
    16 Apr 2014, 08:24 PM Reply Like
  • phxcrane
    , contributor
    Comments (744) | Send Message
     
    Doesn't take much for AG to launch an investigation especially if they are Democrat's. They smell money. Right or wrong has very little to do with it.
    15 Apr 2014, 12:40 PM Reply Like
  • tsalvatore
    , contributor
    Comments (412) | Send Message
     
    The corrected headline still reads "last week the DOJ and FBI started their own inquiries" when the reports were actually that the DOJ and FBI have had ongoing inquiries/investigations and they were only revealed last week. And neither the DOJ or FBI would comment about them, as would be expected. But let's not make it sound like the news out on Friday (about the FBI and DOJ) and last night (about the NY AG) is that they just cracked open a fresh file and assigned an intern to take a look at Herbalife. At some point Carl Icahn and Bill Stiritz are going to wonder how and why they joined this strange game of geriatric scrabble - SEC, FTC, DOJ, FBI, NY AG, and are the next letters to be RICO and DOC?
    15 Apr 2014, 01:07 PM Reply Like
  • Sk8ter2013
    , contributor
    Comments (148) | Send Message
     
    All this people whom also in their heart that new HLF was a Scam and didn't pull out, should not be able to recoup their funds. I can see the mounting Civil suits coming.
    15 Apr 2014, 01:19 PM Reply Like
  • Kay Herbert
    , contributor
    Comments (1173) | Send Message
     
    There will be a lot of stuckholders in this stock. This isn't going to trade above $50 for much longer, just my opinion.
    15 Apr 2014, 02:10 PM Reply Like
  • powershake
    , contributor
    Comments (2195) | Send Message
     
    Well, Ackman is caught as dirt-bag again. Busted with his hands in the cookie jar. Contributing/Bribing AG to do his dirty work.

     

    Stock shoots from minus 3% to plus 3% -- ending up 2%
    15 Apr 2014, 04:14 PM Reply Like
  • herbs4mike
    , contributor
    Comments (2064) | Send Message
     
    Ackman is a dirtbag. He needs to go into the military so he can receive a few adult spankings
    16 Apr 2014, 12:55 PM Reply Like
  • loufah
    , contributor
    Comments (307) | Send Message
     
    Campaign contributions and lobbying are perfectly legal - the former upheld by SCOTUS. Anyone who doesn't like what Ackman is doing should convince someone rich with an opposing viewpoint to do the same, or perhaps one should invest in CDs instead of the stock market.
    16 Apr 2014, 01:18 PM Reply Like
  • loufah
    , contributor
    Comments (307) | Send Message
     
    I'm sorry, that sounded condescending and I didn't mean it to. Point is, it's legal and we have to live with it.
    16 Apr 2014, 02:43 PM Reply Like
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