Herbalife director charged in embezzlement case in Brazil

• SA Contributor Matt Stewart writes that Herbalife (NYSE:HLF) Chairman's Club and board member Pedro Cardoso is one of 12 people charged in a years-old embezzlement case in Brazil. Mr. Cardoso was a partner in a company that was connected to a firm that allegedly siphoned 26.7M Brazilian reais ($10.4M) from the state government in Espirito Santo under the guise of making donations to community centers, schools and hospitals. Instead, the money was used to fund private events that had no public interest.
• The company in question is the Assembleia Legislativa do Espirito Santo (ALES) headed by Jose Carlos Gratz. Mr. Cardoso was a partner in a firm that cashed an ALES check in 1999 for 6,000 Brazilian reais that was signed by Mr. Gratz.
• Under SEC disclosure rules, companies must report legal proceedings that are material in evaluating the integrity of a director. Herbalife has not done so. In a statement mailed to Reuters by an Herbalife official, Mr. Cardoso said the case is a private matter dating back to 1998 which has no bearing on his work with Herbalife. "I have received no official notification of any kind with regards to this matter, " he said.
• The 8th Criminal Court of Vitoria ordered bailiffs to serve him with a subpoena in 2010 but they were unable to locate him because he moved several times without notifying the court so the case remains open.
• Herbalife and the SEC declined further comment.