Herbalife Ltd. (NYSE:HLF) may be facing yet another investigation into allegations that it is a pyramid scheme. This time, the New York Post reports that New York Attorney General Eric Schneiderman has begun to investigate those allegations.
New Herbalife probe uncovered
According to the Post, the unnamed sources claim that two or more whistleblowers have provided sworn testimony to investigators connected with Schneiderman’s office. They also say his office has had complaints from a number of former Herbalife Ltd. (NYSE:HLF) distributors who are Hispanic and claim the multi-level marketing company defrauded them.
Herbalife Ltd. (NYSE:HLF) already faces both criminal and civil investigations in connection with allegations that it is a pyramid scheme.
Herbalife shares react to probes, management in denial
On Friday, it was reported that Manhattan U.S. Attorney Preet Bharara and the FBI had launched criminal investigations of Herbalife Ltd. (NYSE:HLF). Shares of the nutritional company’s stock declined as much as 17% after that report. Then on Monday, the stock erased the losses, rising by as much as 7%.
Herbalife Ltd. (NYSE:HLF) executives say the FBI never told them that the company is being investigated. They also denied that the investigation is happening. However, at least nine other media outlets—in addition to the Financial Times, which first reported the probe—were able to confirm that the investigation is underway.
Herbalife lobbies intensely
Sources also reportedly told the New York Post that Schneiderman has been the target of intense lobbying by both Herbalife Ltd. (NYSE:HLF) supporters and opponents. They said the nutritional supplements company hired law firm Dickstein Shapiro to lobby for it with state attorneys general. They also said that Schneiderman was one of the campaign’s biggest targets.
Last week Herbalife Ltd. (NYSE:HLF) also hired SKD Knickerbocker Group, a political advisory firm. Schneiderman’s ex-wife reportedly works there as a managing director. Herbalife stated that Jennifer Cunningham, his ex-wife, would not be assigned to their case. In the past she had advised Schneiderman while he was campaigning for the office of attorney general.