Bill Ackman is on the attack again. This time the activist hedge fund manager’s target is the couple of Kurt and Cindy O’Connell, independent business people operating out of Appleton, Wisconsin and Bonita Springs, Florida.

Bill Ackman

Ackman: Herbalife distributors targeted for their claims made in video

The O’Connells are featured on the web site www.HerbalifePyramidScheme.com and are used in Ackman’s attack against Herbalife Ltd. (NYSE:HLF). Ackman’s hedge fund, Pershing Square, has placed a $1 billion short bet against Herbalife in a high stakes battle to take the firm down.  It has brought regulatory heat, as investigators determine if the firm is a pyramid scheme, as well as produced a short documentary film on what Ackman calls Herbalife’s questionable business practices.  The attack targets are now including individual distributors of the company.

The apparent ire of the attack are videos the couple produced promoting Herbalife Ltd. (NYSE:HLF) to would-be distributors who would fall under the O’Connell’s revenue stream.

The O’Connell’s were struggling but “had a dream”

“Cindy O’Connell recounts that she and her husband ‘were struggling financially and we had a dream,’” the web site points out, attempting to highlight potentially false and misleading promises.  “Cindy later tells recruits that if they want to make ‘anywhere from a few hundred dollars a month really up to, like, $4,000 a month, you can do that by being in the position on the marketing plan called Supervisor or World Team.’”

The web site notes that the O’Connells outlined income expectations without disclaimers. In another example of potential misleading statements the website points out “Cindy O’Connell tells potential recruits that starting an Herbalife Ltd. (NYSE:HLF) business is a low-cost proposition that will quickly turn profitable:  ‘In my mind, I thought, it takes a lot more money to build this business than it really did.  And when I boiled it right down and actually kinda wrote down what does it cost me to keep my business running every month . . . when I broke it down and added it all up, it really wasn’t that much.  And then when I looked at what the income for my business, how much retail profit was I making, how much wholesale profit was I making, how much royalty profit was I making, how much production bonus was I making, when I was able to add and put that all together I realized, boy, it really doesn’t take that much money to run this business and for the most part, you know, your cash flow is keeping things going and then boom, before you know it, you’re into that profit level.’”

Then the web site digs into a key charge, that Herbalife Ltd. (NYSE:HLF) is all about building a distributor network underneath, bolstering the pyramid scheme claim, quoting husband Kurt.  “Kurt O’Connell then makes it clear that recruiting is the primary means by which an Herbalife distributor can achieve a substantial income.  Referring to ‘royalty income,’ he says, ‘That’s the dream money.  The dream money will come from that royalty, for those of you that are building that big dream.’”

In the O’Connell promotional videos the web site notes claims that the O’Connell’s have earned “over a million dollars last year and our check is still growing.”  That doesn’t top Ackman, who stands to make billions if an Herbalife Ltd. (NYSE:HLF) pyramid is proven and comes crashing down.