The promotional attack machine used to bring Herbalife Ltd. (NYSE:HLF) to its knees is now targeting Anthony Powell, one of the nutritional supplement company’s top distributors.

Herbalife Powell Linkedin

Ackman working to coax the stock of Herbalife

Using a web site operated by Pershing Square Capital to document issues in the Herbalife case to coax the stock of Herbalife Ltd. (NYSE:HLF) lower is not new for the activist hedge fund, as we have previously reported in ValueWalk.

Herbalife powell head shot

The Pershing Square Capital operated website has, under the subsection “perpetrators,” a profile of Anthony Powell, an aggressive entrepreneur highly successful at closing deals to build an Herbalife distribution network of over 16,000 distributors under his domain. Powell used this aggressiveness to become one of Herbalife Ltd. (NYSE:HLF)’s top distributors, in some years earning nearly half a million per year.  The problem is, on Ackman’s Herbalife attack website Powell is accused of making get rich quick promises using a pyramid scheme to build his fortune.

Herbalife targeted as a pyramid scheme

The web site hosts a litany of issues in an attempt to promote Herbalife as an illegal pyramid scheme:

Herbalife Powell ad

In 2002, NWTW, Herbalife, Powell, and other senior Herbalife Ltd. (NYSE:HLF) distributors were sued in a class action in federal district court in Los Angeles. Plaintiff alleged that Herbalife and NWTW constituted a pyramid scheme and that the defendants were committing fraud and securities fraud by making deceptive earnings projections and omitting and misrepresenting the risks inherent in the business.

Plaintiff further alleged that “Powell, along with other of the defendants, conceived, authorized the use of and operated the Lead Generation System known as ‘The Newest Way to Wealth.’”Id. at ¶ 20. Herbalife settled the case for $6 million in 2004.

“Dream Builders (owned by Powell and NWTW) operated under the . . . fictitious name “The Newest Way to Wealth,” and distributed and disseminated the NWTW promotional materials . . . and [sold] the NWTW System . . . .” The company’s registration status is listed as “Permanently Revoked.”

Powell, who worked as an Herbalife Ltd. (NYSE:HLF) distributor from 1991 to 2013, using training videos and online recruitment methods to recruit other distributors to work under his division.  These new Powell recruits, after paying a fee to join the system and work as a marketer, would then recruit other distributors, who would then recruit other distributors. Powell made his money by taking a percentage of the revenue off the top of each distributor recruited by himself and the distributors underneath him that were recruited by his recruits.