Bill Ackman is at it again, focusing on Herbalife Ltd. (NYSE:HLF) independent distributors it considers used questionable business practices to recruit members and perpetuate what is being investigated for being a pyramid scheme.
Ackman focuses his attack on Brett Bartholomew, Katie Carr and the De Brabanders
On HerbalifePyramidScheme.com statements from Bartholomew and Carr, a middle aged couple with all-American looks, are highlighted making big promises. “We are really big in Herbalife on personal development. . . . We want to activate your dreams, activate your goals . . . . Remember at the beginning of the video when I told you that you had just launched yourself into an incredible new business and, you know, you’re gonna become financially free.”
Herbalife distributors targeting disadvantaged people?
Listening to the claims of some Herbalife Ltd. (NYSE:HLF) distributors and watching the movie Wolf of Wall Street might be instructive at its root. Herbalife distributors apparently target disadvantaged people — unemployed, under educated, working class people — and uses promises of an easy path to easy street to ply scant resources from generally working class people. The Wolf of Wall Street was a movie about what was known as a “bucket shop,” stock salespeople who made promises of riches and how it would impact lives of initially working class people, selling them “penny stocks” that, in reality, had little hope of generating wealth.
The site notes the script provided “Herbalife Ltd. (NYSE:HLF) facts in a nutshell” for members to share with recruits to promote the business opportunity. These “facts” included a number of statements that deceptively imply that a recruit could earn substantial income, including: (i) “We have a marketing plan that pays 30% higher than any company in this entire industry”; (ii) “We have more people earning over $100,000 a year than any other corporation in American history”; and (iii) “We have developed more millionaires than even Microsoft.”
Big claims that might fall into the CYNK Technology Corp (OTCMKTS:CYNK) category if they were not fulfilled, a penny stock that apparently has no employees, product or revenue but garnered a multi-billion stock valuation recently, the subject of a regulatory investigation.
Herbalife website claims De Brabanders’ promised path to riches
The site also lays into claims of a path to riches promised by the De Brabanders. “We couldn’t give to our children the things we wanted to give them as they were growing up because of lack of money, but now we have six wonderful grandchildren which we just absolutely adore and we can give them everything now,” the site quotes a video as saying. “It’s now an absolute dream come true now to be able to do things for our grandchildren. . . . It’s become a perfect life for our children, and that is all thanks to Herbalife Ltd. (NYSE:HLF).” The video continues to flash between images of vacations on boats and expensive cars parked in front of what appears to be the de Brabander’s house.
Easy money, work from home, make your own hours, say goodbye to nine to five. All claims are being investigated by regulators. The Wolf of Wall Street ultimately found a jail cell. It is unclear if Herbalife Ltd. (NYSE:HLF) will find a similar fate, but billionaire Bill Ackman is dedicating his powerful activist hedge fund and its resources to make it happen.