Pershing Square New In-Depth Study Released On Herbalife Ltd. (HLF) Practices

Pershing Square New In-Depth Study Released On Herbalife Ltd. (HLF) Practices

Pershing Square Capital Management, L.P. announces the release of a series of background papers on key wrongdoers in Herbalife Ltd. (NYSE: HLF)’s unlawful pyramid scheme, starting with Shawn Dahl



New York, NY – February 3, 2014.   Pershing Square Capital Management, L.P. released today an in-depth study on the deceptive practices and recruitment systems used by Shawn Dahl of White Rock, Vancouver, Canada, who started in 1999 with Herbalife Ltd. (NYSE: HLF), a member of its Chairman’s Club until June 2013, and one of Herbalife’s top distributors in recent years.

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This is the first in a series of papers to be released by Pershing Square.  Other wrongdoers who will be profiled include:

–          Doran Andry, a 22-year Herbalife Ltd. (NYSE:HLF) veteran, member of the Chairman’s Club, and top distributor in recent years;

–          Leslie Stanford, a 33-year Herbalife veteran, member of the Founder’s Circle, and former member of the Board of Directors;

–          John Tartol, a 32-year Herbalife Ltd. (NYSE:HLF) veteran, a member of the Chairman’s Club, and current member of the Board of Directors;

–          And other senior distributors.


Herbalife knows about these deceptive practices, relies upon them, profits from them, and rewards the perpetrators with millions of dollars of remuneration, including discretionary bonuses.


As an unlawful pyramid scheme, Herbalife fosters, promotes, honors, and financially rewards pyramid schemes operated by its top distributors.  Because there is little genuine retail demand for Herbalife’s overpriced commodity products, the company depends for its revenues on the endless recruitment of new distributors.


As an example of Herbalife’s wrongful practices, Dahl operates a lead generation business which recruited large numbers into Herbalife’s pyramid scheme with false promises of easy money and financial freedom.  He took over his lead generation business, Online Business System (OBS), from his mother-in-law, Deborah Stoltz, and her sister, Marilyn Thom, who were convicted in Canadian Federal Court in Vancouver, British Columbia, of operating an unlawful Herbalife pyramid scheme in Canada in 2004.


Pershing Square has evidence that Stoltz and Thom remained active with Herbalife. They were featured as President’s Team members and at company events as recently as December 13th.

Herbalife distanced itself from Dahl in 2013 after Pershing Square’s December 2012 presentation, which shined light on Herbalife and OBS. Herbalife had for more than 13 years facilitated, celebrated, and promoted Dahl’s business.

A summary outlining Dahl’s deceptive practices is attached.  The material, with extensive links to exhibits and videos documenting the allegations, will also be available on

About Pershing Square Capital Management, L.P.

Pershing Square Capital Management, L.P., based in New York City, is a SEC-registered investment advisor to private investment funds.  Pershing Square manages funds that are in the business of trading — buying and selling — securities and other financial instruments.  Funds managed by Pershing Square have established short and other bearish economic positions against securities of Herbalife Ltd.  Pershing Square may change its views about, or its investment positions in,Herbalife at any time, for any reason or no reason.  Pershing Square may buy, sell, cover or otherwise change the form or substance of its Herbalife investment.  Pershing Square disclaims any obligation to notify the market of any such changes.  Please see the full Disclaimer appearing on website



Jennifer Burner

(212) 260-8813

[email protected]


Carolyn Sargent

(212) 843-8030

[email protected]




Summary of Report on Shawn Dahl

Dates of Herbalife Distributorship:  approx. 1999 – 2013

Status in Herbalife:  Chairman’s Club (former)

Business Methods:  Lead Generation, Training Videos, Recruiting Materials

All statements in this summary report are made pursuant to Pershing Square’s disclaimer, available at

  • ·         For over a decade, Shawn Dahl was one of Herbalife’s most successful distributors and was celebrated and promoted by Herbalife as a paragon of success.  He became a member of the Chairman’s Club, a status that only 50 of 3.5 million people have attained.
  • ·         Dahl achieved success by running a lead-generation business called Online Business Systems, which he took over from his mother-in-law Deborah Stoltz and her sister Marilyn Thom in 2004, when they were convicted of operating a scheme of pyramid selling for Herbalife and failing to make required disclosures, in violation of the Canadian Competition Act.  In the months before their conviction as they were negotiating with Canadian authorities, Stoltz and Thom handed the keys to their unlawful business to Dahl, who continued it under the name Online Business Systems (OBS).
  • ·         OBS has recruited huge numbers of new distributors into the Herbalife scheme with false promises of easy money and financial freedom.  We estimate the amount of inventory purchased by OBS’ failed distributors and their other losses to be in the hundreds of millions of dollars.The vast majority of OBS members fail quickly. According to Dahl’s own documents, even among the OBS members who made the investment (often up to $3,000) to qualify as a Supervisor in the Herbalife marketing plan, the turnover rate is 86% per year.
  • ·         Dahl provides various training materials and other business tools that plainly tell members of OBS to focus their efforts on recruiting new distributors into the Herbalife scheme rather than selling Herbalife products to genuine retail customers outside the distribution network.  He has said: “If you want lifestyle income, you recruit.”
  • ·         With full knowledge of OBS’s deceptive practices, Herbalife facilitated OBS’s business and promoted and celebrated Dahl, as well as Stoltz and Thom even after their conviction for running an Herbalife pyramid scheme.  Herbalife CEO Michael Johnson and Herbalife President Des Walsh participated in an OBS conference call, telling people that this was a “powerful business opportunity” that was “changing people’s lives.”  Herbalife featured Dahl’s claims of success in Herbalife’s own its publications and at Herbalife events.
  • ·         While Herbalife has attempted to distance itself from Dahl recently, the company cannot escape liability for participating in Dahl’s deceptive and destructive conduct for a decade.

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