COUNTDOWN TO DEMISE OF HERBALIFE PYRAMID PONZI HAS BEGUN IN USA: SEC/FTC CRIMINALS WILL HAVE NO
CHOICE BUT TO DECLARE PYRAMID PONZI.......
NEW REGULATION TO TAKE DOWN ALL "MLM' PONZI FROM FRAUD STEET CASINO IS MUST
There are two icons of MLM that represent all the others of that “industry”. They are among the oldest and largest MLMs, and they have spread to most other countries worldwide. One is Amway. The other is Herbalife.
Herbalife has just been ruled an illegal pyramid scheme by a court in Belgium. A case had been brought against Herbalife in Belgium by a non-profit consumer protection organization.
Previously, Herbalife marketers have been prosecuted in Canada, and Herbalife has been sued by individual distributors in the USA and in class action suits by American consumers who claim Herbalife is an illegal pyramid scheme.
After years of delay in the Belgian courts, a ruling was finally gained: It concludes that Herbalife is exactly what the consumer group claimed it is, an illegal pyramid scheme based on “endless chain” recruiting. Such a plan dooms the vast majority to losses, by its design and deception.
The Belgian court zeroed in on several key points that affect many other MLMs.
1.) It showed that Herbalife is not a direct selling company.
Herbalife did not offer the court any evidence that it has a base of consumers who buy the products on a retail basis from Herbalife “distributors.” In fact, the actual customers, based on evidence, are the Herbalife salespeople themselves. They buy thousands of dollars of products in order to receive promised commissions gained from recruiting other “salespeople.” It is theoretically possible to sell Herbalife goods to retail customers for a profit, the court acknowledged, but few salespeople ever do, based on evidence, and the Herbalife pay plan offers much more reward for recruiting than for retailing.
2.) The court also rejected Herbalife’s claim (which is also made by many other MLM companies) that its salespeople can be classified as “retail customers.”
The court revealed that Herbalife plays a shell game, depending on whether it is reporting to the SEC and shareholders, arguing to the court, or recruiting consumers, in which sometimes the salespeople are described as “direct sellers” or “distributors” and at other times as “customers.” Clearly, both cannot be true at the same time. Salespeople pay fees, sign legally binding contracts that define them as “contractors,” and are offered rewards based on recruiting.
Herbalife’s “direct selling” disguise and the deceptive shell game of “find the customer” were both rejected by the court, which concluded in plain language that Herbalife rewards consumer investors for recruiting other consumer investors and the rewards are based upon an unsustainable and “dishonest” system of endless recruiting.
Despite this ruling in Belgium (which took 7 years to litigate) and despite previous class action suits brought by American consumers in which Herbalife paid millions to settle, the Federal Trade Commission (FTC) in America, where Herbalife is based, has taken no law enforcement action against the scheme in recent years.
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From 4-9 WSJ Blog, man:
MarketBeat: How big a deal is it for Herbalife to pick a new auditor based on the scrutiny its business is under?
Angel: ”If I were one of the companies involved, I would be extraordinary angry. Not only do I have to find new auditors, I have to get re-audited for the last few years. That’s going to cost a boat-load of money.This is not a good time for Herbalife to shop for a new auditor. There are only three of the big four accounting firms left that they can choose from at this point. Because of the battles going around the company, any auditor going in there is going to demand more money. They’re going to scrutinize everything twice as hard as they normally would because they know that everything they do is going to be examined with a fine tooth comb. They know that everyone’s watching what’s going on with Herbalife. They know that these shorts will look at every line item with an electron microscope. They know that the SEC will be looking at every line item with a magnifying glass. The know that the plaintiff bar is loading up the ammunition to sue everybody in sight at the first opportunity. This is going to be a very risky client. Because of that, it’s going to cost them more in terms of outright fees and the amount of work the accountants will have to do. And, what if they don’t want one of the remaining Big Four? Then how will the markets react to that? There’s a lot of risk here for Herbalife in terms of how they deal with this situation. This is the last thing management needs at a time like this.”