Bill Ackman’s Pershing Square continues his almost four years crusade against Herbalife. The hedge funed released its 18th video on Thursday warning investors about the alleged the company is a pyramid scheme. Ackman has been shorting Herbalife since December of 2012, CNBC‘s Scott Wapner reported on “Fast Money Halftime Report”.
The new video shows a Herbalife President’s team member, Style Bell, speaking at a webinar recruiting members: “You guys are going to make a ridiculous amount of income. You can’t even imagine. When I tell you what you think you’re going to get, it’s going to be times 10, ” according to an Herbalife distributor’s pitch posted on Facts About Herbalife, a Web site Pershing Square maintains.
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“There’s not one of an Herbalife distributor talking to his recruits about how to sell the product. … It’s all about how to recruit people to become distributors, because that’s the only way you can make money, ” Ackman said in in an interview to CNBC.
Less than 1% of the company’s distributors earn more than minimum wage from the company and 90% of new distributors drop out in their first year, Wapner said on CNBC.
Ackman told CNBC that In Herbalife’s 2016 10-K report, the company said it is nearing a resolution with the FTC regarding a regulatory investigation.
In May, Herbalife said it is in advanced discussions regarding a potential settlement of the investigation for $200 million.
“During these processes thousands of Herbalife distributors would attempt to recruit people through webinars but with false, misleading statements about the potential of Herbalife’s business opportunities, ” Ackman said. “The only way to make money is to recruit people to invest thousands of dollars in the company. There is no way for HerbaLife to stop the abuse unless it changes its marketing plan, Ackman explained.
