Questions About Herbalife Questions

Herbalife-Scam-Johnson-Pyramid

Herbalife-Scam-Johnson-Pyramid

Is Herbalife a pyramid scheme?

It’s a good :: and fair … question to be asking if you find yourself enmeshed in a sticky stinky web of Herbalife’s outright fucking lies. Google gets asked the question so often :: that many unicorn distributors focus their marketing attention on phrases like “Herbalife Scam” … rather than on more positive phrases like “Herbalife Formula 1 Wild Berry™ FTW!”

But if you’re a journalist asking that question :: then you’re not a journalist … and don’t let society’s lazy labeling convince you otherwise.

“Is Herbalife a pyramid scheme? Some Wall Street assholes say yes :: while other Wall Street assholes say no … tonight on CNBC ActionNews!”

Why should I care what Wall Street assholes think? Have we outsourced the corruption and fraud exposing functions of the press to Wall Street {aka the causers of fraud and corruption}? Is that a bad idea? Does that question need to be asked? Do I have the balls to say anything conclusive or fucking useful?

Is it a pyramid scheme or not? Hows about checking into the facts for about five seconds … and then just telling us?

The vast majority of Herbalife victims are able to figure out that Herbalife is a scam within a year or two :: but somehow the press can’t manage to do it in three fucking decades. It’s disgusting … almost as disgusting as Herbalife existing.

The stock’s up … the stock’s downooh là là.

Herbalife Chart is Boring

But it’s nothing but downs for the victims of this bullshit … and the stock price has got fuck all to do with it.

Herb Greenberg’s story was good … so he’ll prolly be fired.

BusinessWeek got at it :: the point that should be the point … for about one sentence.

What gets lost in the noise about the hedge fund scuffle is the pain of ordinary people (IBOs, or Independent Business Owners, in industry parlance) who have been burned.

Yep :: those ordinary people are called victims … and there are millions of them. Search Google News for “Herbalife stock” and you’ll get 9000 results :: search for “Herbalife victim” and you’ll get six.

I wonder how a pyramid scheme could last for thirty years?

Just askin’ questions :: ones that have obvious answers … like how I learned from watching all them real reporters.

>> bleep bloop

62 thoughts on “Questions About Herbalife Questions”

  1. Ok, so we shouldn’t focus so much on the stock price or something. But what happened in May 2012?

    It can’t seriously just have been this can it?
    Herbalife shares fall on fund manager’s queries

    I know stocks can be jumpy sometimes{/always}, but stocks often bounce right back. That appears not to have happened after May 2012, so.. why?


    Furry cows moo and decompress.

    1. @Wyrd ::

      Yep :: Einhorn asked three questions … and Herbalife shed $2 billion.

      Because it’s a totally real company … and not an obvious pyramid scheme.

      1. @MKR,

        Ok, so this is obsolete now, but I’ll forever be on the look out for any excuse to post this because it’s so cool. (Buried in a link so as to not be distracting.)

        Whedon On Romney

    1. @Jack, Yup – Carl Icahn looks more like the untrustworthy junk mortgage bond spiv that he is in that photo.

      Carl Ichan has significant shareholdings in Time Warner.

      Time Warner owns Time Magazine.

      Time Magazine did the puff piece http://business.time.com/2013/01/09/is-herbalife-a-pyramid-scheme-the-target-of-market-manipulation-or-just-a-good-gripping-yarn/ on Herbalife.

      Any connection? I think so. Does Time Magazine need to declare affiliations on puff pieces positively correlating with stock positions taken by its owners? That would be a meaty one for the FTC. Except the FTC is not a meat eater, or a vegetarian. More like a plant… or not?

  2. Sharks attacking sharks.

    Either way, the sharks win, and the waters stay muddy and bloody for the minnows.

    Scumbags.

  3. Have you noticed that people who embark on a careers in finance on Wall Street, generally seem to make millions of dollars? It seems like all a person has to do is be really smart, really motivated to make money – and get into finance, and they’ll end up rich.

    Maybe that’s because most everything Americans buy is financed: a car, loans for college, a house, credit cards, etc. I get it that finance is basically banking or lending money, and is big business. But it still amazes me at how many people go into finance and get really rich. Why is it, though, that regardless if the economy is good and growing, or not so good and shrinking, people in finance always make out like bandits?

    About two years ago, when we were in recession and 30 million people were unemployed, and millions of people were losing their homes, I read that bonuses paid to people working on wall street that year set a new record. Something like eighteen billion dollars in bonuses, or like $80,000 FOR EVERY PERSON working on wall street, if averaged out to include all people at the firms, receptionists to senior partners. Of course, receptionists probably don’t get much of a bonus, and the majority of that eighteen billion dollars went to the big wigs.

    But it makes you wonder…

    Is there really THAT much money to be made in finance? Obviously the answer is yes. The finance community is filled with very smart, shrewd sharks that know how to make money off of Fred and Sally Lunchbucket, the average folk, in good times and in bad. When the economy is booming, financing is available to remodel that kitchen in need of updating. When the economy is bad, financing is available to borrow money to go back to school and retool your career…or buy new clothes so you look sharp on job interviews…or buy that new flatscreen TV, since you know you can’t afford to go on vacation this year, at least you can watch your favorite shows in style.

    Every time money moves, the folks on wall street have figured out how to get paid. As long as money is moving from point A to point B, somehow someway, the sharks on wall street get a piece of the action.

    And all the while, the sharks in finance on wall street are making bank. No matter what.

    So these wall street assholes will make billions off of Herbalife. The stock price will go up, and some of the sharks will make a few billion. Then the stock will crash, and other sharks will make a few billion.

    But the average Joe and the average Jane, the common folk who get sold on joining Herbalife with the hope of honestly making some extra money on the side, and maybe, just maybe, if they work really hard and get all of their family and friends to sign up to, the just might have a short at getting rich one day.

    But of course, that will never happen for 99.99% of the herbalife independent distributors. We all know that. They are sold a big lie. They have been deceived. They have been cheated. Because they aren’t shrewd like the sharks on wall street. They don’t really understand how the game is played.

    And when Herbalife eventually crashes and burns, and untold billions of dollars are lost for average Joe and Jane who never made a penny, despite putting in years and hundreds of hours trying to ‘build their business’, they sharks on wall street will have already made their billions.

    And more record bonuses for wall street firms will be paid.

    1. @Mother Kilstein,

      If only your schlubby had your insight and writing talent, he might have a career as a copywriter!

      1. @Lanna, Oh wouldn’t that be nice. If schlubby could actually write. Or do anything to earn a real living. But no, Not-Doctor Harlan Kilstein keeps trying to get rich, selling other wanna-be internet marketers worthless products on how to get rich…

        And all the while the fat turd still lives at home with Mother. Sleeping on my couch. He’s going to turn 63 this year. If this keeps up much longer, schlubby will hit retirement age without ever having left home…

    2. @Mother Kilstein,

      Ok, this is all OT, but… don’t forget the “too big to fail” part. That was an interesting trick that they got in there, the part where they’re so integral to the system that they can’t be allowed to die when they’re supposed to.

      There’s too much money lending going on at interest rates that are too high. Credit cards (i.e. unsecured loans) shouldn’t work in general–they shouldn’t be a viable money making operation. That they do is, IMHO, indicative of a world gone mad.

      I know, I know.. preaching to the choir…

      1. @Wyrd, Interesting trick indeed. The very smart, but ruthless and morally bankrupt, finance sharks on wall street – as well as those running Herbalife, have managed to profit wildly on this giant pyramid scheme…making billions by duping the average Joe, yet somehow this is all technically legal?

  4. The Time article journalist

    http://business.time.com/2013/01/09/is-herbalife-a-pyramid-scheme-the-target-of-market-manipulation-or-just-a-good-gripping-yarn/

    implies yet ignores the fact that Herbalife ties people in and sucks their blood until they are dead or useless…

    “Even if you discount Ackman’s estimate that 98.9% of Herbalife distributors make $475 or less per year before expenses, Herbalife itself says only 9.85% of distributors average more than $7,354 in gross annual compensation.”

    Before expenses! Please read your own copy (if it is?) Mr Matthews. Expenses will easily reduce the $475 and/or the $7,354 to a LOSS for 99% or 90% of distributors.

    And on the Time website. Shame on Time.

    And then the article goes on to whinge about ‘short selling’ receiving as much ‘public opprobrium’ as MLM scams.

    If only there had been more ‘short selling’ over the last twenty years – earlier, more accurate, and non manipulative ‘short selling’.

    Scam bucket operations from Goldman Sachs down would have been kept in their boxes, and a good proportion of the general population would still be enjoying stable jobs in a stable economy – rather than evicted / homeless / jobless.

    You need short selling to kill dishonest hype, miss selling, and over priced crap.

    The argument that short selling in itelf is bad is cretinous. You can make the same arguments for buying long.

    Deceptive activities around short selling (aka Goldman Sachs modus operandi) or around buying long – is what is heinous.

    Yup – that Time article was one heap of misleading shit.

    1. @Random stuff,

      implies yet ignores the fact that Herbalife ties people in and sucks their blood until they are dead or useless…

      Agreed, but the Time article person probably didn’t notice.

      Most conspiracies are either fake or else they’re small and we find out about them eventually and they explode.

      For any actual sort of cover-up of the truth to work on an epic scale, it’s gotta be that most of the general public (like all of us) are a part of it without really realizing it.

      The sick machine that allows and perpetuates scamming seems to be an example of this to me. It’s everywhere. It’s epic in size and scale.

      It has become so normal for people to see friends and family caught up in an MLM and spit back out again afterwards that people just tend to accept it the same way they do cancer. “It’s just one of those things,” they tell themselves. “Sure MLM-X didn’t work out for Johnny, Sue, or Bobby. But the MLM isn’t fundamentally flawed. It must work for some people out there. I mean just look at Herbalife–it’s a publicly traded company for crying out loud.” etc.

      The would-be journalists that write articles are (sadly) no less likely to succumb to this doublethink. Oh and then there’s always the victim blaming that’s probably been going on since the dawn of time. That’s a classic. When all else fails, blame the victim for all the bad sh*t that happened to them. As if the perpetrator(s) somehow carried no responsibility whatsoever.

      Sixty-two thousand four hundred repetitions make one {fake} truth.

      1. @Wyrd, Agreed. It’s a possibility that the journalist has succumbed to this doublethink.

        I’d also agree that for a general scam to work, the general public, including ourselves, just need to believe the glossy PR / sales flim flam / spin, and sometimes it is very good.

        But a good journalist should analyse past the glossy PR / sales flim flam / spin.

        My worry is the fact that Icahn owns a controlling stake in Time Warner, which owns Time Magazine, and that there is a connection between the article which implies Herbalife might be OK, and the fact that Icahn has placed bets that Herbalife is OK.

        If the journalist did just a simple search on Herbalife misery – he would know that his article was not portraying the essential truth and should have changed it. Either he did not do this simple search – so is a poor journalist – or he did, in which case the article is misleading etc.

        …but then again, many journalists are mouthpieces of corporate PR, so why should I be surprised if there is one more or one less.

  5. I was at Barnes & Noble yesterday in the science section… And it is very close to the new age/self-improvement bs section.

    Some little 18 year old ahole from Amway pitches this other guy in that new age/self-help section about how successful he is and bragging that he has his own “business” at the age of only 18 and that he doesn’t live with his parents but by himself.

    He started to talk about Napoleon Hill’s books. I decided to intervene in the conversation just to see if this guy is really successful from reading Napoleon Hill’s BS books.

    He first talked about how these books should be taught in the school system. Really? We should be now teaching children this new age bs.

    He didn’t say anything about Amway for a while. He was trying to build some rapport with me and the other guy. (I played like I was dumb.)

    Than after some small talk about how great self-help books are and how it’s changed his life…

    He then immediately goes into his sales pitch about Amway. Claiming he is making $50,000 a year as an 18 year old… Living on his own and paying all his bills without daddy.

    Right then and there… I laughed very hard inside. Scammers, pyramid schemes, “multi-level marketers” and all other gimmick business cons always feed their sheep this positive self-help “you can do anything in the world guaranteed” BS…

    It is disgustingly manipulative and they know that they have to play with people’s emotions to suck their wallet dry.

    I even asked this ahole some questions to determine if he even fully read the book and applies some of the principles (99.99% of it is BS)…

    Turns out he didn’t even fully read any of Hill’s books. He himself knows it’s just worthless bullshit. I’ve read a lot of Hill’s books for free in the Barnes & Noble and I think it is the most worthless garbage even dangerous thinking.

    He didn’t even right down any of his goals in life like Hill suggests.

    I agree with writing your goals and plans to achieve them but that is IT. I think the rest of it is complete utter garbage. Stuff like psychic abilities, speaking with ghosts, not masturbating like Hill suggests and other completely proven to be false garbage.

    In fact, Hill became poor during the Great Depression and he actually admitted that he couldn’t pull himself out with his BS success secrets. That just goes to show and prove that it is all 99.99% bullshit.

    They only thing recommended is to write down goals with specific plans, review them, take a specific planned course of action, have a written schedule and daily, weekly, monthly planner and just get to work. Forget positive think bullshit. It does nothing, I’m telling you right now.

    Bill Gates or any other big name like Warren Buffet got there because of taking action not positive mental bs and other law of attraction fairy thinking.

    And all you retards out there who keep saying so proudly how Bill Gates dropped out of college and he still was successful without college…

    Actually you are wrong…

    1. He completed 3 years with High Grades. He was almost done with just 2 more semesters. He learned a lot in Harvard in those 3 years.
    2. He actually DID something like taking action and doing some very busy focused work. Not sitting around all day and visualizing wealth, ferraris, mansions and gold coins.
    3. His father was an Attorney who supported him financially.
    4. He went back and completed his degree at Harvard even at middle-age because he knew they value of education.

    The thing with money and success also has a lot to do with what family backgrounds you come from. Warren Buffet came from a decent well-off family and so did Bill Gates.

    It is very rare although it happens that someone self-made from poverty comes out but these scammers, cons and MLM assholes always love to point out these examples as actual typical results.

    And in that case, it has a lot to do with being simply being lucky and also being NATURALLY talented along with years, years and years of dedicated specific focused hard work.

    The true secret of success is just flat out common sense and it is actually a painful cold hard truth.

    This is why these books and brainwashing courses on self-help are so popular because they try to tell people down in their finances that their is a easy shortcut at the push of a button and success will happen to them guaranteed.

    Why do you think sperm banks always ask and strongly insist their donors to be college educated along with submit sometimes to IQ testing and psychological screening?

    Success is simply a combination of genetics, family backgrounds, education levels, being in the right place at the right time, connections, marrying rich or lottery winning.

    Speaking of lottery winning… EVEN that is not f-ing guaranteed since 2/3rds of people who win the lottery within 5-10 years end up worse than they started. Why?

    Because money is not also only a matter of luck or visualizing money in your head in the foolish hopes that it will come out of nowhere.

    It has a lot to do with talent in handling it, flat out classic hard work and being gifted with experience in finance. All these skills and qualities are earned not simply gained overnight or even within a few years… it can actually take DECADES and it has for a lot of authentically wealthy people like Warren Buffet.

    I personally think the FTC should also implement laws that will prevent these self-help cons, pyramid scheme cons and other get-rich quick scammers to use examples of real-world successful people and claim that they will be able to duplicate the results of those people for you. This is flat-out blatant fraud and it simply not possible for these people to know unless they were with these people at all times since birth and even than they would also need to have read their minds throughout their life.

    You don’t need to have books on what makes people successful and how you can be too. The answers are in front of you. Just use common sense, be logical, objective and see the reality of the world. Not wishful bs like law of attraction. Have a scientific discerning attitude and you will generally do ok in life. Wealth however I can not promise you; they are so many factors involved in wealth that are simply out of the majority of people’s control and will very likely stay out of their control. The con-artists often use such a dirty psychological tactic of saying “You are in complete control of your entire life.”

    This is false. We only have a very small control of our lives. This is fact. Whatever control you have on your life, just work hard at it and spend your time wisely. Go get an education if you can as well. Not bs like get-quick rich schemes and seminars.

    Most of these scammers I’ve seen first hand EVENTUALLY end up broke even when they made decent money that they cheated out of their victims. Why? Because they are stupid and people like them have to resort to cheating others for money. Stupid people tend to lose money.

    I’ve even seen law of attraction scammer gurus suggest you to spend money as it will “give the message to the universe that you have a wealth mindset and not a poverty-mindset associated with saving”… These guys have such audacity to give even dangerous advice like this with no credible qualifications in finance, wealth management or business.

    Warren Buffet himself said that saving as much money as possible is key to becoming wealthy. I’ve seen so many people act like they are rich and spend money like they have a high-income to afford it but eventually end up irrepairably bankrupt. If the law of attraction was real, these people would not have been bankrupted, foreclosed and end up homeless like I’ve personally witnessed first hand. I mean they were having a “wealth-mindset” after all right?

    Moral of the story: Be realistic, stay in reality, work hard, get educated, save money and depend on mostly your actions, talent, IQ, intelligence, skills and connections. But even than don’t expect you will become the next Bill Gates or Warren Buffet. Both of them even admitted they didn’t expect themselves to be where they are today, neither should you… It will set you up for dissapointment.

  6. By the way, Tony Robbins was also involved with MLM and his “mentor” Jim Rohn who was also involved in MLM/pyramid schemes. They both studied and promoted Napoleon Hill’s works to their victims. Why are such shady people recommending Napoleon Hill’s books? Becuase they know it is bs and it is dangerous thinking that can put people into a easily manipulated state.

  7. MLMs have always been sketchy. And, I think, all one has to do us look at religious activities over the years to find proof.

    As for Ackman versus Icahn it took me all of 30 seconds to find that at the time of the debate Ackman was shorting HLF and Icahn was long.

    Just a coupla guys trying to earn a buck!

    1. @Caveat Emptor,

      The term “caveat emptor” – (let the) buyer beware – dealt with marketplace goods; that is, things you could touch. It covered vases, art, real estate – things where the buyer had the opportunity to look something over, touch it, search out defects before purchase. It was meant to caution against purchasing items (real world goods) without first subjecting the item to scrutiny.

      The problem with MLM is that the seller deliberately veils his “object” with so much hyperbole that the buyer’s head spins. In the case of coaching, ebooks, and the like – how do you determine when you’ve been bamboozled? At what point is the buyer, in your mind, no longer responsible for being swindled? When an elderly grandmother of seven is talked out of her life savings by a just-out-of-college kid (who needs a paycheck to pay back student loans) prompted by a large MLM like, say, Herbalife – is it her responsibility to mistrust the dream being sold to her? Is it “common sense” to be cynical when you have no way (because of, say, eyesight, or technology moving faster than your ability to comprehend) of fact-checking when the nice young man calling you at home says it’s perfectly safe?

      I think it’s ludicrous to expect certain things from the victims of this industry. These hawkers of dubious wares are fully cognizant that they’re selling a faulty dream; they’re very good at convincing someone that gold plate is solid gold – or that the lead they have sitting around can be transmogrified into gold with just the right coaching under their belt.

      I would argue that what we need is more Caveat Venditor and less caveat emptor – Seller, Beware: we’re watching you, and we’re onto you.

      1. @Alison,
        I couldn’t agree with you more.

        My opinion is more along the lines of the two Wall St. guys. Ackman is shorting the stock (selling before buying). And Icahn is going long the stock (buying before selling). Actually it completely appropriate for the two to be side by side debating their point. Ackman is making points that drive the stock price down and Icahn is making points to drive the stock price up.

        Then The Market decides.

        In the meantime our grandparents are getting bamboozled by the boat load.

        Buy Low.
        Sell High.
        In the stock market it doesn’t matter which one you do first.

  8. Salty-

    Someone thinks your a hate site again. On you tube. It is ridiculous and not worth your time, but whoever made it probably thinks it will work. It even has the “truther” voice.

    1. @Kerry, Sounds like some scammer is really afraid of SD and the truth. Like most scammers though, they are just treading water. People are getting wiser to scammer b.s., and there is nothing bad guys like that can do to put society back in the dark. That type of psychopathic obsession simply proves that advocates like SD are right on track, and need to keep it up.

  9. Dude,

    You have focused yourself on the internet marketing niche, that’s ok if that’s what you want to do with your life… Keep it up…

    You have changed this venue for the better..

    I would suggest do not isolate the talents you have achieved for only this… please.

    There are not many that try… let alone… DO.

    you know man… how many serious issues in this world .. in reality, those that get scammed as well you know, have a measure of personal responsibility.. keep educating.. no doubt..

    The ability you show is an example beyond marketing, if you discount this you discount yourself droid..

    Yes, you found your niche, great, what now ?

    Become great my man.

    Long live the Droid.

    1. @dave ::

      Maybe I’ll be named the next blabbermouth-strongman leader of Venezuela? Or the next Pope?

      Could happen. Put in a good word for me @dave … I’m pretending to count on you.

    1. @dave, ok my comment is back.. thanks

      I am not wrong here.

      you should not be offended.

      Challenged yes.

      1. @G.,

        I’ve just watched it again, and it really does make an impact on you. Look behind the eyes, it’s scary.

        Just listening to the lyrics and it does illustrate the point that there are a lot of parallels to Scamworld:

        – Get the customer into the system when they are at their most vulnerable

        – Any friends or family members that try to reason with you are negative influences and are no longer worthy of being your friends; get rid of them

        – Your real friends are now “the community”

        It’s bullshit of the highest order.

        1. @PercyPennyWhistle,
          It’s covert hypnosis in order to brainwash is what it is.
          And believe me it’s used a lot more than even people here think.
          I make it a kind of side-hobby to go visit all sorts of cults in order to understand their techniques. Some are more crude than others, but if you think your average popular evangelist has not actively studied some of these methods you’d be wrong.

          There is a serious disconnect in a large sector of humanity. Disconnect from ethics, from love, from truth… I seriously think as a species, unless benign aliens with wake-u-the-fuck-up-O rays come and zap us into intelligent behaviour, we are essentially doomed to the inevitable parassitic self-digestion of our own habitat.

    1. @PercyPennyWhistle,

      I know that face. That’s what “fake it till you make it” looks like when there’s an ocean of pain and sadness just underneath the surface.


      Furry cows moo and decompress.

    2. @PercyPennyWhistle, Sad indeed. Hospitals have begun making publicly available their morbidity and mortality rates by diagnosis. It’s happening slowly, but it is happening. Why are they doing this? To improve quality and, if they are successful, compete on outcomes. The goal is to openly share data so everyone involved in the process has a vested interest in improve outcomes. If everyone at hospital A knows their morbidity and mortality rates for a specific diagnosis are lower than the national average (or the hospital across town), then everybody involved in the delivery of care for that specific service better put their heads together and figure out how to improve quality, or they will quickly lose business to other facilities that have better clinical outcomes.

      What does this have to do with Herbalife?

      Thanks to SD and others, the data is getting published and widely shared about how much a person can realistically earn in network marketing and other scams. The data shows a person has a 99.5% chance of making NO MONEY if they allow themselves to get suckered in to the MLM SCAM.

      Would you go to a hospital for surgery if the showed there was a 99.5% chance the operation would fail?

      Would you put your hard earned money into an investment that statistically had a 99.5% chance of failing?

      Would you get on an airplane if there was a 99.5% probability the plan would crash?

      I believe we all have a responsibility to spread the word and share the data with everyone we know that people who get involved with MLM or Network Marketing have a 99.5% chance they WILL NOT MAKE ANY MONEY AT ALL.

      1. @Mother Kilstein,

        (The knee jerk MLM response)

        Would you go to a hospital for surgery if the showed there was a 99.5% chance the operation would fail?

        Well, if the operation fails, then that means the patient didn’t try to stay alive hard enough.

        Would you put your hard earned money into an investment that statistically had a 99.5% chance of failing?

        If someone puts their money into something like that, they totally deserve failure. Even if the person giving the investment advice was just sharing his “personal diary” in a thoroughly misleading way and keeps going on about silver–still it’s totally the investor’s fault if things fail. (Of course, if things succeed, then the guy sharing his “diary” gets all the credit. duh.)

        Would you get on an airplane if there was a 99.5% probability the plan would crash?

        Well obviously, in a situation like this, the passengers are supposed to just know in advance that it’s going to fail and then they’re supposed to all get out on the wings and flap their arms really hard. What’s that about depressurization and freezing? Don’t quibble with me over details! If the passengers really want the plane to stay up, they’ll find a way!

        ————————-

        I believe we all have a responsibility to spread the word and share the data with everyone we know that people who get involved with MLM or Network Marketing have a 99.5% chance they WILL NOT MAKE ANY MONEY AT ALL.

        I agree. MLM is a Bad Gig. You’d have better odds at a casino, and that’s saying something because over time you’re guaranteed to always lose there. (But we might not want to spread around the casino thing.)

        Maybe an argument to make is: so you want to start a business? Ok, fine. But just to be safe, try doing it without pulling out some small business loan and without paying someone else for the privilege to sell their crap.


        Furry cows moo and decompress.

    3. @PercyPennyWhistle, I tried to contact this guy, trying to understand his entanglement with Herbalife but he refused to answer.

      I guess that saying how crappy Herbalife really is won’t help his wretched “business opportunity” to take off.

  10. Correction to previous post:

    Meant to say:

    If everyone at hospital A knows their morbidity and mortality rates for a specific diagnosis are HIGHER than the national average (or the hospital across town), then everybody involved in the delivery of care for that specific service better put their heads together and figure out how to improve quality, or they will quickly lose business to other facilities that have better clinical outcomes.

  11. (from Ackman’s Who Wants to Be a Millionaire pdf)

    Query:
    What company’s goal is to recruit as many inexperienced sales-people as possible (on full commission with limited oversight) without regard for the ultimate demand for its products?

    I can answer that: the scammy kind of company has that as a goal.

    That’s what it was like with the Southwestern Company too. I’m still not sure if Southwestern Co. technically qualifies as a pyramid scheme because I don’t know that over half their income comes from recruitment. But then again, if it doesn’t, then why do they try so hard to recruit? Well, I mean besides the high turn-over of course.

    Anyway– that’s always been a stumper for me: I mean suppose you’ve got some brand, right? You’ve worked to establish the brand so that people know it stands for a good product, quality, etc, etc. Then you go and allow “independent contractors” that aren’t really very independent to run willy nilly all over the place attempting to sell to everybody. And you have very little control over what kinds of claims they make to the prospects they try to sell to. Sure, from a legal perspective, the “independent contractor” ruse might work to prevent lawsuits from touching your company, but what about reputation?

    My supposed student leader/manager/whatever at Southwestern confided in me at one point during the summer that he had half a mind to just up and leave the sales gig that summer–just work his way across country. How was he going to pay for this? Easy! He was going to continue acting as a Southwestern salesperson, selling people books. It’s just he’d take their money and then never show up at the end of the summer to actually deliver their books. (Because by then he’d be another couple of states away.)

    If one person can randomly think of that, it’s likely that a half dozen others have actually done it.

    I understand it’s not directly comparable to Herbalife and most other MLM thingies because most of them don’t have that Southwestern component of taking young, impressionable types and geographically relocating them for just the summer. Or maybe they do?

    Anyway. Fraud and stuff. MLM-style recruit-recruit-recruit! operations kinda sorta encourage fraud on the part of the supposed distributors by design.

    Thanks for tolerating my rambling. ;-)


    Furry cows moo and decompress.

  12. With Herbalife trading at 38.79 at close of market, and Ackman complaining earlier today about other hedge-fund managers trying to put a short-squeeze on him, Ackman having taken a $500 million dollar bath on JC Penny recently, now publicly attacking the CEO he recruited for it, and — more worrisomely —- George Soros pulling hundreds of millions of dollars from Pershing Square …

    … Ackman could be in deep deep trouble with his > $1 billion short position on Herbalife.

    I just watched his 3 h 20 min. presentation and found it riveting — it was easily as entertaining as Margin Call (and I liked the movie) …

    … but a strong moral sense of things isn’t going to help him if he runs out of cash. Herbalife could win this, easily, Droid.

  13. No offence intended, but what the hell is a The Verge?

    Some website founded in 2011. That’s great and all, but what influence does it have?

    Ackman persuaded me. Indeed, I knew pretty much every salient fact in a general sense going in and about Herbalife in particular (although it could have applied to many other MLMs). I even knew how Avon was a legitimate business by comparison.

    So I’m in. Herbalife’s a scam, in my opinion. But the regulators seem to want to do nothing … and Ackman has a hell of a lot of financial pressure on him right now, as near as I can figure.

    So his endurance may not outlast Michael Johnson’s.

  14. Anyway, Carl Icahn is a slippery asshole, but he’s also wicked smart.

    Aside from his excellent double-digit returns including the last few years (and recent intriguing investment into Nuance, which I think is astute), he predicted a couple months back that Ackman could be in desperate trouble with a short-squeeze.

    And what was Ackman complaining about a few hours ago? Yep. That.

  15. So Johnson was just dumped as CEO of JC Penny.

    I guess half a billion dollars lost is real money after all, especially when you’re over a billion short on a stock that isn’t tanking and Soros (and probably others) are pulling money out of your hedge fund.

    Board member Bill Ackman, the hedge fund manager whose Pershing Square is J.C. Penney’s largest shareholder, might also take heat for his role in the CEO debacle.

    Well no kidding.

    Ackman handpicked Johnson to replace Ullman and in May 2012 said the company had been “chronically mismanaged” during his tenure. Ackman could not be reached for comment, but said last Friday that criticism of Johnson “is deserved.”

    1. @Christoph Dollis ::

      Don’t care :: don’t care … and don’t care.

      Lot’s of the people getting fucked over by the likes of Herbalife can’t pay the fucking water bill … can’t buy medicine … or are dead. You know?

      So spare me … go seek alpha.

      1. @SD,

        Here are some intriguing finance-industry tidbits that might be relevant to your interests:

        Herbalife Shares Reopen After KPMG Resigns as Auditor

        Herbalife resumes trading, down slightly
        Accounting firm KPMG told Herbalife that it had to resign as auditor because it learned that a KPMG partner may have used inside information to trade Herbalife stock.

        KPMG resigns as auditor for Herbalife, Skechers
        KPMG withdrew its recent audit reports of both companies, because it felt its own independence had been compromised.

        Prosecutors Said to Be Investigating Tips at KPMG Involving Herbalife and Skechers
        In its announcement, Herbalife said it believed its financial accounts for its last three fiscal years remained accurate. But KPMG, citing concerns about its independence, withdrew its audits for those years.

        It is unclear when Herbalife will hire a new auditor, though any such firm would probably take a fresh look at the company’s financial records.

        Bill Ackman is playing Upton Sinclair, trying to convince the upper class and the government to act on behalf of the exploited working people. He’ll have more luck shocking them with the treacherous accounting practices used to make their HLF stock-sausages.

        Hopefully Herbalife’s next auditor will look closely at Ackman’s presentation and address those alleged errors and omissions in their reports to shareholders.

        1. @Lanna,

          Re Upton Sinclair / shock / stock-sausages: That’s an awesome analogy.

          So, regarding auditors and auditing: there’s a lot here I don’t know about I guess. I always figured that the IRS audits you over your taxes and that’s that.

          I guess publicly traded companies sometimes have audits and auditors separate / apart from the IRS?

          An auditor isn’t the same as an accountant. An auditor is some sort of official financial examiner.

          It must assuredly not be anything close to a perfect process. Else there’d be less (successful) financial corruption all around.

          1. @Wyrd,

            I’m not an accountant. Do not consider this business advice. Consult a qualified professional.

            If you would like to gorge yourself on auditing info, check out Wikipedia’s entry for “financial audit.”

            If you’d like a quick-and-dirty explanation of U.S. financial audits for your own edification, read on.

            So, regarding auditors and auditing: there’s a lot here I don’t know about I guess. I always figured that the IRS audits you over your taxes and that’s that.

            An IRS audit is something the IRS does under certain circumstances to verify that the taxpayer isn’t under-reporting income or over-reporting deductions. A financial audit is something a corporate entity employs a CPA firm to do annually for a number of reasons, such as meeting government reporting requirements (e.g., for not-for-profit corporations) and catching embezzlers.

            I guess publicly traded companies sometimes have audits and auditors separate / apart from the IRS?

            Not just publicly traded companies. There are sort of three tiers of financial accountability:
            – Annual financial reports (P&L, balance sheet, cash)
            – Audited financial reports (verified by CPAs)
            – SEC/SOX-compliant reporting (for publicly traded companies)

            Very small, closely-held companies can get away with unaudited financial reports. But even small, local companies get their financial reports audited. Publicly-traded companies have to go beyond auditing and complete quarterly SEC filing and meet Sarbanes-Oxley regulations.

            An auditor isn’t the same as an accountant. An auditor is some sort of official financial examiner.

            Erm, yes and no. An auditor is an accountant, but not all accountants are auditors. And an audit CPA isn’t as infallible as “official financial examiner” sounds.

            So, first, in the U.S., saying lowercase “accountant” with no qualifiers is like saying “biologist” or “computer programmer.” It denotes a type of work, not a specific credential.

            The credential one would seek is Certified Public Accountant (CPA), which is earned by passing the grueling CPA exam after first completing a bachelor’s in accounting (or, in some states, having on-the-job experience). It’s akin to passing the bar after first completing law school, except a person can work as a company’s private/in-house lowercase accountant without becoming a CPA.

            CPAs usually go work at a CPA firm, where they specialize in providing either tax services or audit services to the firm’s clients. So there are in-house accountants, tax CPAs, and audit CPAs, as well as separate bookkeeping and finance professionals, and they all do distinct things.

            It must assuredly not be anything close to a perfect process. Else there’d be less (successful) financial corruption all around.

            Auditors have the official credential of Certified Public Accountant, but the firm that employs them is hired by the company they’re auditing.

            There’s a form of client-side corruption called opinion shopping, where the client will only hire an audit firm that will give them a clean bill of health.

            Similarly, audit firm Arthur Andersen was afraid Enron would cancel their lucrative consulting contracts if they raised flags about mark-to-market accounting, so they hushed up the audit team’s concerns internally.

            The audit team only verifies a random sampling of transactions, files, etc., so it’s also possible for there to be mistakes they didn’t catch.

            Also, an audit report doesn’t come with a big red sticker if they found mistakes. You have to read carefully to see where the company’s been allowing theft, losing track of its money, switching bookkeeping practices month-to-month, entering entertainment expenses as travel expenses, etc.

            And audit teams are only human, so they could be duped by a clever client-side psychopath.

            The nitty gritty allegation of Ackman’s long-ass presentation was that Herbalife is a pyramid scheme because it makes more money from recruitment than from retail sales, and that it’s been miscategorizing some of its recruitment profits as retail profits in order to hide this from the regulators and {dot dot dot} KPMG was allowing them to get away with that miscategorization. Now that Herbalife has to get three years of audits redone – with Ackman’s allegations and Einhorn’s question still hanging in the air – a diligent audit firm would address those issues.

            1. @Lanna,

              That was helpful, thanks. I already had most of that in my head. But I’d not caught many of the details from back when Enron got in trouble, and I’d forgotten all about Arthur Anderson.

              The main thing I was missing was that I didn’t get that auditing, not just plain old accounting, was routine in the business world.

              Given the level of corruption that still pervasively exists, it’s depressing.

              It’s like if you’d only found out–just today that there had ever been a civil rights movement and that the current levels of sexism and racism in the land are what you have given that there was such a movement rather than what you have before there’d ever been such a movement.

              #TheMoreYouKnow {rainbow-thing — goes over 3/4 of the way, then nukes}

      2. @SD,

        I found it riveting because it reminded me of the MLMs I’d been sucked in by. I’m hardly unsympathetic.

        But still, I agree with the financial analysts who said it was just an awful strategy — laying down over a billion dollars of his investors money, hoping for the regulators to run to their rescue.

        Even if Ackman is ultimately proven right, it doesn’t do him nor Pershing Capital any good if they’re proven right after they blow through their cash.

        But the presentation itself? Great. The regulators? Not so great. Any plan that relies on the regulators?

        Foolhardy.


  16. Bill Ackman is playing Upton Sinclair, trying to convince the upper class and the government to act on behalf of the exploited working people. He’ll have more luck shocking them with the treacherous accounting practices used to make their HLF stock-sausages.

    Yeah, I agree with this. And losing KPMG as their auditor is bad timing for them. That gives Ackman or those seeking justice from Herbalife an opening, because now the regulators can have an excuse to look at Herbalife’s books other than, “We weren’t doing our job for a long time.”

    Whether the regulators will do anything, I don’t know, but at least now they can do it with plausible cover for their past sloth and neglect.

  17. SD wrote: “I wonder how a pyramid scheme could last for thirty years?*

    Yeah, and how could Mormonism, a genuine American great grandaddy of ScamWorld, last for more than 150 years? (If you are unfamiliar with the story of Joe Smith and Co., get reading! It’s crazy fascinating…in an icky way!) And those mormons, they’ve got modern journalists just as confuzzled. Journalists of the 19th century (Mark Twain, notably, but many more as well) were more clear sighted on the topic (Arthur Conan Doyle was definitely onto them as well), but somehow, it survived anyway, the holy undead zombie reelihjihn of the inter mountain region.

    Just found your blog, thank you, for what you do.

  18. Herbalife is totally a scam, they are in my country (Colombia) and they are always looking for people to scam, i hate them and also Amway.

    1. @riacardos,

      Can you tell us the cost of becoming an Herbalife distributor in Colombia? Or the cost of some of their products?

      I looked on the CIA World Factbook and learned that Colombia’s “income inequality is among the worst in the world, and more than a third of the population lives below the poverty line.” With a per capita GDP of US$10,700, unemployment of 10.3%, and 44.4% of household income going to the top 10% of households, Colombia can’t afford Herbalife, and that’s what makes it the kind of place Herbalife would target. (Those figures are all worse than the U.S. numbers, so no tangents about the U.S. of A. going to hell in a handbasket, please.)

      According to Herbalife’s December 31, 2012, 10-K, they’ve been in Colombia since 2001, and their two February 2011 “Extravaganzas in Buenos Aires, Argentina, and Bogota, Colombia,” together attracted 15,000 people. How soon until the market for Herbalife in Colombia drops?

      Ackman’s people found this English-language brochure for prospective distributors in Colombia (where the official language is Spanish!). On pages 9 and 10 it lists the additional surcharges Colombian distributors must pay:

      The only charges are 7% above price list for packaging and handling (excluding literature), a [15%] logistic surcharge of 15% on the Retail Price, and the corresponding VAT.

      I read here that the standard VAT is 16%, but they were considering reducing it to a 7% consumption duty for restaurant food. Do you know what the rate is for Herbalife’s products?
      Even if the VAT is 0%, that’s still a 22% markup on the distributors’ costs, likely to seriously undercut their profits.

      Yeah, Herbalife sucks. Have their been any lawsuits against them in Colombia?

  19. March 12, 2013 – “National Consumers League calls on FTC to investigate allegations against Herbalife”
    http://www.nclnet.org/newsroom/press-releases/767-national-consumers-league-calls-on-ftc-to-investigate-allegations-against-herbalife

    May 3, 2013 – “Pyramid Scheme Alert formally requests that the office of the North Carolina Attorney General begin an investigation of the multi-level marketing company, Herbalife International. We ask you to investigate
    the merit of the claims it is making to NC residents of offering an “income opportunity.”
    * http://pyramidschemealert.org/wordpress/wp-content/uploads/2013/05/PSAtoNCAGReHLF1.pdf
    * http://pyramidschemealert.org/wordpress/wp-content/uploads/2013/05/North-CarolinaPyramidScheme.pdf

    May 14, 2013 – “Pyramid Scheme Alert has sent an official request letter to to the United States Federal Trade Commission’s (FTC) Acting Director of the Consumer Protection Bureau asking that the agency initiate an investigation of the multi-level marketing company, Herbalife.”
    http://pyramidschemealert.org/regulators-asked-to-investigate-herbalife/

    May 20, 2013 – “Hispanic group asks FTC to probe Herbalife”
    http://www.nypost.com/p/news/business/hispanic_group_asks_ftc_to_probe_Vt2z7YHZyfo7LBYaokOaZO

    1. @Jack,

      But.. but.. but how can that be!? I mean Herbalife is friend to all children! (Just like Gamera the giant turtle.)

      Herbalife Receives Corporate Social Responsibility Award for its Support of Taiwanese Little League

      Herbalife products are sold in more than 80 countries to and through a network of independent distributors. The company supports the Herbalife Family Foundation and its Casa Herbalife program to help bring good nutrition to children. Herbalife’s website contains information about Herbalife, including financial and other information at http://www.herbalife.com.

      There’s a bit in the Percy Jackson book series about how franchise restaurants are actually heads of the hydra that have learned how to hide themselves very effectively. It’s deeply unnerving when kids’ fiction is so close to the truth.


      Furry cows moo and decompress.

      1. @Wyrd,

        Are you an MST3K fan?

        “Gamera is really neat.

        Gamera is filled with meat.

        We’ve been eating Gamera!

        Shell

        Teeth

        Eyes

        Flames

        Claws

        Breath

        Scales

        Fun!!!!”

        I think I’d try the turtle meat before I’d try herbalife.

        1. @Barbara,

          Are you an MST3K fan?

          http://youtu.be/FGRHqvC7f_o

          Res ipsa loquitur. — @SD taught me that. Except I’m not meaning to imply negligence or anything negative. It’s just fun to write in Latin, the Language of Old Stuff. Basically, if something is in Latin then either it’s way outdated or it is now timeless.


          Furry cows moo and decompress.

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