Herbalife, the Los Angeles-based company that markets nutritional supplements and shakes worldwide through a system of distributors, is under the microscope of the Federal Bureau of Investigation, which has launched a probe of its activities. Complaints from hedge fund manager Bill Ackman, accusing Herbalife of being a Ponzi scheme, are said to have prompted the investigation, although no Herbalife officials have as yet been formally accused of any wrongdoing. News of the FBI probe, however, sent Herbalife shares spiraling downward by 14 perce6ynt by close of the market last Friday.
The FBI investigation is the latest in a series of inquiries that Herbalife is facing from an assortment of government agencies trying to determine whether the millions of distributors which make up its distribution system are involved in any type of fraudulent activity. Officials at Herbalife say that they are not aware of any ongoing investigation either by the U.S. Department of Justice or the FBI, insisting that neither agency has requested any information from them either in the recent past or at the current time. But officials with the Federal Trade Commission have confirmed that Ackman’s charges that a pyramid scheme exists have prompted opening the FBI investigation.
On The Web:
Criminal probe launched in Herbalife