Herbalife Linked To Canadian Pyramid Scheme

Aug 19 2013 | 9:29am ET

Nutritional supplements company Herbalife may—as Pershing Square Capital Management's William Ackman alleges—or may not be a pyramid scheme. But it kept company with pyramid schemes, according to a new report.

A Financial Times investigation shows that Herbalife maintained its ties to Online Business Systems for almost a decade after a Canadian court had branded the company's predecessor a pyramid scheme.

A 2004 ruling found that Global Online Systems, which became OBS, was a criminal "scheme of pyramid selling." The company's main business was recruiting salespeople for Herbalife.

GOS was ordered to make changes to its practices and to notify its customers about its criminal conviction. But before the court ruled, the company encouraged customers to move their business to OBS, which is run by the daughter of one of GOS' founders. And OBS promised that "your Herbalife lineage remains the same regardless of the changes to your new marketing system."

Herbalife earlier this year moved to distance itself from OBS, the FT reports, restricting the use of leads and marketing materials by distributors. The company has since ended the sale of leads to or by distributors.


In Depth

Will Liquid Alts’ Performance Sustain Future Asset Flows?

Aug 25 2014 | 10:34am ET

Liquid alternative investment funds saw the highest percentage of capital inflows...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.