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Herbalife accused of fraud and operating a pyramid scheme

Many companies’ corporate headquarters are located in Las Vegas, and these offices are responsible for the oversight of national and international branches of the business. When it is suspected that large companies such as these are conducting themselves in an illegal fashion, the management teams and their business practices may come under investigation. If it is discovered that these corporations were in fact engaging in business fraud, deceptive trade practices or other unlawful activity, severe penalties may result.

In 2012, a prominent hedge fund manager publicly proclaimed that Herbalife was conducting itself in a fraudulent manner. Civil rights groups have also lodged complaints against the company, accusing it of utilizing a pyramid scheme strategy that exploits minorities. These and other complaints have culminated in several recent investigations into Herbalife’s practices, launched by the attorneys general of New York and Illinois as well as the FBI and the Federal Trade Commission.

The business documents of Herbalife distributors are being reviewed, but this report offers no initial findings or other details regarding these investigations. The company maintains that it is operating within the confines of the law, and has issued a public statement asserting that the business is cooperating with authorities.

All businesses operating within the United States must comply with any applicable laws. If they do not, they may face business litigation and criminal charges. Company owners and executives who would like to protect themselves against such lawsuits and investigations may wish to speak with an attorney to ensure that their operations do not invite any legal sanctions.

Source: Yahoo! News, “Illinois investigates Herbalife as federal, state probes grow,” Svea Herbst-Bayliss, April 17, 2014.

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