Duane Stanford of Bloomberg has provided an investigative report today into the claims of “running a ponzi scheme” and other related wrong doings being made by a group of Latinos against global nutrition firm Herbalife Ltd. (NYSE:HLF).
While the $6.48 billion market capped nutrition firm headquartered in Cayman Island and its backers like billionaire investor Carl Icahn have been denying these allegations, various government agencies have been compelled to investigate the company operations to determine the truth in the complaints which have been lodged by impacted investors at regular intervals.
Duane Stanford tracked down complainants living at a facility in Illinois, being run by Latino advocacy group called League of United State Latin Americans, in order to understand first hand, the allegations against Herbalife Ltd. (NYSE:HLF).
One of the alleged victims that Mr. Stanford interviewed was Miguel Calderon. Mr. Calderon has filed a complaint against the nutrition company stating that he was duped out of $22000 by the firm, thanks to its pyramid scheme and has furnished documents which support his investments claims with Herbalife Ltd. (NYSE:HLF).
Mr. Calderon concedes that he had signed up with Herbalife after one of his friends recommended the scheme to him and thought that the doubling of his investment, as promised by the company was a certainty, as his friend was vouchsafing for the scheme and acted as his sponsor when signing up with the firm.
Mr. Stanford through his many conversations with similar victims has gone on to conclude that in his opinion, “Many of the victims, did not read the contracts that they signed. They really did not have a clear understanding of the mechanism through which they would be able to earn the return on their investments.” He opines that many of these victims wrongly concluded that if they just invested in the scheme, “they would be able to double their money.”
Mr. Stanford as part of his detailed investigations has also spoken to former FTC attorneys, local Herbalife Ltd. (NYSE:HLF) sponsors and hedge fund investors. From these conversations he has come to appreciate the complexity of the current legal investigations, which are aimed to determine if Herbalife Ltd. (NYSE:HLF) is running a legitimate distribution business or a hyped up ponzi scheme.