Editor's Note: The online version of this story includes information that was inadvertently omitted from the print version. It also corrects the year Minkow was released from prison, which was 1995.
Five years ago, former ZZZZ Best carpet cleaning charlatan Barry Minkow was released from prison after serving a sentence for fraud, racketeering and tax evasion.
Since then, the one-time San Fernando Valley resident has reinvented himself, first as a minister and now as an unlikely champion of corporate governance reform.
His latest target?
Herbalife Ltd., the nutritional supplement maker and multilevel marketing phenomenon that five years ago also set about reforming its less-than-stellar public image.
The Century City-based company was handed over to Michael Johnson, a slick Walt Disney Co. executive who sought to improve the product line and leave behind its history of marketing abuses not without some success.
But Minkow, who now lives in San Diego, doesn't buy it.
He considers the marketer of vitamins and weight-loss shakes little more than a pyramid scheme hiding behind the respectability of a NYSE ticker symbol and $2.5 billion market cap not to mention what he claims is a purveyor of unsafe products.
"Herbalife is what we call a fully disclosed fraud," Minkow said. "Everything is there but you have to read between the lines. And when you look at the turnover you can see the model can't sustain itself, except for the people at the very top."
A corporate gadfly with Minkow's past might easily be dismissed, but at least one of his barbs hit the bull's eye.
Last month, he conducted a credentials check of top company managers and directors and discovered the chief operating officer, Greg Probert, hadn't completed requirements for the MBA listed on his resume. Probert, also a former Disney executive and longtime friend of Johnson, resigned less than a week after the story broke.
Then on March 28, Minkow published his latest attack on the Web site of his San Diego-based Fraud Discovery Institute. The post contended that he had hired an independent lab to test several Herbalife products and had found what he contends to be unsafe levels of lead in the children's version of a meal-replacement shake.
As a result, the company is in the process of testing lead and other contaminant levels in all 61 products sold in the United States. Herbalife contends early results show lead levels far lower than Minkow claims, with the company planning to release a detailed report.
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