Herbalife share prices fell on Monday after the company’s longtime foe William Ackman said he will present evidence Tuesday to show that the Los Angeles supplements company operates as a massive fraud.
“You’re going to learn why Herbalife is going to collapse,” said Ackerman, founder of Pershing Square Capital Management, which has taken a short position on Herbalife. “And that’s a pretty strong statement, but this is the largest fraud, public fraud in terms of scale, of countries involved, (of) harm to people,” Ackman said.
Ackman said he will back up his claims in a presentation based upon hundreds of hours of recorded video and audio evidence as well as internal Herbalife documents.
Herbalife is a multilevel marketing company that sells weight-loss products and other goods through a network of distributors. Ackman has alleged the firm operates as an illegal pyramid scheme.
Representatives of Herbalife could not be reached for comment. In a statement on Monday that followed Ackerman’s announcement, Herbalife asserted that its member-owned nutrition clubs number 4,000 in the United States alone and that its sellers are required to undertake extensive training before starting a nutrition club.
The firm also highlighted its relationship with members of the Latino community, who according to Herbalife frequently live in areas that are “flooded” with fast-food outlets and can obtain more nutritious products from Herbalife.
Herbalife share prices rebounded slightly after falling 11 percent on Monday to reach $54.10 in after-hours trading on the NYSE.
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