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Pyramid Scheme

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BUSINESS
April 26, 1991 | GREGORY CROUCH, TIMES STAFF WRITER
The California attorney general's office believed that FundAmerica, Inc. was running a pyramid scheme as early as September, 1988--nearly two years before Florida authorities filed criminal charges against the company--but it never took formal action against the Orange County marketing company, according to a letter obtained by The Times on Thursday.
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BUSINESS
April 11, 2014 | By Stuart Pfeifer and Richard A. Serrano
The Justice Department and FBI have opened an investigation of Los Angeles nutritional products company Herbalife Ltd., which has been fighting critics who say it's operating an illegal pyramid scheme. Law enforcement sources confirmed the investigation. The FBI started looking into the company "more than several months ago," said a person who has been briefed on the investigation. "We are doing our job of getting to the bottom of this issue," said the official, who asked not to be identified because the investigation is ongoing.
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BUSINESS
March 7, 1996 | JAMES S. GRANELLI, TIMES STAFF WRITER
Hawaii state prosecutors said Wednesday they are investigating an Orange County company to determine if its sales of how-to kits to would-be travel agents constitute an illegal pyramid scheme. In addition, World Class Network in Irvine faces a securities probe by another Hawaii agency to determine if it is selling unregistered securities in the form of distributorships.
BUSINESS
April 11, 2014 | By Walter Hamilton and Richard Serrano
Shares of Herbalife Ltd. suffered their biggest loss in more than a year Friday following a report that criminal authorities are investigating the Los Angeles nutritional products company. The FBI has launched a criminal investigation of Herbalife and its web of independent distributors, a federal law enforcement source told The Times. A federal law enforcement official in New York confirmed Friday that the FBI had opened an inquiry into Herbalife but did not know first-hand the extent of the investigation.
BUSINESS
December 21, 2012 | By Tiffany Hsu
With its three-day stock plunge accelerating Friday, Herbalife Ltd. said it will defend itself against a hedge fund manager's accusations that the business is a “pyramid scheme” - but the company said its response won't come until next month. The Los Angeles maker of nutritional products said Friday that it will wait until the week of Jan. 7 to host an event for analysts at which it will respond to the “distorted, outdated and inaccurate information” alleged by moneyman Bill Ackman.
BUSINESS
December 3, 2013 | By Stuart Pfeifer
Herbalife Ltd. said a Belgian appeals court has overturned a lower court finding that the company operated an unlawful pyramid scheme. Critics of the Los Angeles nutritional products company had said the 2011 ruling in Belgium was evidence that the company improperly rewards its independent sales people for recruiting others into the business. Herbalife said in a statement that a Belgian appeals court ruled that the company's sales model "is in full compliance with the law. " PHOTOS: Top 10 Southern California companies "Herbalife always believed that the first judgment contained factual errors and was based on misinterpretations of its direct-selling sales method, and was confident that the original judgment would be overturned on appeal," Herbalife said in a statement Tuesday.
BUSINESS
December 21, 2012 | By Stuart Pfeifer, Walter Hamilton and Andrew Tangel, Los Angeles Times
With investors punishing his company's stock for a third consecutive day, the top executive of Herbalife Ltd. sought to reassure shareholders Friday that his company is not a pyramid scheme. Working from the firm's tony headquarters in downtown Los Angeles, Herbalife chief Michael Johnson telephoned institutional investors, including fund managers at Fidelity, disputing highly publicized criticism from prominent New York hedge fund manager Bill Ackman. Johnson also assembled a team of about a dozen top company officials to prepare a point-by-point defense against Ackman's assertions that Herbalife is a "sophisticated pyramid scheme" whose independent sales associates make more money recruiting new distributors than actually selling products.
BUSINESS
December 18, 2013 | By Stuart Pfeifer
A year ago, activist investor Bill Ackman rocked Wall Street with a $1-billion bet that shares of Herbalife Ltd., the Los Angeles seller of weight-loss and nutrition products, would slide to zero. Herbalife was a "pyramid scheme," bound to be undone by regulators and destroyed, he told the Los Angeles Times and other media outlets Dec. 19. Herbalife shares plummeted 42% in the next five days, hitting a midday low of $24.24 on Christmas Eve. At the time, it seemed that 2013 would be difficult for Herbalife.
NEWS
June 11, 1999 | From Times Wire Reports
A businessman was convicted in New York City of cheating 22,000 investors out of $700 million in what prosecutors called the biggest pyramid scheme in U.S. history. Patrick Bennett and his wife sobbed after a federal jury found him guilty of 42 counts, including securities fraud and laundering more than $1 billion. The jury did not reach a verdict on 11 counts, including the most serious charge of conspiracy. Bennett, 46, was held without bail and faces at least 20 years in prison.
CALIFORNIA | LOCAL
December 7, 2002 | From Times Staff Reports
A woman was sentenced to 12 years in state prison Friday and her stepfather was given five years' probation for operating an elaborate pyramid scheme that stole more than $2.5 million from working-class Latino families throughout Southern California. Joan Frederick, 30, and Felix Navarrete, 70, were found guilty in October of grand theft and operating an "endless chain scheme" for nearly two years through a telecommunications company called La Luz de Oro (or, Light of Gold).
BUSINESS
March 12, 2014 | By Walter Hamilton
The Federal Trade Commission has launched a civil investigation into Herbalife Ltd., the Los Angeles-based nutritional-products maker said Wednesday. Herbalife did not disclose any details of the probe, but it has been waging an ongoing battle against a hedge fund manager's allegations that it is running a thinly disguised pyramid scheme. The company reiterated its long-stated position that its business model is sound and said it would cooperate with the inquiry. "Herbalife welcomes the inquiry given the tremendous amount of misinformation in the marketplace, and will cooperate fully with the FTC,” the company said in a statement.
BUSINESS
March 12, 2014 | By Walter Hamilton
The rancorous battle over Herbalife's business practices took a critical turn as the company revealed that it is being investigated by the Federal Trade Commission. Herbalife did not reveal details of the probe, but the Los Angeles nutritional products maker reiterated its long-held position that its business model is sound. The company has been the target of accusations that it operates a pyramid scheme. "Herbalife welcomes the inquiry given the tremendous amount of misinformation in the marketplace, and will cooperate fully with the FTC," the company said in a statement.
BUSINESS
January 23, 2014 | By Stuart Pfeifer
California Atty. Gen. Kamala D. Harris' staff has agreed to meet Friday in Los Angeles with a coalition of critics who believe that Herbalife Ltd. preys on poverty-stricken immigrants with false hopes of easy money, a member of the group said. “The momentum is heading in the wrong direction for Herbalife,” said Brent Wilkes, national executive director of the League of United Latin American Citizens, who is among those scheduled to meet with Harris' staff. “There's a lot of people who have been shown the evidence and now believe the company is defrauding hundreds of thousands, if not millions, of people.” An Herbalife spokeswoman declined to comment.
BUSINESS
January 16, 2014 | By Stuart Pfeifer
Herbalife Ltd. shares fell 10% Thursday after China said it would investigate whether multi-level marketing company Nu Skin Enterprises Inc. operates a pyramid scheme. The Chinese government said it would investigate Nu Skin one day after a newspaper in China accused Nu Skin of running a pyramid scheme. Nu Skin confirmed the investigation and said in a statement that it had launched a “province-by-province business review and will invite relevant regulators to provide guidance.” The company also said it would take steps to improve training and education of employees in China and cautioned that sales will be affected: “As we work through this evolving situation and remain focused on long-term growth, there will likely be a negative impact on China revenue.
NEWS
December 18, 2013 | By Stuart Pfeifer
A year ago, activist investor Bill Ackman rocked Wall Street with a $1-billion bet that shares of Herbalife Ltd., the Los Angeles seller of weight-loss and nutrition products, would slide to zero. Herbalife was a "pyramid scheme," bound to be undone by regulators and destroyed, he told the Los Angeles Times and other media outlets Dec. 19. Herbalife shares plummeted 42% in the next five days, hitting a midday low of $24.24 on Christmas Eve. At the time, it seemed that 2013 would be difficult for Herbalife.
BUSINESS
December 18, 2013 | By Stuart Pfeifer
A year ago, activist investor Bill Ackman rocked Wall Street with a $1-billion bet that shares of Herbalife Ltd., the Los Angeles seller of weight-loss and nutrition products, would slide to zero. Herbalife was a "pyramid scheme," bound to be undone by regulators and destroyed, he told the Los Angeles Times and other media outlets Dec. 19. Herbalife shares plummeted 42% in the next five days, hitting a midday low of $24.24 on Christmas Eve. At the time, it seemed that 2013 would be difficult for Herbalife.
BUSINESS
September 28, 2006 | From Bloomberg News
The Securities and Exchange Commission is seeking to shut down a network of 25,000 websites, accusing operators of running a $15-million pyramid scheme that promises to shower participants with easy cash. Prosperity Automated System, which bills itself as a marketing network, "is destined to collapse and leave the vast majority of investors with substantial losses," the SEC said Wednesday. The complaint targets the network and its creator, William M. Osterhout of Citrus Heights, Calif.
BUSINESS
December 16, 2013 | By Stuart Pfeifer
Shares of Herbalife Ltd. stock surged more than 9% Monday after the company said its new accounting firm made "no material changes" after re-auditing three years of the company's financial statements. The new audits were required because KPMG resigned as Herbalife's auditors this year after the partner who had overseen the company's audits admitted to insider trading in Herbalife stock. PricewaterhouseCoopers re-audited Herbalife's financial statements from 2010, 2011 and 2012.
BUSINESS
December 3, 2013 | By Stuart Pfeifer
Herbalife Ltd. said a Belgian appeals court has overturned a lower court finding that the company operated an unlawful pyramid scheme. Critics of the Los Angeles nutritional products company had said the 2011 ruling in Belgium was evidence that the company improperly rewards its independent sales people for recruiting others into the business. Herbalife said in a statement that a Belgian appeals court ruled that the company's sales model "is in full compliance with the law. " PHOTOS: Top 10 Southern California companies "Herbalife always believed that the first judgment contained factual errors and was based on misinterpretations of its direct-selling sales method, and was confident that the original judgment would be overturned on appeal," Herbalife said in a statement Tuesday.
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