Minkow vs. USANA and Herbalife
MarketWave Alert #96
Anti-MLM Zealots Lose Again!
No Enforcement Action Recommended
June 26th, 2008
On October 29th Barry Minkow published a report claiming Herbalife, like Usana (see Rebuttal Report) was breaking Chinese law by illegally conducting MLM business within mainland China. Twenty seven pages of this 90 page report was an arid, repetitive attempt by über-anti-MLM zealot Robert FitzPatrick to convince the regulatory recipients listed on the report that Herbalife was a "Penny Stock, Pump & Dump, Ponzi Scheme". That list included the FBI and, of course, the SEC. On October 30th Minkow launched a web site called "Doomed by Design" where he attempted to make the same case, only with more colorful and dramatic pictures.
One day later, on November 1st of 2007, the SEC, which had already begun an investigation into insider trading a month earlier, notified Herbalife that they were expanding their investigation. The new issues they were looking into was the amount of product being personally consumed by Herbalife distributors. Within FitzPatrick's portion of Minkow's report he spent the bulk of his efforts on making a case that Herbalife was a pyramid scheme because not enough product was actually moving to bona-fide end user customers. In spite of crystal clear evidence to the contrary, Fitzpatrick is still touting a mythical "51%" of commissions coming from retail sales to non-participants as the FTC's established benchmark for legality. There could be no other reason for the SEC to be reviewing such internal consumption activity than to also be evaluating their status as a legal, legitimate network marketing company.
Well, today the SEC closed their investigation of Herbalife, and guess what? They found nothing requiring any "enforcement action". No evidence of an illegal pyramid scheme (apparently the FTC forgot to tell the SEC about that 51% deal), no concern about misbegotten revenue from China, no insider trading... nothing!
To read a press release regarding this notice, see: http://biz.yahoo.com/bw/080625
By the way, here's where Team Minkow supporters, such as head cheerleader Tracy Coenen and the Yahoo! board bashers, will try to claim that just because the SEC "does not intent to recommend any enforcement action be taken against the company" (the SEC's exact words) this doesn't mean that they didn't find any evidence of wrongdoing. Which leaves us to ponder why, after investigating Usana for ten months, and Herbalife for eight months, and in spite of actually finding signs of illegal activity, the SEC just, as one Team Minkow supporter has suggested, "didn't have the will" to take action.
This would be funnier if it wasn't for the mainstream media's full and unchallenged support of Minkow's original accusations, but complete silence when his targets are vindicated.
Wall Street Journal? Forbes? Anyone?
MarketWave, Inc.
MarketWave Alerts(tm) is copyrighted material. Alerts may be freely copied or forwarded in their entirety only under the condition that they not be edited or revised in any way, the MarketWave web site address be included, and the non-subscriber recipient be agreeable to receiving it. It is the belief of MarketWave that the information presented is accurate and truthful as of the date of the Alert. Any and all commentary is the expressed opinions, views and beliefs of Len Clements protected under the U.S. Constitution. Len Clements is not an attorney nor should any part of any Alert be construed as legal advice, nor should it replace the advice of competent legal council.
posted by Mark Worthen, Psy.D. at Thursday, June 26, 2008
0 comments
links to this post
