US authorities have opened a criminal probe into Herbalife , a nutrition and weight loss company.
From a New York Times report and AFP there has been some chatter that Herbalife has been under investigation for a better part of a year. Herbalife officials have stated that it is possible no action will be taken against Herbalife and the criminal probe will be dropped.
The investigation’s focus has been on Herbalife’s direct-selling business model.
Herbalife distributes its products via a network of sales representatives, which has come under fire with some suggesting that Herbalife is really a pyramid scheme, included in this allegation is billionaire hedge fund manager William Ackman. The company has clearly denied this however their stock performance has suffered.
Shares in the Los Angeles based company have fallen sharply in recent months amid the allegations.
The Federal Trade Commission says it has launched a civil inquiry into Herbalife. Herbalife is also being investigated by the SEC (Securities Exchange Commission)
But the company issued a statement on Friday, responding to “media reports and rumors in happy wheels demo the marketplace,” saying it was unaware of any criminal investigation.
“We have no knowledge of any ongoing investigation by the DOJ (Department of Justice) or the FBI, and we have not received any formal nor informal request for information from either agency,” the Herbalife statement said.