Herbalife is being probed by the FBI for allegedly operating an illegal pyramid scheme, sending stocks plummeting for the international nutritional and weight-loss products company, the Christian Science Monitor reported on April 12.
The Herbalife probe stems from allegations that the multi-billion dollar company is a pyramid scheme. But Herbalife Ltd. officials maintained that they were not aware of the FBI’s Herbalife probe and defended the company, which was founded in 1980 and does business in 80 countries around the world, including China, its hottest growing market.
News of the Herbalife probe sent stocks tumbling 14 percent, the Los Angeles Times reported.
The Herbalife probe by the FBI is just the latest in a long battleground over the company. Hedge fund manager William Ackman, who runs the $13 billion hedge fund Pershing Square Capital Management from New York, has accused Herbalife of being a pyramid scheme for more than a year.
Herbalife suffered a blow last month, too, when it announced that the company was the subject of a civil inquiry by the Federal Trade Commission.