Litigation

Lying in business is not compartmentalized (Herbalife, NYSE:HLF)

By Tracy Coenen

Reformed white collar criminal Barry Minkow has been investigating multi-level marketing schemes such as Usana Health Sciences, Herbalife Ltd., and PrePaid Legal. One of the most recent revelations by Minkow and his Fraud Discovery Institute was that the president of Herbalife, Gregory Probert, did not have the MBA he and the company claimed in SEC filings.

This revelation led to Mr. Probert resigning from Herbalife last week. Are you asking yourself why this is a big deal? Heck, even a Goldman Sachs analyst said the lie was nothing to be concerned about.

But it’s simple. Lying by company executives in one area of their lives or business lives is not usually compartmentalized. If an executive is willing to lie about this, he may likely be willing to lie about other things. (And that’s exactly what Minkow is suggesting in regard to the Herbalife business model.)

Barry appeared on Neil Cavuto’s show on FOX Business last week:

Full post as published by The FRAUDfiles Blog on May 05, 2008 (boomark / email).